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 ~~March 28,~~September 26, 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~~773-628-1000

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

Title of Each Class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.01 par value

LFUS

NASDAQ

Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically 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 ~~April 24,~~October 23, 2020, the registrant had outstanding ~~24,276,841~~24,375,049 shares of Common Stock, net of Treasury Shares.

Table of Contents

TABLE OF CONTENTS



		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~March 28,~~September 26, 2020 (unaudited) and December 28, 2019	3
	Condensed Consolidated Statements of Net Income for the three and nine months ended ~~March 28,~~September 26, 2020 (unaudited) and ~~March 30,~~September 28, 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended ~~March 28,~~September 26, 2020 (unaudited) and ~~March 30,~~September 28, 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 28,~~September 26, 2020 (unaudited) and ~~March 30,~~September 28, 2019 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the ~~three~~nine months ended ~~March 28,~~September 26, 2020 (unaudited) and ~~March 30,~~September 28, 2019 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3536
Item 4.	Controls and Procedures	3536
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	3637
Item 1A.	Risk Factors	3637
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3637
Item 3.	Defaults Upon Senior Securities	3738
Item 4.	Mine Safety Disclosures	3738
Item 5.	Other Information	3738
Item 6.	Exhibits	3738
Signatures		39

Table of Contents

LITTELFUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)							(Unaudited)
(in thousands)	March 28, 2020			December 28, 2019			(in thousands)	September 26, 2020		December 28, 2019
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	620,575		$	531,139		Cash and cash equivalents	$	641,890	$	531,139
Short-term investments	43			44			Short-term investments	52		44
Trade receivables, less allowances of $37,482 and $42,043 at March 28, 2020 and December 28, 2019, respectively	207,912			202,309
Trade receivables, less allowances of $42,737 and $42,043 at September 26, 2020 and December 28, 2019, respectively							Trade receivables, less allowances of $42,737 and $42,043 at September 26, 2020 and December 28, 2019, respectively	231,930		202,309
Inventories	227,282			237,507			Inventories	243,832		237,507
Prepaid income taxes and income taxes receivable	4,253			4,831			Prepaid income taxes and income taxes receivable	1,218		4,831
Prepaid expenses and other current assets	32,418			28,564			Prepaid expenses and other current assets	30,012		28,564
Total current assets	1,092,483			1,004,394			Total current assets	1,148,934		1,004,394

Net property, plant, and equipment	334,829			344,617			Net property, plant, and equipment	339,870		344,617
Intangible assets, net of amortization	308,393			321,247			Intangible assets, net of amortization	296,159		321,247
Goodwill	812,763			820,589			Goodwill	799,791		820,589
Investments	21,248			24,099			Investments	26,066		24,099
Deferred income taxes	7,608			8,069			Deferred income taxes	7,173		8,069
Right of use lease assets, net	20,611			21,918			Right of use lease assets, net	18,811		21,918
Other assets	14,694			14,965			Other assets	17,566		14,965
Total assets	$	2,612,629		$	2,559,898		Total assets	$	2,654,370	$	2,559,898
LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	106,796		$	117,320		Accounts payable	$	120,938	$	117,320

Accrued liabilities	73,512			84,120			Accrued liabilities	98,437		84,120
Accrued income taxes	17,907			14,122			Accrued income taxes	15,231		14,122
Current portion of long-term debt	10,000			10,000			Current portion of long-term debt	0		10,000
Total current liabilities	208,215			225,562			Total current liabilities	234,606		225,562
Long-term debt, less current portion	764,195			669,158			Long-term debt, less current portion	725,507		669,158
Deferred income taxes	49,698			49,763			Deferred income taxes	46,584		49,763
Accrued post-retirement benefits	35,904			38,198			Accrued post-retirement benefits	40,279		38,198
Non-current operating lease liabilities	15,960			17,166			Non-current operating lease liabilities	14,193		17,166
Other long-term liabilities	61,709			64,037			Other long-term liabilities	63,639		64,037
Shareholders’ equity:							Shareholders’ equity:
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		)
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, September 26, 2020–26,015,067; December 28, 2019–25,855,203							Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, September 26, 2020–26,015,067; December 28, 2019–25,855,203	258		256
Treasury stock, at cost: 1,644,103 and 1,473,901 shares, respectively							Treasury stock, at cost: 1,644,103 and 1,473,901 shares, respectively	(242,323)		(216,447)
Additional paid-in capital	874,360			867,996			Additional paid-in capital	891,924		867,996
Accumulated other comprehensive loss	(121,802		)	(106,823		)	Accumulated other comprehensive loss	(107,238)		(106,823)
Retained earnings	963,820			950,901			Retained earnings	986,810		950,901
Littelfuse, Inc. shareholders’ equity	1,476,817			1,495,883			Littelfuse, Inc. shareholders’ equity	1,529,431		1,495,883
Non-controlling interest	131			131			Non-controlling interest	131		131
Total equity	1,476,948			1,496,014			Total equity	1,529,562		1,496,014
Total liabilities and equity	$	2,612,629		$	2,559,898		Total liabilities and equity	$	2,654,370	$	2,559,898

See accompanying Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

See accompanying Notes to Condensed Consolidated Financial Statements.


	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. (Loss) Income		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
Net income	—		—		—		—		43,792		—		43,792



Other comprehensive loss, 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
Net income	—		—		—		—		35,647		—		35,647



Other comprehensive loss, net of tax	—		—		—		(17,026)		—		—		(17,026)
Stock-based compensation	—		3,488		—		—		—		—		3,488

Withheld shares on restricted share units for withholding taxes	—		—		(790)		—		—		—		(790)
Stock options exercised	1		2,191		—		—		—		—		2,192
Repurchases of common stock	—		—		(49,526)		—		—		—		(49,526)

Cash dividends paid ($0.48 per share)	—		—		—		—		(11,715)		—		(11,715)
Balance at September 28, 2019	$	256	$	860,871	$	(216,384)	$	(112,608)	$	939,946	$	131	$	1,472,212

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. 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 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 Disaggregation

The following tables disaggregate the Company’s revenue by primary business units for the three and nine months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019:

Three Months Ended March 28, 2020
(in thousands)
Electronics
Segment

Automotive
Segment

Industrial
Segment

Total
Electronics – Passive Products and Sensors $ 84,598
$ —
$ —
$ 84,598
Electronics – Semiconductor 129,591
—
—
129,591
Passenger Car Products —
52,645
—
52,645
Automotive Sensors —
24,174
—
24,174
Commercial Vehicle Products —
27,951
—
27,951
Industrial Products —
—
27,137
27,137
Total $ 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 September 28, 2019								Nine Months Ended September 28, 2019
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	94,766	$	0	$	0	$	94,766	$	311,624	$	0	$	0	$	311,624
Electronics – Semiconductor	132,486		0		0		132,486		440,575		0		0		440,575
Passenger Car Products	0		53,889		0		53,889		0		164,348		0		164,348
Automotive Sensors	0		23,877		0		23,877		0		74,616		0		74,616
Commercial Vehicle Products	0		26,915		0		26,915		0		87,850		0		87,850
Industrial Products	0		0		30,038		30,038		0		0		86,337		86,337
Total	$	227,252	$	104,681	$	30,038	$	361,971	$	752,199	$	326,814	$	86,337	$	1,165,350

See Note ~~16,~~14, Segment Information for net sales by segment and countries.

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.

The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue.

Ship and Debit Program

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

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.

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 June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments." The standard modifies the measurement approach for credit losses on financial instruments, including trade receivables, from an incurred loss method to a current expected credit loss method ("CECL"). The standard requires the measurement of expected credit losses to be based on relevant information, including historical experiences, current conditions and a forecast that is supportable. The Company adopted the new standard on December 29, 2019. The adoption of 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~~other 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~~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.

The components of inventories at ~~March 28,~~September 26, 2020 and December 28, 2019 are as follows:

3. Property, Plant, and Equipment

The components of net property, plant, and equipment at ~~March 28,~~September 26, 2020 and December 28, 2019 are as follows:

(in thousands) March 28, 2020 December 28, 2019
Land $ 22,781
$ 24,758
Building 105,067
108,501
Equipment 633,899
631,273
Accumulated depreciation and amortization (426,918 ) (419,915 )
Total $ 334,829
$ 344,617

The Company recorded depreciation expense of ~~$13.8~~$14.2 million and ~~$13.1~~ $13.3 million for the three months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019, respectively, and $42.0 million and $39.0 million for nine months ended September 26, 2020 and September 28, 2019, respectively.

