United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 29, 2019~~March 28, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 0-20388

LITTELFUSE, INC.

(Exact name of registrant as specified in its charter)



Delaware		36-3795742
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8755 West Higgins Road
Suite 500
Chicago	Illinois	60631
(Address of principal executive offices)		(ZIP Code)

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [ ] No [ ]

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

As of ~~July 26, 2019,~~April 24, 2020, the registrant had outstanding ~~24,587,591~~24,276,841 shares of Common Stock, net of Treasury Shares.

TABLE OF CONTENTS



		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~June 29, 2019~~March 28, 2020 (unaudited) and December ~~29, 2018~~28, 2019	3
	Condensed Consolidated Statements of Net Income for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 (unaudited) and ~~June~~March 30, ~~2018~~2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 (unaudited) and ~~June~~March 30, ~~2018~~2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 (unaudited) and ~~June~~March 30, ~~2018~~2019 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 (unaudited) and ~~June~~March 30, ~~2018~~2019 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	3637
Item 4.	Mine Safety Disclosures	3637
Item 5.	Other Information	37
Item 6.	Exhibits	37
Signatures		3839

LITTELFUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)						(Unaudited)
(in thousands)	June 29, 2019			December 29, 2018			March 28, 2020			December 28, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	474,781		$	489,733		$	620,575		$	531,139
Short-term investments	34			34			43			44
Trade receivables, less allowances of $34,468 and $36,038 at June 29, 2019 and December 29, 2018, respectively	245,723			232,892
Trade receivables, less allowances of $37,482 and $42,043 at March 28, 2020 and December 28, 2019, respectively							207,912			202,309
Inventories	254,305			258,228			227,282			237,507
Prepaid income taxes and income taxes receivable	1,374			2,339			4,253			4,831
Prepaid expenses and other current assets	63,332			49,291			32,418			28,564
Total current assets	1,039,549			1,032,517			1,092,483			1,004,394
Net property, plant, and equipment	338,500			339,894			334,829			344,617
Intangible assets, net of amortization	341,174			361,474			308,393			321,247
Goodwill	826,408			826,715			812,763			820,589
Investments	25,456			25,405			21,248			24,099
Deferred income taxes	9,200			7,330			7,608			8,069
Right of use lease assets, net	23,280			—			20,611			21,918
Other assets	18,018			20,971			14,694			14,965
Total assets	$	2,621,585		$	2,614,306		$	2,612,629		$	2,559,898
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	123,058		$	126,323		$	106,796		$	117,320
Accrued liabilities	111,696			138,405			73,512			84,120
Accrued income taxes	21,657			20,547			17,907			14,122
Current portion of long-term debt	10,000			10,000			10,000			10,000
Total current liabilities	266,411			295,275			208,215			225,562
Long-term debt, less current portion	676,940			684,730			764,195			669,158
Deferred income taxes	53,039			51,853			49,698			49,763
Accrued post-retirement benefits	30,666			31,874			35,904			38,198
Non-current operating lease liabilities	18,643			—			15,960			17,166
Other long-term liabilities	65,944			72,232			61,709			64,037
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, June 29, 2019–25,786,662; December 29, 2018–25,641,959	255			254
Treasury stock, at cost: 1,157,213 and 868,045 shares, respectively	(166,068		)	(116,454		)
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, March 28, 2020–25,902,213; December 28, 2019–25,855,203							256			256
Treasury stock, at cost: 1,626,357 and 1,473,901 shares, respectively							(239,817		)	(216,447		)
Additional paid-in capital	855,192			835,828			874,360			867,996
Accumulated other comprehensive loss	(95,582		)	(97,924		)	(121,802		)	(106,823		)
Retained earnings	916,014			856,507			963,820			950,901
Littelfuse, Inc. shareholders’ equity	1,509,811			1,478,211			1,476,817			1,495,883
Non-controlling interest	131			131			131			131
Total equity	1,509,942			1,478,342			1,476,948			1,496,014
Total liabilities and equity	$	2,621,585		$	2,614,306		$	2,612,629		$	2,559,898

See accompanying Notes to Condensed Consolidated Financial Statements.

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)


	Three Months Ended						Six Months Ended					Three Months Ended
(in thousands, except per share data)	June 29, 2019			June 30, 2018			June 29, 2019		June 30, 2018			March 28, 2020		March 30, 2019
Net sales	$	397,879		$	459,183		$	803,379	$	876,996		$	346,096	$	405,500
Cost of sales	256,071			290,196			506,343		558,386			222,384		250,272
Gross profit	141,808			168,987			297,036		318,610			123,712		155,228

Selling, general, and administrative expenses	57,666			73,244			120,621		150,758			54,386		62,955
Research and development expenses	21,458			22,748			42,867		45,288			14,595		21,409
Amortization of intangibles	10,050			13,373			20,241		25,371			9,981		10,191
Total operating expenses	89,174			109,365			183,729		221,417			78,962		94,555
Operating income	52,634			59,622			113,307		97,193			44,750		60,673

Interest expense	5,589			5,782			11,275		11,205			5,418		5,686
Foreign exchange (gain) loss	(3,575		)	3,200			668		(7,354		)
Other (income) expense, net	(2,947		)	(1,678		)	1,358		(3,621		)
Foreign exchange loss												2,584		4,243
Other expense, net												1,249		4,305
Income before income taxes	53,567			52,318			100,006		96,963			35,499		46,439
Income taxes	9,775			9,992			19,225		18,609			10,855		9,450
Net income	$	43,792		$	42,326		$	80,781	$	78,354		$	24,644	$	36,989

Income per share:
Basic	$	1.77		$	1.69		$	3.27	$	3.18		$	1.01	$	1.50
Diluted	$	1.75		$	1.67		$	3.23	$	3.12		$	1.00	$	1.48

Weighted-average shares and equivalent shares outstanding:
Basic	24,740			25,004			24,729		24,671			24,393		24,717
Diluted	24,983			25,401			24,998		25,086			24,578		25,009

See accompanying Notes to Condensed Consolidated Financial Statements.

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended						Six Months Ended					Three Months Ended
(in thousands)	June 29, 2019			June 30, 2018			June 29, 2019		June 30, 2018			March 28, 2020			March 30, 2019
Net income	$	43,792		$	42,326		$	80,781	$	78,354		$	24,644		$	36,989
Other comprehensive income (loss):
Pension and postemployment adjustment, net of tax	161			766			112		763			561			(49		)
Foreign currency translation adjustments	(5,892		)	(16,708		)	2,230		(16,984		)	(15,540		)	8,122
Comprehensive income	$	38,061		$	26,384		$	83,123	$	62,133		$	9,665		$	45,062

See accompanying Notes to Condensed Consolidated Financial Statements.

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended						Three Months Ended
(in thousands)	June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
OPERATING ACTIVITIES
Net income	$	80,781		$	78,354		$	24,644		$	36,989
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	25,727			24,431			13,821			13,088
Amortization of intangibles	20,241			25,371			9,981			10,191
Deferred revenue	—			1,921			(145		)	—
Non-cash inventory charges	—			36,927
Impairment charges	—			1,125			2,237			—
Stock-based compensation	12,250			15,883			2,965			3,966
Loss (gain) on investments and other assets	2,458			(3,311		)
Loss on investments and other assets							2,604			2,810
Deferred income taxes	(632		)	2,434			616			(72		)
Other	2,009			778			3,547			5,393
Changes in operating assets and liabilities:
Trade receivables	(13,242		)	(33,481		)	(9,457		)	(5,800		)
Inventories	6,230			(1,502		)	6,667			(3,250		)
Accounts payable	(17,927		)	13,684			(3,964		)	(8,499		)
Accrued liabilities and income taxes	(36,713		)	(16,383		)	(7,012		)	(27,170		)
Prepaid expenses and other assets	(1,090		)	(5,316		)	(1,225		)	3,273
Net cash provided by operating activities	80,092			140,915			45,279			30,919

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	(775		)	(310,487		)	—			(775		)
Purchases of property, plant, and equipment	(25,249		)	(40,315		)	(16,586		)	(14,076		)
Net proceeds from sale of property, plant and equipment, and other	6,212			68
Net proceeds from sale of property, plant and equipment							50			607
Net cash used in investing activities	(19,812		)	(350,734		)	(16,536		)	(14,244		)

FINANCING ACTIVITIES
Proceeds of revolving credit facility	—			60,000			100,000			—
Proceeds of term loan	—			75,000
Net proceeds from senior notes payable	—			175,000
Payments of term loan	(7,500		)	(40,025		)	(2,500		)	(5,000		)
Payments of revolving credit facility	—			(60,000		)
Net proceeds related to stock-based award activities	3,011			5,568			2,956			2,198
Purchases of common stock	(49,861		)	—			(22,927		)	(17,906		)
Debt issuance costs	—			(878		)
Cash dividends paid	(21,274		)	(18,458		)	(11,725		)	(10,625		)
Net cash (used in) provided by financing activities	(75,624		)	196,207
Net cash provided by (used in) financing activities							65,804			(31,333		)
Effect of exchange rate changes on cash and cash equivalents	392			(7,917		)	(5,111		)	1,539
Decrease in cash and cash equivalents	(14,952		)	(21,529		)
Increase (decrease) in cash and cash equivalents							89,436			(13,119		)
Cash and cash equivalents at beginning of period	489,733			429,676			531,139			489,733
Cash and cash equivalents at end of period	$	474,781		$	408,147		$	620,575		$	476,614
Supplementary Cash Flow Information
Cash paid during the period for interest							$	7,354		$	8,011
Capital expenditures, not yet paid							$	5,832		$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Littelfuse, Inc. Shareholders’ Equity																		Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock			Accum. Other Comp. Inc. (Loss)			Retained Earnings			Non-controlling Interest		Total			Common Stock		Addl. Paid in Capital		Treasury Stock			Accum. Other Comp. Inc. (Loss)			Retained Earnings			Non-controlling Interest		Total
Balance at December 29, 2018	$	254	$	835,828	$	(116,454	)	$	(97,924	)	$	856,507		$	131	$	1,478,342
Balance at December 28, 2019																			$	256	$	867,996	$	(216,447	)	$	(106,823	)	$	950,901		$	131	$	1,496,014
Net income	—		—		—			—			36,989			—		36,989			—		—		—			—			24,644			—		24,644
Other comprehensive income, net of tax	—		—		—			8,073			—			—		8,073			—		—		—			(14,979		)	—			—		(14,979		)
Stock-based compensation	—		3,966		—			—			—			—		3,966			—		2,965		—			—			—			—		2,965
Withheld shares on restricted share units for withholding taxes	—		—		(94		)	—			—			—		(94		)	—		—		(443		)	—			—			—		(443		)
Stock options exercised	—		2,292		—			—			—			—		2,292			—		3,399		—			—			—			—		3,399
Repurchases of common stock	—		—		(13,555		)	—			—			—		(13,555		)	—		—		(22,927		)	—			—			—		(22,927		)
Cash dividends paid ($0.43 per share)	—		—		—			—			(10,625		)	—		(10,625		)
Balance at March 30, 2019	$	254	$	842,086	$	(130,103	)	$	(89,851	)	$	882,871		$	131	$	1,505,388
Net income	—		—		—			—			43,792			—		43,792
Other comprehensive income, net of tax	—		—		—			(5,731		)	—			—		(5,731		)
Stock-based compensation	—		8,284		—			—			—			—		8,284
Withheld shares on restricted share units for withholding taxes	—		—		(4,010		)	—			—			—		(4,010		)
Stock options exercised	1		4,822		—			—			—			—		4,823
Repurchases of common stock	—		—		(31,955		)	—			—			—		(31,955		)
Cash dividends paid ($0.43 per share)	—		—		—			—			(10,649		)	—		(10,649		)
Balance at June 29, 2019	$	255	$	855,192	$	(166,068	)	$	(95,582	)	$	916,014		$	131	$	1,509,942
Cash dividends paid ($0.48 per share)																			—		—		—			—			(11,725		)	—		(11,725		)
Balance at March 28, 2020																			$	256	$	874,360	$	(239,817	)	$	(121,802	)	$	963,820		$	131	$	1,476,948

