2021 Annual Report
Dear Fellow Shareholders,
2021 was truly an exceptional year for Littelfuse. Day in and day out, Littelfuse associates around the
world worked hard to support one another and our key stakeholders. The superior execution of our teams
drove outstanding results while serving our customers across industrial, transportation and electronics end
markets. We grew our company by winning significant new business and successfully navigating supply
chain challenges. As a result, we delivered record financial performance and made strong progress
on our strategic business initiatives. Compared to 2020, we achieved:
• Annual revenue of $2.1 billion, up 44 percent
• Adjusted operating margin of 19.1 percent1, 480 basis points higher
• Adjusted diluted EPS of $13.192, an increase of 106 percent
• Cash flow from operating activities of $373 million, up 45 percent
Over the last few years we have strategically positioned our business within the long-term structural growth
themes of sustainability, connectivity, and safety. We have proven our commitment to being our customers’
supplier of choice by expanding our global capabilities and product portfolio. Our results and successes
reflect the strong execution from our global team and the power of our overall strategy shown below.
Throughout the year, we advanced our strategic business initiatives, driving content and share gains in
high-growth markets, both organically and through acquisitions.
• Organically, we built momentum with our investments for best-in-class growth. We increased
our customer-driven innovation, digital presence, eMobility resources and capabilities.
• We completed two strategic acquisitions, adding approximately $300 million in annualized
sales, which will sustain and enhance our long-term organic growth.
Within industrial end markets, we partnered with customers on sustainability and safety-related
applications and captured new business in renewable energy and Industry 4.0 applications. We delivered
innovative new products to meet tighter safety requirements for food and beverage, and general industrial
applications. In addition, we strengthened our product offerings with the acquisition of Hartland Controls
in January 2021. This acquisition accelerated our growth in the heating, ventilation, air conditioning, and
refrigeration (HVAC/R) end markets.
Turning to transportation end markets, we expanded our eMobility investments to support electrification
with OEMs and Tier 1s. For passenger vehicles, we captured design wins within battery management
systems for EVs, on-vehicle charging and EV charging infrastructure applications. We also secured
automotive electronics wins on infotainment and telematic systems, and advanced safety systems. In
commercial vehicles, we secured design wins across electric trucks and buses, material handling and
agricultural equipment markets. We more than doubled the size of our commercial vehicle business with
our acquisition of Carling Technologies in November 2021. This acquisition significantly expands our
technology offerings, strengthens our engineering, design, and test capabilities, and enables critical scale.
2021 Annual Report
Across electronics end markets, we leveraged our differentiated and expansive go-to-market strategy.
We captured business wins through our broad distribution channel and OEM partnerships, from continued
content growth across appliances and building and home automation, battery management systems within
tablets and notebook computers, and 5G infrastructure. Data centers and cloud storage also continued to
be a major source of growth as online gaming and streaming services drove increased demand. In addition,
we accelerated advancements in our digital presence to meet evolving user expectations and hybrid work
requirements.
Our organic growth from all of these efforts, coupled with our strategic acquisitions that expand our
presence in higher growth markets, position us well for continued success. One year into our current five-
year growth strategy, we are well on our way to delivering sustained double-digit revenue growth, best-in-
class profitability, and top-tier shareholder returns.
Finally, I would like to highlight our commitment to sustainability. Our first annual sustainability report,
published in October 2021, communicates our progress.
• Environmentally, we are committed to conducting our operations in a responsible manner and all
of our manufacturing locations are ISO 14001 certified to help us monitor our impact. We also set
a goal to achieve a greenhouse gas reduction of 38 percent by 2035, and we continue to invest in
programs to support our energy conservation initiatives. Further, our core products enable our
customers’ applications that are focused on a more sustainable environment.
• Socially, we have programs in place to ensure the health, wellness and safety of our global
associates and have launched key initiatives around diversity, talent development and community
involvement. We have a zero-injury workplace goal, and are committed to improving our female
representation in leadership positions.
• From a governance perspective, the Nominating and Governance Committee of our Board of
Directors provides oversight of our Sustainability Program. Our Leadership Team has responsibility
for the development and execution of our environmental, social, and governance programs, and
for establishing goals and key performance indicators in these areas for our business units and
corporate functions. In addition, we have strong global ethics and compliance policies, training
programs, and procedures and controls around data security and privacy. Our Board of Directors
is comprised of a diverse group of members that provide deep experience in our business and end
markets, as well as fresh perspectives.
We recognize the long-term value a robust environmental, social, and governance (ESG) strategy can add
to our business and look forward to continuing to share our progress through the publication of annual
sustainability reports.
We enter 2022 well-positioned to deliver continued profitable growth and value for all stakeholders.
This year represents our 95th anniversary as a successful, global company. I am truly proud of our global
leadership and growth over the years, and the strong reputation we have built. Notably, we were recently
recognized as one of America’s Best Mid-Sized Companies in 2022 by Forbes magazine based on
our financial performance and total shareholder return during 2021 and over the last five years. This
acknowledgment highlights the great teamwork and execution by our associates around the world and their
focus on delivering the highest levels of quality and service for our customers — everywhere, every day.
In closing, thank you for your ongoing support of our company as we continue to execute our growth
strategy.
Dave Heinzmann
President and Chief Executive Officer
2021 Annual Report
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 (“PSLRA”) - The statements contained in the letter to shareholders and the other sections of this report and in the Company’s Annual Report
on Form 10-K that are not historical facts are intended to constitute “forward-looking statements” entitled to the safe-harbor provisions of the PSLRA.
These statements may involve risks and uncertainties, including, but not limited to, risks relating to the severity and duration of the COVID-19 pandemic
and the measures taken in response thereto and the effects of those items on the Company’s business; product demand and market acceptance;
economic conditions; the impact of competitive products and pricing; product quality problems or product recalls; capacity and supply difficulties or
constraints; coal mining exposures reserves; cybersecurity matters; failure of an indemnification for environmental liability; exchange rate fluctuations;
commodity price fluctuations; the effect of the Company’s accounting policies, labor disputes, restructuring costs in excess of expectations, pension plan
asset returns less than assumed, and integration of acquisitions; and uncertainties related to political and regulatory changes and other risks that may
be detailed in “Item 1A, Risk Factors” in the Form 10-K and in the Company’s other Securities and Exchange Commission filings.
A reconciliation of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with
GAAP is set forth on the following page:
1Adjusted operating margin excludes acquisition-related and integration costs, certain purchase accounting inventory adjustments, restructuring,
impairment and other charges, and gain on sale of fixed assets, as applicable.
2Adjusted diluted EPS reflects impact of certain non-GAAP adjustments.
LITTELFUSE, INC.
GAAP TO NON-GAAP RECONCILIATION
(In millions of USD except per share amounts unaudited)
Adjusted operating margin reconciliation
Net sales
GAAP operating income
Add back non-GAAP adjustments to operating income (see below)
Adjusted operating income
Adjusted operating margin
Non-GAAP EPS reconciliation
GAAP diluted EPS
EPS impact of Non-GAAP adjustments (see below)
Adjusted diluted EPS
Non-GAAP adjustments - (income)/expense
Acquisition-related and integration costs
Purchase accounting inventory adjustments
Restructuring, impairment and other charges
Gain on sale of fixed assets
Non-GAAP adjustments to operating income
Other expense, net
Non-operating foreign exchange loss (gain)
Non-GAAP adjustments to income before income taxes
Income taxes
Non-GAAP adjustments to net income
Total EPS impact
2021
$ 2,079.9
385.6
2020
$ 1,445.7
162.4
44.0
$ 206.4
12.6
398.2
19.1 %
14.3 %
2021
2020
11.38 $
1.81
13.19 $
5.29
1.11
6.40
2021
2020
7.0 $
8.4
2.2
(5.0)
12.6
21.4
17.2
51.2
6.0
45.2 $
2.3
—
41.7
—
44.0
2.1
(14.9)
31.2
3.9
27.3
1.81 $
1.11
$
$
$
$
$
$
NON-GAAP FINANCIAL MEASURES
The information included in the letter to shareholders includes the non-GAAP financial measures of adjusted operating
margin and adjusted diluted earnings per share. These non-GAAP financial measures exclude the effect of certain
expenses and income not related directly to the underlying performance of our fundamental business operations. The
company believes that adjusted operating margin and adjusted diluted earnings per share provide useful information to
investors regarding its operational performance because they enhance an investor’s overall understanding of our core
financial performance and facilitate comparisons to historical results of operations, by excluding items that are not related
directly to the underlying performance of our fundamental business operations or were not part of our business operations
during a comparable period. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP
financial measures is included herein. The company believes that these non-GAAP financial measures are commonly
used by financial analysts and others in the industries in which we operate, and thus further provide useful information to
investors. Management additionally uses these measures when assessing the performance of the business and for
business planning purposes. Note that our definitions of these non-GAAP financial measures may differ from those
terms as defined or used by other companies.
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
☒
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Mark one)
for the fiscal year ended January 01, 2022
Or
☐
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the transition
period from to
Commission file number 0-20388
LITTELFUSE, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
36-3795742
(I.R.S. Employer Identification No.)
8755 West Higgins Road Suite 500
Chicago, Illinois 60631
(Address of principal executive offices)
773-628-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange On Which Registered
Common Stock, $0.01 par value
LFUS
NASDAQ Global Select MarketSM
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ 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 emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of 24,616,682 shares of voting stock held by non-affiliates of the registrant was approximately $6,125,123,061 based on the last reported sale
price of the registrant’s Common Stock as reported on the NASDAQ Global Select MarketSM on June 26, 2021.
As of February 11, 2022, the registrant had outstanding 24,689,579 shares of Common Stock, net of Treasury Shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Littelfuse, Inc. Proxy Statement for the 2022 Annual Meeting of Stockholders (the “Proxy Statement”) are incorporated by reference into Part III of this
Form 10-K.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules.
Form 10-K Summary
Schedule II – Valuation and Qualifying Accounts and Reserves
Signatures
Exhibit Index
Page
3
3
11
17
17
17
18
19
21
21
41
42
85
85
86
87
87
89
89
89
90
90
91
92
93
2
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K that are not historical facts are intended to constitute
“forward-looking statements” entitled to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995
(“PSRLA”). The Company cautions that forward-looking statements, which speak only as of the date they are made, are subject
to risks, uncertainties and other factors, and actual results and outcomes may differ materially from those indicated or implied
by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, risks and
uncertainties relating to general economic conditions; the severity and duration of the coronavirus disease 2019 ("COVID-19")
pandemic and the measures taken in response thereto and the effects of those items on the Company’s business; product
demand and market acceptance; economic conditions; the impact of competitive products and pricing; product quality problems
or product recalls; capacity and supply difficulties or constraints; coal mining exposures reserves; cybersecurity matters; failure
of an indemnification for environmental liability; exchange rate fluctuations; commodity price fluctuations; the effect of the
Company's accounting policies; labor disputes; restructuring costs in excess of expectations; pension plan asset returns less than
assumed; uncertainties related to political or regulatory changes; integration of acquisitions may not be achieved in a timely
manner, or at all; and other risks that may be detailed in Item 1A. "Risk Factors" below and in the Company’s other Securities
and Exchange Commission filings.
AVAILABLE INFORMATION
The Company is subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended and
as a result, are obligated to file annual, quarterly, and current reports, proxy statements, and other information with the United
States Securities and Exchange Commission (“SEC”). The Company makes these filings available free of charge on its website
(http://investor.littelfuse.com) as soon as reasonably practicable after it electronically files them with, or furnish them to, the
SEC. Information on the Company’s website does not constitute part of this Annual Report on Form 10-K. In addition, the SEC
maintains a website (http://www.sec.gov) that contains the Company’s annual, quarterly, and current reports, proxy and
information statements, and other information the Company electronically files with, or furnishes to, the SEC. The Company’s
website and the information contained therein or connected thereto are not incorporated into this Annual Report on Form 10-K.
ITEM 1. BUSINESS.