4. Goodwill and Other Intangible Assets

The amounts for goodwill and changes in the carrying value by segment for the ~~three~~nine months ended ~~March 28,~~September 26, 2020 are as follows:

(in thousands) Electronics Automotive Industrial Total
As of December 28, 2019 $ 650,796
$ 131,321
$ 38,472
$ 820,589
Currency translation (5,873 ) (1,693 ) (260 ) (7,826 )
As of March 28, 2020 $ 644,923

$ 129,628

$ 38,212

$ 812,763

The Company tests its goodwill annually for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During the second quarter of 2020, the Company recorded a non-cash charge of $33.8 million to recognize the impairment of goodwill in the automotive sensors reporting unit within the Automotive segment. The goodwill impairment charge was due to reductions in the estimated fair value for the automotive sensors reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2019 annual goodwill impairment test. These lower future expectations were driven by projected extended declines in end market demand due to the COVID-19 pandemic. In addition, during the second quarter of 2020, certain customers notified the Company of their decision to delay future programs along with a customer canceling their existing program. The goodwill impairment charge was determined using Level 3 inputs, including discounted cash flow analysis and comparable marketplace fair value data. As of September 26, 2020, the automotive sensors reporting unit had $9.4 million of remaining goodwill.

The components of other intangible assets ~~at March 28,~~as of September 26, 2020 and December 28, 2019 are as follows:

Accumulated Amortization

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

The Company recognized a $0.3 million non-cash impairment charge in the first quarter of 2020 on a certain patent triggered by the Company’s announcement to consolidate a manufacturing facility within the Industrial segment.

Estimated annual amortization expense related to intangible assets with definite lives as of ~~March 28,~~September 26, 2020 is as follows:

(in thousands)
Amount
2020 $ 38,291
2021 37,487
2022 36,561
2023 32,195
2024 29,135
2025 and thereafter 144,705
Total $ 318,374


(in thousands)	Amount
2020	$	41,742
2021	38,258
2022	37,274
2023	32,492
2024	29,695
2025 and thereafter	146,610
Total	$	326,071

5. Table~~Lease Commitments~~ of Contents

The Company leases office and production space under various non-cancelable operating leases that expire no later than 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 at March 28, 2020 and December 28, 2019:~~

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

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

Leases cost
(in thousands)
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 $ 117
$ 153
Variable lease expenses Cost of sales, SG&A expenses 318
194
Operating lease rent expenses Cost of sales, SG&A expenses 2,173
2,193
Total operating lease costs Cost of sales, SG&A expenses $ 2,608
$ 2,540

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 6,620
2022 5,341
2023 3,590
2024 3,177
2025 and thereafter 498
Total lease payments $ 25,382

Present value of lease liabilities $ 23,033



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

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

6.5. Accrued Liabilities

The components of accrued liabilities ~~at March 28,~~as of September 26, 2020 and December 28, 2019 are as follows:


(in thousands)	September 26, 2020		December 28, 2019
Employee-related liabilities	$	49,805	$	40,774
Operating lease liability	6,866		7,259
Interest	2,747		5,058
Professional services	2,869		3,986

Restructuring liability	4,542		2,679
Other non-income taxes	3,509		1,940
Other	28,099		22,424
Total	$	98,437	$	84,120

(in thousands) March 28, 2020 December 28, 2019
Employee-related liabilities $ 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 2,058
1,940
Other 22,146
22,424
Total $ 73,512
$ 84,120

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

7.6. Restructuring, Impairment and Other Charges

The Company recorded restructuring, impairment and other charges for the three and nine months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019 as follows:

For the three and nine months ended ~~March 28,~~September 26, 2020,, the Company recorded total restructuring charges of ~~$1.7~~$1.3 million and $4.8 million, primarily for employee termination ~~costs and other restructuring charges.~~costs. These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions across all segments and the previously announced consolidation of a manufacturing facility within the Industrial segment. The Company also recognized ~~$2.2~~$36.1 million of impairment charges for the nine months ended September 26, 2020, which included a $33.8 million goodwill impairment charge associated with the automotive sensors reporting unit within the Automotive segment in the second quarter of 2020 and a $2.2 million impairment charge related to the land and building associated

For the three and nine months ended ~~March 30,~~September 28, 2019, the Company recorded total restructuring charges of ~~$2.7~~$2.2 million, ~~of which $2.5~~and $10.6 million, ~~was~~respectively, for employee termination costs and ~~$0.3 million for~~ other restructuring charges. These charges primarily related to reorganization of operations and selling, general and administrative functions as well as integration of IXYS within the Electronics segment and the reorganization of operations in the commercial vehicle products and automotive sensors businesses within the Automotive segment.

The restructuring ~~reserves~~liability as of ~~March 28,~~September 26, 2020 and December 28, 2019 are ~~$3.3~~$4.5 million and $2.7 million, respectively. The restructuring ~~reserves are~~liability is 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 ~~March~~September 2021.

The carrying amounts of debt at ~~March 28,~~September 26, 2020 and December 28, 2019 are as follows:

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.

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 could be made in up to 2 advances. The first advance of $125.0 million occurred on October 13, 2017 and the second advance of $75.0 million occurred on January 16, 2018. For the Term Loan, the Company was 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 ~~$2.5~~$5.0 million of principal payments on the term loan ~~during~~before the ~~three months ended 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").

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 ($140.0 million) of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company; (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 Company made payments of $60.0 million on the amended revolving credit facility during the three months ended September 26, 2020. The balance under the facility ~~is $240.0~~was $180.0 million as of ~~April 3,~~September 26, 2020.

Outstanding borrowings under the amended Credit Agreement bears interest, at the Company’s option, at either LIBOR, fixed for interest periods of one, two, three or six-month periods, plus 1.25% to 2.00%, or at the bank’s Base Rate, as defined, plus 0.25% to 1.00%, based upon the Company’s Consolidated Leverage Ratio, as defined. The Company was also required to pay commitment fees on unused portions of the credit agreement ranging from 0.125% to 0.20%, based on the Consolidated Leverage Ratio, as defined in the agreement. The amended 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 1.90% at September 26, 2020.

As of September 26, 2020, the Company had 0 amount outstanding in letters of credit and had available $245.1 million of borrowing capacity under the Revolving Credit Facility based on financial covenants. At September 26, 2020, the Company was in compliance with all covenants under the Credit Agreement.

On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in 2 series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.

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

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

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 ~~March 28,~~September 26, 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 ~~$7.4 million and $8.0~~$6.4 million for the three months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019, and $17.2 million and $17.9 million for the nine months ended September 26, 2020 and September 28, 2019, respectively.

9.8. 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 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 three months ended ~~March 30,~~September 26, 2020, the Company recorded impairment charges of $0.1 million and during the nine months ended September 28, 2019, the Company recorded impairment charges of $2.8 million in Other ~~expense (income),~~income, net in the Condensed Consolidated Statements of Net Income to adjust these certain investments to their estimated fair value. As of ~~March 28,~~September 26, 2020 and December 28, 2019, the balances of these investments were $0.5 million and $0.4 ~~million.~~million, respectively. The fair value of these investments are measured on a nonrecurring basis ~~and determined to be~~using Level 3 inputs 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.

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 ~~March 28,~~September 26, 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~~expired 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,~~

As of ~~March 28,~~September 26, 2020 and December 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 ~~March 28,~~September 26, 2020:

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

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

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 ~~March 28,~~September 26, 2020 and December 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 ~~March 28,~~September 26, 2020 and December 28, 2019 were as follows:

March 28, 2020 December 28, 2019
(in thousands)
Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value
Euro Senior Notes, Series A due 2023 $ 128,316
$ 121,124
$ 129,808
$ 131,710
Euro Senior Notes, Series B due 2028 104,189
94,743
105,400
110,336
USD Senior Notes, Series A due 2022 25,000
24,681
25,000
25,054
USD Senior Notes, Series B due 2027 100,000
97,097
100,000
102,548
USD Senior Notes, Series A due 2025 50,000
48,921
50,000
50,775
USD Senior Notes, Series B due 2030 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.~~segment during the first quarter of 2020. See Note 7,6, 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.~~appraisal and classified as a Level 3 input under the fair value hierarchy.

The second quarter of 2020 goodwill impairment charge was the result of measuring a reporting unit at fair value on a nonrecurring basis as shown below:

Nine Months Ended September 26, 2020

September 26, 2020

(in thousands)

Impairment Charge

Estimated Fair Value Measurement (Level 3)

Carrying Value

Goodwill

$33,841

$8,953

9,449

See Note 4, Goodwill and Other Intangible Assets for further discussion regarding goodwill impairment charges.