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 30, 2017 $ 229
$ 310,012
$ (41,294 ) $ (63,668 ) $ 722,140
$ 137
$ 927,556
Net income —
—
—
—
36,029
—
36,029
Cumulative effect adjustment —
—
—
(9,795 ) 9,795
—
—
Other comprehensive income, net of tax —
—
—
(279 ) —
—
(279 )
Stock-based compensation —
8,714
—
—
—
—
8,714
Withheld shares on restricted share units for withholding taxes —
—
(2,758 ) —
—
—
(2,758 )
Stock options exercised —
9,609
—
—
—
—
9,609
Issuance of common stock 22
472,279
—
—
—
—
472,301
Cash dividends paid ($0.37 per share) —
—
—
—
(9,198 ) —
(9,198 )
Balance at March 31, 2018 $ 251
$ 800,614
$ (44,052 ) $ (73,742 ) $ 758,766
$ 137
$ 1,441,974
Net income —
—
—
—
42,326
—
42,326
Other comprehensive income, net of tax —
—
—
(15,942 ) —
—
(15,942 )
Stock-based compensation —
7,169
—
—
—
—
7,169
Non-controlling interest —
—
—
—
—
(7 ) (7 )
Withheld shares on restricted share units for withholding taxes —
—
(4,284 ) —
—
—
(4,284 )
Stock options exercised 2
8,043
—
—
—
—
8,045
Cash dividends paid ($0.37 per share) —
—
—
—
(9,261 ) —
(9,261 )
Balance at June 30, 2018 $ 253
$ 815,826
$ (48,336 ) $ (89,684 ) $ 791,831
$ 130
$ 1,470,020



	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 29, 2018	$	254	$	835,828	$	(116,454	)	$	(97,924	)	$	856,507		$	131	$	1,478,342
Net income	—		—		—			—			36,989			—		36,989
Other comprehensive loss, net of tax	—		—		—			8,073			—			—		8,073
Stock-based compensation	—		3,966		—			—			—			—		3,966
Withheld shares on restricted share units for withholding taxes	—		—		(94		)	—			—			—		(94		)
Stock options exercised	—		2,292		—			—			—			—		2,292
Repurchases of common stock	—		—		(13,555		)	—			—			—		(13,555		)
Cash dividends paid ($0.43 per share)	—		—		—			—			(10,625		)	—		(10,625		)
Balance at March 30, 2019	$	254	$	842,086	$	(130,103	)	$	(89,851	)	$	882,871		$	131	$	1,505,388

See accompanying Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements

1. Summary of Significant Accounting Policies and Other Information

Nature of Operations

Littelfuse, Inc. and subsidiaries (the “Company”) is a global manufacturer of leading technologies in circuit protection, power control and sensing. ~~The Company's~~Serving over 100,000 end customers, 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 deliver innovative, high-quality solutions for a safer, greener and increasingly connected world.

Basis of Presentation

The Company’s accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the consolidated balance sheets, statements of net income and comprehensive income, statements of cash flows, and statement of stockholders' equity prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. They have been prepared in accordance with accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~29, 2018~~28, 2019 which should be read in conjunction with the disclosures therein. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for interim periods are not necessarily indicative of annual operating results.

Revenue Recognition

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 impact on the Company’s consolidated financial statements.

Revenue Disaggregation

The following tables disaggregate the Company’s revenue by primary business units for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 and ~~June~~March 30, ~~2018 :~~2019:


	Three Months Ended June 29, 2019								Six Months Ended June 29, 2019								Three Months Ended March 28, 2020
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	108,481	$	—	$	—	$	108,481	$	216,858	$	—	$	—	$	216,858	$	84,598	$	—	$	—	$	84,598
Electronics – Semiconductor	151,072		—		—		151,072		308,089		—		—		308,089		129,591		—		—		129,591
Passenger Car Products	—		53,916		—		53,916		—		110,459		—		110,459		—		52,645		—		52,645
Automotive Sensors	—		24,682		—		24,682		—		50,739		—		50,739		—		24,174		—		24,174
Commercial Vehicle Products	—		30,052		—		30,052		—		60,935		—		60,935		—		27,951		—		27,951
Industrial Products	—		—		29,676		29,676		—		—		56,299		56,299		—		—		27,137		27,137
Total	$	259,553	$	108,650	$	29,676	$	397,879	$	524,947	$	222,133	$	56,299	$	803,379	$	214,189	$	104,770	$	27,137	$	346,096



	Three Months Ended March 30, 2019
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	108,377	$	—	$	—	$	108,377
Electronics – Semiconductor	157,017		—		—		157,017
Passenger Car Products	—		56,543		—		56,543
Automotive Sensors	—		26,057		—		26,057
Commercial Vehicle Products	—		30,883		—		30,883
Industrial Products	—		—		26,623		26,623
Total	$	265,394	$	113,483	$	26,623	$	405,500

Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
(in thousands)
Electronics
Segment

Automotive
Segment

Industrial
Segment

Total

Electronics
Segment

Automotive
Segment

Industrial
Segment

Total
Electronics – Passive Products and Sensors $ 128,321
$ —
$ —
$ 128,321
$ 242,816
$ —
$ —
$ 242,816
Electronics – Semiconductor 171,036
—
—
171,036
320,952
—
—
320,952
Passenger Car Products —
63,581
—
63,581
—
127,160
—
127,160
Automotive Sensors —
30,729
—
30,729
—
62,052
—
62,052
Commercial Vehicle Products —
32,862
—
32,862
—
64,090
—
64,090
Industrial Products —
—
32,654
32,654
—
—
59,926
59,926
Total $ 299,357
$ 127,172
$ 32,654
$ 459,183
$ 563,768
$ 253,302

$ 59,926

$ 876,996

See Note 16, Segment Information for net sales by segment and countries.

Revenue Recognition

The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.

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

Revenue and Billing

The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue. ~~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’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.

Return to Stock

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

Volume Rebates

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

Recently Adopted Accounting Standards

In ~~February~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, "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 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 requires using a modified retrospective transition with either 1) periods prior to the adoption date being recast or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast.

The Company adopted the standard on December 30, 2018 using alternative modified retrospective transition method provided in ASU No. 2018-11, "Leases (Topic 842): Target 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 Condensed Consolidated Balance Sheets, with no impact to its Condensed Consolidated Statements of Net Income and no impact on Condensed Consolidated Statements of Cash Flow. See Note 6, ~~Lease Commitments,~~ ~~for further discussion.~~

~~In February 2018,~~ the FASB issued ASU No. ~~2018-02 “Income Statement—Reporting Comprehensive Income~~2016-13, "Financial Instruments - Credit Losses (Topic ~~220): Reclassification~~326), Measurement 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.Credit Losses on Financial Instruments." The standard ~~also requires entities~~modifies the measurement approach for credit losses on financial instruments, including trade receivables, from an incurred loss method 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.~~a current expected credit loss method ("CECL"). The standard ~~allows~~requires the ~~option~~measurement of ~~applying either~~expected credit losses to be based on relevant information, including historical experiences, current conditions and a ~~retrospective adoption, meaning the standard~~forecast that 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.supportable. The Company adopted the new standard on December ~~30, 2018.~~29, 2019. The adoption of ~~this guidance~~the standard did not have a material effect on our Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement." ASU 2018-13 modifies 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 new standard removes certain disclosures, modifies certain disclosures and adds additional disclosures related to fair value measurement. The Company adopted the new standard on December 29, 2019. The adoption of ASU 2018- 13 did not have a material impact on our Condensed 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 Company adopted the new standard on December 29, 2019. The adoption of ASU 2018-15 did not have a material impact on our Condensed Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The objective of this is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (LIBOR). The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect a material effect from the adoption of this guidance on its Condensed Consolidated Financial Statements.

2. ~~Acquisitions~~

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

~~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 control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The acquisition of 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 its 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 was 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 (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 $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 purchase 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 result, total consideration was valued at $856.5 million.

The total purchase price of $856.5 million has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, 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 IXYS acquisition:

(in thousands)
Purchase Price
Allocation
Total purchase consideration:
Cash, net of cash acquired $ 302,865
Cash settled stock options 3,622
Littelfuse stock 434,192
Converted stock options 38,109
Total purchase consideration $ 778,788
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net $ 155,930
Property, plant, and equipment 77,442
Intangible assets 212,720
Goodwill 382,360
Other non-current assets 28,706
Other non-current liabilities (78,370 )
$ 778,788

Approximately $49.1 million of net receivables was included in IXYS’s current assets. All IXYS goodwill, other assets and liabilities were recorded in the Electronics segment and primarily reflected in the Americas and European geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining IXYS’s products and technology with the Company’s existing electronics product portfolio. Goodwill resulting from the IXYS acquisition is not expected to be deductible for tax purposes.

Included in the Company’s Condensed Consolidated Statements of Net Income for the three and six months ended June 30, 2018 are net sales of approximately $100.2 million and $186.5 million, respectively, and a loss before income taxes of $13.9 million and $31.7 million, respectively, since the January 17, 2018 acquisition of IXYS. During the three and six months ended June 30,

2018, the Company recognized a charge of $19.0 million and $36.9 million, respectively, for the amortization of the fair value inventory step-up. The step-up was a non-cash charge to cost of goods and reflected as other non-segment costs. The Company recognized approximately $1.6 million and $7.5 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the three and six months ended June 30, 2018, of which $4.5 million was recognized immediately as it related to prior services periods.

During the three and six months ended June 30, 2018, the Company incurred approximately $0.8 million and $11.0 million, respectively, of legal 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.~~

~~Pro Forma Results~~

The following table summarizes, on a pro forma basis, the combined results of operations of the Company and IXYS as though the acquisition had occurred as of January 1, 2017. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the IXYS acquisition occurred as of January 1, 2017 or of future consolidated operating results.

Three Months Ended Six Months Ended
(in thousands, except per share amounts) June 30, 2018 June 30, 2018
Net sales $ 459,183
$ 893,709
Income before income taxes 74,857
134,227
Net income 59,283
106,247
Net income per share — basic 2.37
4.26
Net income per share — diluted 2.33
4.22

~~Pro forma results presented above primarily reflect the following adjustments:~~

Three Months Ended Six Months Ended
(in thousands) June 30, 2018 June 30, 2018
Amortization(a) $ 3,298
$ 5,185
Transaction costs(b) —
9,976
Amortization of inventory step-up(c) 19,031
36,927
Stock compensation(d) 210
4,689
Income tax impact of above items (5,582 ) (13,329 )


~~(a)~~	The amortization adjustment for the three and six months ended June 30, 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 was fully amortized in the fiscal 2017 pro forma results.


~~(b)~~	~~The transaction cost adjustments reflect the reversal of certain bank and attorney fees from the six months ended June 30, 2018 and recognition of those fees during the six months ended July 1, 2017.~~


~~(c)~~	The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the three and six months ended June 30, 2018 and recognition of those costs during the three and six months ended July 1, 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 six months ended June 30, 2018.

3. Inventories

The components of inventories at ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 are as follows:


(in thousands)	June 29, 2019		December 29, 2018		March 28, 2020			December 28, 2019
Raw materials	$	75,908	$	69,883	$	75,202		$	76,732
Work in process	93,523		88,505		84,030			84,561
Finished goods	84,874		99,840		100,415			110,388
Inventory Reserves					(32,365		)	(34,174		)
Total	$	254,305	$	258,228	$	227,282		$	237,507

4.3. Property, Plant, and Equipment

The components of net property, plant, and equipment at ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 are as follows:


(in thousands)	June 29, 2019			December 29, 2018			March 28, 2020			December 28, 2019
Land	$	24,962		$	25,630		$	22,781		$	24,758
Building	106,962			114,636			105,067			108,501
Equipment	612,580			583,043			633,899			631,273
Accumulated depreciation and amortization	(406,004		)	(383,415		)	(426,918		)	(419,915		)
Total	$	338,500		$	339,894		$	334,829		$	344,617

The Company recorded depreciation expense of ~~$12.6~~$13.8 million and ~~$12.8~~$13.1 million for the three months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~and June 30, 2018, respectively, and $25.7 millionand $24.4 million for the six months ended June 29, 2019 and June 30, 2018,~~ respectively.

5.4. Goodwill and Other Intangible Assets

The amounts for goodwill and changes in the carrying value by segment for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 are as follows:


(in thousands)	Electronics			Automotive		Industrial		Total			Electronics			Automotive			Industrial			Total
As of December 29, 2018	$	656,039		$	132,332	$	38,344	$	826,715
As of December 28, 2019											$	650,796		$	131,321		$	38,472		$	820,589
Currency translation	(529		)	89		133		(307		)	(5,873		)	(1,693		)	(260		)	(7,826		)
As of June 29, 2019	$	655,510		$	132,421	$	38,477	$	826,408
As of March 28, 2020											$	644,923		$	129,628		$	38,212		$	812,763

The components of other intangible assets at ~~June 29,~~March 28, 2020 and December 28, 2019 are as follows:


							As of March 28, 2020
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value		Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights							$	9,545	$	1,755	$	7,790
Patents, licenses and software	$	139,415	$	75,175	$	64,240	129,380		$	80,506	$	48,874
Distribution network	43,900		35,702		8,198		43,076		36,560		6,516
Customer relationships, trademarks, and tradenames	374,658		105,922		268,736		357,188		111,975		245,213
Total	$	557,973	$	216,799	$	341,174	$	539,189	$	230,796	$	308,393



	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 network	43,239		36,163		7,076
Customer relationships, trademarks, and tradenames	360,534		106,618		253,916
Total	$	544,586	$	223,339	$	321,247

During the three months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~and June 30, 2018,~~ the Company recorded amortization expense of ~~$10.1~~$10.0 million and ~~$13.4 million, respectively. During the six months ended June 29, 2019 and June 30, 2018, the Company recorded amortization expense of $20.2 million and $25.4~~$10.2 million, respectively.