GENERAL
PART I
Littelfuse, Inc., was incorporated under the laws of the State of Delaware in 1991. References herein to the “Company,” “we,”
“our” or “Littelfuse” refer to Littelfuse, Inc. and its subsidiaries. References herein to “2021”, “fiscal 2021” or “fiscal year
2021” refer to the fiscal year ended January 1, 2022. References herein to “2020”, “fiscal 2020” or “fiscal year 2020” refer to
the fiscal year ended December 26, 2020. References herein to “2019”, “fiscal 2019” or “fiscal year 2019” refer to the fiscal
year ended December 28, 2019. The Company operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest
to December 31. Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly
comparable to the prior 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this
convention, the fiscal year 2021 contained 53 weeks while each of fiscal 2020 and fiscal 2019 contained 52 weeks.
OVERVIEW
Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer
world. Across more than 15 countries, and with approximately 17,000 global associates, the Company partners with customers
to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, the Company’s products are found in
a variety of industrial, transportation and electronics end markets – everywhere, every day.
Segments
The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial. Within these
segments, the Company designs, manufactures and sells components, modules and subassemblies to empower the long-term
structural themes of sustainability, connectivity and safety. Over the last decade the Company has positioned itself within the
center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable,
connected, and safer world. The ever-increasing complexity of applications surrounding these themes continues to drive greater
demand for the Company’s reliable products and a higher level of product content. As a result, the Company has evolved its
presence across the industrial, transportation and electronics end markets it serves, which is relatively balanced. With a long list
of target applications within each primary end market, the Company believes its balanced approach is healthy for the long-term
sustainability of its business, increases diversification and creates additional growth opportunities. Across electronics end
3
markets, product demand is largely driven by the amplified themes of electrification, energy efficiency, automation, and
connectivity. In transportation end markets, including passenger and commercial vehicles, the ongoing electronification and
electrification of applications is driving increased product demand. Across industrial end markets, product demand is driven by
a more sustainable ecosystem. For example, solar and wind energy, and energy storage systems that enable lower carbon
emissions, the ongoing proliferation of electric vehicles and charging stations, more efficient climate control units, increasing
requirements for electrical safety, and the rising demand for factory and process automation. For segment and geographical
information and consolidated net sales and operating income see Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations and Note 16, Segment Information, of the Notes to Consolidated Financial Statements
included in this Annual Report.
•
•
•
Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse
accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”)
suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as
discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon
and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate
bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial
motor drives and power conversion, automotive electronics, electric vehicle and related infrastructure, power supplies,
data centers and telecommunications, medical devices, alternative energy and energy storage, building and home
automation, appliances, and mobile electronics.
Transportation Segment: Formerly known as Automotive segment. The term “Transportation” represents a more
comprehensive description of the Company’s broad range of products, and the applications and end markets it serves.
Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment
manufacturers (“OEMs”), Tier-one suppliers and parts and aftermarket distributors in passenger vehicle, heavy duty
truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets.
Passenger vehicle products are used in internal combustion engine, hybrid and electric vehicles including blade fuses,
battery cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and sensor products designed to
monitor the occupant’s safety and environment as well as the vehicle’s powertrain. Commercial vehicle products
include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving
a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine.
Industrial Segment: Consists of industrial circuit protection (industrial fuse), industrial controls (protection relay,
contactors, transformers) and temperature sensors for use in various applications such as renewable energy and energy
storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO,
mining and industrial automation.
Strategy
In February 2021, the Company announced its new five-year strategic plan which builds upon its strengths from its previous
strategy. The Company is well-positioned within the center of the global structural growth themes of sustainability,
connectivity, and safety, which will continue to drive increased demand for the company’s products across the transportation,
industrial and electronics end markets that it serves. The Company is targeting average annual organic sales growth of 5-7
percent and average annual sales growth from strategic acquisitions of 5-7 percent. The Company expects to achieve this
through content and share gains, expanded presence in high-growth markets and geographies, and targeting high-growth and
niche applications. The Company will continue to invest in its people, as well as customer-driven innovation, eMobility, and its
digital infrastructure to improve customer experience, and its operating systems. It plans to capitalize on growth opportunities
where technologies and applications are converging across its product segments, while continuing to acquire and integrate
businesses that fit its strategic focus areas.
Recent Acquisitions
•
•
Carling Technologies: On November 30, 2021, the Company acquired Carling Technologies (“Carling”), a leader in
switching, circuit protection and power distribution technologies with a strong global presence in commercial
transportation, communications infrastructure and marine markets. At the time of acquisition, Carling had annualized
sales of approximately $170 million. The purchase price for Carling was $315 million subject to change for working
capital adjustments and the operations of Carling are included in the Transportation segment.
Hartland Controls: On January 28, 2021, the Company acquired Hartland Controls ("Hartland"), a manufacturer and
leading supplier of electrical components used primarily in heating, ventilation, air conditioning ("HVAC") and other
industrial and control systems applications. At the time of acquisition, Hartland had annualized sales of approximately
4
•
•
$70 million. The purchase price for Hartland was $111.0 million and the operations of Hartland are included in the
Industrial segment.
IXYS Corporation: On January 17, 2018, the Company acquired IXYS corporation ("IXYS"), a global pioneer in the
power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors
across the industrial, communications, consumer and medical markets. IXYS had a broad customer base, serving more
than 3,500 customers through its direct sales force and global distribution partners. The purchase price for IXYS was
$856.5 million, which included consideration of cash, Littelfuse common stock, and the value of converted, or cash
settled IXYS equity awards. The operations of IXYS are included in the Electronics segment.
U.S. Sensor: On July 7, 2017, the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for $24.3
million. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistor probes and
assemblies across a number of industrial end markets. The operations of U.S. Sensor are included in the Industrial
segment.
• Monolith Semiconductor Inc.: On February 28, 2017, pursuant to a Securities Purchase Agreement between the
Company and the stockholders of Monolith Semiconductor Inc. (“Monolith”), a U.S. start-up Company developing
silicon carbide technology, the Company increased its investment in Monolith by acquiring approximately 62% of the
outstanding common stock of Monolith for $15.0 million. During 2018, the Company acquired the remaining
outstanding stock of Monolith for $9.0 million based on Monolith meeting certain technical and sales targets, and now
owns 100% of Monolith. The operations of Monolith are included in the Electronics segment.
Sales and Operations
The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial.
Net sales by segment for the periods indicated are as follows:
(in millions)
Electronics
Transportation
Industrial
Total
2021
Fiscal Year
2020
$
$
1,300.7 $
528.1
251.1
2,079.9 $
937.7 $
395.8
112.2
1,445.7 $
2019
961.1
428.5
114.3
1,503.9
The Company operates in three geographic regions: Asia-Pacific, the Americas, and Europe. The Company designs,
manufactures products and sells to customers in all three regions.
Net sales in the Company’s three geographic regions, based upon the shipped-to destination, are as follows:
(in millions)
Asia-Pacific
Americas
Europe
Total
2021
Fiscal Year
2020
$
$
955.7 $
694.3
429.9
2,079.9 $
670.5 $
457.8
317.4
1,445.7 $
2019
656.8
508.4
338.7
1,503.9
The Company’s products are sold worldwide through distributors, direct sales force and manufacturers’ representatives in
certain regions. For the fiscal year 2021, approximately 69% of the Company’s net sales were to customers outside the United
States (“U.S.”), including approximately 30% to China.
The Company manufactures many of its products on fully integrated manufacturing and assembly equipment. The Company
maintains product quality through a Global Quality Management System with most manufacturing sites certified under ISO
9001:2000. In addition, several of the Littelfuse manufacturing sites are also certified under IATF 16949 and ISO 14001.
5
Additional information regarding the Company’s sales by geographic area and long-lived assets in different geographic areas is
in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
BUSINESS ENVIRONMENT
Electronics Segment
The Company designs, manufactures and sells components and modules to empower the long-term mega sustainability themes.
Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to
enable its customers’ applications focused on a more sustainable, connected, and safer world. The ever-increasing complexity
of applications surrounding these themes continues to drive greater demand for the Company’s reliable products and a higher
level of product content. As a result, the Company has evolved its presence across the industrial, transportation and electronics
end markets it serves.
Circuit protection technologies in the Electronics Segment are designed to protect against harmful occurrences like voltage
spikes, short circuits, power surges and electrostatic discharge. Products include fuses and fuse accessories, PTC resettable
fuses, ESD suppressors, varistors, gas discharge tubes, and semiconductor products such as discrete TVS diodes, TVS diode
arrays, and protection thyristors.
The Company also offers a wide range of power control products used to convert and regulate energy and safely and efficiently
control power across a broad spectrum of industrial applications like renewable energy and energy storage systems, motor
drives and power conversion. Products include a comprehensive portfolio of semiconductor components and modules including
thyristors, MOSFETs, rectifiers and fast recovery diodes, IGBTs and wide band gap devices. The 2018 acquisition of IXYS
expanded the Company's power semiconductor portfolio in medium and high-power industrial applications and technology
expertise. The Company expects to continue to diversify and expand its presence within the industrial market, leveraging the
strong IXYS industrial OEM customer base.
As products become increasingly sophisticated, smarter and more connected, the need for complex sensor technologies
continues to grow. Sensor products in the Electronics Segment are used in a wide variety of applications including appliances,
building and home automation, industrial controls, and commercial vehicles.
Transportation Segment
The Company is a primary supplier of fuses and circuit protection technologies to global automotive OEMs, through sales made
to Tier One automotive suppliers, main-fuse box, and wire harness manufacturers that incorporate the fuses into their products,
as well as automotive component parts manufacturers, and automotive parts distributors. The Company also sells its fuses in the
replacement parts market, with its products being sold through merchandisers, discount stores, and service stations, as well as
under private label by national firms.
Passenger vehicle products are used in internal combustion engine, hybrid and electric vehicles including blade fuses, battery
cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and sensor products designed to monitor the
occupant’s safety and environment as well as the vehicle’s powertrain.
The Company’s commercial vehicle business includes a variety of products including power distribution modules and units,
low and high current switches, circuit breakers, relays, battery management products, ignition key switches, and trailer
connectors. These products are used in applications serving a number of end markets, including heavy-duty truck, construction,
agriculture, material handling and marine. Products are sold directly to a mix of OEMs, Tier One suppliers, aftermarket
channels, as well as through general distribution. The acquisition of Carling Technologies significantly expanded the
Company's switching, circuit protection and power distribution product portfolios. The Company expects to continue to expand
its presence within transportation end markets, leveraging its strong OEM, Tier One and distributor customer base and go-to-
market strength, and by continuing to expand its product portfolio through organic and inorganic investments.
Industrial Segment
The Company designs and sells a broad range of power fuses and holders, protection relays and controls, temperature sensors
and other circuit protection products, contactors and transformers, for use in various industrial applications such as renewable
energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential
construction, MRO, mining and industrial automation. These products are used to protect personnel and equipment from
excessive currents, over voltages, and electrical shock hazards.
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Products are sold direct to OEMs, and through electrical distributors and electronics distribution channels. The 2021 acquisition
of Hartland expanded the Company’s contactors and transformers product portfolios. The Company expects to continue to
expand its presence within industrial end markets, leveraging its strong customer base, and go-to-market strength, and by
continuing to expand its product portfolio through organic and inorganic investments.
PRODUCT DESIGN AND DEVELOPMENT
The Company employs scientific, engineering, and other personnel to continually improve its existing product lines and to
develop new products at its research, product design, and development (“R&D”) and engineering facilities with primary
locations in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Taiwan (China), United Kingdom ("U.K."), and the
U.S. The Company maintains a staff of engineers, chemists, material scientists and technicians whose primary responsibility is
to design and develop new products.
Proposals for the development of new products are initiated primarily by sales, marketing, and product management personnel
with input from customers. The entire product development process usually ranges from a few months to a few years based on
the complexity of development, with continuous efforts to reduce the development cycle. During fiscal years 2021, 2020, and
2019, the Company expended $65.9 million, $52.5 million, and $80.0 million, respectively, on R&D.
PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY
The Company generally relies on patents, trademarks, licenses, and nondisclosure agreements to protect its intellectual property
and proprietary products. In cases where it is deemed necessary by management, key employees are required to sign an
agreement that they will maintain the confidentiality of the Company’s proprietary information and trade secrets.
The Company owns a large portfolio of patents worldwide and new products are continually being developed to replace older
products. The Company regularly applies for patent protection on such new products. While, in the aggregate, the Company’s
patents are important in the operation of its businesses, the Company believes that the loss by expiration or otherwise of any
one patent or group of patents would not materially affect its business.
MANUFACTURING
The Company’s manufacturing facilities are in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Portugal, the
U.K., and the U.S. The Company performs the majority of its own fabrication and maintains in-house capabilities for metal
stamping, surface mount assembly, plating (silver, nickel, zinc, and oxides) and thermoplastic molding. In addition, the
Company fabricates semiconductor wafers for certain applications and maintains in-house capability for epitaxy fabrication, die
attach, and wafer probe testing. After sub-components are readied for assembly, final assembly is accomplished on fully
automatic and semi-automatic assembly machines. Quality assurance and operations personnel, using techniques such as
statistical process control, perform tests, checks and measurements during the production process to maintain the highest levels
of product quality, including safety and reliability, and customer satisfaction. Additionally, the Company utilizes external wafer
foundries and subcontracted test and assembly facilities for a portion of its semiconductor business.
The principal raw materials for the Company’s products include copper and copper alloys, resin and heat-resistant plastics, zinc,
melamine, glass, silver, gold, raw silicon, solder, rubber, and various gases. The Company’s strategy is to prequalify suppliers
for quality assurance and supply continuity, and when possible, to localize supply sources close to its manufacturing sites. This
helps to minimize the transportation of materials, and ultimately reduces the Company’s environmental footprint by decreasing
emissions, consistent with its sustainability strategy. For critical materials, the Company looks to diversify its supplier base by
prequalifying second sources.
SALES AND MARKETING
The Company goes to market through selling organizations consisting of worldwide direct sales personnel, distribution partners
and manufacturers’ representatives. The direct sales force closely works with global OEM, Tier One automotive, consulting
engineers, and major end customers to design-in and sell all of the Company’s products. The distributors provide fulfillment for
a majority of customers including those partnered with electronic manufacturing services ("EMS"). The Company has sales
offices and direct sales channels in a number of countries around the world.
Electronics Segment
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Our Electronics segment products are used across a variety of applications. While certain of our products require less design
support for our customers, many of our products are incorporated into applications with complex design technical support
requirements. Most Electronics segment products are sold through our direct salesforce or through our channel distribution
partners. The fulfillment of these products is primarily through our broad line distribution partners, including global distributors
such as Arrow Electronics, Inc., Future Electronics and TTI, Inc., regional and high service distributors, including Digi-Key and
Mouser, as well as directly to OEM's.
Transportation Segment
The Company primarily uses a direct sales force to service all of the major automotive and commercial vehicle OEMs, system
suppliers, and Tier One automotive and aftermarket customers globally. In selected areas, the Company also uses distributors to
service smaller customers and to provide supply chain fulfillment for certain customers.
The Company also leverages its transportation customer relationships to sell products from the Electronics segment into
transportation end markets, primarily to Tier One automotive customers. These revenues are reported in the Electronics
segment.
Industrial Segment
The Company markets and sells its Industrial segment products direct to OEMs, and through electrical distributors and
electronics distribution channels to various end customers including electrical contractors, factories, municipalities, and utilities.
CUSTOMERS
The Company directly sells to over 6,900 customers and distributors worldwide. Sales to Arrow Electronics, Inc., which were
reported in our Electronics, Transportation and Industrial segments, were 10.7%, 10.4% and 10.7% of consolidated net sales in
2021, 2020, and 2019, respectively. No other single customer accounted for more than 10% of net sales during any of the last
three years. During fiscal 2021, 2020, and 2019, net sales to customers outside the U.S. accounted for approximately 69%,
73%, and 71%, respectively, of the Company’s total net sales.
CYBERSECURITY
The Company relies on its information technology systems and networks in connection with many of its business activities.
Some of these networks and systems are managed directly by the Company, while others are managed by third-party service
providers and are not under the Company's day-to-day control. We oversee the services provided by the third-party service
providers. We continually evaluate ourselves for appropriate business continuity and disaster recovery planning, with test
scenarios that include simulations and penetration tests. Our networks are monitored by intrusion detection services, and our
systems and applications are routinely tested for vulnerabilities and are operated with an appropriate patch management
program. We employ a skilled IT workforce to implement our cybersecurity programs and to handle specific security
responsibilities. Our IT workforce is trained to address security and compliance-related issues as they arise.
COMPETITION
The Company’s products compete with similar products of other manufacturers, some of which may have substantially greater
financial resources than the Company. In the Electronics segment, the Company’s competitors include Eaton Corporation,
Bourns Inc., TDK, ON Semiconductor Corporation, Infineon Technologies, STMicroelectronics NV, Semtech Corporation, and
Vishay Intertechnology Inc. In the Transportation segment, the Company’s competitors include Eaton Corporation, Pacific
Engineering, MTA (Meccanotecnica Codognese), CTS Corporation, Amphenol Corporation, Sensata Technologies Holding
NV, and TE Connectivity Ltd. In the Industrial segment, the Company’s major competitors include Eaton Corporation, GE
Multilin, and Mersen. The Company believes that it globally competes on the basis of innovative products, the breadth of its
product line, the quality, design and performance of its products based on their reliability, consistency and safety, its technical
capabilities and application expertise, and the responsiveness of its customer service.
BACKLOG
The backlog of unfilled orders at January 1, 2022 was approximately $1,657.1 million, compared to $709.9 million at
December 26, 2020 with the increase primarily driven by all segments and acquisition. Substantially all the orders currently in
backlog are scheduled for delivery in 2022.
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HUMAN CAPITAL MANAGEMENT
A passion for engineering excellence and an innovative spirit have been a part of what it means to work at Littelfuse since its
founding in 1927. The Company hires bright minds who want to make a big impact and are committed to improve the safety,
reliability and performance of our customers’ products. As the Company's human capital is critical to its success, the Company
strives to make Littelfuse a safe, diverse, and inclusive workplace, provide competitive compensation, benefits, and health and
wellness programs, offer appropriate training and promote community involvement.
Employee Data
At January 1, 2022, the Company had approximately 17,000 full-time, part-time and temporary employees; of which 53% are
female and 47% are male; and of which 52%, 37% and 11% are located in the Americas, Asia-Pacific region, and Europe,
respectively.
Core Values
Littelfuse core values – Customer Focus, Teamwork, Results Driven, Integrity and Innovation – guide conversations, decisions,
and interactions for our business. Together, they are the foundation of the Company's working relationships both internally and
externally and the Company asks each of associates to exemplify these high standards every day.
Governance & Oversight
The Chief Human Resources Officer ("CHRO") is responsible for developing and executing the Company’s human capital
strategy. This includes establishing and implementing the Company's global policies and programs for leadership and employee
development, compensation, benefits, workforce planning, human resources systems, and ensuring effective and efficient
internal company operations. The CHRO is responsible for developing and integrating the Company’s diversity, inclusion, and
belonging strategy in its business operations. The Chief Executive Officer ("CEO") and CHRO regularly update the Company's
board of directors on human capital matters.
Leadership and Employee Development
The Company is committed to identifying and developing our next generation of leaders. The Company's talent review and
succession planning processes support the development of the Company's talent pipeline, as well as the diversity of its talent.
The Company is focused on both the recruitment of diverse candidates and the development of the Company's diverse
employees to provide the opportunity to advance their careers and move into leadership positions within the Company.
Globally, the Company conducts enterprise-wide talent review processes with the CEO, business unit and function leaders
focusing on the Company's high-performing and high-potential talent, diverse talent, and the succession for the Company's
most critical roles. Also, the Company's board of directors reviews and assesses management development plans for senior
executives and the succession plans relating to those positions.
From the Company's production lines to its engineering labs, the office or distribution center, the contributions of the
Company's talented teams make a critical difference. The Company's goal is to ensure that every employee is provided with the
appropriate resources and opportunities to enjoy a successful and rewarding career at Littelfuse. The Company's training
programs cover topics including job-skills, enterprise six-sigma, Lean manufacturing, information security, and ethics and
compliance. All global associates are required to take the Company's annual Code of Conduct training, which is made available
in local languages for the Company's global workforce. The Company also has regional development programs that assist the
Company's current and future leaders to develop leadership skills and grow their careers in Littelfuse.
Diversity and Inclusion
As part of driving sustainable success, The Company values and celebrates diversity in every aspect of work with customers,
stakeholders, suppliers and each other. The Company's commitment to diversity and equity empowers its associates to innovate,
deliver bold solutions and drive growth with the multifaceted insight that comes from true community. The Company believes
that when everyone is included, everyone wins.
Our Diversity, Inclusion and Belonging Council focuses on enhancing the diversity across the Company's stakeholders through
bold solutions, to drive sustainable success across the company. In addition, the Company also has a number of employee
resource groups, each sponsored by a member of our executive leadership team, that enhance its inclusive and diverse culture.
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One example is the Company's Women’s Initiative Network (WiN). WiN was established to provide a forum to inspire and
accelerate associate advancement and development through networking, mentoring, coaching and education.
Compensation and Benefits
The Company provides compensation and benefits programs designed to be both competitive and equitable, in order to attract,
retain and motivate highly qualified associates. The components of the Company's compensation program vary by region and
employee-type, and include items such as base salary, performance-based bonus plans, equity awards, paid time off, and tuition
reimbursement. Global programs include a combination of statutory and additional supplemental benefits in the areas of health,
welfare and retirement.
Health, Safety and Wellness
The Company is committed to the safety, health, human rights, and well-being of our employees. The Company continuously
evaluates opportunities to raise safety and health standards through the Company's environmental, health, and safety teams.
Compliance audits and internal processes are in place to stay ahead of workplace hazards, and the Company strives for a zero-
injury workplace and to further our strong culture of safety. The Company further supports the mental and physical well-being
of the Company's employees through a range of wellness programs that promote a healthy lifestyle.
During the COVID-19 pandemic, the Company has prioritized the health and safety of its associates and their families. In an
effort to protect the health and safety of our associates, the Company has taken proactive steps in our facilities globally to
implement safety procedures including hygiene and disinfection protocols, social distancing, and providing transportation
alternatives for employees to get to work and personal protective equipment.
Community Involvement
The Company encourages and sponsors employees to donate their time and other resources to improve the communities where
they live and work. The Company's teams around the globe regularly engage in local community outreach, sponsoring activities
and initiatives that align with its overall community involvement strategy. The causes the Company supports include science,
technology, engineering and mathematics ("STEM") education, community improvement and environmental stewardship.
SUSTAINABILITY
The Company is focused on creating long-term value for customers, employees, investors, and the communities where they live
and work through sustainable business practices. Many of the Company's key end markets are linked to sustainable applications
such as electric vehicles and charging infrastructure, renewable energy, and power management. Sustainable end markets have
been a focus of the Company for decades and the Company published its first Sustainability Report in 2021, as the Company
aims to further communicate its commitment and progress towards key internal sustainability initiatives. The initial focus areas
in the Company's Sustainability Report include:
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business ethics
training, education, and career
development
health and safety in the
workplace
economic performance
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innovation
water and wastewater
management
diversity and equal opportunity
energy management
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climate change and greenhouse
gas emissions
sustainable supply chain
community involvement
waste and hazardous material
management
Additional information on how the Company manages each of these topics and the sustainability program progress is available
in the Company's Sustainability Report, located on the Company's website at https://www.littelfuse.com/about-us/
sustainability.aspx. The contents of the Company's Sustainability Report and website are not incorporated by reference in this
Annual Report on Form 10-K.