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)~~income,, net in the Condensed Consolidated Statements of Net Income. The components of net periodic benefit cost for the three and nine months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019 were as follows:


	For the Three Months Ended				For the Nine Months Ended
(in thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Components of net periodic benefit cost:
Service cost	$	615	$	509	$	1,825	$	1,523
Interest cost	511		777		1,655		2,374
Expected return on plan assets	(422)		(773)		(1,551)		(2,384)
Amortization of prior service and net actuarial loss	279		60		688		184
Net periodic benefit cost	$	983	$	573	$	2,617	$	1,697

For the Three Months Ended
(in thousands) March 28, 2020 March 30, 2019
Components of net periodic benefit cost:
Service cost $ 618
$ 500
Interest cost 658
784
Expected return on plan assets (727 ) (790 )
Amortization of prior service and net actuarial loss 145
62
Net periodic benefit cost $ 694

$ 556

The Company expects to make approximately $2.3 million of cash contributions to its pension plans in 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~~The Company recorded $0.5 million and $0.2 million expense for the three months ended September 26, 2020 and September 28, 2019,

respectively, and $1.5 million and $0.6 million expense for the nine months ended September 26, 2020 and September 28, 2019, respectively, in Cost of Sales and Other ~~expense (income),~~income, net within the Condensed Consolidated Statements of Net Income. For three and nine months ended ~~March 28,~~September 26, 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 and $0.5 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 UKU.K. 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. Due to the signing of the group annuity contract being a significant change in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million (£10.9 million) to both the net pension liability and unamortized actuarial loss within other comprehensive income (loss) during the second quarter. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the second quarter.

~~11.~~10. Other Comprehensive Income ~~(Loss)~~

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


(in thousands)	Three Months Ended September 26, 2020						Three Months Ended September 28, 2019
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Defined benefit pension plan and other adjustments	$	273	$	(290)	$	563	$	155	$	18	$	137

Foreign currency translation adjustments	16,418		0		16,418		(17,163)		0		(17,163)
Total change in other comprehensive income (loss)	$	16,691	$	(290)	$	16,981	$	(17,008)	$	18	$	(17,026)


(in thousands)	Nine Months Ended September 26, 2020						Nine Months Ended September 28, 2019
	Pre-tax		Tax		Net of Tax		Pre-tax		Tax		Net of Tax
Defined benefit pension plan and other adjustments	$	(12,270)	$	(2,555)	$	(9,715)	$	278	$	29	$	249

Foreign currency translation adjustments	9,300		0		9,300		(14,933)		0		(14,933)
Total change in other comprehensive loss	$	(2,970)	$	(2,555)	$	(415)	$	(14,655)	$	29	$	(14,684)

Due to the signing of the group annuity contract being a significant change in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million to unamortized actuarial loss within other comprehensive income (loss). See Note 9, Benefits Plans for further discussion.

The following tables set forth the changes in accumulated other comprehensive income (loss) ~~income~~ by component for the ~~three~~nine months ended ~~March 28,~~ September 26, 2020 and ~~March 30,~~September 28, 2019:


(in thousands)	Pension and postretirement liability and reclassification adjustments		Foreign currency translation adjustment		Accumulated other comprehensive (loss) income
Balance at December 29, 2018	$	(9,959)	$	(87,965)	$	(97,924)

Activity in the period	249		(14,933)		(14,684)
Balance at September 28, 2019	$	(9,710)	$	(102,898)	$	(112,608)

Amounts reclassified from accumulated other comprehensive income (loss) ~~income~~ to earnings for the three and nine months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019 were as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Pension and Postemployment plans:
Amortization of prior service and net actuarial loss	$	452	$	60	$	1,226	$	184

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

~~12.~~11. Income Taxes

The effective tax rate for the three and nine months ended ~~March 28,~~September 26, 2020 was ~~30.6%~~17.9% and 23.1% respectively, compared to the effective tax rate for the three and nine months ended ~~March 30,~~September 28, 2019 of ~~20.3%~~13.9% and 17.7%. The effective tax ~~rate~~rates for the 2020 ~~period is~~periods are higher than the effective tax ~~rate~~rates for the comparable 2019 ~~comparable period~~periods, primarily due to the impact of the goodwill impairment charge of $33.8 million that was recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate, as well as 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 first nine months of 2020 ~~period~~ is higher than the applicable U.S. statutory tax rate primarily due to the impact of the goodwill impairment charge of $33.8 million that was recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate, as well as the forecasted impact of non-U.S. losses and expenses with no tax benefit and the U.S. ~~GILTI~~global intangible low-taxed income tax provisions (in the 2019 comparable period the impact of these items was more than offset by the impact of income earned in lower tax jurisdictions)., offset in part by the impact of income earned in lower tax jurisdictions.

12. Earnings Per Share

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

Three Months Ended
(in thousands, except per share amounts) March 28, 2020 March 30, 2019
Numerator:
Net income as reported $ 24,644
$ 36,989

Denominator:
Weighted average shares outstanding
Basic 24,393
24,717
Effect of dilutive securities 185
292
Diluted 24,578

25,009

Earnings Per Share:
Basic earnings per share $ 1.01
$ 1.50
Diluted earnings per share $ 1.00
$ 1.48


	Three Months Ended				Nine Months Ended
(in thousands, except per share amounts)	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Numerator:
Net income as reported	$	55,356	$	35,647	$	71,009	$	116,428

Denominator:
Weighted average shares outstanding
Basic	24,357		24,482		24,354		24,646
Effect of dilutive securities	216		202		181		248
Diluted	24,573		24,684		24,535		24,894

Earnings Per Share:
Basic earnings per share	$	2.27	$	1.46	$	2.92	$	4.72
Diluted earnings per share	$	2.25	$	1.44	$	2.89	$	4.68

Potential shares of common stock relating to stock options and restricted share units excluded from the earnings per share calculation because their effect would be anti-dilutive were ~~153,836~~290,262 and ~~77,047~~205,516 for the three months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019, respectively, and 194,857 and 147,090 for the nine months ended September 26, 2020 and September 28, 2019, 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 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, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. The Company ~~does not expect to repurchase shares in~~has suspended share repurchases for the ~~near future~~near-term due to the uncertainty of the impact and duration of ~~COVID-19.~~COVID-19 and to focus on other capital allocation priorities.

~~For~~The Company did 0t repurchase any shares of its common stock for the three months ended ~~March~~September 26, 2020. During the three months ended September 28, 2019, the Company repurchased 311,786 shares of its common stock totaling $49.5 million. For the nine months ended September 26, 2020 and ~~March 30,~~September 28, 2019, the Company repurchased 175,110 and ~~79,916~~579,916 shares of its common stock totaling $22.9 million and ~~$13.6~~$95.0 million, respectively.

~~14.~~13. 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. The following is a description of the investments and related party transactions.

Powersem GmbH: The Company owns 45% of the outstanding equity of Powersem GmbH (“Powersem”), a module manufacturer based in Germany.

EB-Tech Co., Ltd.: The Company owns approximately 19% of the outstanding equity of EB Tech Co., Ltd. (“EB Tech”), a company with expertise in radiation technology based in South Korea.

Automated Technology (Phil), Inc.: The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. One member of the Company's Board of Directors serves on the Board of Directors of ATEC.

Additionally, the Company has certain cost method investments in VTOOL Ltd. and Securepush Ltd. with a total book value of ~~$0.4~~$0.5 million as of ~~March 28,~~September 26, 2020 and one member of the Company’s Board of Directors is currently an investor and a director of VTOOL Ltd. and Securepush Ltd.

On April 26, 2019, the Company sold its subsidiary Microwave Technology, LLC. (“MWT”) resulting in a loss on disposal of $2.6 million reflected in Other income, ~~(expense),~~ net in the Condensed Consolidated Statements of Net Income. The operations of MWT were included in the Electronics segment. One member of the Company’s Board of Directors is an owner of a company that purchased MWT.

~~15.~~14. 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. Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the 3 operating segments. The Company does not report inter-segment revenue because the operating segments do not record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments' current results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income, interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.

•Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors,

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

suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, 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 end markets. Passenger car fuse products include fuses and fuse accessories for internal combustion engine vehicles and hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, and high-voltage fuses. Commercial vehicle products include fuses, switches, relays, and power distribution modules for the commercial vehicle industry. Automotive sensor products include a wide range of automotive and commercial vehicle products designed to monitor the passenger compartment occupants, safety and environment as well as the vehicle’s powertrain.