During the three months ended March 28, 2020, the Company recognized a $0.3 million non-cash impairment charge on a certain patent triggered by the Company’s announcement to consolidate a manufacturing facility within the Industrial segment.

Estimated annual amortization expense related to intangible assets with definite lives as of ~~June 29, 2019~~March 28, 2020 is as follows:


(in thousands)	Amount		Amount
2019	$	40,119
2020	39,458		$	38,291
2021	36,833		37,487
2022	36,743		36,561
2023	31,524		32,195
2024 and thereafter	176,738
2024			29,135
2025 and thereafter			144,705
Total	$	361,415	$	318,374

6.5. Lease Commitments

The Company leases office and production space under various non-cancelable operating leases that expire no later than ~~2025.~~2028. 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 Condensed Consolidated Balance Sheet. 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 June 29,~~at March 28, 2020 and December 28, 2019:


Leases (in thousands)	Condensed Consolidated Balance Sheet Classification	June 29, 2019		Condensed Consolidated Balance Sheet Classification	March 28, 2020		December 28, 2019
Assets
Operating ROU assets	Right of use lease assets, net	$	23,280	Right of use lease assets, net	$	20,611	$	21,918
Liabilities
Current operating lease liabilities	Accrued liabilities	$	7,349	Accrued liabilities	$	7,073	$	7,259
Non-current operating lease liabilities	Non-current operating lease liabilities	18,643		Non-current operating lease liabilities	$	15,960	$	17,166
Total lease liabilities		$	25,992		$	23,033	$	24,425

The following table represents the lease costs for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019:


Leases cost (in thousands)	Condensed Consolidated Statements of Net Income Classification	Three Months Ended June 29, 2019		Six Months Ended June 29, 2019		Condensed Consolidated Statements of Net Income Classification	Three Months Ended March 28, 2020		Three Months Ended March 30, 2019
Short-term lease expenses	Cost of sales, SG&A expenses	$	148	$	301	Cost of sales, SG&A expenses	$	117	$	153
Variable lease expenses	Cost of sales, SG&A expenses	187		381		Cost of sales, SG&A expenses	318		194
Operating lease rent expenses	Cost of sales, SG&A expenses	2,215		4,408		Cost of sales, SG&A expenses	2,173		2,193
Total operating lease costs	Cost of sales, SG&A expenses	$	2,550	$	5,090	Cost of sales, SG&A expenses	$	2,608	$	2,540


Maturity of Lease Liabilities as of June 29, 2019 (in thousands)	Operating leases
2019 (excluding the six months ended June 29, 2019)	$	4,476
2020	7,594
Maturity of Lease Liabilities as of March 28, 2020 (in thousands)			Operating leases
2020 (excluding the three months ended March 28, 2020)			$	6,156
2021	5,861		6,620
2022	4,829		5,341
2023	3,190		3,590
2024 and thereafter	3,147
2024			3,177
2025 and thereafter			498
Total lease payments	$	29,097	$	25,382

Present value of lease liabilities	$	25,992	$	23,033



Operating Lease Term and Discount Rate	~~June 29, 2019~~March 28, 2020
Weighted-average remaining lease term (years)	~~4.26~~3.90
Weighted-average discount rate	~~5.17~~5.04	%


Other Information (in thousands)	Six Months Ended June 29, 2019			Three Months Ended March 28, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flow payments for operating leases	$	(4,463	)	$	(2,242	)
Leased assets obtained in exchange for operating lease liabilities	1,510			848

7.6. Accrued Liabilities

The components of accrued liabilities at ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 are as follows:


(in thousands)	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Employee-related liabilities	$	36,048	$	60,640	$	32,381	$	40,774
Operating lease liability					7,073		7,259
Interest					3,159		5,058
Professional services					3,359		3,986
Restructuring liability					3,336		2,679
Other non-income taxes	30,467		21,523		2,058		1,940
Operating lease liability	7,349		—
Professional services	4,595		6,169
Interest	4,366		5,137
Accrued share repurchases	—		4,349
Restructuring liability	4,753		3,887
Other	24,118		36,700		22,146		22,424
Total	$	111,696	$	138,405	$	73,512	$	84,120

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

7. Restructuring, Impairment and Other Charges

The Company recorded restructuring, impairment and other charges for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ as follows:


	Three months ended June 29, 2019								Six months ended June 29, 2019								Three months ended March 28, 2020
(in thousands)	Electronics		Automotive		Industrial		Total		Electronics		Automotive		Industrial		Total		Electronics		Automotive		Industrial		Total
Employee terminations	$	1,698	$	3,241	$	674	$	5,613	$	3,498	$	3,846	$	721	$	8,065	$	881	$	399	$	321	$	1,601
Other restructuring charges	—		70		—		70		13		90		250		353		1		120		3		124
Total restructuring charges	1,698		3,311		674		5,683		3,511		3,936		971		8,418		882		519		324		1,725
Impairment																	—		—		2,237		2,237
Total	$	1,698	$	3,311	$	674	$	5,683	$	3,511	$	3,936	$	971	$	8,418	$	882	$	519	$	2,561	$	3,962


	Three months ended June 30, 2018								Six months ended June 30, 2018								Three months ended March 30, 2019
(in thousands)	Electronics		Automotive		Industrial		Total		Electronics		Automotive		Industrial		Total		Electronics		Automotive		Industrial		Total
Employee terminations	$	2,402	$	—	$	62	$	2,464	$	3,079	$	99	$	65	$	3,243	$	1,800	$	605	$	47	$	2,452
Other restructuring charges	670		—		—		670		670		—		—		670		13		20		250		283
Total restructuring charges	3,072		—		62		3,134		3,749		99		65		3,913		1,813		625		297		2,735
Impairment	—		88		1,037		1,125		—		88		1,037		1,125		—		—		—		—
Total	$	3,072	$	88	$	1,099	$	4,259	$	3,749	$	187	$	1,102	$	5,038	$	1,813	$	625	$	297	$	2,735

2020

For the three months ended March 28, 2020, the Company recorded total restructuring charges of $1.7 million, for employee termination costs and other restructuring charges. These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions across all segments and the announced consolidation of a manufacturing facility within the Industrial segment. The Company also recognized $2.2 million of impairment charges related to the land and building associated

with the Company’s announcement to consolidate a manufacturing facility within the Industrial segment. The impairment charges were included in selling, general and administrative expenses.

2019

For ~~the~~ three ~~and six~~ months ended ~~June 29,~~March 30, 2019, the Company recorded total restructuring charges of ~~$5.7~~$2.7 million, ~~and $8.4~~of which $2.5 million, ~~respectively,~~was for employee termination costs and $0.3 million for other restructuring ~~charges.These~~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 and automotive sensors 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 associated with this plant closure.

~~2018~~

For the three and six months ended June 30, 2018, the Company recorded total restructuring charges of $3.1 million and $3.9 million, respectively, 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. For the three and six months ended June 30, 2018, the Company recorded impairment charges of $1.1 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.

The restructuring reserves as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 are ~~$4.8~~$3.3 million and ~~$3.9~~$2.7 million, respectively. The restructuring reserves are included within accrued liabilities in the Condensed Consolidated Balance Sheets. The Company anticipates the remaining payments associated with employee terminations will primarily be completed by ~~December 2019.~~March 2021.

9.8. Debt

The carrying amounts of debt at ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 are as follows:


(in thousands)	June 29, 2019			December 29, 2018			March 28, 2020			December 28, 2019
Revolving Credit Facility							$	100,000		$	—
Term Loan	$	147,500		$	155,000		142,500			145,000
Euro Senior Notes, Series A due 2023	132,992			133,417			128,316			129,808
Euro Senior Notes, Series B due 2028	107,984			108,330			104,189			105,400
U.S. Senior Notes, Series A due 2022	25,000			25,000			25,000			25,000
U.S. Senior Notes, Series B due 2027	100,000			100,000			100,000			100,000
U.S. Senior Notes, Series A due 2025	50,000			50,000			50,000			50,000
U.S. Senior Notes, Series B due 2030	125,000			125,000			125,000			125,000
Other	2,619			2,619			2,619			2,619
Unamortized debt issuance costs	(4,155		)	(4,636		)	(3,429		)	(3,669		)
Total debt	686,940			694,730			774,195			679,158
Less: Current maturities	(10,000		)	(10,000		)	(10,000		)	(10,000		)
Total long-term debt	$	676,940		$	684,730		$	764,195		$	669,158

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~~included 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~~could be made in up to ~~two~~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, the Company iswas 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 ~~quarterly~~$2.5 million of principal payments ~~of $2.5 million and $7.5 million~~ on the term loan during the three ~~and six~~ months ended ~~June 29, 2019.~~March 28, 2020.

Outstanding borrowings under the Credit Agreement ~~bear~~bore 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 iswas 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~~Credit Agreement included 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 ~~3.65%~~2.47% at ~~June 29, 2019.~~March 28, 2020.

On March 25, 2020, the company borrowed $100.0 million from the revolving credit facility to preserve financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to coronavirus disease 2019 ("COVID-19").

As of ~~June 29, 2019,~~March 28, 2020, the Company had ~~$0.1 million~~0 amount outstanding in letters of credit and had available ~~$531.1~~$219.8 million of borrowing capacity under the Revolving Credit Facility based on financial covenants. At ~~June 29, 2019,~~March 28, 2020, the Company was in compliance with all covenants under the Credit Agreement.

On April 3, 2020, the Company amended the Credit Agreement to effect certain changes, including, among others: (i) eliminating the $200.0 million unsecured term loan credit facility, the remaining outstanding balance of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company; (iii) modifying performance-based interest rate margins and undrawn fees; and (iv) extending the maturity date to April 3, 2025. The amended Credit Agreement also allows the Company to increase the size of the revolving credit facility or enter into one or more tranches of term loans if there is no event of default and the Company is in compliance with certain financial covenants. The balance under the facility is $240.0 million as of April 3, 2020.

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~~2 series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023

(“ (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.

On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $125 million aggregate principal amount of senior notes in ~~two~~2 series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017.

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~~2 series. On January 16, 2018, $50 million aggregate principal amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing on August 15, 2018.

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

The Senior Notes are subject to certain customary covenants, including limitations on the Company’s ability, with certain exceptions, to engage in mergers, consolidations, asset sales and transactions with affiliates, to engage in any business that would substantially change the general business of the Company, and to incur liens. In addition, the Company is required to satisfy certain financial covenants and tests relating to, among other matters, interest coverage and leverage. At ~~June 29, 2019,~~March 28, 2020, the Company was in compliance with all covenants under the Senior Notes.

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

Interest paid on all Company debt was ~~$3.5~~$7.4 million and ~~$3.7~~$8.0 million for the three months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~and June 30, 2018, respectively, and $11.5 million and $7.7 million for the six months ended June 29, 2019 and June 30, 2018,~~ respectively.

~~10.~~9. Fair Value of Assets and Liabilities

For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows:

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

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

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

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

Cash Equivalents

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

Investments in Equity Securities

Investments in equity securities listed on a national market or exchange are valued at the last sales price and classified within Level 1 of the valuation hierarchy and recorded in investments and other assets.

The Company has certain convertible debt and convertible preferred stock investments that are accounted for under the cost method reflected in other assets in the Condensed Consolidated Balance Sheets. During the ~~six~~three months ended ~~June 29,~~March 30, 2019, the Company recorded impairment charges of $2.8 million in Other expense (income), net in the Condensed Consolidated Statements of Net Income to adjust these certain investments to their estimated fair ~~value~~value. As of ~~$1.2~~March 28, 2020 and December 28, 2019, the balances of these investments were $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.

Mutual Funds

The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value and recorded in other assets.

There were no changes during the quarter ended ~~June 29, 2019~~March 28, 2020 to the Company’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 notional value of the forward contracts at December 28, 2019 was $16.0 million and expires on May 5, 2020. On March 23, 2020, the Company unwound the foreign currency exchange forward contract entered on October 30, 2019 and recognized a gain of $0.2 million within Other expenses,

net during the three months ended March 28, 2020. 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 ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of ~~June 29, 2019:~~March 28, 2020:


	Fair Value Measurements Using								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		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash Equivalents									$	198,221	$	—	$	—	$	198,221
Investments in equity securities	$	11,161	$	—	$	—	$	11,161	10,529		—		—		10,529
Mutual funds	9,619		—		—		9,619		8,769		—		—		8,769

The following table presents assets measured at fair value by classification within the fair value hierarchy as of December ~~29, 2018:~~28, 2019:


	Fair Value Measurements Using								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		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 securities	$	10,312	$	—	$	—	$	10,312	12,969		—		—		12,969
Mutual funds	9,112		—		—		9,112		10,464		—		—		10,464

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’s other financial instruments include cash and cash equivalents, short-term investments, accounts receivable and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and accounts receivable approximate their fair values. The Company’s revolving and term loan debt facilities’ fair values approximate book value at ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018,~~28, 2019, as the rates on these borrowings are variable in nature.