ENVIRONMENTAL REGULATION
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The Company is subject to numerous foreign, federal, state, and local regulations relating to air and water quality, the disposal
of hazardous waste materials, safety and health. Compliance with applicable environmental regulations has not significantly
changed the Company’s competitive position, capital spending or earnings in the past and the Company does not presently
anticipate that compliance with such regulations will change its competitive position, capital spending or earnings for the
foreseeable future.
The Company believes that it is currently in compliance in all material respects with applicable environmental laws and
regulations.
Littelfuse GmbH, which was acquired by the Company in May 2004, is responsible for maintaining closed coal mines in
Germany from legacy operations. The Company is compliant with German regulations pertaining to the maintenance of the
mines and has an accrual related to certain of these coal mine shafts based on an engineering study estimating the cost of
remediating the dangers (such as a shaft collapse) of certain of these closed coal mine shafts in Germany. The accrual is
reviewed annually and calculated based upon the estimated costs of remediating the shafts. Further information regarding the
coal mine liability accrual is provided in Note 1, Summary of Significant Accounting Policies and Other Information, of the
Notes to Consolidated Financial Statements included in this Annual Report.
ITEM 1A. RISK FACTORS.
The Company’s business, financial condition, and results of operations are subject to various risks and uncertainties, including
the risk factors it has identified below. Any of the following risk factors could materially and adversely affect the Company’s
business, financial condition, or results of operations. These factors are not necessarily listed in order of importance.
1) Operational Risks:
The Company’s industry is subject to intense competitive pressures.
The Company operates in markets that are highly competitive. The Company competes on the basis of price, product
performance and quality, service, and / or brand name across the industries and markets it serves. Competitive pressures could
affect the prices the Company is able to charge its customers or demand for its products.
The Company may not always be able to compete on price, particularly when compared to manufacturers with lower cost
structures. Some of the Company’s competitors have substantially greater sales, financial and manufacturing resources and may
have greater access to capital than the Company. As other companies enter its markets or develop new products, competition
may further intensify. The Company’s failure to compete effectively could materially adversely affect its business, financial
condition, and results of operations.
The Company engages in strategic acquisitions and may not realize the anticipated benefits of the acquisitions and / or may
encounter difficulties in integrating these businesses.
The Company seeks to grow through strategic acquisitions. In the past, the Company has acquired a number of businesses or
companies and additional product lines and assets. The Company intends to continue to expand and diversify its operations with
additional future acquisitions.
An acquired business, technology, service or product could under-perform relative to the Company’s expectations and the price
paid for it, or not perform in accordance with the Company’s anticipated timetable. This could cause the Company’s financial
results to differ from expectations in any given fiscal period, or over the long term. The success of these transactions also
depends on the Company’s ability to integrate the assets, operations, and personnel associated with these acquisitions. The
Company may encounter difficulties in integrating acquisitions with the Company’s operations and may not realize the degree
or timing of the benefits that are anticipated from an acquisition.
The Company may also discover liabilities or deficiencies associated with the companies or assets it acquires that were not
identified in advance, which may result in significant unanticipated costs. The effectiveness of the Company’s due diligence
review and its ability to evaluate the results of such due diligence are dependent upon the accuracy and completeness of
statements and disclosures made or actions taken by the companies acquired or their representatives, as well as the limited
amount of time in which acquisitions are executed. In addition, the Company may fail to accurately forecast the financial
impact of an acquisition transaction, including tax and accounting charges. Acquisitions may also result in recording of
significant additional expenses to the results of operations and recording of substantial intangible assets on the balance sheet
upon closing. Any of these factors may adversely affect the Company’s financial condition and results of operations.
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Disruptions in the Company’s manufacturing, supply or distribution chain could result in an adverse impact on results of
operations.
The Company sources materials and sells product through various global network channels. A disruption could occur within the
Company’s manufacturing, distribution or supply chain network. This could include damage or destruction due to various
causes including natural disasters or political instability which would cause one or more of these network channels to become
non-operational. This could adversely affect the Company’s ability to manufacture or deliver its products in a timely manner,
impair its ability to meet customer demand for products and result in lost sales or damage to its reputation. Such a disruption
could have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company may be unable to manufacture and deliver products in a manner that is responsive to its customers’ needs.
The end markets for the Company’s products are characterized by technological change, frequent new product introductions
and enhancements, changes in customer requirements and emerging industry standards. The introduction of products
embodying new technologies and the emergence of new industry standards could render its existing products obsolete and
unmarketable before it can recover any or all of its research, development, and commercialization expenses on capital
investments. Furthermore, the life cycles of its products may change and are difficult to estimate.
The Company’s future success will depend upon its ability to manufacture and deliver products in a manner that is responsive
to its customers’ needs. The Company will need to develop and introduce new products and product enhancements on a timely
basis that keep pace with technological developments and emerging industry standards and address increasingly sophisticated
requirements of its customers. The Company invests heavily in research and development without knowing if it will recover
these costs. The Company’s competitors may develop products or technologies that will render its products non-competitive or
obsolete. If it cannot develop and market new products or product enhancements in a timely and cost-effective manner, its
business, financial condition and results of operations could be materially adversely affected.
The Company’s business may be interrupted by labor disputes or other interruptions of supplies.
A work stoppage could occur at certain Company facilities, most likely as a result of disputes under collective bargaining
agreements or in connection with negotiations of new collective bargaining agreements. In addition, the Company may
experience a shortage of supplies for various reasons, such as financial distress, work stoppages, natural disasters, or production
difficulties that may affect one of its suppliers. A significant work stoppage, or an interruption or shortage of supplies for any
reason, if protracted, could substantially adversely affect the Company’s business, financial condition and results of operations.
Failure to attract and retain qualified personnel could affect the Company’s business results.
The Company’s success in its existing and acquired businesses, depends on the Company’s ability to attract, retain, and
motivate a highly-skilled and diverse management team and workforce. Failure to ensure that the Company has the depth and
breadth of personnel with the necessary skill set and experience could impede its ability to deliver growth objectives and
execute the Company’s strategy. Competition for qualified employees among companies that rely heavily upon engineering and
technology is at times intense, and the loss of qualified employees could hinder the Company’s ability to conduct research
activities successfully and develop marketable products.
The Company may not be successful protecting its intellectual property.
The Company considers its intellectual property, including patents, trade names, and trademarks, to be of significant value to its
business as a whole. The Company’s products are manufactured, marketed, and sold under a portfolio of patents, trademarks,
licenses, and other forms of intellectual property, some of which expire or are allowed to lapse at various dates in the future.
The Company develops and acquires new intellectual property on an ongoing basis and considers all of its intellectual property
to be valuable. The Company's policy is to file applications and obtain patents for the great majority of its novel and innovative
new products including product modifications and improvements. Based on the broad scope of its product lines, the Company
believes that the loss or expiration of any single intellectual property right would not have a material adverse effect upon its
consolidated results of operations, financial position and cash flows; however, multiple losses or expirations could have a
material adverse effect upon the Company’s consolidated results of operations, financial position and cash flows.
2) Regulatory Risks:
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Climate change, and the regulatory and legislative developments related to climate change, may have a material adverse
impact on our business and results of operations.
The potential physical impacts of climate change on our business operations are highly uncertain and differ in each geographic
region where we operate. These impacts may include changes in weather patterns and increased weather intensity, water
shortages, changing sea levels and changing temperatures. The impacts of climate change may materially and adversely impact
the cost of production, insurance availability, and financial performance of our operations. Further, any impacts to our business
and financial condition as a result of climate change are likely to occur over a sustained period of time and are therefore
difficult to quantify with any degree of specificity. For example, extreme weather events may result in adverse physical effects
on portions of our or others infrastructure, which could disrupt our supply chain and our customers and ultimately our business
operations. In addition, disruption of transportation and distribution systems could result in reduced operational efficiency and
customer service interruption. Climate-related events have the potential to disrupt our business, including the business of our
suppliers and customers, and may cause us to experience higher attrition, and additional costs to resume operations.
Increased government or governmental bodies contemplating legislative and regulatory changes in response to the potential
impact of climate change could impose significant costs on us and our suppliers and customers, including increased cost of
materials and natural resources, sources and supply of energy, capital equipment, environmental monitoring and reporting, or
other costs to comply with such regulations. Potential regulations or standards could mandate more restrictive manufacturing
requirements, such as stricter limits on greenhouse gas emissions and material used in production. Any future climate change
regulations could also adversely impact our ability to compete with companies not subject to such regulations.
Changes in U.S. and other countries trade policy, including the imposition of tariffs and the resulting consequences, may
have a material adverse impact on our business and results of operations.
In the past several years, the U.S. government adopted a new approach to trade policy and in some cases to renegotiate, or
potentially terminate, certain existing bilateral or multi-lateral trade agreements. It also imposed tariffs on certain foreign goods
and products. These measures may materially increase costs for goods imported into the U.S. This in turn could require us to
materially increase prices to our customers which may reduce demand, or, if we do not or are unable to increase prices, could
result in lower margins on products sold. Changes in U.S. trade policy have resulted in, and could result in more, U.S. trading
partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries.
Additionally, continued geo-political issues may result in customers in China seeking to source products from local suppliers,
which could result in lower sales or lost customers.
The Company is exposed to political, economic, and other risks that arise from operating a multinational business.
The Company's customers, suppliers, employees and operations are located in numerous countries around the world, and
contribute significantly to its revenues and earnings. Sales to customers outside the U.S. constituted approximately 69% of the
Company's net sales in fiscal 2021. Many of the Company's key customers are located outside of U.S. and maintain global
operations. Serving a global customer base and remaining competitive in the global marketplace requires the Company to
diversify its operations outside the U.S. to capitalize on customer and market opportunities, build a global workforce and
maintain a cost efficient structure. In addition, the Company sources a significant amount of raw materials, components and
finished goods from third-party suppliers and contract manufacturers. The Company’s operating activities are subject to a
number of risks generally associated with multi-national operations, including risks relating to the following:
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general economic conditions;
currency fluctuations and exchange restrictions;
import and export duties and restrictions;
the imposition of tariffs and other import or export barriers;
compliance with regulations governing import and export activities;
current and changing regulatory requirements;
political and economic instability;
potentially adverse income tax consequences;
transportation delays and interruptions;
labor unrest;
natural disasters;
terrorist activities;
public health concerns, including the outbreak of the coronavirus or other pandemics;
difficulties in staffing and managing multi-national operations; and
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•
limitations on the Company’s ability to enforce legal rights and remedies.
Any of these factors could have a material adverse effect on the Company’s consolidated results of operations, financial
position and cash flows.
The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial
condition, liquidity, and capital investments.
The World Health Organization declared the COVID-19 outbreak a pandemic in 2020, and the virus continues to spread in
areas where we operate and sell our products. The COVID-19 pandemic and similar situations/circumstances in the future could
have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital
investments. Several public health organizations have recommended, and some local governments have implemented, certain
measures to slow and limit the transmission of the virus, including travel restrictions, shelter-in-place requirements and social
distancing requirements. Such preventive measures, or others we may voluntarily put in place, may have a material adverse
effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee
availability, potential increased vulnerability to cybersecurity incidents, including breaches of information systems security due
to widespread remote working arrangements, potential border closures. Our suppliers and customers, including OEMs and
distribution partners, may also face similar disruptions to their operations, which could lead to a disruption in our supply chain
as well as decreased demand for our products. These issues may also materially affect our future access to our sources of
liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. These
disruptions may continue to occur and may result in future impairment, restructuring and other charges. To the extent the
COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the
other risks described in the risk factors disclosed in Part I, Item 1A. Risk Factors, including those relating to our products and
services, financial performance, debt covenant compliance and debt obligations. The ultimate magnitude of COVID-19,
including the extent of its impact on our financial and operational results, which could be material, will be determined by the
length of time that the pandemic continues, its effect on the demand for our services, as well as the effect of governmental
regulations imposed in response to the pandemic. We cannot at this time predict the impact of the COVID-19 pandemic, but it
could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.