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

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

Segment information is summarized as follows:

(a) Included in “Other” Operating income ~~(loss)~~ for the third quarter of 2020 ~~first quarter~~ is ~~$1.2~~$0.3 million ($1.6 million year-to-date) of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there ~~were $4.0~~was $1.3 million ($40.9 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs of $1.2 million ($4.6 million year-to-date), and other restructuring charges of $0.1 million ($0.2 million year-to-date), the goodwill impairment charge of $33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Automotive segment, and impairment charges of $2.2 million recorded in the first quarter associated with the

announced consolidation of a manufacturing facility within the Industrial ~~segment and $1.7 million of employee termination costs and other restructuring charges.~~segment. See Note 7,4, Goodwill and Other Intangible Assets and Note 6, Restructuring, Impairment and Other Charges, for further discussion.

Included in "Other" Operating income ~~(loss)~~ for the ~~first~~third quarter of 2019 is ~~$2.4~~$3.2 million ($6.9 million year-to-date) of acquisition integration charges primarily related to the IXYS acquisition. In addition, there were ~~$2.7~~$2.5 million ($11.0 million year-to-date) of restructuring charges primarily related to employee termination costs.

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

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

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

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

Three Months Ended
(in thousands) March 28, 2020 March 30, 2019
Additions to long-lived assets
United States $ 580
$ 905
China 1,657
1,225
Mexico 2,592
5,484
Germany 753
598
Philippines 3,218
5,229
Other countries(a)
2,508
635
Total additions to long-lived assets $ 11,308

$ 14,076

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~~(a)~~	~~Each country included in other countries 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 to general economic conditions; the severity and duration of the coronavirus disease 2019 ("COVID-19") pandemic and the measures taken in response thereto and the effects of those items on the Company’s business; product demand and market acceptance; economic conditions; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; failure of an indemnification for environmental liability; exchange rate fluctuations; commodity price fluctuations; the effect of the Company's accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than assumed; uncertainties related to political or regulatory changes; integration of acquisitions may not be achieved in a timely manner, or at all; and other risks that may be detailed in Item 1A. "Risk Factors" of this Quarterly Report on Form 10-Q for the quarter ended ~~March 28,~~September 26, 2020, the Company's Annual Report on Form 10-K for the year ended December 28, 2019, and the Company's other ~~fillings~~filings and submissions with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise.

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

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Executive Overview

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

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.

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 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 ~~first~~third quarter of 2020, the Company recognized net sales of ~~$346.1~~$391.6 million compared to ~~$405.5~~$362.0 million in the ~~first~~third quarter of 2019 representing ~~a decrease~~an increase of ~~$59.4~~$29.6 million, or ~~14.6%~~8.2%. The ~~decrease~~increase was primarily driven by ~~lower~~higher volume in ~~the~~ Electronics segment, ~~due to electronics distribution partners~~ and ~~end customers reducing excess inventories, lower volume in the Automotive segment, the impact of COVID-19 and $3.3~~$4.4 million or ~~0.8%~~1.2% of ~~unfavorable~~favorable changes in foreign exchange ~~rates, partially offset by higher volume in the Industrial segment.~~rates. The Company recognized net income of ~~$24.6~~$55.4 million, or ~~$1.00~~$2.25 per diluted share, in the ~~first~~third quarter of 2020 compared to net income of ~~$37.0~~$35.6 million, or ~~$1.48~~$1.44 per diluted share in the ~~first~~third quarter of 2019. The ~~decrease~~increase in net income ~~was primarily due to lower~~reflects higher operating income in the Electronics ~~segment.~~and Automotive segments, higher foreign exchange gains and lower acquisition-related and integration charges.

The Company continues to take actions to improve its cost structure. The Company expects to realize cost savings from the restructuring activities taken during 2019 and 2020, including the reorganization of certain ~~manufacturing,~~research and development, selling and administrative functions across all ~~segments~~segments. The Company is also in process of several restructuring activities across its manufacturing and supply chain footprint, including the consolidation of a manufacturing facility within the Industrial ~~Segment.~~Segment, which is expected to be completed in the first half of 2021.

Net cash provided by operating activities was ~~$45.3~~$164.3 million for the ~~three~~nine months ended ~~March 28,~~September 26, 2020 as compared to ~~$30.9~~$160.9 million for the ~~three~~nine months ended ~~March 30,~~September 28, 2019. The increase in net cash provided by operating activities was primarily due to lower annual incentive payments and ~~inventory levels,~~favorable changes in net working capital partially offset by lower ~~earnings.~~earnings largely due to the impact of COVID-19.

~~During the three months ended March 28, 2020 and March 30, 2019, the Company repurchased 175,110 and 79,916 shares of its common stock totaling $22.9 million and $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 ($140.0 million) of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company; (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~~Company made payments of $60.0 million on the amended revolving credit facility during the three months ended September 26, 2020.The balance under the facility ~~is $240.0~~was $180.0 million as of ~~April 3,~~September 26, 2020.

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Impact of COVID-19 on Business

The ~~global emergence~~Company continued to manage through the COVID-19 impacts during the third quarter, with a lesser impact to its financial results compared to the first six months 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~~2020. Our manufacturing facilities ~~in China and~~generally operated at normal capacity levels as production disruptions were minimal during the ~~Philippines as a result of government directives.~~third quarter. 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 dueeffects from COVID-19 continued to drive higher ~~costs for~~ freight ~~and protective supplies,~~cost, as well as spending on personal protective equipment ("PPE"), additional personnel and employee transportation costs, ~~related to the above temporary plant closures.~~partially offset by certain international government subsidies and COVID-19 relief programs.

~~The future impacts of COVID-19 on our business are currently unknown.~~ The Company’s priorities ~~are~~continue to ~~focus~~be first, on our ~~employees, customers~~associates, their families and the communities in which we operate; second, our customers; and third, long-term financial health of the company. In an effort to protect the health and safety of our employees, the Company ~~took~~has enacted numerous proactive, aggressive actions ~~from the earliest signs~~at its facilities globally, and implemented a number of ~~the outbreak in China, adopting performing temperature checks in many locations, procuring~~safety procedures including hygiene and ~~distributing proper PPE (personal protective equipment) to employees and their families in many locations, following strict hand and respiratory hygiene, sanitization and cleaning~~disinfection protocols, ~~and outlining~~ social distancing ~~policies at our locations~~and wearing PPE. The Company expects these actions will continue for the foreseeable future.

During the first half of 2020, governments around the ~~world. The Company is also limiting the number of employees attending meetings~~world enacted various measures 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 orand slow its ~~spread, governments around the world have also enacted various~~spread. These measures ~~including~~included orders to close all businesses not deemed ~~“essential,”~~“essential”, isolate residents to their homes or places of residence, and practice social distancing when engaging in essential ~~activities. These government measures have~~activities, which disrupted certain of our operating locations in ~~Asia, Europe and Mexico. All~~around the world. During the third quarter, all of our ~~China~~ manufacturing ~~locations that were temporarily closed in February~~facilities have ~~returned operations to~~been operating and are generally at 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~~meet production requirements for their 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~~may continue to negatively impact its business ~~activity.~~activity for the foreseeable future. It is currently difficult to estimate the magnitude ~~and duration~~ of the COVID-19 disruption, if future disruptions will occur due to a resurgence in COVID-19 cases 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.

Goodwill Impairment Assessment

~~Risks Related to Market Conditions~~

The Company performs its annual goodwill impairment tests ason the first day of ~~September 30,~~the fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. ~~Since September 30, 2019, the date~~As part of ~~the Company’s last annual~~its interim review for indicators of impairment, management analyzed potential changes in the ~~market~~ value of individual reporting units with goodwill based on each reporting unit’s operating results for the ~~Company’s stock has declined.~~nine months ended September 26, 2020 compared to expected results. In addition, management considered how other key assumptions, including discount rates and expected long-term growth rates, used in last fiscal year’s impairment analysis, could be impacted by changes in market conditions and economic events. Management ~~has~~ considered ~~the resulting decline~~trends in ~~the Company’s market capitalization in~~these factors when 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.unit. Based on ~~this~~September 26, 2020 interim assessment, ~~management~~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. ANevertheless, 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~~

During the second quarter of 2020, the Company recorded a non-cash charge of $33.8 million to ~~management’s estimates of~~recognize the ~~fair value of the Company’s reporting units and could~~

~~result in a review for~~ impairment of goodwill ~~prior~~in the automotive sensors reporting unit within the Automotive segment. The goodwill impairment charge was due to reductions in the estimated fair value for the automotive sensors reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2019 annual goodwill impairment test. These lower future expectations were driven by projected extended declines in end market demand due to the COVID-19 pandemic. In addition, during the second quarter of 2020, certain customers notified the Company of their decision to delay future programs along with a customer canceling an existing program. The goodwill impairment charge was determined using Level 3 inputs, including discounted cash flow analysis and comparable marketplace fair value data. As of September ~~29,~~26, 2020, the ~~Company’s next annual measurement date, and a potential corresponding impairment charge.~~

~~In particular, the~~ automotive sensors reporting unit had $9.4 million of remaining goodwill.