The carrying value and estimated fair values of the Company’s Euro Senior Notes, Series A and Series B and USD Senior Notes, Series A and Series B, as of ~~June 29, 2019~~March 28, 2020 and December ~~29, 2018~~28, 2019 were as follows:


	June 29, 2019				December 29, 2018				March 28, 2020				December 28, 2019
(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Euro Senior Notes, Series A due 2023	$	132,992	$	136,568	$	133,417	$	130,888	$	128,316	$	121,124	$	129,808	$	131,710
Euro Senior Notes, Series B due 2028	107,984		116,210		108,330		103,774		104,189		94,743		105,400		110,336
USD Senior Notes, Series A due 2022	25,000		24,781		25,000		24,115		25,000		24,681		25,000		25,054
USD Senior Notes, Series B due 2027	100,000		100,440		100,000		94,458		100,000		97,097		100,000		102,548
USD Senior Notes, Series A due 2025	50,000		49,884		50,000		47,434		50,000		48,921		50,000		50,775
USD Senior Notes, Series B due 2030	125,000		123,756		125,000		114,731		125,000		118,648		125,000		127,701

The Company recognized impairment charges of $1.9 million for the land and building and $0.3 million for a certain patent as a result of the Company’s announcement to consolidate a manufacturing facility within the Industrial segment. See Note 7, Restructuring, Impairment and Other Charges, for further discussion. The fair value of the land and building was determined to be Level 3 under the fair value hierarchy and was valued using a real estate appraisal.

~~11.~~10. Benefit Plans

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

The Company recognizes interest cost, expected return on plan assets, and amortization of prior service, net within Other expense (income), net in the Condensed Consolidated Statements of Net Income. The components of net periodic benefit cost for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ were as follows:


	For the Three Months Ended						For the Six Months Ended						For the Three Months Ended
(in thousands)	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
Components of net periodic benefit cost:
Service cost	$	514		$	533		$	1,014		$	1,066		$	618		$	500
Interest cost	813			501			1,597			1,002			658			784
Expected return on plan assets	(821		)	(540		)	(1,611		)	(1,080		)	(727		)	(790		)
Amortization of prior service	62			74			124			148
Amortization of prior service and net actuarial loss													145			62
Net periodic benefit cost	$	568		$	568		$	1,124		$	1,136		$	694		$	556

The Company expects to make approximately $2.3 million of cash contributions to its pension plans in ~~2019.~~2020.

The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. For the three months ended March 28, 2020 and March 30, 2019, the Company recorded $0.5 million and $0.2 million expense, respectively, in Cost of Sales and Other expense (income), net within the Condensed Consolidated Statements of Net Income. For three months ended March 28, 2020, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $0.2 million.

On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company will be required to pay and administer pension payments to certain of the Company’s UK pension plan participants, or their designated beneficiaries, who have been receiving pension payments. The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $36 million, representing approximately 30% of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand. In connection with this transaction, the Company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $18 million and $22 million, reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan. The actual settlement charge could differ from this estimate due to final data and plan wind-up expenses.

~~12.~~11. Other Comprehensive Income (Loss)

Changes in other comprehensive (loss) income by component were as follows:


(in thousands)	Three Months Ended June 29, 2019								Three Months Ended June 30, 2018								Three Months Ended March 28, 2020									Three Months Ended March 30, 2019
	Pre-tax			Tax		Net of Tax			Pre-tax			Tax		Net of Tax			Pre-tax			Tax			Net of Tax			Pre-tax			Tax			Net of Tax
Defined benefit pension plan adjustments	$	201		$	40	$	161		$	803		$	37	$	766		$	555		$	(6	)	$	561		$	(78	)	$	(29	)	$	(49	)
Foreign currency translation adjustments	(5,892		)	—		(5,892		)	(16,708		)	—		(16,708		)	(15,540		)	—			(15,540		)	8,122			—			8,122
Total change in other comprehensive income (loss)	$	(5,691	)	$	40	$	(5,731	)	$	(15,905	)	$	37	$	(15,942	)	$	(14,985	)	$	(6	)	$	(14,979	)	$	8,044		$	(29	)	$	8,073

(in thousands) Six Months Ended
June 29, 2019 Six Months Ended
June 30, 2018
Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax
Defined benefit pension plan adjustments $ 123
$ 11
$ 112
$ 734
$ (29 ) $ 763
Foreign currency translation adjustments 2,230
—
2,230
(16,984 ) —
(16,984 )
Total change in other comprehensive income (loss) $ 2,353
$ 11
$ 2,342
$ (16,250 ) $ (29 ) $ (16,221 )

The following tables set forth the changes in accumulated other comprehensive (loss) income by component for the ~~six~~three months ended ~~June 29, 2019~~ March 28, 2020 and ~~June~~March 30, ~~2018:~~2019:


(in thousands)	Pension and postretirement liability and reclassification adjustments			Foreign currency translation adjustment			Accumulated other comprehensive income (loss)			Pension and postretirement liability and reclassification adjustments			Foreign currency translation adjustment			Accumulated other comprehensive income (loss)
Balance at December 29, 2018	$	(9,959	)	$	(87,965	)	$	(97,924	)
Balance at December 28, 2019										$	(18,046	)	$	(88,777	)	$	(106,823	)
Activity in the period	112			2,230			2,342			561			(15,540		)	(14,979		)
Balance at June 29, 2019	$	(9,847	)	$	(85,735	)	$	(95,582	)
Balance at March 28, 2020										$	(17,485	)	$	(104,317	)	$	(121,802	)

(in thousands)
Pension and
postretirement
liability and
reclassification
adjustments

Unrealized
gain (loss) on
investments

Foreign
currency
translation
adjustment

Accumulated
other
comprehensive
income (loss)
Balance at December 30, 2017 $ (10,836 ) $ 9,795
$ (62,627 ) $ (63,668 )
Cumulative effect adjustment (a)

—

(9,795 ) —
(9,795 )
Activity in the period 763
—
(16,984 ) (16,221 )
Balance at June 30, 2018 $ (10,073 ) $ —
$ (79,611 ) $ (89,684 )

~~(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.~~



(in thousands)	Pension and postretirement liability and reclassification adjustments			Foreign currency translation adjustment			Accumulated other comprehensive income (loss)
Balance at December 29, 2018	$	(9,959	)	$	(87,965	)	$	(97,924	)
Activity in the period	(49		)	8,122			8,073
Balance at March 30, 2019	$	(10,008	)	$	(79,843	)	$	(89,851	)

Amounts reclassified from accumulated other comprehensive (loss) income to earnings for the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019 ~~and June 30, 2018~~ were as follows:


	Three Months Ended				Six Months Ended				Three Months Ended
(in thousands)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Pension and Postemployment plans:
Amortization of prior service	$	62	$	74	$	124	$	148
Amortization of prior service and net actuarial loss									$	345	$	62

The Company recognizes the amortization of prior service costs in Other (expense) income, net within the Condensed Consolidated Statements of Net Income.

~~13.~~12. Income Taxes

The effective tax rate for the three ~~and six~~ months ended ~~June 29, 2019~~March 28, 2020 was ~~18.2% and 19.2% respectively,~~30.6% compared to the effective tax rate for the three ~~and six~~ months ended ~~June~~March 30, ~~2018~~2019 of ~~19.1% and 19.2% respectively.~~20.3%. The effective tax ~~rates~~rate for ~~both periods were~~the 2020 period is higher than the effective tax rate for the 2019 comparable period primarily due to a reduction in the forecasted income earned in lower tax jurisdictions in 2020 driven by the uncertainty resulting from the impact of COVID-19. The effective tax rate for the 2020 period is higher than the applicable U.S. statutory tax rate primarily due to the forecasted impact of non-U.S. losses and expenses with no tax benefit and the U.S. GILTI tax provisions (in the 2019 period the impact of these items was more than offset by the impact of income earned in lower tax ~~jurisdictions.~~

jurisdictions).

~~14.~~13. Earnings Per Share

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


	Three Months Ended				Six Months Ended				Three Months Ended
(in thousands, except per share amounts)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Numerator:
Net income as reported	$	43,792	$	42,326	$	80,781	$	78,354	$	24,644	$	36,989

Denominator:
Weighted average shares outstanding
Basic	24,740		25,004		24,729		24,671		24,393		24,717
Effect of dilutive securities	243		397		269		415		185		292
Diluted	24,983		25,401		24,998		25,086		24,578		25,009

Earnings Per Share:
Basic earnings per share	$	1.77	$	1.69	$	3.27	$	3.18	$	1.01	$	1.50
Diluted earnings per share	$	1.75	$	1.67	$	3.23	$	3.12	$	1.00	$	1.48

Potential shares of common stock relating to stock options excluded from the earnings per share calculation because their effect would be anti-dilutive were ~~167,599~~153,836 and ~~47,849~~77,047 for the three months ended ~~June 29,~~March 28, 2020 and March 30, 2019, ~~and June 30, 2018, respectively, and 121,326 and 23,659 for the six months ended June 29, 2019 and June 30, 2018, respectively .~~respectively.

Share Repurchase Program

The Company’s Board of Directors 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 ("2018 program"). On April 26, 2019, the Company's Board of Directors authorized to 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 ("2019 program")~~. During~~ to replace its previous expired 2018 program. On April 23, 2020, the Company's Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. The Company does not expect to repurchase shares in the near future due to the uncertainty of the impact and duration of COVID-19.

For the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019, the Company repurchased ~~188,214~~175,110 and ~~268,130~~79,916 shares of its common stock totaling ~~$32.0~~$22.9 million and ~~$45.5~~$13.6 million, respectively.

~~As of July 26, 2019, the Company repurchased 49,816 shares of its common stock since the quarter ended June 29, 2019.~~

~~15.~~14. Related Party Transactions

As a result of the Company’s acquisition of IXYS, the Company has equity ownership in various investments that are accounted for under the equity ~~method and recorded in investments in the Condensed Consolidated Balance Sheets.~~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. For the three months ended June 29, 2019 and June 30, 2018, the Company recorded revenues of $0.1 million and $0.3 million from sales of products to Powersem for use as components in their products, respectively. For the six months ended June 29, 2019 and June 30, 2018, the Company recorded revenues of $0.2 million and $0.4 million from sales of products to Powersem for use as components in their products, respectively. During the three months ended June 29, 2019 and June 30, 2018, the Company purchased $0.9 million and $1.0 million of products from Powersem, respectively. During the six months ended June 29, 2019 and June 30, 2018, the Company purchased $1.7 million and $2.1 million of products from Powersem, respectively. As of June 29, 2019, the accounts receivable balance from Powersem was $0.1 million and the accounts payable balance to Powersem was $0.1 million. As of December 29, 2018, the trade receivable balance from Powersem was $0.1 million and the accounts payable balance to Powersem was $0.2 million.

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. During both the three months ended June 29, 2019 and June 30, 2018, EB Tech rendered processing services for the Company totaling approximately $0.1 million. During both the six months ended June 29, 2019 and June 30, 2018, EB Tech rendered processing services for the Company totaling approximately $0.2 million. As of June 29, 2019 and December 29, 2018, the Company’s accounts payable balance to EB Tech was $0.1 million.

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. ~~During~~One member of the ~~three months ended June 29, 2019 and June 30, 2018, ATEC rendered assembly and test services to~~Company's Board of Directors serves on the Board of Directors of ATEC.



	For the Three Months Ended March 28, 2020						For the Three Months Ended March 30, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	0.4	$	—	$	—	$	0.1	$	—	$	—
Purchase material/ service from related party	0.2		—		1.8		0.8		0.1		1.5

	March 28, 2020						December 28, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Accounts Receivable balance	$	0.1	$	—	$	—	$	—	$	—	$	—
Accounts Payable balance	0.1		—		—		0.2		—		0.1

Additionally, the Company ~~totaling approximately $2.3~~has certain cost method investments in VTOOL Ltd. and Securepush Ltd. with a total book value of $0.4 million as of March 28, 2020and $2.8 million, respectively. During the six months ended June 29, 2019 and June 30, 2018, ATEC rendered assembly and test services to the Company totaling approximately $3.8 million and $5.2 million, respectively. Asone member of ~~June 29, 2019 and December 29, 2018,~~ the Company’s ~~accounts payable balance to ATEC was $0.5 million.~~Board of Directors is currently an investor and a director of VTOOL Ltd. and Securepush Ltd.