Environmental liabilities could adversely impact the Company’s financial position.
Foreign, federal, state and local laws and regulations impose various restrictions and controls on the discharge of materials,
chemicals and gases used in the Company’s manufacturing processes or in its finished goods. These environmental regulations
have required the Company to expend a portion of its resources and capital on relevant compliance programs. Under these laws
and regulations, the Company could be held financially responsible for remedial measures if its current or former properties are
contaminated or if it sends waste to a landfill or recycling facility that becomes contaminated, even if the Company did not
cause the contamination. The Company may be subject to additional common law claims if it releases substances that damage
or harm third parties. In addition, future changes in environmental laws or regulations may require additional investments in
capital equipment or the implementation of additional compliance programs. Any failure to comply with new or existing
environmental laws or regulations could subject the Company to significant liabilities and could have a material adverse effect
on its consolidated results of operations, financial position and cash flows.
In the conduct of manufacturing operations, the Company has handled and does handle materials that are considered hazardous,
toxic or volatile under federal, state, and local laws. The risk of accidental release of such materials cannot be completely
eliminated. In addition, the Company operates or owns facilities located on or near real property that was formerly owned and
operated by others. Certain of these properties were used in ways that involved hazardous materials. Contaminants may migrate
from, within or through these properties. These releases or migrations may give rise to claims. Where third parties are
responsible for contamination, the third parties may not have funds, or not make funds available when needed, to pay
remediation costs imposed upon the Company under environmental laws and regulations.
The Company is responsible for the maintenance of discontinued coal mining operations in Germany. The risk of
environmental remediation exists, and the Company is in the process of remediating the mines considered to be the most at risk.
3) Financial Risks:
Reorganization activities may lead to additional costs and material adverse effects.
In the past, the Company has taken actions to restructure and optimize its production and manufacturing capabilities and
efficiencies through relocations, consolidations, plant closings or asset sales. In the future, the Company may take additional
restructuring actions including the consolidating, closing or selling of additional facilities. These actions could result in
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impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to
normal or attendant risks and uncertainties. The Company may be unsuccessful in any of its current or future efforts to
restructure or consolidate its business. Plans to minimize or eliminate any loss of revenues during restructuring or consolidation
may not be achieved. These activities may have a material adverse effect upon the Company’s business, financial condition and
results of operations.
The Company’s ability to manage currency or commodity price fluctuations or supply shortages is limited.
As a resource-intensive manufacturing operation, the Company is exposed to a variety of market and asset risks, including the
effects of changes in commodity prices, foreign currency exchange rates, and interest rates. The Company has multiple sources
of supply for the majority of its commodity requirements. However, significant shortages that disrupt the supply of raw
materials or result in price increases could affect prices the Company charges its customers, its product costs, and the
competitive position of its products and services. The Company monitors and manages these exposures as an integral part of its
overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse
effects on its results. Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be
predicted. In addition, because of intense price competition and the Company’s high level of fixed costs, it may not be able to
address such changes even if they are foreseeable. Substantial changes in these rates and prices could have a material adverse
effect on the Company’s results of operations and financial condition. In addition, significant portions of its revenues and
earnings are exposed to changes in foreign currency rates. As it operates in multiple foreign currencies, changes in those
currencies relative to the U.S. dollar will impact its revenues and expenses. The impact of possible currency devaluation in
countries experiencing high inflation rates or significant exchange fluctuations can impact the Company’s results and financial
guidance. For additional discussion of interest rate, currency or commodity price risk, see Item 7A, Quantitative and
Qualitative Disclosures about Market Risk.
The Company’s effective tax rate could materially increase as a consequence of various factors, including U.S. and/or
international tax legislation, mix of the Company’s earnings by jurisdiction, and U.S. and non-U.S. jurisdictional tax audits.
The Company is subject to taxes in the U.S. and numerous non-U.S. jurisdictions. Therefore, it is subject to changes in tax laws
in each of these jurisdictions, including changes discussed in the paragraphs below. The outcome of these and other legislative
developments, including changes to interpretations of recently enacted legislation, could have a material adverse effect on the
Company’s future effective tax rate and cash flows.
U.S. tax legislative proposals currently being considered in a bill referred to as “Build Back Better” could, among other things,
increase the Company’s U.S. taxes on non-U.S. earnings, effective in 2023. In addition, the Organization for Economic
Cooperation and Development (“OECD”) is working with a group of more than 100 countries to significantly change the tax
treatment of multinational businesses, subjecting them to tax in additional jurisdictions, modifying the methods by which they
allocate profits among jurisdictions, and subjecting them to a minimum level of tax. As part of this effort, during 2021, the
OECD reached a near-unanimous agreement among the working group jurisdictions to apply a minimum income tax rate of
15%, on a country-by-country basis. In December of 2021, the OECD published model rules to assist with implementation of
the minimum tax regime, proposed to be effective in 2023, and the European Union published a directive that would
incorporate the OECD-led minimum tax proposals into European Union law. The Company’s income tax rate in certain non-
U.S. jurisdictions is lower than 15%. Enactment of these minimum tax proposals, and the other proposals discussed above,
could have a material adverse effect on the Company’s future effective tax rate and cash flows.
Certain European jurisdictions, including Germany and the Netherlands, have enacted or will enact tax legislation based upon
directives from the European Union. Such legislation could potentially deny tax deductions for certain expenses and/or subject
to tax the income earned in certain low tax jurisdictions.
The Company has two subsidiaries in China which benefit from lower income tax rates due to “tax holidays” which apply for
three-year periods. The tax holiday for one of the subsidiaries expires at the end of 2022, and for the other subsidiary the tax
holiday will expire at the end of 2023. Future year tax benefits will depend upon the Company’s ability to obtain extensions,
after the three-year periods expire. There can be no assurance that future extensions will be granted.
The tax rates applicable in the jurisdictions within which the Company operates vary widely. Therefore, the Company’s
effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction.
The Company’s tax returns are subject to examination by various U.S. and non-U.S. tax authorities, including the U.S. Internal
Revenue Service. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to
determine the adequacy of its provision for income taxes. However, there can be no assurance as to the outcome of these
examinations.
15
A decline in expected profitability of the Company or individual reporting units of the Company could result in the
impairment of assets, including goodwill and other long-lived assets.
The Company continues to hold material amounts of goodwill and other long-lived assets on its balance sheet. A decline in
expected profitability, particularly if there is a decline in the global economy, could call into question the recoverability of the
Company’s related goodwill and other long-lived tangible and intangible assets and require the write-down or write-off of these
assets. Such an occurrence could have a material adverse effect on the Company’s consolidated results of operations, financial
position and cash flows.
A significant fluctuation between the U.S. dollar and other currencies could adversely impact the Company's revenue and
earnings.
Although the Company's financial results are reported in U.S. dollars, the majority of the Company’s operations consist of
manufacturing and sales activities in foreign countries. The Company’s most significant net long exposure is to the euro. The
Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso. Changes in
foreign exchange rates could have an adverse effect on the Company's results of operations, financial position and cash flows.
The Company’s revenues may vary significantly from period to period.
The Company’s revenues may vary significantly from one period to another due to a variety of factors including:
•
•
•
•
•
•
•
•
•
•
•
•
changes in customers’ buying decisions;
changes in demand for its products;
changes in its distributor inventory stocking;
the Company’s product mix;
the Company’s effectiveness in managing manufacturing processes;
costs and timing of its component purchases;
the effectiveness of its inventory control;
the degree to which it is able to utilize its available manufacturing capacity;
the Company’s ability to meet delivery schedules;
general economic and industry conditions;
local conditions and events that may affect its production volumes, such as labor conditions and political instability;
and
seasonality of certain product lines.
The bankruptcy or insolvency of a major customer could adversely affect the Company.
The bankruptcy or insolvency of a major customer could result in lower sales revenue and cause a material adverse effect on the
Company’s consolidated results of operations, financial position and cash flows. In addition, the bankruptcy or insolvency of a
major auto manufacturer or significant supplier likely could lead to substantial disruptions in the automotive supply base,
resulting in lower demand for the Company’s products, which would likely cause a decrease in sales revenue and have a
substantial adverse impact on the Company’s consolidated results of operations, financial position and cash flows.
The inability to maintain access to capital markets may adversely affect the Company’s business and financial results.
The Company’s ability to invest in its businesses, make strategic acquisitions, and refinance maturing debt obligations may
require access to the capital markets and sufficient bank credit lines to support short-term borrowings. If the Company is unable
to access the capital markets or bank credit facilities, it could experience a material adverse effect on its consolidated results of
operations, financial position and cash flows.
Fixed costs may reduce operating results if sales fall below expectations.
The Company’s expense levels are based, in part, on its expectations for future sales. Many of the Company’s expenses,
particularly those relating to capital equipment and manufacturing overhead, are relatively fixed. The Company might not be
able to reduce spending quickly enough to compensate for reductions in sales. Accordingly, shortfalls in sales could materially
and adversely affect the Company’s consolidated results of operations, financial position and cash flows.
The volatility of the Company’s stock price could affect the value of an investment in the Company’s stock and future
financial position.
16
The market price of the Company’s stock can fluctuate widely. Between December 26, 2020 and January 1, 2022, the closing
sale price of the Company’s common stock ranged between a low of $234.59 and a high of $334.84. The volatility of the stock
price may be related to any number of factors, such as volatility in the financial markets, general macroeconomic conditions,
industry conditions, market expectations concerning the Company’s results of operations, or the volatility of its revenues as
discussed above under “The Company’s Revenues May Vary Significantly from Period to Period.” The historic market price of
the Company’s common stock may not be indicative of future market prices. The Company may not be able to sustain or
increase the value of its common stock. Declines in the market price of the Company’s stock could adversely affect the
Company’s ability to retain personnel with stock incentives, to acquire businesses or assets in exchange for stock and/or to
conduct future financing activities with or involving the Company’s common stock.
The Company is exposed to, and may be adversely affected by, potential security breaches or other disruptions to its
information technology systems and data security.
The Company relies on its information technology systems and networks in connection with many of its business activities.
Some of these networks and systems are managed directly by the Company, while others are managed by third-party service
providers and are not under the Company’s direct control. The Company’s operations routinely involve receiving, storing,
processing and transmitting sensitive information pertaining to its business, customers, dealers, suppliers, employees, and other
sensitive matters. As with most companies, the Company has experienced cyber-attacks, attempts to breach its systems, and
other similar incidents, none of which have been material. Any future cyber incidents could, however, materially disrupt
operational systems; result in loss of trade secrets or other proprietary or competitively sensitive information; compromise
personally identifiable information regarding employees or customers or other third parties; and jeopardize the security of the
Company’s facilities. A cyber incident could be caused by malicious outsiders using sophisticated methods to circumvent
firewalls, encryption, and other security defenses. Because techniques used to obtain unauthorized access or to sabotage
systems change frequently and generally are not recognized until they are launched against a target, the Company may be
unable to anticipate these techniques or to implement adequate preventative measures. Information technology security threats,
including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication and
could create financial liability, subject the Company to legal or regulatory sanctions or damage the Company’s reputation with
customers, dealers, suppliers, and other stakeholders. The Company continuously seeks to maintain a robust program of
information security and controls, but the impact of a material information technology event could have a material adverse
effect on the Company’s competitive position, reputation, results of operations, financial position and cash flows.
Customer demands and regulations related to conflict-free minerals may force the Company to incur additional expenses.
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires disclosure of use of “conflict” minerals mined from
the Democratic Republic of Congo and adjoining countries and efforts to prevent the use of such minerals. In the semiconductor
industry, these minerals are most commonly found in metals. As there may be only a limited number of suppliers offering
“conflict free” metals, the Company cannot be certain that it will be able to obtain necessary metals in sufficient quantities or at
competitive prices. Also, the Company may face challenges with its customers and suppliers if it is unable to sufficiently verify
that the metals used in its products are “conflict free.”