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The semiconductor reporting unit has experienced declines in net sales ~~due to lower automotive market car build, reduced volumes and temporary customer shut-downs due to COVID-19. In addition,~~for the ~~semiconductors reporting unit has experienced declines in sales~~nine months ended September 26, 2020 due to temporary ~~plant~~ shut-downs of its plants as well as outsourced manufacturing partners 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.~~this unit. Further negative developments having a significant impact on the estimated fair value of ~~these~~this reporting ~~units~~unit could result in future goodwill impairment charges. As of the September 30, 2019 annual goodwill impairment test, the ~~automotive sensors and~~ semiconductors reporting ~~units~~unit estimated fair ~~values~~value exceeded its book value by approximately ~~40% and~~ 42%~~, respectively.~~. As of ~~March 28,~~September 26, 2020, ~~$42.2 million and $462.7~~$473.3 million of goodwill was allocated to the ~~automotive sensors and~~ semiconductors reporting ~~units, respectively.~~unit. The ~~automotive sensors reporting unit is included within the Automotive segment and the~~ semiconductors reporting unit is included within the Electronics segment.

Risks Related to Market Conditions

While the Company has not historically or currently as of September 26, 2020 had significant credit risk on its accounts receivable, the impact of 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 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 ~~first~~third quarter of 2020 includes ~~$5.2~~$0.3 million ($1.6 million year-to-date) of ~~non-segment~~acquisition-related and integration charges ~~which included $4.0~~related to the IXYS acquisition and other contemplated acquisitions. In addition, there were $1.3 million ($40.9 million year-to-date) of restructuring, impairment and other charges, primarily related toemployee termination costs of $1.2 million ($4.6 million year-to-date), and other restructuring charges of $0.1 million ($0.2 million year-to-date), the goodwill impairment charge of $33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Automotive segment, and impairment charges of $2.2 million recorded in the first quarter associated with the announced consolidation of a manufacturing facility inwithin the Industrial ~~segment and~~segment.

The third quarter of 2019 includes $5.7 million ($17.9 million year-to-date) of non-segment charges, of which $2.5 million ($11.0 million year-to-date) of restructuring charges are primarily related to employee termination costs and other restructuring charges and ~~$1.2~~$3.2 million ($6.9 million year-to-date) of acquisition-related and integration charges are primarily related to the IXYS acquisition and other contemplated acquisitions.

The first quarter of 2019 includes $2.4 million of acquisition integration charges primarily related to the IXYS acquisition. In addition, there were $2.7 million of restructuring charges primarily related to employee termination costs.


	Third Quarter								First Nine Months
(in thousands)	2020		2019		Change		% Change		2020		2019		Change		% Change
Net sales	$	391,566	$	361,971	$	29,595	8.2	%	$	1,044,999	$	1,165,350	$	(120,351)	(10.3)	%
Gross profit	138,176		130,946		7,230		5.5	%	360,987		427,982		(66,995)		(15.7)	%
Operating expenses	73,618		83,779		(10,161)		(12.1)	%	263,629		267,508		(3,879)		(1.5)	%
Operating income	64,558		47,167		17,391		36.9	%	97,358		160,474		(63,116)		(39.3)	%
Income before income taxes	67,426		41,404		26,022		62.8	%	92,340		141,410		(49,070)		(34.7)	%
Income taxes	12,070		5,757		6,313		109.7	%	21,331		24,982		(3,651)		(14.6)	%
Net income	$	55,356	$	35,647	$	19,709	55.3	%	$	71,009	$	116,428	$	(45,419)	(39.0)	%

First Quarter
(in thousands) 2020 2019 Change
%
Change
Net sales $ 346,096
$ 405,500
$ (59,404 ) (14.6 )%
Gross profit 123,712
155,228
(31,516 ) (20.3 )%
Operating expenses 78,962
94,555
(15,593 ) (16.5 )%
Operating income 44,750
60,673
(15,923 ) (26.2 )%
Income before income taxes 35,499
46,439
(10,940 ) (23.6 )%
Income taxes 10,855
9,450
1,405
14.9 %
Net income $ 24,644
$ 36,989
$ (12,345 ) (33.4 )%

Net Sales

Net sales ~~decreased $59.4~~increased $29.6 million or ~~14.6%~~8.2% for the ~~first~~third quarter of 2020 compared to the ~~first~~third quarter of 2019 primarily due to higher volume in Electronics segment, and $4.4 million or 1.2% of favorable changes in foreign exchange rates.

Net sales decreased $120.4 million or 10.3% for the first nine months of 2020 compared to the first nine months of 2019 primarily due to lower volume driven by the disruption across the Electronics and Automotive segments due to temporary closures of manufacturing facilities in the first half of the fiscal year resulting from government directives due to the impact of

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COVID-19, lower volume across the Electronics segment from electronics distribution partners and end customers reducing excess 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 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$1.2 million or ~~0.8%~~0.1% of unfavorable changes in foreign exchange ~~rates, partially offset by higher volume in the Industrial segment.~~rates.

Gross Profit

Gross profit was ~~$123.7~~$138.2 million, or ~~35.7%~~35.3% of net sales, in the third quarter of 2020 compared to $130.9 million, or 36.2% of net sales, for the third quarter of 2019. The increase in gross profit is primarily due to higher volume in the Electronics segment, partially offset by higher freight, supplies and other costs due to the impact of COVID-19. The decrease in gross margin is primarily due to unfavorable price and product mix and changes in foreign exchange rates.

Gross profit was $361.0 million, or 34.5% of net sales, in the first ~~quarter~~nine months of 2020 compared to ~~$155.2~~$428.0 million, or ~~38.3%~~36.7% of net sales, infor the first ~~quarter~~nine months of 2019. The decrease in gross profit reflected lower volume across all segments. The decrease in gross margin is primarily due to lower volumes across the Electronics ~~segment,~~and Automotive segments, additional ~~costs associated with higher freight, supplies and other~~ costs associated with government-directed plant shutdowns and supply chain constraints, higher freight, supplies and other costs due to the impact of COVID-19, and unfavorable price and product mix.

Operating Expenses

Total operating expenses were ~~$79.0~~$73.6 million, or ~~22.8%~~18.8% of net sales, for the ~~first~~third quarter of 2020 compared to ~~$94.6~~$83.8 million, or ~~23.3%~~23.1% of net sales, for the ~~first~~third quarter of 2019. The decrease in operating expenses of ~~$15.6~~$10.2 million is primarily due to ~~global cost saving initiatives across all segments,~~lower research and development expenses of $6.7 million, a reduction in acquisition-related and integration charges of $2.9 million and reduced incentive compensation and travel expenses due to COVID-19.

Total operating expenses were $263.6 million, or 25.2% of net sales, for the first nine months of 2020 compared to $267.5 million, or 23.0% of net sales, for the first nine months of 2019. The decrease in operating expenses of $3.9 million is primarily due to lower research and development expenses of $21.6 million, lower incentive compensation, ~~lower~~ sales commissions and travel expenses due to COVID-19, and ~~lower~~a $5.3 million reduction in acquisition-related and integration charges, ~~of $1.2 million,~~ partially offset by the second quarter goodwill impairment charge of $33.8 million, or 3.2% of net sales, in the automotive sensors reporting unit within the Automotive segment and impairment charges of $2.2 million related to the Company’s first quarter announcement to consolidate a manufacturing facility within the Industrial segment.

Operating Income

Operating income was ~~$44.8~~$64.6 million, ~~a decrease~~an increase of ~~$15.9~~$17.4 million, or ~~26.2%~~36.9%, for the ~~first~~third quarter of 2020 compared to ~~$60.7~~$47.2 million for the third quarter of 2019. The increase is primarily due to higher gross margin in the Electronics segment and the lower operating expenses noted above. Operating margins increased from 13.0% in the third quarter of 2019 to 16.5% in the third quarter of 2020 driven by the factors mentioned above.