On ~~March 25,~~April 26, 2019, the Company ~~entered into a definitive agreement to sell the assets and liabilities of~~sold its subsidiary Microwave Technology, ~~Inc.~~LLC. (“MWT”) resulting in a loss on disposal of $2.6 million reflected in Other income (expense), net in the Condensed Consolidated Statements of Net Income. The operations of ~~Microwave Technology, Inc.~~MWT were included in the Electronics segment. One member of the Company’s Board of Directors is ~~the co-owner~~an owner of a company that ~~agreed to purchase~~purchased MWT. ~~This transaction closed on April 26, 2019.~~

~~16.~~15. Segment Information

The Company and its subsidiaries design, manufacture and sell components and modules for circuit protection, power control and sensing throughout the world. The Company 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’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 ~~three~~3 operating segments. The Company does not report inter-segment revenue because the operating segments do not record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to ~~segments~~segments' current results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income, interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.

•

Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor and power semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon carbide, metal-oxide-semiconductor field-effect transistors (“MOSFETs”) and silicon carbide diodes; and insulated gate bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial and automotive electronics, electric vehicle infrastructure, data and telecommunications, medical devices, LED lighting, consumer electronics and appliances

positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors,

reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage

suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, metal-oxide-semiconductor field effect

transistors (“MOSFETs”) and silicon carbide diodes; and insulated gate bipolar transistors (“IGBT”) technologies.

The segment covers a broad range of end markets, including industrial 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 ~~industries.~~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, emissions, speed and suspension.~~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, ~~- solar and wind,~~ electric vehicle infrastructure, non-residential construction, HVAC systems, ~~elevator~~elevators and other industrial equipment.

Segment information is summarized as follows:


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018			March 28, 2020			March 30, 2019
Net sales
Electronics	$	259,553		$	299,357		$	524,947		$	563,768		$	214,189		$	265,394
Automotive	108,650			127,172			222,133			253,302			104,770			113,483
Industrial	29,676			32,654			56,299			59,926			27,137			26,623
Total net sales	$	397,879		$	459,183		$	803,379		$	876,996		$	346,096		$	405,500

Depreciation and amortization
Electronics	$	14,729		$	15,651		$	30,071		$	29,329		$	15,531		$	15,342
Automotive	6,904			5,969			13,781			11,939			7,187			6,877
Industrial	1,056			1,467			2,116			2,927			1,084			1,060
Other	—			3,103			—			5,607
Total depreciation and amortization	$	22,689		$	26,190		$	45,968		$	49,802		$	23,802		$	23,279

Operating income (loss)
Electronics	$	43,630		$	67,311		$	92,666		$	121,275		$	32,272		$	49,037
Automotive	10,349			15,711			23,550			34,102			14,116			13,200
Industrial	5,831			5,279			9,336			9,988			3,534			3,505
Other(a)	(7,176		)	(28,679		)	(12,245		)	(68,172		)	(5,172		)	(5,069		)
Total operating income	52,634			59,622			113,307			97,193			44,750			60,673
Interest expense	5,589			5,782			11,275			11,205			5,418			5,686
Foreign exchange (gain) loss	(3,575		)	3,200			668			(7,354		)
Other (income) expense, net	(2,947		)	(1,678		)	1,358			(3,621		)
Foreign exchange loss													2,584			4,243
Other expense, net													1,249			4,305
Income before income taxes	$	53,567		$	52,318		$	100,006		$	96,963		$	35,499		$	46,439

(a) Included in “Other” Operating income (loss) for the ~~2019 second~~2020 first quarter is ~~$1.5~~$1.2 million ~~($3.8~~of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there were $4.0 million ~~year-to-date)~~ of ~~acquisition related~~restructuring, impairment and ~~integration~~other charges, primarily related to impairment charges of $2.2 million associated with the ~~IXYS acquisition. In addition, there were $5.7~~announced consolidation of a manufacturing facility within the Industrial segment and $1.7 million ~~($8.4 million year-to-date)~~of ~~restructuring charges primarily related to~~ employee termination ~~costs.~~costs and other restructuring charges. See Note 8,7, Restructuring, Impairment and Other Charges, for further discussion.

Included in "Other" Operating income (loss) for the ~~second~~first quarter of ~~2018~~2019 is ~~includes approximately $26.8~~$2.4 million ~~($65.4 million year-to-date)~~ of acquisition integration charges primarily related to the IXYS acquisition, which include $19.0 million ($36.9 million year-to-date) of purchase accounting inventory step-up charges, $2.0 million ($13.6 million year-to-date) in acquisition-related and integration costs primarily related to legal, accounting and other expenses, $3.1 million ($5.6 million year-to-date) in backlog amortization costs, $2.7 million of employee termination costs and other restructuring charges, and $4.5 million year-to-date stock compensation expense recognized immediately upon close for converted IXYS options related to prior service periods and $2.1 million year-to-date change in control expense related to IXYS.acquisition. In addition, there were ~~$0.5~~$2.7 million ~~($1.2 million year-to-date)~~ of restructuring charges primarily related to employee termination costs, other restructuring, impairment charges of $1.1 million associated with the exit of the Custom business in the second quarter, and $0.3 million ($0.5 million year-to-date) of acquisition-related expenses for other contemplated acquisitions.costs.

The Company’s net sales by country were as follows:


	Three Months Ended				Six Months Ended				Three Months Ended
(in thousands)	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Net sales
United States	$	115,991	$	137,236	$	235,519	$	261,112	$	102,910	$	119,528
China	107,728		127,776		214,593		234,284		86,015		106,866
Other countries(a)	174,160		194,171		353,267		381,600		157,171		179,106
Total net sales	$	397,879	$	459,183	$	803,379	$	876,996	$	346,096	$	405,500

The Company’s long-lived assets by country were as follows:


(in thousands)	June 29, 2019		December 29, 2018		March 28, 2020		December 28, 2019
Long-lived assets
United States	$	58,015	$	58,691	$	54,870	$	58,081
China	92,621		95,806		83,830		88,306
Mexico	74,147		70,495		69,664		73,096
Germany	37,976		36,548		35,483		36,025
Philippines	37,275		32,459		55,347		51,738
Other countries(a)	38,466		45,895		35,635		37,371
Total long-lived assets	$	338,500	$	339,894	$	334,829	$	344,617

The Company’s additions to long-lived assets by country were as follows:


	Six Months Ended				Three Months Ended
(in thousands)	June 29, 2019		June 30, 2018		March 28, 2020		March 30, 2019
Additions to long-lived assets
United States	$	3,454	$	4,234	$	580	$	905
China	4,958		14,711		1,657		1,225
Mexico	8,727		8,874		2,592		5,484
Germany	3,712		5,182		753		598
Philippines	6,629		4,241		3,218		5,229
Other countries(a)	2,378		3,073		2,508		635
Total additions to long-lived assets	$	29,858	$	40,315	$	11,308	$	14,076


(a)	Each country included in other countries ~~are~~is less than 10% of net sales.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement Regarding Forward-Looking Statements Under the Private Securities Litigation Reform Act of 1995 (“PSLRA”).

Certain statements in this section and other parts of this Quarterly Report on Form 10-Q may constitute "forward-looking statements" within the meaning of the federal securities laws and are entitled to the safe-harbor provisions of the PSLRA. These statements include statements regarding the Company’s future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy, although not all forward-looking statements contain such terms. The Company cautions that forward-looking statements, which speak only as of the date they are made, are subject to risks, uncertainties and other factors, and actual results and outcomes may differ materially from those indicated or implied by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, risks and uncertainties relating togeneral economic conditions; the severity and duration of the coronavirus disease 2019 ("COVID-19") pandemic and the measures taken in response thereto and the effects of those items on the Company’s business; product demand and market acceptance; economic conditions; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity price fluctuations; the effect of the Company's accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than assumed; uncertainties related to political or regulatory changes; ~~the risk that expected benefits, synergies and growth prospects~~integration of ~~the Company’s completed acquisition of IXYS Corporation (“IXYS”)~~acquisitions may not be achieved in a timely manner, or at all; the risk that IXYS’s business may not be successfully integrated with the Company’s; the risk that the Company and IXYS will be unable to retain and hire key personnel; and the risk that disruption from the acquisition may adversely affect the Company’s or IXYS’ business and their respective relationships with customers, suppliers or employees; and other risks ~~which~~that may be detailed in ~~the Company's other Securities and Exchange Commission filings, including those set forth under~~ Item 1A. "Risk Factors" of this Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, the Company's Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019, and the Company's other fillings and submissions with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise.

This report, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, should be read in conjunction with information provided in the consolidated financial statements and the related Notes thereto appearing in the Company's Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide information that is supplemental to, and should be read together with, the consolidated financial statements and the accompanying notes. Information in MD&A is intended to assist the reader in obtaining an understanding of (i) the consolidated financial statements, (ii) the changes in certain key items within those financial statements from year-to-year, (iii) the primary factors that contributed to those changes, and (iv) any changes in known trends or uncertainties that we are aware of and that may have a material effect on future performance. In addition, MD&A provides information about the Company’s segments and how the results of those segments impact the results of operations and financial condition as a whole.

Executive Overview

Founded in 1927, Littelfuse is a global manufacturer of leading technologies in circuit protection, power control and sensing. ~~Sold in~~

Serving over ~~150 countries,~~100,000 end customers, 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 deliver innovative, high-quality solutions for a safer, greener and increasingly connected world.

The Company maintains a network of global laboratories and engineering centers that develop new products and product enhancements, provide customer application support and test products for safety, reliability, and regulatory compliance. The Company conducts its business through three reportable segments: Electronics, Automotive, 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 ~~to mitigate equipment damage, minimize electrical hazards~~ and improve productivity and our sensor products are used to identify and detect temperature, proximity, flow speed and fluid level in various applications.

Executive Summary

For the ~~second~~first quarter of ~~2019,~~2020, the Company recognized net sales of ~~$397.9~~$346.1 million compared to ~~$459.2~~$405.5 million in the ~~second~~first quarter of ~~2018~~2019 representing a decrease of ~~$61.3~~$59.4 million, or ~~13.4%~~14.6%. The decrease was primarily driven by lower volume in the Electronics segment due to electronics distribution partners and end customers reducing excess inventories, lower volume in the Automotive ~~segments~~segment, the impact of COVID-19 and ~~$7.9~~$3.3 million or ~~1.7%~~0.8% of unfavorable changes in foreign exchange ~~rates.~~rates, partially offset by higher volume in the Industrial segment. The Company recognized net income of ~~$43.8~~$24.6 million, or ~~$1.75~~$1.00 per diluted share, in the ~~second~~first quarter of ~~2019~~2020 compared to net income of ~~$42.3~~$37.0 million, or ~~$1.67~~$1.48 per diluted share in the ~~second~~first quarter of ~~2018.~~2019. The ~~increase~~decrease in net income ~~reflects lower non-segment charges compared to prior year~~was primarily due to ~~the IXYS acquisition, partially offset by~~ lower operating income ~~across all segments and foreign exchange losses.~~in the Electronics segment.

The Company continues to take actions to improve its cost ~~structure and drive the synergies from the integration of IXYS.~~structure. The Company expects to realize cost savings from the restructuring activities taken during 2019 and 2020, including the reorganization of certain manufacturing, selling and administrative functions across all ~~segments. For~~segments and the three and six months ended June 29, 2019, the Company recorded total restructuring charges of $5.7 million and $8.4 million respectively, for employee termination costs and other restructuring charges, which included $1.7 million of restructuring costs associated with the closureconsolidation of a ~~European~~ manufacturing facility ~~in the automotive sensors business~~ within the ~~Automotive segment.~~Industrial Segment.

Net cash provided by operating activities was ~~$80.1~~$45.3 million for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 as compared to ~~$140.9~~$30.9 million for the ~~six~~three months ended ~~June~~March 30, ~~2018.~~2019. The ~~decrease~~increase in net cash provided by operating activities ~~reflected lower earnings and higher working capital levels~~was primarily due to ~~the timing of supplier payments.~~lower annual incentive payments and inventory levels, partially offset by lower earnings.

During the three ~~and six~~ months ended ~~June 29,~~March 28, 2020 and March 30, 2019, the Company repurchased ~~188,214~~175,110 and ~~268,130~~79,916 shares of its common stock totaling ~~$32.0~~$22.9 million and ~~$45.5 million.~~$13.6 million, respectively.

On March 25, 2020, the company borrowed $100.0 million from its current revolving credit facility to preserve financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19. On April 3, 2020, the Company amended the existing credit agreement to effect certain changes, including, among others: (i) eliminating the $200.0 million unsecured term loan credit facility, the remaining outstanding balance of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company; (iii) modifying performance-based interest rate margins and undrawn fees; and (iv) extending the maturity date to April 3, 2025. The amended credit agreement also allows the Company to increase the size of the revolving credit facility or enter into one or more tranches of term loans if there is no event of default and the Company is in compliance with certain financial covenants. The current balance under the facility is $240.0 million as of April 3, 2020.