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
The Company’s engineering and research and development, manufacturing, sales, and distribution centers are located in
approximately 77 owned or leased facilities worldwide with primary operations in China, Germany, Italy, Japan, Lithuania,
Mexico, Netherlands, Philippines, South Korea, U.K, and the U.S. totaling approximately 3.9 million square feet. The
Company’s owned facilities include approximately 2.1 million square feet and the Company’s leased facilities include
approximately 1.8 million square feet. The Company’s corporate headquarters is located in the U.S. in Chicago, Illinois.
The Company believes its facilities are adequate to meet its requirements for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings, other than routine litigation incidental to its business.
17
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
Information about our Executive Officers.
The executive officers of the Company are as follows:
Name
David W. Heinzmann
Meenal A. Sethna
Ryan K. Stafford
Maggie Chu
Matthew J. Cole
Alexander Conrad
Deepak Nayar
Age
58
Position
President and Chief Executive Officer
52
54
53
50
56
62
Executive Vice President and Chief Financial Officer
Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and
Corporate Secretary
Senior Vice President and Chief Human Resources Officer
Senior Vice President, eMobility and Corporate Strategy
Senior Vice President and General Manager, Passenger Vehicle Business
Senior Vice President and General Manager, Electronics Business
David W. Heinzmann, President and Chief Executive Officer and a member of the Board of Directors. Mr. Heinzmann began
his career at Littelfuse in 1985 as a manufacturing engineer and has held positions of increasing responsibility since that time,
including Vice President, Global Operations, from 2007 to 2014, and Chief Operating Officer from 2014 until assuming his
current position in 2017.
Meenal A. Sethna, Executive Vice President and Chief Financial Officer. Ms. Sethna joined Littelfuse in 2015 as Senior Vice
President of Finance until assuming her current position in 2016. Prior to joining Littelfuse, Ms. Sethna served from 2011 to
2015 as Vice President and Corporate Controller of Illinois Tool Works Inc., a diversified manufacturer of specialized
industrial equipment, consumables, and related service businesses. Ms. Sethna is a Certified Public Accountant in Illinois.
Ryan K. Stafford, Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and Corporate Secretary. Mr.
Stafford joined Littelfuse as its first General Counsel and Chief Human Resources Officer in 2007, became Corporate Secretary
in 2017, and assumed his current position in 2021. Prior to joining Littelfuse, Mr. Stafford served in a number of roles at Tyco
International Ltd., including Vice President of China Operations and Vice President & General Counsel for its Engineered
Products & Services Business Segment.
Maggie Chu, Senior Vice President and Chief Human Resources Officer. Ms. Chu joined Littelfuse in 2021 as Senior Vice
President and Chief Human Resources Officer. Prior to joining Littelfuse, Ms. Chu served from 2018 to 2021 at Caterpillar,
Inc., a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and
diesel-electric locomotives, as Segment Human Resources Director for the Energy & Transportation segment and Corporate
Services group. Prior to Caterpillar, Ms. Chu spent 15 years with General Electric Company, a high-tech industrial company, in
a number of global human resources leadership roles across several of General Electric’s industrial businesses.
Matthew J. Cole, Senior Vice President, eMobility and Corporate Strategy. Mr. Cole joined Littelfuse in 2015 as Senior Vice
President and General Manager, Industrial Business Unit, and in 2019 became Senior Vice President, Business Development
and Corporate Strategy until assuming his current position in 2021. Prior to joining Littelfuse, Mr. Cole served from 2009 to
2015 as Vice President and General Manager of the Advanced Measurement Technology division of AMETEK, a global leader
in electronic instruments and electromechanical devices.
Alexander Conrad, Senior Vice President and General Manager, Passenger Vehicle Business. Mr. Conrad joined Littelfuse in
2005 as Sales Manager, Germany & Eastern Europe. He then held various positions of increasing responsibility at Littelfuse
including Sales Director EMEA; Global Director of Sales; Managing Director, Passenger Car Products from 2013 to 2014; and
Vice President, Passenger Car Products, from 2015 until assuming his current position in 2018.
Deepak Nayar, Senior Vice President and General Manager, Electronics Business. Mr. Nayar joined Littelfuse in 2005 as
Business Line Director of the Electronics Business Unit. He then held various positions of increasing responsibility at Littelfuse
including Vice President, Global Sales, Electronics Business Unit, and from 2011 until assuming his current position in 2020,
Senior Vice President, Electronics Business Unit.
18
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Shares of the Company’s common stock are traded under the symbol “LFUS” on the NASDAQ Global Select MarketSM.
Number of Holders
As of February 11, 2022, there were 56 holders of record of the Company’s common stock.
Dividend Policy
The future dividend policy will be determined by the Board of Directors based upon its evaluation of earnings, cash availability,
and general business prospects. Currently, there are restrictions on the payment of dividends contained in the Company’s credit
agreements that relate to the maintenance of certain financial ratios. However, the Company expects to continue paying cash
dividends on a quarterly basis for the foreseeable future.
Recent Sales of Unregistered Securities
There were no sales of unregistered securities by us or affiliates during the fiscal year ended January 1, 2022.
Purchases of Equity Securities
On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the
Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program"). On April 29, 2020, the Company
announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's
common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program.
On April 28, 2021, the Company announced that the Board of Directors authorized a new three-year program to repurchase up
to $300 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to
replace its previous 2020 program.
The Company did not repurchase shares of its common stock during the fiscal year ended January 1, 2022. There are
$300 million in the aggregate of shares available for purchase under the new program as of January 1, 2022.
Stock Performance Graph
The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the
Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the
Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically
incorporates it by reference into such filing.
The following stock performance graph compares the five-year cumulative total return on Littelfuse common stock to the five-
year cumulative total returns on the Russell 1000 Index and the Dow Jones Electrical Components and Equipment Industry
Group Index. The Company believes that the Russell 1000 Index and the Dow Jones Electrical Components and Equipment
Industry Group Index represent a broad market index and peer industry group for total return performance comparison. The
stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future
stock price performance.
19
Littelfuse, Inc.
Russell 1000
12/2016
$
12/2017
12/2018
12/2019
12/2020
100 $
100
131 $
122
115 $
116
129 $
152
12/2021
217
233
174 $
184
Dow Jones US Electrical Components & Equipment
100
127
112
138
167
209
The Dow Jones Electrical Components and Equipment Industry Group Index includes the common stock of A. O. Smith Corp.;
AAON, Inc.; American Superconductor Corp.; AMETEK, Inc.; Amphenol Corp.; Arrow Electronics, Inc.; Avnet, Inc.; AVX
Corp.; Capstone Turbine Corp.; CTS Corp.; General Cable Corp.; Hubbell Inc. Class B; Jabil Circuit, Inc.; Littelfuse, Inc.;
Methode Electronics, Inc.; Plexus Corp.; Powerwave Technologies, Inc.; Regal-Beloit Corp.; Vicor Corp.; and Vishay
Intertechnology, Inc.
For Littelfuse, Inc. and all indexes noted above, a $100 investment made on December 31, 2016 and reinvestment of all
dividends is assumed. Returns for the Company’s fiscal years presented above are as of the last day of the respective fiscal year
which was December 30, 2017, December 29, 2018, December 28, 2019, December 26, 2020, and January 1, 2022 for the fiscal
years 2017, 2018, 2019, 2020 and 2021, respectively.
20
ITEM 6. SELECTED FINANCIAL DATA.
The information presented below provides selected financial data of the Company during the past five fiscal years and should
be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations,
and Item 8, Financial Statements and Supplementary Data, for the respective years presented:
(in thousands, except per share data)
Net sales
Gross profit
Operating income
Net income
Per share of common stock:
Income from continuing operations
- Basic
- Diluted
Cash dividends paid
Cash and cash equivalents
Total assets
Short-term debt
Long-term debt, less current portion
2021
2020
2019
$ 2,079,928 $ 1,445,695 $ 1,503,873 $ 1,718,468 $ 1,221,534
506,533
218,511
119,519
771,926
385,642
283,806
501,172
162,372
129,986
546,295
192,791
139,082
653,415
225,049
164,565
2017
2018
11.54
11.38
2.02
478,473
3,151,704
25,000
611,897
5.33
5.29
1.92
687,525
2,747,593
—
687,034
5.66
5.60
1.82
531,139
2,559,898
10,000
669,158
6.62
6.52
1.60
489,733
2,614,306
10,000
684,730
5.27
5.21
1.40
429,676
1,740,102
6,250
489,361
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion of the Company's financial condition and results of operations should be read together with the
Consolidated Financial Statements and notes to those statements included in Item 8 of Part II of this Annual Report on Form
10-K.
BUSINESS
For a description of the Company’s business, segments and product offerings, see Item 1, Business.
2021 EXECUTIVE OVERVIEW
Net sales increased by $634.2 million or 43.9% including $27.4 million or 1.9% of favorable changes in foreign exchange rates
in 2021 compared to 2020. The increase was due to volume growth across all segments and businesses while 2020 had
temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19. The
increase was due to higher sales of $363.0 million, $138.9 million, and $132.3 million in the Electronics, Industrial, and
Transportation segments, respectively, driven by higher volumes across all businesses within these segments. The volume
increase within the Electronics segment was led by broad-based demand across electronics, transportation and industrial end
markets. The increase with the Industrial segment was primarily due to $100.5 million of net sales resulting from the Hartland
acquisition and volume growth across all businesses within the Industrial segment. The increase within the Transportation
segment was due to volume growth driven by higher demand in the global auto and commercial vehicle markets, greater
content growth across passenger vehicles due to vehicle mix, including growth in electric vehicles and some customers
maintaining additional inventory of our products, and $15.3 million of net sales resulting from the Carling acquisition. The
Company recognized net income of $283.8 million, or $11.38 per diluted share, in 2021 compared to net income of $130.0
million, or $5.29 per diluted share in 2020. The increase in net income reflects higher operating income of $223.3 million
driven by a $156.9 million increase in operating income in the Electronics segment, the 2020 goodwill impairment charge of
$33.8 million, a $24.3 million increase in operating income in the Transportation segment partially offset by higher foreign
exchange losses of $32.0 million and a $19.9 million non-cash pension settlement charge associated with the completion of the
buy-out of one of our U.K. pension plans.
Supply chain constraints, including transportation capacity shortages have and are expected to continue to impact the Company,
our suppliers and our customers. This has resulted in higher transportation and input costs incurred by the Company.
21
Net cash provided by operating activities was $373.3 million for the fiscal year ended January 1, 2022 representing an increase
of $115.3 million as compared to the fiscal year ended December 26, 2020. The increase in net cash provided by operating
activities was primarily due to higher cash earnings partially offset by increases in working capital resulting from higher sales
growth.
On January 28, 2021, the Company acquired Hartland Controls, a manufacturer and leading supplier of electrical components
used primarily in HVAC and other industrial and control systems applications. At the time of acquisition, Hartland had
annualized sales of approximately $70 million. The purchase price for Hartland was $111.0 million and the operations of
Hartland are included in the Industrial segment.
On November 30, 2021, the Company acquired Carling, a leader in switching, circuit protection and power distribution
technologies with a strong global presence in commercial transportation, communications infrastructure and marine markets. At
the time of acquisition, Carling had annualized sales of approximately $170 million. The purchase price for Carling was
approximately $315 million and the operations of Carling are included in the Transportation segment.
Impact of COVID-19 on Business
The effects from COVID-19 continue to drive increased costs, though less than net costs incurred in 2020. Ongoing costs
include spending on personal protective equipment ("PPE"), additional personnel and employee transportation costs, and
manufacturing inefficiencies. as well as an increase in material costs and transportation costs due to global supply chain and
logistics constraints around the world.
During 2021, all of our manufacturing facilities were operational and were generally running at normal capacity levels.
The Company anticipates that the disruptions caused by COVID-19 may continue to impact its business activity for the
foreseeable future. It is currently difficult to estimate the magnitude of the COVID-19 disruption, if future disruptions will
occur due to a 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
fiscal year 2022.