Operating income was $97.4 million, a decrease of $63.1 million, or 39.3%, for the first nine months of 2020 compared to $160.5 million for the first ~~quarter~~nine months of 2019. The decrease in operating income is primarily due to lower gross margin across ~~the Electronics segment, partially offset by the lower~~all segments and higher operating expenses noted above. Operating margins decreased from ~~15.0%~~13.8% in the first ~~quarter~~nine months of 2019 to ~~12.9%~~9.3% in the first ~~quarter~~nine months of 2020 driven by the factors mentioned above. The second quarter goodwill impairment charge of $33.8 million negatively impacted the operating margin by 3.2% for the first nine months of 2020.

Income Before Income Taxes

Income before income taxes was ~~$35.5~~$67.4 million, or ~~10.3%~~17.2% of net sales, for the third quarter of 2020 compared to $41.4 million, or 11.4% of net sales, for the third quarter of 2019. In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was primarily impacted by foreign exchange gains of $6.2 million during the three months ended September 26, 2020 compared to foreign exchange losses of $5.0 million, lower interest expense of $0.6 million, partially offset by lower interest income of $1.1 million and a reduction in investment gains of $1.0 million associated with our equity investments during the three months ended September 26, 2020 compared to the three months ended September 28, 2019.

Income before income taxes was $92.3 million, or 8.8% of net sales, for the first ~~quarter~~nine months of 2020 compared to ~~$46.4~~$141.4 million, or ~~11.5%~~12.1% of net sales, for the first ~~quarter~~nine months of 2019. ~~The decline in~~In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was ~~primarily driven be lower operating income discussed above. In addition, income before taxes was primarily~~ impacted by foreign exchange gains of $9.6 million during the nine months ended September 26, 2020 compared to foreign exchange losses of $5.6 million during the nine months ended

Table of Contents

September 28, 2019, impairment charges of ~~$2.8~~$3.1 million for certain other investments and a $2.6 million loss on the disposal of a business within the Electronics segment during ~~three~~the nine months ended ~~March~~September 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 ~~unrealized~~a $1.5 million increase in coal mining reserves, $1.5 million decreases in investment ~~losses of $2.3 million~~gains associated with our equity investments, and lower interest income of $1.0 million during the ~~three~~nine months ended ~~March 28,~~September 26, 2020 compared to ~~unrealized gains of $0.4 million during~~ the ~~three~~nine months ended ~~March 30, 2019.~~September 28, 2019

Income Taxes

Income tax expense for the third quarter of 2020 was ~~$10.9~~$12.1 million, or an effective tax rate of ~~30.6%~~17.9%, ~~for the first quarter of 2020~~ compared to income tax expense of ~~$9.5~~$5.8 million, or an effective tax rate of ~~20.3%~~13.9%, for the ~~first~~the third quarter of 2019. The effective tax rate for the third quarter of 2020 ~~period~~ is higher than the effective tax rate for the comparable 2019 ~~comparable~~ period, primarily due to the impact of the goodwill impairment charge of $33.8 million that was recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate, as well as a reduction in the forecasted income earned in lower tax jurisdictions in 2020 driven by the uncertainty resulting from the impact of COVID-19.

Income tax expense for the first nine months of 2020 was $21.3 million, or an effective tax rate of 23.1%, compared to income tax expense of $25.0 million, or an effective tax rate of 17.7%, for the first nine months of 2019. The effective tax rate for the first nine months of 2020 is higher than the effective tax rate for the comparable 2019 period, primarily due to the impact of the goodwill impairment charge of $33.8 million that was recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate, as well as 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 first nine months of 2020 is higher than the applicable U.S. statutory tax rate primarily due to the impact of the goodwill impairment charge of $33.8 million that was recorded in the second quarter of 2020, the substantial majority of which did not result in a tax benefit in the annual estimated effective tax rate, as well as the forecasted impact of non-U.S. losses and expenses with no tax benefit and the U.S. ~~GILTI~~global intangible low-taxed income tax provisions (in the 2019 comparable period the impact of these items was more than offset by the impact of income earned in lower tax jurisdictions)., offset in part by the impact of 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 ~~15,~~14, 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:


	First Quarter										Third Quarter								First Nine Months
(in thousands)	2020		2019		Change			% Change		(in thousands)	2020		2019		Change		% Change		2020		2019		Change		% Change
Electronics	$	214,189	$	265,394	$	(51,205	)	(19.3	)%	Electronics	$	255,349	$	227,252	$	28,097	12.4	%	$	692,809	$	752,199	$	(59,390)	(7.9)	%
Automotive	104,770		113,483		(8,713		)	(7.7	)%	Automotive	104,724		104,681		43		—	%	271,493		326,814		(55,321)		(16.9)	%
Industrial	27,137		26,623		514			1.9	%	Industrial	31,493		30,038		1,455		4.8	%	80,697		86,337		(5,640)		(6.5)	%
Total	$	346,096	$	405,500	$	(59,404	)	(14.6	)%	Total	$	391,566	$	361,971	$	29,595	8.2	%	$	1,044,999	$	1,165,350	$	(120,351)	(10.3)	%

Net sales ~~decreased $51.2~~increased $28.1 million, or ~~19.3%~~12.4%, in the ~~first~~third quarter of 2020 compared to the third quarter of 2019 primarily due to higher volume in the semiconductor and electronics products businesses and favorable changes in foreign exchange rates of $2.4 million.

Net sales decreased $59.4 million, or 7.9%, in the first ~~quarter~~nine months of 2020 compared to the first nine months of 2019 primarily due to lower volume ~~across all~~in the semiconductor and electronics products businesses ~~from electronics distribution partners and end customers reducing excess inventories,~~driven by the production disruption ~~from~~due to temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19, lower

volume from electronics distribution partners and end customers reducing excess inventories, and unfavorable changes in foreign exchange rates of ~~$1.7~~$0.6 million.

Net sales ~~decreased $8.7 million, or 7.7%,~~were flat in the ~~first~~third quarter of 2020 compared to the third quarter of 2019 as favorable changes in foreign exchange rates of $2.0 million and increased volume in auto sensor business were offset by decreased volume in the passenger car products and commercial vehicle businesses.

Net sales decreased $55.3 million, or 16.9%, in the first ~~quarter~~nine months of 2020 compared to the first nine months of 2019 due to decreased volume across all businesses driven by the production disruption due to temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19, a decline in global auto production ~~a reduction in~~driven by lower global end market demand and temporary closures of customer ~~demand late in the quarter due to the impact of COVID-19,~~manufacturing facilities, and unfavorable changes in foreign exchange rates of ~~$1.5~~$0.4 million.

Net sales increased by ~~$0.5~~$1.5 million, or ~~1.9%~~4.8%, in the ~~first~~third quarter of 2020 compared to the ~~first~~third quarter of 2019 primarily due to ~~higher~~the transfer of the temperature sensor product line totaling $2.3 million which was previously reported in the Electronics segment, partially offset by lower volume in the relay business.

Net sales decreased by $5.6 million, or 6.5%, in the first nine months of 2020 compared to the first nine months of 2019 primarily due to decreased volume across all businesses ~~partially offset~~driven by the production disruption due to temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19 in the first half of 2020, and unfavorable changes in foreign exchange rates of ~~$0.1 million.~~$0.2 million, partially offset by the transfer of the temperature sensor product line in the third quarter of 2020 previously reported in the Electronics segment.

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:

Net sales ~~decreased $31.9~~increased $28.2 million, or ~~18.5%~~17.7%, in the ~~first~~third quarter of 2020 compared to the third quarter of 2019. The increase in net sales was primarily due to higher volume across all businesses within the Electronics segment, and favorable changes in foreign exchange rates of $1.0 million.

Net sales decreased $20.9 million, or 4.1%, in the first ~~quarter~~nine months of 2020 compared to the first nine months of 2019. The decrease in net sales was primarily due to lower volume across all businesses within the Electronics segment and lower volume in the passenger car products business within the Automotive segment, and ~~automotive sensor~~unfavorable changes in foreign exchange rates of $1.1 million.

Net sales increased $1.0 million, or 0.8%, in the third quarter of 2020 compared to the third quarter of 2019 primarily due to higher volume in the electronics products business within the Electronics segment, partially offset by lower volume in the

commercial vehicle business within the Automotive segment and unfavorable changes in foreign exchange rates of $0.1 million.