Impact of COVID-19 on Business

The global emergence of COVID-19 impacted the Company’s 2020 first quarter results. The Electronics segment had reduced sales volume driven by production disruption from temporary closures of manufacturing facilities in China and the Philippines as a result of government directives. The Automotive segment had reduced sales volume driven by a reduction in customer demand late in the quarter. Additionally, the Company incurred incremental costs of approximately $2.5 million primarily due to higher costs for freight and protective supplies, as well as costs related to the above temporary plant closures.

The future impacts of COVID-19 on our business are currently unknown. The Company’s priorities are to focus on our employees, customers and long-term financial health of the company. In an effort to protect the health and safety of our employees, the Company took numerous proactive, aggressive actions from the earliest signs of the outbreak in China, adopting performing temperature checks in many locations, procuring and distributing proper PPE (personal protective equipment) to employees and their families in many locations, following strict hand and respiratory hygiene, sanitization and cleaning protocols and outlining social distancing policies at our locations around the world. The Company is also limiting the number of employees attending meetings in person, reducing the number of people in our sites at any one time, implementing working from home, and suspending employee travel.

In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. These government measures have disrupted certain of our operating locations in Asia, Europe and Mexico. All of our China manufacturing locations that were temporarily closed in February have returned operations to normal capacity levels, while certain operations in Europe, the Philippines and Mexico continue to be temporarily closed or operating at reduced capacity levels.

The Company continues to focus on our customers and to support their critical needs. We continue to work with customers to provide necessary products, many of which are considered essential, including healthcare and medical devices, transportation, communication and energy infrastructure.

The Company has taken cost containment initiatives to help offset the impact of lower demand and the business disruption created by COVID-19. During the quarter, the Company suspended annual wage increases and its 2020 annual cash incentive program. The Company also reduced salaries of the CEO and executive leadership team, and reduced cash compensation of its board of directors. The Company continues to develop and execute contingency plans to manage our business performance within this uncertain environment.

The Company anticipates that the global health crisis caused by COVID-19 will negatively impact its business activity. It is currently difficult to estimate the magnitude and duration of the COVID-19 disruption and its impact on our employees, customers, suppliers and vendors. The Company will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and other stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business and operations, including the effects on our customers, employees, and prospects, or on our financial results for the remainder of fiscal 2020.

Risks Related to Market Conditions

The Company performs its annual goodwill impairment tests as of September 30, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Since September 30, ~~2018,~~2019, the date of the Company’s last annual review for impairment, the market value of the Company’s stock has declined. Management has considered the resulting decline in the Company’s market capitalization in performing its assessment of whether an interim impairment review was required for any reporting units. As part of this assessment, management analyzed the potential declines in value of individual reporting units based on each reporting unit’s operating results for the three months ended March 28, 2020 compared to expected results as of September 30, 2019. In addition, management considered how other key assumptions, including discount rates, expected profitability and long-term growth rates used in the last fiscal year’s impairment analysis, could be impacted by recent market conditions and economic events. Based on this interim assessment, management concluded that as of March 28, 2020, no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying value. A continued global economic slowdown and further business disruption due to COVID-19 could result in changes to expectations of future financial results and key valuation assumptions. These changes could result in changes to management’s estimates of the fair value of the Company’s reporting units and could

result in a review for impairment of goodwill prior to September 29, 2020, the Company’s next annual measurement date, and a potential corresponding impairment charge.

In particular, the automotive sensors reporting unit has experienced declines in sales due to lower automotive market car build, reduced volumes and temporary customer shut-downs due to COVID-19. In addition, the semiconductors reporting unit has experienced declines in sales due to temporary plant shut-downs and lower customer demand primarily due to COVID-19. The Company continues to evaluate the impact of COVID-19 on its future long-term expectations for these units. Further negative developments having a significant impact on the estimated fair value of these reporting units could result in future goodwill impairment charges. As of the September 30, 2019 annual goodwill impairment test, the automotive sensors and semiconductors reporting units estimated fair values exceeded its book value by approximately 40% and 42%, respectively. As of March 28, 2020, $42.2 million and $462.7 million of goodwill was allocated to the automotive sensors and semiconductors reporting units, respectively. The automotive sensors reporting unit is included within the Automotive segment and the semiconductors reporting unit is included within the Electronics segment.

While the Company has ~~repurchased 660,102 shares~~not historically had significant credit risk on accounts receivable, the impact of ~~its common stock at an average price~~the COVID-19 pandemic and associated economic slowdown may increase the Company’s credit risk on accounts receivable. It is possible that the Company’s customers may experience liquidity issues which may impact the timing of ~~$171.81 totaling $113.4 million.~~the collections on receivables. The Company will continue to evaluate how the ongoing pandemic may impact collectability.

Results of Operations

The following table summarizes the Company’s unaudited condensed consolidated results of operations for the periods presented. The ~~second~~first quarter of ~~2019~~2020 includes ~~$7.2~~$5.2 million ~~($12.2 million year-to-date)~~ of non-segment charges, of which ~~$5.7~~included $4.0 million ~~($8.4 million year-to-date)~~ of restructuring, ~~charges are primarily related to employee termination costs~~impairment and ~~$1.5 million ($3.8 million year-to-date) of acquisition related and integration charges are primarily related to the IXYS acquisition.~~

~~The second quarter of 2018 includes approximately $26.8 million ($65.4 million year-to-date) of~~other charges primarily related to impairment charges of $2.2 million associated with the ~~IXYS acquisition, which include $19.0 million ($36.9 million year-to-date)~~announced consolidation of ~~purchase accounting inventory step-up charges, $2.0 million ($13.6 million year-to-date)~~a manufacturing facility in ~~acquisition-related~~the Industrial segment and ~~integration costs primarily related to legal, accounting and other expenses, $3.1 million ($5.6 million year-to-date)in backlog amortization costs, $2.7 million of~~ employee termination costs and other restructuring charges and ~~$4.5~~$1.2 million ~~year-to-date stock compensation expense recognized immediately upon close for converted IXYS options~~of acquisition-related and integration charges primarily related to ~~prior service periods~~the IXYS acquisition and ~~$2.1~~other contemplated acquisitions.

The first quarter of 2019 includes $2.4 million ~~year-to-date change in control expense~~of acquisition integration charges primarily related to ~~IXYS.~~the IXYS acquisition. In addition, there were ~~$0.5~~$2.7 million ~~($1.2 million year-to-date)~~of restructuring charges primarily related to employee termination costs, other restructuring, impairment charges of $1.1 million associated with the exit of the Custom business in the second quarter, and $0.3 million ($0.5 million year-to-date)of acquisition-related expenses for other contemplated acquisitions.

costs.


	Second Quarter									First Six Months									First Quarter
(in thousands)	2019		2018		Change			% Change		2019		2018		Change			% Change		2020		2019		Change			% Change
Net sales	$	397,879	$	459,183	$	(61,304	)	(13.4	)%	$	803,379	$	876,996	$	(73,617	)	(8.4	)%	$	346,096	$	405,500	$	(59,404	)	(14.6	)%
Gross profit	141,808		168,987		(27,179		)	(16.1	)%	297,036		318,610		(21,574		)	(6.8	)%	123,712		155,228		(31,516		)	(20.3	)%
Operating expenses	89,174		109,365		(20,191		)	(18.5	)%	183,729		221,417		(37,688		)	(17.0	)%	78,962		94,555		(15,593		)	(16.5	)%
Operating income	52,634		59,622		(6,988		)	(11.7	)%	113,307		97,193		16,114			16.6	%	44,750		60,673		(15,923		)	(26.2	)%
Income before income taxes	53,567		52,318		1,249			2.4	%	100,006		96,963		3,043			3.1	%	35,499		46,439		(10,940		)	(23.6	)%
Income taxes	9,775		9,992		(217		)	(2.2	)%	19,225		18,609		616			3.3	%	10,855		9,450		1,405			14.9	%
Net income	$	43,792	$	42,326	$	1,466		3.5	%	$	80,781	$	78,354	$	2,427		3.1	%	$	24,644	$	36,989	$	(12,345	)	(33.4	)%

Net Sales

Net sales decreased ~~$61.3~~$59.4 million or ~~13.4%~~14.6% for the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018~~2019 primarily due to lower volume across the Electronics ~~and Automotive segments~~segment from electronics distribution partners and end customers reducing excess ~~electronics channel~~ inventories and production, and lower volume across the Automotive segment due to a decline in global auto production driven by lower global end market demand and ~~$7.9~~a reduction in customer demand due to COVID-19, disruption across the Electronics and Automotive segments due to temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19, and $3.3 million or ~~1.7%~~0.8% of unfavorable changes in foreign exchange ~~rates.~~rates, partially offset by higher volume in the Industrial segment.

Net sales decreased $73.6 million or 8.4% for the first six months of 2019 compared to the first six months of 2018 primarily due to lower volume across the Electronics and Automotive segments and $17.9 million or 2.0% of unfavorable changes in foreign exchange rates.

Gross Profit

Gross profit was ~~$141.8~~$123.7 million, or ~~35.6%~~35.7% of net sales, in the ~~second~~first quarter of ~~2019~~2020 compared to ~~$169.0~~$155.2 million, or ~~36.8%~~38.3% of net sales, in the ~~second~~first quarter of ~~2018.~~2019. The decrease in gross profit is primarily due to lower volumes ~~unfavorable price impacts~~across the Electronics segment, additional costs associated with higher freight, supplies and ~~product mix,~~other costs associated with government-directed plant shutdowns and costs related to restructuring activities taken during 2019. In addition, the second quarter 2018 gross profit was negatively impacted by the IXYS purchase accounting inventory step-up charge of $19.0 million, which negatively impacted the 2018 gross margin by 4.1%.

Gross profit was $297.0 million, or 37.0% of net sales, in the first six months of 2019 compared to $318.6 million, or 36.3% of net sales, in the first six months of 2018. The decrease in gross profit reflected lower volume across all segments. The increase in gross margin is primarilysupply chain constraints due to the ~~2018 IXYS purchase accounting inventory step-up charge~~impact of ~~$36.9 million, which negatively impacted the 2018 gross margin by 4.2%, partially offset by~~COVID-19, and unfavorable price ~~impacts~~ and product ~~mix within the Electronics and Automotive segments.~~mix.

Operating Expenses

Total operating expenses were ~~$89.2~~$79.0 million, or ~~22.4%~~22.8% of net sales, for the ~~second~~first quarter of ~~2019~~2020 compared to ~~$109.4~~$94.6 million, or ~~23.8%~~23.3% of net sales, for the ~~second~~first quarter of ~~2018.~~2019. The decrease in operating expenses of ~~$20.2~~$15.6 million is primarily due to ~~lower annual incentive compensation expenses,~~ global cost saving initiatives across all segments, lower incentive compensation, lower sales commissions and ~~reduced backlog amortization expense~~travel expenses due to COVID-19, and lower acquisition-related and integration charges of ~~$3.1~~$1.2 million, partially offset by the impairment charges of $2.2 million related to the ~~IXYS acquisition in 2018.~~Company’s announcement to consolidate a manufacturing facility within the Industrial segment.

Total operating expenses were $183.7 million, or 22.9% of net sales, for the first six months of 2019 compared to $221.4 million, or 25.2% of net sales, for the first six months of 2018. The decrease in operating expenses of $37.7 million is primarily due to lower annual incentive compensation expenses, lower acquisition and integration related costs of $10.3 million, global cost saving initiatives, reduced backlog amortization expense of $5.6 million, $4.5 million stock compensation expense and $2.1 million of change in control expense related to the IXYS acquisition in 2018.

Operating Income

Operating income was ~~$52.6~~$44.8 million, a decrease of ~~$7.0~~$15.9 million, or ~~11.7%~~26.2%, for the ~~second~~first quarter of ~~2019~~2020 compared to ~~$59.6~~$60.7 million for the ~~second~~first quarter of ~~2018.~~2019. The decrease in operating income is primarily due to lower gross margin across ~~all segments,~~the Electronics segment, partially offset by the lower operating expenses noted above. Operating margins ~~increased~~decreased from ~~13.0%~~15.0% in the ~~second~~first quarter of ~~2018~~2019 to ~~13.2%~~12.9% in the ~~second~~first quarter of ~~2019~~2020 driven by the factors mentioned above.

Operating income was $113.3 million, an increase of $16.1 million, or 16.6%, for the first six months of 2019 compared to $97.2 million for the first six months of 2018. The increase in operating income is primarily due to the $36.9 million purchase accounting inventory step-up charges in 2018 and the lower operating expenses noted above partially offset by lower gross profit across all segments. Operating margins increased from 11.1% in the first six months of 2018 to 14.1% in the first six months of 2019 driven by the factors mentioned above.

Income Before Income Taxes

Income before income taxes was ~~$53.6~~$35.5 million, or 13.5% of net sales, for the second quarter of 2019 compared to $52.3 million, or 11.4% of net sales, for the second quarter of 2018. In addition to the factors impacting comparative results for operating income discussed above, income before taxes was impacted by foreign exchange gains of $3.6 million during the three months ended June 29, 2019 compared to foreign exchange losses of $3.2 million during the three months ended June 30, 2018, and interest income of $1.3 million during three months ended June 29, 2019 compared to $0.3 million during the three months ended June 30, 2018.