OUTLOOK
Vision and Strategy
The Company closely collaborates with strategic customers to design and manufacture innovative and reliable solutions to help
empower a sustainable, connected, and safer world in virtually every market that uses electrical energy.
Within transportation end markets, the Company’s products are found in passenger vehicles and commercial vehicles, like
material handling equipment, heavy-duty truck and bus, off-road and recreational vehicles, construction equipment, agricultural
machinery, rail and marine. The Company is also a key enabler of electrification, or eMobility, across these transportation
applications, and EV charging infrastructure. The Company continues to advance its existing customer relationships with OEM,
Tier one and channel partners while driving product content growth for advanced, high-growth applications.
Within industrial end markets, the Company’s products are found in renewable energy and energy storage applications, HVAC,
factory automation and safety, industrial motor drives and power conversion, and heavy and general industrial type
applications. The Company utilizes its deep technical engineering capabilities and design support to drive product content
growth across high-growth applications like renewables, energy storage, HVAC, and industrial automation.
Within electronics end markets, the Company’s products are found in data center, cloud storage and telecom infrastructure
applications, building technologies and automation, appliances, mobile electronics, medical devices, and gaming and
entertainment applications. The Company leverages its strategic distribution partnerships and deep OEM relationships, coupled
with its comprehensive product offerings, to drive product content growth across a broad range of applications.
The Company expects the ever-increasing complexity of application architectures, driven by ongoing electronification and
electrification across these end markets, to drive increasing product content opportunities. Built upon that framework, the
Company has positioned itself around the structural growth themes of sustainability, connectivity, and safety, which will
22
continue to drive increased demand for the Company’s innovative, reliable solutions across the transportation, industrial and
electronics end markets that it serves.
The Company’s five-year strategic plan, built around these structural growth themes, is focused on delivering top tier
shareholder returns by driving double-digit sales growth, best-in-class profitability, earnings per share growth, strong cash flow
generation, and deploying capital to drive value creation. The Company pursues the following major strategic objectives, which
are summarized below, along with more specific areas of focus. The Company uses the financial measures below to gauge
progress toward achieving these strategic objectives. These measures include organic sales growth, operating margins, cash
flow from operations, and returns on invested capital.
Strategic Objectives
Priorities
Double-digit sales growth
5-7% average annual growth from annual
organic sales growth
5-7% average annual growth from
strategic acquisitions
EPS growth
Earnings per share growth greater than
revenue growth
Capital allocation and returns
Cash flow from operations less capital
expenditures is targeted to approximate
or exceed net income
Target 40% of free cash flow returned
to shareholders
Remainder focused on strategic
acquisitions
Return on invested capital percentage in
the high-teens
●
●
●
●
●
●
●
●
●
●
●
●
●
Increased product content with existing and new customers, and expand
market share
Expand portfolio into new and underpenetrated, high-growth
geographies and end markets
Increase innovation capabilities and investments
Leverage breadth of go-to-market strategies
Targeted mergers and acquisitions to enhance and sustain organic
growth
Focus on higher profitability growth opportunities
Improve operating margins through operational and commercial
excellence
Disciplined approach to balancing costs with long-term strategic
investments
Disciplined management of working capital
Deployment of capital consistent with capital allocation priorities
Mergers and acquisitions that align with strategy and financial metrics
Grow dividend in line with earnings
Opportunistic share repurchases
The Company’s strategy is focused on accelerating organic growth by increasing its product content in applications and share
gains, enhancing technology efforts to drive innovation, capitalizing on cross segment opportunities, and gaining traction in
underpenetrated, high-growth geographies and end markets. The Company also leverages strategic acquisitions to enhance and
sustain its organic growth. The Company will continue to make targeted strategic acquisitions that align to its strategy and
financial metrics to drive growth across its business, products, markets, and technologies while leveraging existing customers
and targeting new customers.
Management believes that profitable growth through a combination of organic growth and strategic acquisitions is critical to the
Company’s competitiveness, while enhancing value the Company delivers to all of its stakeholders. In addition, the Company
continues to implement initiatives across all platforms to enhance productivity while managing its cost structure to align with
business conditions. Areas of focus include integration of operations and streamlining administrative and support activities to
drive improved operating margins.
The Company seeks to deploy its capital consistent with capital allocation priorities. These priorities include investments to
drive increased organic growth, targeted acquisitions that align to the Company’s strategic and financial metrics, and enhance
and sustain its organic growth, and returning capital to shareholders through dividends and opportunistic share repurchases.
Critical Estimates and Significant Accounting Policies
23
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most critical
accounting policies are those that are most important to the portrayal of its financial condition and results of operations, and
which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates
of matters that are inherently uncertain. The Company has identified the following as its most critical accounting policies and
judgments. Although management believes that its estimates and assumptions are reasonable, they are based upon information
available when they are made, and therefore, actual results may differ from these estimates under different assumptions or
conditions. The Company has reviewed these critical accounting policies and related disclosures with the Audit Committee of
its Board of Directors. Significant accounting policies are more fully described in the Notes to Consolidated Financial
Statements included elsewhere in this Annual Report.
Critical Accounting Estimates
Goodwill
The Company’s methodology for allocating the purchase price of acquisitions is based on established valuation techniques that
reflect the consideration of a number of factors, including valuations performed by third-party appraisers when appropriate.
Goodwill is measured as the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired
and liabilities assumed. Based on its current organization structure, the Company has seven reporting units for which cash flows
are determinable and to which goodwill has been allocated.
The Company annually tests goodwill 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. The Company also performs an interim review for indicators of impairment each quarter to assess whether an interim
impairment review is required for any reporting unit. As part of its interim reviews, management analyzes potential changes in
the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected
results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including
discount rates and expected long-term growth rates, used in the last annual impairment test, could be impacted by changes in
market conditions and economic events.
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 Transportation segment. As of January 1, 2022, the automotive
sensors reporting unit had $9.2 million of remaining goodwill.
Quantitative Assessment for Impairment
For the seven reporting units with goodwill, the Company compares the estimated fair value of each reporting unit to its
carrying value. If the carrying value of a reporting unit exceeds the estimated fair value, the difference between the estimated
fair value and carrying value is recorded as the amount of the goodwill impairment charge. The results of the goodwill
impairment test as of September 26, 2021 indicated that the estimated fair values for each of the seven reporting units exceeded
their respective carrying values. Accordingly, there were no goodwill impairment charges recorded as part of the Company’s
2021 annual goodwill impairment test.
As part of its impairment test for these reporting units, the Company engaged a third-party appraisal firm to assist in the
Company’s determination of the estimated fair values. This determination included estimating the fair value of each reporting
unit using both the income and market approaches. The income approach requires management to estimate a number of factors
for each reporting unit, including projected operating results, economic projections, anticipated future cash flows, discount rates
and the allocation of shared or corporate items. The market approach estimates fair values using comparable marketplace fair
value data from within a comparable industry grouping. The Company weighted both the income and market approach equally
to estimate the concluded fair value of each reporting unit. The determination of fair value requires the Company to make
significant estimates and assumptions, which primarily include, but are not limited to: the selection of appropriate peer group
companies; control premiums appropriate for acquisitions in which the Company competes; the discount rate; terminal growth
rates; and forecasts of revenue, operating income, depreciation and amortization and capital expenditures.
Goodwill Impairment Assumptions
24
Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those
estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future
financial results or other underlying assumptions could have a significant impact on the fair value of the reporting units. Future
declines in the overall market value of the Company’s equity may also result in a conclusion that the fair value of one or more
reporting units has declined below its carrying value.
One measure of the sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by which each
reporting unit “passed” (fair value exceeds the carrying value) the goodwill impairment test. All seven of the reporting units
passed the goodwill impairment test, with fair values that exceeded the carrying values between 95% and 380% of their
respective estimated fair values. As of the most recent annual test conducted on September 26, 2021, the Company noted that
the excess of fair value over the carrying value was 380%, 104%, 255%, 217%, 95%, 144%, and 231% for its reporting units:
Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products,
Automotive Sensors, Relays, and Power Fuse, respectively. Relatively small changes in the Company’s key assumptions would
not have resulted in any reporting units failing the goodwill impairment test.
Generally, changes in estimates of expected future cash flows would have a similar effect on the estimated fair value of the
reporting unit. That is, a 1.0% decrease in estimated annual future cash flows would decrease the estimated fair value of the
reporting unit by approximately 1.0%. The estimated long-term net sales growth rate can have a significant impact on the
estimated future cash flows, and therefore, the fair value of each reporting unit. A 1.0% decrease in the long-term net sales
growth rate would have resulted in no reporting units failing the goodwill impairment test. Of the other key assumptions that
impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate. The
estimated discount rate was 8.9% for the Electronics-Passive Products and Sensors and the Passenger Car Products reporting
units, 9.9% for the Electronics-Semiconductor, Commercial Vehicle Products and the Automotive Sensors reporting units,
10.9% for the Power Fuse reporting unit and 11.9% for the Relays reporting unit. A 1.0% increase in the estimated discount
rates would have resulted in no reporting units failing the annual goodwill impairment test. The Company believes that its
estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ
due to the inherent uncertainty in making such estimates. Additionally, price deterioration or lower volume could have a
significant impact on the fair values of the reporting units.
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred taxes are recognized for the future
effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the
differences are expected to reverse. The Company recognizes deferred taxes for temporary differences, operating loss
carryforwards and tax credit and other tax attribute carryforwards (excluding carryforwards where usage has been determined to
be remote). Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the
deferred tax assets will not be realized. U.S. state and non-U.S. income taxes are provided on the portion of non-U.S. income
that is expected to be remitted to the U.S. and be taxable (and non-U.S. income taxes are provided on the portion of non-U.S.
income that is expected to be remitted to an upper-tier non-U.S. entity). Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of
investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those
operations. Management regularly evaluates whether non-U.S. earnings are expected to be permanently reinvested. This
evaluation requires judgment about the future operating and liquidity needs of the Company and its non-U.S. subsidiaries.
Changes in economic and business conditions, non-U.S. or U.S. tax laws, or the Company’s financial situation could result in
changes to these judgments and the need to record additional tax liabilities.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than
50% likelihood of being realized upon ultimate settlement.
The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on
accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the
global intangible low-taxed income provisions ("GILTI").
In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI
inclusions as a period cost if and when incurred. Thus, for the fiscal years ended January 1, 2022, December 26, 2020, and
25
December 28, 2019, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions,
and any current year impact was recorded as a part of the current portion of income tax expense.
Further information regarding income taxes, including a detailed reconciliation of current year activity, is provided in Note 14,
Income Taxes, of the Notes to Consolidated Financial Statements included in this Annual Report.
Critical Accounting Policies
Revenue Recognition
Revenue Disaggregation
The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended January 1, 2022
and December 26, 2020:
(in thousands)
Electronics
Segment
Fiscal Year Ended January 1, 2022
Industrial
Segment
Transportation
Segment
Total
Electronics – Semiconductor
$
678,861 $
Electronics – Passive Products and Sensors
621,883
— $
—
266,020
160,300
101,738
— $
678,861
—
—
—
—
621,883
266,020
160,300
101,738
251,126
—
251,126
$
1,300,744 $
528,058 $
251,126 $ 2,079,928
Fiscal Year Ended December 26, 2020
— $
—
200,455
101,324
93,985
—
Total
— $ 522,352
—
—
—
—
112,169
415,410
200,455
101,324
93,985
112,169
—
—
—
—
—
—
—
—
(in thousands)
Electronics
Segment
Transportation
Segment
Industrial
Segment
Electronics – Semiconductor
$
522,352 $
Electronics – Passive Products and Sensors
415,410
Passenger Car Products
Commercial Vehicle Products
Automotive Sensors
Industrial Products
Total
Passenger Car Products
Commercial Vehicle Products
Automotive Sensors
Industrial Products
Total
$
937,762 $
395,764 $
112,169 $ 1,445,695
See Note 16, Segment Information, for net sales by segment and countries.
Revenue Recognition
The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and
control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately
short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and
risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products
and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company
adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by
the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in
exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s sales
channels are primarily through direct sales and independent third-party distributors.