Net sales decreased $62.8 million, or 15.8%, in the first nine months of 2020 compared to the first nine months of 2019 primarily due to lower volume across all segments driven by the production disruption due to temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19, lower volume across the Electronics segment from electronics distribution partners and end customers reducing excess inventories and production, lower volume in all businesses within the Automotive segment and unfavorable changes in foreign exchange rates of ~~$0.9 million~~.

Net sales ~~decreased $10.0~~increased $0.4 million, or ~~10.5%~~0.5%, in the ~~first~~third quarter of 2020 compared to the third quarter of 2019. The increase in net sales was primarily due to favorable changes in foreign exchange rates of $3.5 million and increased volume in auto sensor business within the Automotive segment, mostly offset by lower volume in the semiconductor business within the Electronics segment.

Net sales decreased $36.7 million, or 13.9%, in the first ~~quarter~~nine months of 2020 compared to the first nine months of 2019. The decrease in net sales was primarily due to lower volume ~~across all businesses~~in the semiconductor business within the Electronics segment, lower volume in ~~passenger car products and commercial vehicle~~all businesses within the Automotive segment, ~~and unfavorable~~partially offset by favorable changes in foreign exchange rates of ~~$2.3 million, partially offset by higher volume in automotive sensor business within the Electronics segment.~~$0.2 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~~$641.9 million as of ~~March 28,~~September 26, 2020, an increase of ~~$89.4~~$110.8 million as compared to December 28, 2019. As of ~~March 28,~~September 26, 2020, ~~$310.1~~$266.2 million of the Company's ~~$620.6~~$641.9 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 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 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 was 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 ~~$2.5~~$5.0 million of principal payments on the term loan ~~during~~before the ~~three months ended March 28, 2020.~~

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

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

As of September 26, 2020, the Company had no amount outstanding in letters of credit and had available $245.1 million of borrowing capacity under the Revolving Credit Facility based on financial covenants. At September 26, 2020, the Company was in compliance with all covenants under the Credit Agreement.

Further information regarding the Company’s credit agreement is provided in Note 8,7, Debt, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.

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 8,7, Debt, of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report.

The Company was in compliance with all covenants under the Credit Agreement and Senior Notes as of ~~March 28,~~September 26, 2020 and currently expects to remain in compliance based on management’s estimates of operating and financial results for 2020. As of ~~March 28,~~September 26, 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.

During the ~~first~~third quarter of 2020 the Company paid quarterly dividends of $11.7 million to the shareholders. On ~~April~~October 23, 2020, the Board of Directors of the Company declared a quarterly cash dividend of $0.48 per share, payable on ~~June 4,~~December 3, 2020 to stockholders of record as of ~~May 21,~~November 19, 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 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 ~~$45.3~~$164.3 million for the ~~three~~nine months ended ~~March 28,~~September 26, 2020, compared to ~~$30.9~~$160.9 million during the ~~three~~nine months ended ~~March 30,~~September 28, 2019. The increase in net cash provided by operating activities was primarily due to lower annual incentive payments and ~~inventory levels,~~favorable changes in net working capital partially offset by lower ~~earnings.~~earnings largely due to the impact of COVID-19.

Cash Flow from Investing Activities

Net cash used in investing activities was ~~$16.5~~$41.4 million for the ~~three~~nine months ended ~~March 28,~~September 26, 2020 compared to ~~$14.2~~$33.0 million during the ~~three~~nine months ended ~~March 30,~~September 28, 2019. Capital expenditures were ~~$16.6~~$41.5 million, representing an increase of ~~$2.5~~$3.1 million compared to 2019. During the nine months ended September 28, 2019, the Company received proceeds of $6.4 million from the sale of a property within the Industrial segment.

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 ~~of $31.3~~was $18.4 million for the ~~three~~nine months ended ~~March 30,~~September 26, 2020 compared to $135.5 million for the nine months ended September 28, 2019. During the ~~three~~nine months ended ~~March 28,~~September 26, 2020, the company borrowed $100.0 million from ~~the~~its 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 Credit Agreement to eliminate the $200.0 million unsecured term loan credit facility, with the remaining outstanding balance of $140.0 million repaid in full on April 3, 2020 through a new borrowing of $140.0 million under the recently amended revolving credit facility. The Company made payments of $60.0 million on the amended revolving credit facility during the third quarter of 2020. The Company made principal payments of $5.0 million and $7.5 million on the term loan during the nine months ended September 26, 2020 and September 28, 2019, respectively. For the ~~three~~nine months ended ~~March 28,~~September 26, 2020 and ~~March 30,~~September 28, 2019, the Company repurchased 175,110 and ~~79,916~~579,916 shares of its common stock totaling $22.9 million and ~~$13.6~~$95.0 million, respectively, but made payments of ~~$17.9~~$99.4 million related to settled share repurchases during the ~~three~~nine months ended ~~March 30,~~September 28, 2019. ~~The Company made payments of $2.5 million and $5.0 million on the term loan during the three months ended March 28, 2020 and March 30, 2019, respectively.~~ Additionally, dividends paid increased ~~$1.1~~$2.1 million from ~~$10.6~~$33.0 million in the ~~three~~nine months ended ~~March 30,~~September 28, 2019 to ~~$11.7~~$35.1 million for the ~~three~~nine months ended ~~March 28,~~September 26, 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"). 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, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program. The 2019 program expired on April 30, 2020 with 324,890 of authorized repurchases remaining. The Company ~~does not expect to repurchase shares in~~has suspended share repurchases for the ~~near future~~near-term due to the uncertainty of the impact and duration of ~~COVID-19.~~COVID-19 and to focus on other capital allocation priorities.

~~During~~The Company did not repurchase shares of its common stock during the three months ended ~~March~~September 26, 2020, and for the three months ended September 28, 2019, the Company repurchased 311,786 shares of its common stock totaling $49.5 million. For the nine months ended September 26, 2020 and September 28, 2019, the Company repurchased 175,110 and ~~79,916~~579,916 shares of its common stock totaling $22.9 million and ~~$13.6~~$95.0 million, respectively.

Off-Balance Sheet Arrangements

As of ~~March 28,~~September 26, 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 28, 2019. During the ~~three~~nine months ended ~~March 28,~~September 26, 2020, there were no significant changes in the application of critical accounting policies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


	Three Months Ended							Nine Months Ended
(in thousands)	March 28, 2020			March 30, 2019			(in thousands)	September 26, 2020		September 28, 2019
OPERATING ACTIVITIES							OPERATING ACTIVITIES
Net income	$	24,644		$	36,989		Net income	$	71,009	$	116,428
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	13,821			13,088			Depreciation	41,953		38,988
Amortization of intangibles	9,981			10,191			Amortization of intangibles	29,912		30,068

Deferred revenue	(145		)	—			Deferred revenue	(438)		(228)

Impairment charges	2,237			—			Impairment charges	36,078		322

Stock-based compensation	2,965			3,966			Stock-based compensation	14,544		15,738
Loss on investments and other assets	2,604			2,810
(Gain) loss on investments and other assets							(Gain) loss on investments and other assets	(1,200)		559
Deferred income taxes	616			(72		)	Deferred income taxes	1,567		(203)
Other	3,547			5,393			Other	(8,549)		8,267
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Trade receivables	(9,457		)	(5,800		)	Trade receivables	(29,362)		2,781
Inventories	6,667			(3,250		)	Inventories	(1,611)		18,102
Accounts payable	(3,964		)	(8,499		)	Accounts payable	6,661		(29,453)

Accrued liabilities and income taxes	(7,012		)	(27,170		)	Accrued liabilities and income taxes	(2,095)		(44,241)
Prepaid expenses and other assets	(1,225		)	3,273			Prepaid expenses and other assets	5,787		3,735
Net cash provided by operating activities	45,279			30,919			Net cash provided by operating activities	164,256		160,863

INVESTING ACTIVITIES							INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	—			(775		)	Acquisitions of businesses, net of cash acquired	0		(775)

Purchases of property, plant, and equipment	(16,586		)	(14,076		)	Purchases of property, plant, and equipment	(41,536)		(38,397)
Net proceeds from sale of property, plant and equipment	50			607			Net proceeds from sale of property, plant and equipment	148		6,212
Net cash used in investing activities	(16,536		)	(14,244		)	Net cash used in investing activities	(41,388)		(32,960)

FINANCING ACTIVITIES							FINANCING ACTIVITIES
Proceeds of revolving credit facility	100,000			—			Proceeds of revolving credit facility	240,000		0
Payments of revolving credit facility							Payments of revolving credit facility	(60,000)		0