~~Income before income taxes was $100.0 million, or 12.4%~~10.3% of net sales, for the first ~~six months~~quarter of ~~2019~~2020 compared to ~~$97.0~~$46.4 million, or ~~11.1%~~11.5% of net sales, for the first ~~six months~~quarter of ~~2018. In addition to the factors impacting comparative results for~~2019. The decline in income before income taxes was primarily driven be lower operating income discussed ~~above,~~above. In addition, income before taxes was primarily impacted by ~~foreign exchange losses of $0.7 million during the six months ended June 29, 2019 compared to foreign exchange gains of $7.4 million during the six months ended June 30, 2018,~~ impairment charges of ~~$3.1~~$2.8 million for certain other investments and a $2.6 million loss on the disposal of a business within the Electronics segment during ~~the six~~three months ended ~~June 29,~~March 28, 2019, lower foreign exchange losses of $1.7 million during the three months ended March 28, 2020 compared to the three months ended March 30, 2019 and higher interest income of $0.9 million during three months ended March 28, 2020 compared to the three months ended March 30, 2019, partially offset by ~~$1.0~~unrealized investment losses of $2.3 million ~~increases in interest income during~~associated with our equity investments during the ~~first six~~three months ~~of 2019~~ended March 28, 2020 compared to unrealized gains of $0.4 million during the ~~first six~~three months ~~of 2018.~~ended March 30, 2019.

Income Taxes

Income tax expense was ~~$9.8~~$10.9 million, or an effective tax rate of ~~18.2%~~30.6%, for the ~~second~~first quarter of ~~2019~~2020 compared to ~~$10.0~~income tax expense of $9.5 million, or an effective tax rate of ~~19.1%~~20.3%, for the ~~second~~first quarter of ~~2018.~~2019. The effective tax ~~rates~~rate for ~~both periods were~~the 2020 period is higher than the effective tax rate for the 2019 comparable period primarily due to a reduction in the forecasted income earned in lower tax jurisdictions in 2020 driven by the uncertainty resulting from the impact of COVID-19. The effective tax rate for the 2020 period is higher than the applicable U.S. statutory tax rate primarily due to the forecasted impact of non-U.S. losses and expenses with no tax benefit and the U.S. GILTI tax provisions (in the 2019 period the impact of these items was more than offset by the impact of income earned in lower tax ~~jurisdictions.~~jurisdictions).

Income tax expense for the first six months of 2019 was $19.2 million, or an effective tax rate of 19.2%, compared to income tax expense of $18.6 million, or an effective tax rate of 19.2%, for the first six months of 2018. The effective tax rates for both periods were lower than the applicable U.S. statutory tax rate primarily due to income earned in lower tax jurisdictions.

Segment Results of Operations

The Company reports its operations by the following segments: Electronics, Automotive and Industrial. Segment information is described more fully in Note ~~16,~~15, Segment Information, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report.

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


	Second Quarter									First Six Months									First Quarter
(in thousands)	2019		2018		Change			% Change		2019		2018		Change			% Change		2020		2019		Change			% Change
Electronics	$	259,553	$	299,357	$	(39,804	)	(13.3	)%	$	524,947	$	563,768	$	(38,821	)	(6.9	)%	$	214,189	$	265,394	$	(51,205	)	(19.3	)%
Automotive	108,650		127,172		(18,522		)	(14.6	)%	222,133		253,302		(31,169		)	(12.3	)%	104,770		113,483		(8,713		)	(7.7	)%
Industrial	29,676		32,654		(2,978		)	(9.1	)%	56,299		59,926		(3,627		)	(6.1	)%	27,137		26,623		514			1.9	%
Total	$	397,879	$	459,183	$	(61,304	)	(13.4	)%	$	803,379	$	876,996	$	(73,617	)	(8.4	)%	$	346,096	$	405,500	$	(59,404	)	(14.6	)%

Electronics Segment

Net sales decreased ~~$39.8~~$51.2 million, or ~~13.3%~~19.3%, in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018~~2019 primarily due to lower volume ~~in the semiconductor~~across all businesses from electronics distribution partners and ~~electronics products businesses~~end customers reducing excess inventories, production disruption from temporary closures of manufacturing facilities resulting from government directives due to ~~softer market demands~~the impact of COVID-19, and unfavorable changes in foreign exchange rates of ~~$4.4~~$1.7 million.

Net sales decreased $38.8 million, or 6.9%, in the first six months of 2019 compared to the first six months of 2018 primarily due to lower volume in the electronics products and semiconductor businesses due to softer market demands and unfavorable changes in foreign exchange rates of $9.7 million.

Automotive Segment

Net sales decreased ~~$18.5~~$8.7 million, or ~~14.6%~~7.7%, in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018~~2019 due to decreased volume ~~primarily~~across all businesses from a decline in global auto production, a reduction in customer demand late in the ~~passenger car and automotive sensor businesses~~quarter due to the impact of COVID-19, and unfavorable changes in foreign exchange rates of ~~$3.3~~$1.5 million.

Net sales decreased $31.2 million, or 12.3%, in the first six months of 2019 compared to the first six months of 2018 due to decreased volume primarily in the passenger car and automotive sensor businesses and unfavorable changes in foreign exchange rates of $7.7 million.

Industrial Segment

Net sales ~~decreased slightly~~increased by ~~$3.0~~$0.5 million, or ~~9.1%~~1.9%, in the ~~second~~first quarter of 2020 compared to the first quarter of 2019 ~~compared to the second quarter of 2018~~ primarily due to ~~the exit of the Custom business during the second quarter of 2018 and~~higher volume across all businesses, partially offset by unfavorable changes in foreign exchange rates of ~~$0.2 million, partially offset by higher volume in the power fuse business.~~$0.1 million.

Net sales decreased slightly by $3.6 million, or 6.1%, in the first six months of 2019 compared to the first six months of 2018 primarily due to the exit of the Custom business during the second quarter of 2018 and unfavorable changes in foreign exchange rates of $0.5 million, partially offset by higher volume in the power fuse business.

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:


	Second Quarter									First Six Months									First Quarter
(in thousands)	2019		2018		Change			% Change		2019		2018		Change			% Change		2020		2019		Change			% Change
Asia-Pacific	$	172,895	$	203,581	$	(30,686	)	(15.1	)%	$	345,676	$	382,853	$	(37,177	)	(9.7	)%	$	140,873	$	172,781	$	(31,908	)	(18.5	)%
Americas	135,894		146,619		(10,725		)	(7.3	)%	273,928		285,348		(11,420		)	(4.0	)%	120,501		138,034		(17,533		)	(12.7	)%
Europe	89,090		108,983		(19,893		)	(18.3	)%	183,775		208,795		(25,020		)	(12.0	)%	84,722		94,685		(9,963		)	(10.5	)%
Total	$	397,879	$	459,183	$	(61,304	)	(13.4	)%	$	803,379	$	876,996	$	(73,617	)	(8.4	)%	$	346,096	$	405,500	$	(59,404	)	(14.6	)%

Asia-Pacific

Net sales decreased ~~$30.7~~$31.9 million, or ~~15.1%~~18.5%, in the ~~second~~first quarter of ~~2019~~2020 compared to the ~~second~~first quarter of ~~2018.~~2019. The decrease in net sales was primarily due to lower volume ~~in semiconductor business and electronics products~~across all businesses within the Electronics segment, ~~and~~ lower volume in ~~the~~ passenger car products and automotive ~~sensors~~sensor businesses within the Automotive segment, and unfavorable changes in foreign exchange rates of ~~$2.6 million.~~$0.9 million.

Americas

Net sales decreased ~~$37.2~~$17.5 million, or ~~9.7%~~12.7%, in the first ~~six months~~quarter of ~~2019~~2020 compared to the first ~~six months~~quarter of ~~2018.~~2019 primarily due to lower volume across all businesses within the Electronics segment, lower volume in automotive sensor and commercial vehicle businesses in the Automotive segment, and unfavorable changes in foreign exchange rates of $0.1 million, partially offset by higher volume across all businesses within the Industrial segment.

Europe

Net sales decreased $10.0 million, or 10.5%, in the first quarter of 2020 compared to the first quarter of 2019. The decrease in net sales was primarily due to lower volume ~~in semiconductor business and electronics products~~across all businesses within the Electronics segment, ~~and~~ lower volume ~~across all~~in passenger car products and commercial vehicle businesses within the Automotive segment and unfavorable changes in foreign exchange rates of ~~$5.2 million.~~

~~Americas~~

Net sales decreased $10.7 million, or 7.3%, in the second quarter of 2019 compared to the second quarter of 2018 primarily due to lower volume in semiconductor business within the Electronics segment, lower volume across all businesses in 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 $0.2$2.3 million, partially offset by higher volume in ~~electronics products~~automotive sensor business within the Electronics segment.

Net sales decreased $11.4 million, or 4.0%, in the first six months of 2019 compared to the first six months of 2018 primarily due to lower volume in semiconductor business within the Electronics segment, lower volume across all businesses in 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 $0.6 million, partially offset by higher volume in the electronics products within the Electronics segment.

~~Europe~~

Net sales decreased $19.9 million, or 18.3%, in the second quarter of 2019 compared to the second quarter of 2018. The decrease in net sales was primarily due to lower volume in electronics products within the Electronics segment, lower volume in passenger car products and automotive sensors businesses within the Automotive segment and unfavorable changes in foreign exchange rates of $5.1 million.

Net sales decreased $25.0 million, or 12.0%, in the first six months of 2019 compared to the first six months of 2018. The decrease in net sales was primarily due to lower volume in electronics products within the Electronics segment and unfavorable changes in foreign exchange rates of $12.1 million.

Liquidity and Capital Resources

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

Cash and cash equivalents were $620.6 million as of March 28, 2020, an increase of $89.4 million as compared to December 28, 2019. As of March 28, 2020, $310.1 million of the Company's $620.6 million cash and cash equivalents was held by U.S. subsidiaries.

Revolving Credit Facility/Term Loan

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~~included 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~~could 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 iswas 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 ~~quarterly principle payments of~~ $2.5 million ~~and $7.5 million~~of principal payments on the term loan during the three ~~and six~~ months ended ~~June 29, 2019.~~March 28, 2020.

As of ~~June 29, 2019,~~March 28, 2020, the Company had ~~$0.1 million~~no amounts outstanding in letters of credit and had available ~~$531.1~~$219.8 million of borrowing capacity under the Revolving Credit Facility based on financial covenants. ~~At June 29, 2019,~~

more tranches of term loans if there is no event of default and the Company is in compliance with ~~all covenants~~certain financial covenants. The balance under the ~~Credit Agreement.~~ facility is $240.0 million as of April 3, 2020.

Further information regarding the Company’s credit agreement is provided in Note 9,8, Debt, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly 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 (“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 2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing on August 15, 2018. Further information regarding the Company’s Senior Notes is provided in Note 9,8, Debt, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.

Debt Covenants

The Company was in compliance with all covenants under the Credit Agreement and Senior Notes as of March 28, 2020 and currently expects to remain in compliance based on management’s estimates of operating and financial results for 2020. As of March 28, 2020, 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. The ultimate magnitude of COVID-19, including the extent of its impact on our financial and operational results, which could be material, will be determined by the length of time that the pandemic continues, its effect on the demand for our products, as well as the effect of governmental regulations imposed in response to the pandemic. While we cannot at this time predict the impact of the COVID-19, it could have a material negative impact on our business, financial condition, results of operations and future cash flows which could impact the Company’s ability to comply with debt covenants in the future.

Dividends

During the ~~second~~first quarter of ~~2019,~~2020 the Company paid quarterly dividends of ~~$10.6~~$11.7 million to the ~~shareholders totaling $21.3 million year to date as of June 29, 2019.~~shareholders. On ~~July 24, 2019,~~April 23, 2020, the Board of Directors ~~approved~~of the Company declared a ~~12% increase in the~~ quarterly cash dividend ~~from $0.43~~of $0.48 per share, payable on June 4, 2020 to ~~$0.48. The dividend will be paid on September 5, 2019 to shareholders~~stockholders of record as of ~~August 22, 2019.~~May 21, 2020. Future determinations regarding the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, payout ratio, capital requirements, financial condition, prospects and other factors that our board of directors may deem relevant.

Cash Flow Overview


	First Six Months						First three Months
(in thousands)	2019			2018			2020			2019
Net cash provided by operating activities	$	80,092		$	140,915		$	45,279		$	30,919
Net cash used in investing activities	(19,812		)	(350,734		)	(16,536		)	(14,244		)
Net cash (used in) provided by financing activities	(75,624		)	196,207
Net cash provided by (used in) financing activities							65,804			(31,333		)
Effect of exchange rate changes on cash and cash equivalents	392			(7,917		)	(5,111		)	1,539
Decrease in cash and cash equivalents	(14,952		)	(21,529		)
Increase (decrease) in cash and cash equivalents							89,436			(13,119		)
Cash and cash equivalents at beginning of period	489,733			429,676			531,139			489,733
Cash and cash equivalents at end of period	$	474,781		$	408,147		$	620,575		$	476,614

Cash Flow from Operating Activities

Operating cash inflows are largely attributable to sales of the Company’s products. Operating cash outflows are largely attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.

Net cash provided by operating activities was ~~$80.1~~$45.3 million for the ~~six~~three months ended ~~June 29, 2019,~~March 28, 2020, compared to ~~$140.9~~$30.9 million during the ~~six~~three months ended ~~June~~March 30, ~~2018.~~2019. The ~~decrease~~increase in net cash provided by operating activities ~~reflected lower earnings and higher working capital levels~~was primarily due to ~~the timing of supplier payments.~~lower annual incentive payments and inventory levels, partially offset by lower earnings.

Cash Flow from Investing Activities

Net cash used in investing activities was ~~$19.8~~$16.5 million for the ~~six~~three months ended ~~June 29, 2019~~March 28, 2020 compared to ~~$350.7~~$14.2 million during the ~~six~~three months ended ~~June~~March 30, ~~2018. Net cash used for the acquisition of IXYS was $306.5 million for the six months ended June 30, 2018.~~2019. Capital expenditures were ~~$25.2~~$16.6 million, representing ~~a decrease~~an increase of ~~$15.1~~$2.5 million compared to ~~2018. Additionally, the Company received proceeds of $6.4 million from the sale of a property within the Industrial segment.~~2019.

Cash Flow from Financing Activities

Net cash provided by financing activities was $65.8 million for the three months ended March 28, 2020 compared to net cash used in financing activities ~~was $75.6~~of $31.3 million for the ~~six~~three months ended ~~June 29, 2019 compared to net cash provided by financing activities of $196.2 million for~~March 30, 2019. During the ~~six~~three months ended ~~June~~March 28, 2020, the company borrowed $100.0 million from the revolving credit facility to preserve financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19. For the three months ended March 28, 2020 and March 30, ~~2018. The~~2019, the Company repurchased ~~268,130~~175,110 and 79,916 shares of its common stock ~~during the six months ended June 29, 2019~~ totaling ~~$45.5~~$22.9 million and $13.6 million, respectively, but made payments of ~~$49.9~~$17.9 million related to settled share ~~repurchases.~~repurchases during the three months ended March 30, 2019. The Company made payments of ~~$7.5~~$2.5 million and $5.0 million on the term loan during the ~~six~~three months ended ~~June 29,~~March 28, 2020 and March 30, 2019, as compared to $310.0 million of proceeds from the credit facility and senior notes payable and $100.0 million of payments on the credit facility and term loan during the six months ended June 30, 2018.respectively. Additionally, dividends paid increased ~~$2.8~~$1.1 million from ~~$18.5~~$10.6 million in ~~2018~~the three months ended March 30, 2019 to ~~$21.3~~$11.7 million for the ~~six~~three months ended ~~June 29, 2019.~~March 28, 2020.

Share Repurchase Program

The Company’s Board of Directors 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 (“("2018 ~~Program”~~program"). ~~The Share Repurchase Program expired on April 30, 2019 with 471,888 shares repurchased.~~ On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program") to replace its previous expired 2018 program. On April 23, 2020, the Company's Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, ~~2019~~2020 to April 30, ~~2020.~~ 2021 (the "2020 program") to replace its previous expired 2019 program. The Company does not expect to repurchase shares in the near future due to the uncertainty of the impact and duration of COVID-19.

During the three ~~and six~~ months ended ~~June 29, 2019,~~March 28, 2020, the Company repurchased ~~188,214~~175,110 and ~~268,130~~79,916 shares of its common stock totaling ~~$32.0~~$22.9 million and ~~$45.5~~$13.6 million, respectively.

Off-Balance Sheet Arrangements

As of ~~June 29, 2019,~~March 28, 2020, the Company did not have any off-balance sheet arrangements, as defined under SEC rules. Specifically, the Company was not liable for guarantees of indebtedness owed by third parties, the Company was not directly liable for the debt of any unconsolidated entity and the Company did not have any retained or contingent interest in assets. The Company does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Critical Accounting Policies and Estimates

The Company’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of the Condensed Consolidated Financial Statements, the Company uses estimates and makes judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. The assumptions, estimates, and judgments are based on historical experience, current trends, and other factors the Company believes are relevant at the time it prepares the Condensed Consolidated Financial Statements.

The significant accounting policies and critical accounting estimates are consistent with those discussed in Note 1, Summary of Significant Accounting Policies and Other Information, to the consolidated financial statements and the MD&A section of the Company’s Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019. During the ~~six~~three months ended ~~June 29, 2019,~~March 28, 2020, there were no significant changes in the application of critical accounting policies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

See Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of our Annual Report on Form 10-K for the year ended December ~~29, 2018.~~28, 2019. During the ~~six~~three months ended ~~June 29, 2019,~~March 28, 2020, there have been no material changes in our exposure to market risk.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(b) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~June 29, 2019.~~March 28, 2020. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the quarter ended ~~June 29, 2019,~~March 28, 2020, our disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(f) and 15d-15(f) under the Exchange Act that occurred during the quarter ended ~~June 29, 2019~~March 28, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

~~During~~The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.

The World Health Organization has declared the ~~six months ended June 29, 2019,~~COVID-19 outbreak a pandemic, and the virus continues to spread in areas where we operate and sell our products. The COVID-19 pandemic and similar situations/circumstances in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. Several public health organizations have recommended, and some local governments have implemented, certain measures to slow and limit the transmission of the virus, including travel restrictions, shelter-in-place requirements and social distancing requirements. Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential border closures, disruptions to the businesses of our channel partners, and others. Our suppliers and customers may also face these and other challenges, which could lead to a disruption in our supply chain as well as decreased demand for our products. These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. These disruptions may continue to occur and may result in future impairment, restructuring and other charges. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors disclosed in Part I, Item 1a. Risk Factors of our Form 10-K, including those relating toour products and services, financial performance, debt covenant compliance and debt obligations. The ultimate magnitude of COVID-19, including the extent of its impact on our financial and operational results, which could be material, will be determined by the length of time that the pandemic continues, its effect on the demand for our services, as well as the effect of governmental regulations imposed in response to the pandemic. We cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

Other than the item listed above, there have been no material changes ~~from the~~in our risk factors from those disclosed in our Annual Report on Form 10-K for our year ended December ~~29, 2018.~~28, 2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities

~~The Company’s~~On May 1, 2019, the Company announced that its Board of Directors authorized ~~the~~a program to repurchase of up to 1,000,000 shares of the ~~Company’s~~Company's common stock ~~under a program~~ for the period May 1, ~~2018~~2019 to April 30, 2020 ("2019 ~~(the "2018~~ program"). On April ~~26, 2019,~~29, 2020, the ~~Company's~~Company announced that its Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, ~~2019~~2020 to April 30, ~~2020~~2021 (the ~~"2019~~"2020 program")~~. As~~ to replace its previous expired 2019 program. The Company does not expect to repurchase shares in the near future due to the uncertainty of ~~April 30, 2019, there were 528,112~~the impact and duration of ~~authorized repurchases remaining under the 2018 program.~~ COVID-19.

During the three ~~and six~~ months ended ~~June 29, 2019,~~March 28, 2020, the Company repurchased ~~188,214 and 268,130~~175,110 shares of its common stock totaling ~~$32.0 million and $45.5~~$22.9 million. There are ~~811,786~~324,890 shares yet to be purchased under the 2019 program as of ~~June��29, 2019.~~March 28, 2020.

The table below presents shares of the Company’s common stock which were acquired by the Company during ~~six~~three months ended ~~June 29, 2019:~~March 28, 2020:

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 under the plans or programs
2018 Program
December 30 through January 26 66,796
$ 169.11
66,796
541,232
January 27 through February 23 13,120
172.16
13,120
528,112
February 24 through March 30 —
—
—
528,112
March 31 through April 30 —
—
—
528,112
2019 Program
May1 through May 25 90,301
170.53
90,301
909,699
May 26 through June 29 97,913
169.09
97,913
811,786
Total 268,130
$ 169.73
268,130
811,786



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 under the plans or programs
2019 Program
December 29 through January 25	—	$	—	—	500,000
January 26 through February 22	—	—		—	500,000
February 23 through March 28	175,110	130.93		175,110	324,890
Total	175,110	$	130.93	175,110	324,890

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS



	Exhibit	Description

	10.1	Amended and Restated Credit Agreement, dated as of April 3, 2020, by and among Littelfuse, Inc., certain subsidiaries of the company, as designated borrowers, certain subsidiaries of the company, as guarantors, the lenders party thereto and Bank of America, N.A., as agent, JPMorgan Chase Bank, N.A., as syndication agent, PNC Bank, National Association, as senior documentation agent, BMO Harris Bank, N.A. and Wells Fargo Bank, National Association, as co-documentation agents, BofA Securities, Inc. as sole bookrunner and joint lead arranger, and JPMorgan Chase Bank, N.A., as joint lead arranger (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 7, 2020, Commission File No. 20388).+

	10.2	Form of Restricted Stock Unit Award Agreement (Tier I) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

	10.3	Form of Option Award Agreement (Tier I) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

	10.4	Form of Restricted Stock Unit Award Agreement (Non-Employee Director) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++



	10.5	Form of Option Award Agreement (Non-Employee Director) under the Littelfuse, Inc. Long-Term Incentive Plan (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed April 24, 2020, Commission File No. 20388). ++

	10.6*	Form of Restricted Stock Unit Award Agreement (Tier II) under the Littelfuse, Inc. Long-Term Incentive Plan. ++

	10.7*	Form of Restricted Stock Unit Award Agreement (IXYS Tier II) under the IXYS Corporation Equity Incentive Plan. ++

	31.1*	Certification of David W. Heinzmann, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2*	Certification of Meenal A. Sethna, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1**	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101.INS*101	The following financial information from LITTELFUSE, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 28, 2020 formatted in Inline XBRL ~~Instance Document~~(Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders Equity , (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

	101.SCH*104	~~XBRL Taxonomy Extension Schema Document~~

	101.CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

	101.DEF*	~~XBRL Taxonomy Definition Linkbase Document~~

	101.LAB*	~~XBRL Taxonomy Extension Label Linkbase Document~~

	101.PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document~~The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, formatted in Inline XBRL.

	+	Certain schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC. The registrant agrees to furnish supplementary a copy of any omitted schedule or exhibit to the SEC upon request.
	++	Management contract or compensatory plan or arrangement.
	*	Filed herewith.
	**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended ~~June 29, 2019,~~March 28, 2020, to be signed on its behalf by the undersigned thereunto duly authorized.



	Littelfuse, Inc.

~~Date: July 31, 2019~~	By:	/s/ Meenal A. Sethna
		Meenal A. Sethna
	Executive Vice President and Chief Financial Officer

Date: ~~July 31, 2019~~April 29, 2020	By:	/s/ Jeffrey G. Gorski
		Jeffrey G. Gorski
	Vice President and Chief Accounting Officer

3839



(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash, net of cash acquired	$	302,865
Cash settled stock options	3,622
Littelfuse stock	434,192
Converted stock options	38,109
Total purchase consideration	$	778,788
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	155,930
Property, plant, and equipment	77,442
Intangible assets	212,720
Goodwill	382,360
Other non-current assets	28,706
Other non-current liabilities	(78,370		)
	$	778,788



(in thousands)	Six Months Ended June 29, 2019						Six Months Ended June 30, 2018
	Pre-tax		Tax		Net of Tax		Pre-tax			Tax			Net of Tax
Defined benefit pension plan adjustments	$	123	$	11	$	112	$	734		$	(29	)	$	763
Foreign currency translation adjustments	2,230		—		2,230		(16,984		)	—			(16,984		)
Total change in other comprehensive income (loss)	$	2,353	$	11	$	2,342	$	(16,250	)	$	(29	)	$	(16,221	)



(in thousands)	Pension and postretirement liability and reclassification adjustments			Unrealized gain (loss) on investments			Foreign currency translation adjustment			Accumulated other comprehensive income (loss)
Balance at December 30, 2017	$	(10,836	)	$	9,795		$	(62,627	)	$	(63,668	)
Cumulative effect adjustment (a)	—			(9,795		)	—			(9,795		)
Activity in the period	763			—			(16,984		)	(16,221		)
Balance at June 30, 2018	$	(10,073	)	$	—		$	(79,611	)	$	(89,684	)

Title of Each Class

Trading Symbol

Name of ~~Each Exchange~~
~~On Which Registered~~

exchange on which registered

Common Stock, $0.01 par value

Global Select MarketSM