Payments of term loan	(2,500		)	(5,000		)	Payments of term loan	(145,000)		(7,500)
Net proceeds related to stock-based award activities	2,956			2,198			Net proceeds related to stock-based award activities	6,437		4,412
Purchases of common stock	(22,927		)	(17,906		)	Purchases of common stock	(22,927)		(99,387)
Debt issuance costs							Debt issuance costs	(1,786)		0
Cash dividends paid	(11,725		)	(10,625		)	Cash dividends paid	(35,100)		(32,990)
Net cash provided by (used in) financing activities	65,804			(31,333		)
Net cash used in financing activities							Net cash used in financing activities	(18,376)		(135,465)
Effect of exchange rate changes on cash and cash equivalents	(5,111		)	1,539			Effect of exchange rate changes on cash and cash equivalents	6,259		(6,114)
Increase (decrease) in cash and cash equivalents	89,436			(13,119		)	Increase (decrease) in cash and cash equivalents	110,751		(13,676)
Cash and cash equivalents at beginning of period	531,139			489,733			Cash and cash equivalents at beginning of period	531,139		489,733
Cash and cash equivalents at end of period	$	620,575		$	476,614		Cash and cash equivalents at end of period	$	641,890	$	476,057
Supplementary Cash Flow Information							Supplementary Cash Flow Information
Cash paid during the period for interest	$	7,354		$	8,011		Cash paid during the period for interest	$	17,228	$	17,872

Capital expenditures, not yet paid	$	5,832		$	—		Capital expenditures, not yet paid	$	6,267	$	8,978



(in thousands)	March 28, 2020			December 28, 2019
Raw materials	$	75,202		$	76,732
Work in process	84,030			84,561
Finished goods	100,415			110,388
Inventory Reserves	(32,365		)	(34,174		)
Total	$	227,282		$	237,507


(in thousands)	September 26, 2020		December 28, 2019
Raw materials	$	81,849	$	76,732
Work in process	90,494		84,561
Finished goods	105,425		110,388
Inventory Reserves	(33,936)		(34,174)
Total	$	243,832	$	237,507


	As of September 26, 2020
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	9,913	$	1,895	$	8,018
Patents, licenses and software	133,737		$	88,142	$	45,595
Distribution network	43,547		38,107		5,440
Customer relationships, trademarks, and tradenames	365,300		128,194		237,106

Total	$	552,497	$	256,338	$	296,159


	Three months ended September 28, 2019								Nine months ended September 28, 2019
(in thousands)	Electronics		Automotive		Industrial		Total		Electronics		Automotive		Industrial		Total
Employee terminations	$	655	$	109	$	49	$	813	$	4,153	$	3,955	$	770	$	8,878
Other restructuring charges	128		1,150		124		1,402		141		1,240		374		1,755
Total restructuring charges	783		1,259		173		2,215		4,294		5,195		1,144		10,633
Impairment	0		322		0		322		0		322		0		322

Total	$	783	$	1,581	$	173	$	2,537	$	4,294	$	5,517	$	1,144	$	10,955


	Three Months Ended September 26, 2020								Nine Months Ended September 26, 2020
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	108,253	$	0	$	0	$	108,253	$	285,697	$	0	$	0	$	285,697
Electronics – Semiconductor	147,096		0		0		147,096		407,112		0		0		407,112
Passenger Car Products	0		52,691		0		52,691		0		135,645		0		135,645
Automotive Sensors	0		26,093		0		26,093		0		64,166		0		64,166
Commercial Vehicle Products	0		25,940		0		25,940		0		71,682		0		71,682
Industrial Products	0		0		31,493		31,493		0		0		80,697		80,697
Total	$	255,349	$	104,724	$	31,493	$	391,566	$	692,809	$	271,493	$	80,697	$	1,044,999



	Three Months Ended March 28, 2020
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	84,598	$	—	$	—	$	84,598
Electronics – Semiconductor	129,591		—		—		129,591
Passenger Car Products	—		52,645		—		52,645
Automotive Sensors	—		24,174		—		24,174
Commercial Vehicle Products	—		27,951		—		27,951
Industrial Products	—		—		27,137		27,137
Total	$	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


	As of March 28, 2020							As of December 28, 2019
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value		(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	9,545	$	1,755	$	7,790	Land use rights	$	9,649	$	1,730	$	7,919
Patents, licenses and software	129,380		$	80,506	$	48,874	Patents, licenses and software	131,164		78,828		52,336
Distribution network	43,076		36,560		6,516		Distribution network	43,239		36,163		7,076
Customer relationships, trademarks, and tradenames	357,188		111,975		245,213		Customer relationships, trademarks, and tradenames	360,534		106,618		253,916
Total	$	539,189	$	230,796	$	308,393	Total	$	544,586	$	223,339	$	321,247



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



Leases cost (in thousands)	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	$	117	$	153
Variable lease expenses	Cost of sales, SG&A expenses	318		194
Operating lease rent expenses	Cost of sales, SG&A expenses	2,173		2,193
Total operating lease costs	Cost of sales, SG&A expenses	$	2,608	$	2,540



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	6,620
2022	5,341
2023	3,590
2024	3,177
2025 and thereafter	498
Total lease payments	$	25,382

Present value of lease liabilities	$	23,033



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


	Fair Value Measurements Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash Equivalents	$	92,472	$	0	$	0	$	92,472
Investments in equity securities	15,042		0		0		15,042
Mutual funds	11,692		0		0		11,692


	For the Three Months Ended March 28, 2020						For the Three Months Ended March 30, 2019							For the Three Months Ended September 26, 2020						For the Three Months Ended September 28, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC		(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party	$	0.4	$	—	$	—	$	0.1	$	—	$	—	Sales to related party	$	0.4	$	0	$	0	$	0.2	$	0	$	0
Purchase material/ service from related party	0.2		—		1.8		0.8		0.1		1.5
Purchase material/service from related party													Purchase material/service from related party	0.8		0		2.4		0.8		0.1		1.7

														For the Nine Months Ended September 26, 2020						For the Nine Months Ended September 28, 2019
(in millions)													(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Sales to related party													Sales to related party	$	1.1	$	0	$	0	$	0.4	$	0	$	0
Purchase material/service from related party													Purchase material/service from related party	1.8		0		5.8		2.4		0.3		5.5

	March 28, 2020						December 28, 2019							September 26, 2020						December 28, 2019
(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC		(in millions)	Powersem		EB Tech		ATEC		Powersem		EB Tech		ATEC
Accounts Receivable balance	$	0.1	$	—	$	—	$	—	$	—	$	—	Accounts Receivable balance	$	0.1	$	0	$	0	$	0	$	0	$	0
Accounts Payable balance	0.1		—		—		0.2		—		0.1		Accounts Payable balance	0.1		0		0.1		0.2		0		0.1


•	~~Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories,~~


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


	First three Months							First Nine Months
(in thousands)	2020			2019			(in thousands)	2020		2019
Net cash provided by operating activities	$	45,279		$	30,919		Net cash provided by operating activities	$	164,256	$	160,863
Net cash used in investing activities	(16,536		)	(14,244		)	Net cash used in investing activities	(41,388)		(32,960)
Net cash provided by (used in) financing activities	65,804			(31,333		)
Net cash used in financing activities							Net cash used in financing activities	(18,376)		(135,465)
Effect of exchange rate changes on cash and cash equivalents	(5,111		)	1,539			Effect of exchange rate changes on cash and cash equivalents	6,259		(6,114)
Increase (decrease) in cash and cash equivalents	89,436			(13,119		)	Increase (decrease) in cash and cash equivalents	110,751		(13,676)
Cash and cash equivalents at beginning of period	531,139			489,733			Cash and cash equivalents at beginning of period	531,139		489,733
Cash and cash equivalents at end of period	$	620,575		$	476,614		Cash and cash equivalents at end of period	$	641,890	$	476,057



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


		Exhibit	Description

		10.1*	Amended and Restated Littelfuse Deferred Compensation Plan for Non-Employee Director s. ++

		~~Exhibit~~	~~Description~~

~~10.1~~31.1*	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	The following financial information from LITTELFUSE, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~March 28,~~September 26, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Net Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders Equity , (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.

		104	The cover page from this Quarterly Report on Form 10-Q for the quarter ended ~~March 28,~~September 26, 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.



	Littelfuse, Inc.

	By:	/s/ Meenal A. Sethna
		Meenal A. Sethna
	Executive Vice President and Chief Financial Officer

Date: ~~April 29,~~October 28, 2020	By:	/s/ Jeffrey G. Gorski
		Jeffrey G. Gorski
	Vice President and Chief Accounting Officer