The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense
commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized
is less than one year.
26
Revenue and Billing
The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based
on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors,
costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price
lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales
agreement. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient
under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the
practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment
activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling
revenue.
Ship and Debit Program
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the
ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is
referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between
the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a
competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its
price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference
between the contracted price and the lower approved price. The Company establishes reserves for this program based on
historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a
reduction of revenue.
Return to Stock
The Company has a return to stock policy whereby certain customers, with prior authorization from the Company's
management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance
for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.
Volume Rebates
The Company offers volume-based sales incentives to certain customers to encourage greater product sales. If customers
achieve their specific quarterly or annual sales targets, they are entitled to rebates. The Company estimates the projected
amount of rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products
are sold.
Allowance for Doubtful Accounts
The Company currently measures the expected credit losses based on our historical credit loss experience. The Company has
not experienced significant recent or historical credit losses and is not forecasting any significant credit losses which would
require adjustments to our methodology. If current conditions and supportable forecasts indicate that our historical loss
experience is not reasonable and no longer supportable, the Company may adjust its historical credit loss experience and to
reflect these conditions and forecasts. The Company regularly analyzes its significant customer accounts and, when the
Company becomes aware of a customer’s inability to meet its financial obligations, the Company records a specific reserve for
bad debt to reduce the related receivable to the amount the Company reasonably believes is collectible. The Company also
analyzes all other customers based on a variety of factors including the length of time the receivables are past due, the financial
health of the customer, macroeconomic considerations and historical collection and loss experience. Historically, the allowance
for doubtful accounts has been adequate to cover bad debts. If circumstances related to specific customers change, the estimates
of the recoverability of receivables could be further adjusted.
Inventory
The Company performs regular detailed assessments of inventory, which include a review of, among other factors, demand
requirements, product life cycle and development plans, component cost trends, product pricing, shelf life, and quality issues.
Based on the analysis, the Company records adjustments to inventory for excess quantities, obsolescence or impairment when
appropriate to reflect inventory at net realizable value. Historically, inventory reserves have been adequate to reflect inventory
at net realizable value.
27
Long-Lived Assets
The Company evaluates the recoverability of other long-lived assets, including property, plant and equipment and certain
identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset
group may not be recoverable. Factors which could trigger an impairment review include significant underperformance relative
to historical or projected operating results, significant changes in the manner of use of the assets or the strategy for the overall
business, a significant decrease in the market value of the assets or significant negative industry or economic trends. When the
Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or
more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected
to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future
undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value. For the
fiscal year ended December 26, 2020, the Company recognized a $2.2 million impairment charge related to the land and
building associated with the Company’s announced consolidation of a manufacturing facility within the Industrial segment. For
the year-ended December 28, 2019, the Company recognized non-cash impairment charges of $0.3 million for certain
machinery and equipment related to the closure of a European manufacturing facility in the automotive sensors business within
the Transportation segment.
Environmental Liabilities
Environmental liabilities are accrued based on estimates of the probability of potential future environmental exposure. Costs
related to on-going maintenance of environmental sites are expensed as incurred. If actual or estimated probable future losses
exceed the Company’s recorded liability for such claims, it would record additional charges as other expense during the period
in which the actual loss or change in estimate occurred. The Company evaluates its reserve for coal mine remediation annually
utilizing a third-party expert.
Pension Plans
The Company records annual income and expense amounts relating to its pension and postretirement benefits plans based on
calculations which include various actuarial assumptions including discount rates, expected long-term rates of return and
compensation increases. The Company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance
sheet date (or more frequently if a significant event requiring remeasurement occurs) and modifies the assumption based on
current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the
Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount
recorded in accumulated other comprehensive (loss) income. The Company believes that the assumptions utilized in recording
its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and
investment advisors. The Company maintains several pension plans in international locations. The expected returns on plan
assets and discount rates are determined based on each plan’s investment approach, local interest rates and plan participant
profiles. The weighted-average discount rates for the Company’s defined benefit plans primarily in Europe and the Asia-Pacific
regions at January 1, 2022 and December 26, 2020 were 3.1% and 1.2%, respectively.
A 50 basis point change in the discount rates at January 1, 2022 would have the following effect on the projected benefit
obligation:
(in millions)
Projected benefit obligation
0.5%
Increase
0.5%
Decrease
$
(5.9) $
6.4
On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an
insurance company will be required to directly pay and administer pension payments to certain of the Company’s U.K. pension
plan participants, or their designated beneficiaries. The Company completed the buy-out of this U.K. pension plan during the
fourth quarter of 2021 and as a result recorded a non-cash pension settlement charge of $19.9 million (£14.9 million), inclusive
of the accelerated recognition of prior service cost of $0.5 million (£0.4 million). The purchase of this group annuity contract
reduced the Company’s outstanding pension benefit obligation by $47.1 million, representing 35% of the total obligation of the
Company’s qualified pension plans.
Equity-based Compensation
Equity-based compensation expense is recorded for stock-option awards and restricted share units based upon the fair values of
the awards. The fair value of stock-option awards is estimated at the grant date using the Black-Scholes option pricing model,
28
which includes assumptions for volatility, expected term, risk-free interest rate and dividend yield. Expected volatility is based
on implied volatilities from traded options on Littelfuse stock, historical volatility of Littelfuse stock and other factors.
Historical data is used to estimate employee termination experience and the expected term of the options. The risk-free interest
rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company initiated a quarterly cash dividend in
2010 and expects to continue making cash dividend payments for the foreseeable future. The fair value of restricted share units
is determined based on the Company's stock price on the grant date reduced by the present value of expected dividends through
the vesting period.
Total equity-based compensation expense for all equity compensation plans was $21.4 million, $19.1 million, and $19.9 million
in 2021, 2020, and 2019, respectively. Further information regarding this expense is provided in Note 12, Stock-Based
Compensation, of the Notes to Consolidated Financial Statements included in this Annual Report.
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet arrangements as defined under SEC rules. The Company does not participate in
transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities.
In the financial review that follows, the Company discusses its consolidated results of operations, financial position, cash flows
and certain other information. This discussion should be read in conjunction with the Company’s Consolidated Financial
Statements and related notes.
RESULTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 01, 2022 AS COMPARED TO THE YEAR
ENDED DECEMBER 26, 2020
The fiscal year 2021 included approximately $12.6 million of non-segment charges, of which $8.4 million relates to purchase
accounting inventory step-up charges, $7.0 million of acquisition-related and integration charges related to the Carling and
Hartland acquisitions and other contemplated acquisitions, and $2.2 million of restructuring, impairment and other charges,
primarily related to employee termination costs. See Note 8, Restructuring, Impairment and Other Charges, for further
discussion. Additionally, partially offsetting the above amounts was a gain of $5.0 million recorded for the sale of buildings
within the Electronics segment.
The fiscal year 2020 included approximately $44.0 million of non-segment charges, of which $2.3 million of charges are
acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition,
there were $41.7 million of restructuring, impairment and other charges, primarily related to the goodwill impairment charge of
$33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Transportation
segment, employee termination costs of $5.5 million, $2.2 million of impairment charges recorded in the first quarter associated
with the announced consolidation of a manufacturing facility within the Industrial segment and other restructuring charges of
$0.2 million.
Fiscal year 2021 also included approximately $17.2 million in foreign currency exchange losses primarily attributable to
changes in the value of the Euro, Chinese renminbi, Mexican peso, and Philippine peso against the U.S. dollar, while fiscal year
2020 included approximately $14.9 million in foreign currency exchange gains primarily attributable to changes in the value of
the Euro, Philippine peso, and Chinese renminbi against the U.S. dollar.
(in thousands, except % change)
Net sales
Cost of sales
Gross profit
Operating expenses
Operating income
Other expense (income), net
Income before income taxes
Income taxes
Net income
$
Fiscal Year
2021
2,079,928 $
1,308,002
771,926
386,284
385,642
8,932
341,025
57,219
283,806
2020
1,445,695 $
944,523
501,172
338,800
162,372
(5,083)
161,253
31,267
129,986
Change
% Change
634,233
363,479
270,754
47,484
223,270
14,015
179,772
25,952
153,820
43.9 %
38.5 %
54.0 %
14.0 %
137.5 %
(275.7) %
111.5 %
83.0 %
118.3 %
29
Net Sales
Net sales increased $634.2 million or 43.9% including $27.4 million or 1.9% of favorable changes in foreign exchange rates for
2021 compared to 2020. The increase was due to volume growth across all segments and businesses while 2020 had temporary
closures of manufacturing facilities resulting from government directives due to the impact of COVID-19. The increase was due
to higher sales of $363.0 million, $138.9 million, and $132.3 million in the Electronics, Industrial, and Transportation
segments, respectively, primarily driven by higher volumes across all businesses within these segments. The volume increase
within the Electronics segment was led by broad-based demand across electronics, transportation and industrial end markets.
The increase within the Industrial segment was primarily due to $100.5 million of net sales resulting from the Hartland
acquisition and volume growth across all businesses within the Industrial segment. The increase within the Transportation
segment was due to volume growth driven by higher demand in the global auto and commercial vehicle markets, greater
content growth across passenger vehicles due to vehicle mix, including growth in electric vehicles and some customers
maintaining additional inventory of our products, and $15.3 million of net sales resulting from the Carling acquisition.
Cost of Sales
Cost of sales was $1,308.0 million, or 62.9% of net sales, in 2021, compared to $944.5 million, or 65.3% of net sales, in 2020.
The increase in cost of sales was primarily due to greater volume across all segments driven by the factors discussed above
along with the Hartland and Carling acquisitions. As a percent of net sales, cost of sales decreased 2.4% driven by volume
leverage, partially offset by higher transportation, duty and tariff charges of 2.2%, the purchase accounting inventory charges of
$8.4 million or 0.4% resulting from the Hartland and Carling acquisitions, and higher material costs.
Gross Profit
Gross profit was $771.9 million, or 37.1% of net sales, in 2021, compared to $501.2 million, or 34.7% of net sales, in 2020. The
$270.8 million increase in gross profit was primarily due to higher volume across all segments while 2020 had additional costs
associated with government-directed plant shutdowns and supply chain constraints. The increase in gross margin of 2.4% was
primarily driven by volume leverage and favorable product mix within the Electronics segment, partially offset by higher
transportation, duty and tariff charges as a percent of net sales of 2.2%, the purchase accounting inventory charges of $8.4
million or 0.4%, and higher material costs.
Operating Expenses
Total operating expenses were $386.3 million, or 18.6% of net sales, for 2021 compared to $338.8 million, or 23.4% of net
sales, for 2020. The increase in operating expenses of $47.5 million is primarily due to higher selling, general, and
administrative expenses of $71.0 million largely due to higher accrued incentive compensation, the Hartland and Carling
acquisitions and higher acquisition-related and integration charges of $4.7 million, and higher research and development
expenses of $13.4 million, partially offset by the 2020 goodwill impairment charge of $33.8 million, or 2.3% of net sales, in the
automotive sensors reporting unit within the Transportation segment and impairment charges of $2.2 million related to the
Company’s 2020 first quarter announcement to consolidate a manufacturing facility within the Industrial segment.
Operating Income
Operating income for 2021 was $385.6 million, an increase of $223.3 million or 137.5% compared to $162.4 million for 2020.
The increase in operating income was primarily due to higher gross margin across all segments, led by the Electronics segment
partially offset by higher operating expenses noted above. Operating margins increased from 11.2% in 2020 to 18.5% in 2021
primarily driven by the factors mentioned above. The 2020 goodwill impairment charge of $33.8 million negatively impacted
the 2020 operating margin by 2.3%.
Income Before Income Taxes
Income before income taxes for 2021 was $341.0 million, or 16.4% of net sales compared to $161.3 million, or 11.2% of net
sales, for 2020. In addition to the factors impacting comparative results for operating income discussed above, income before
income taxes was impacted by foreign exchange losses of $17.2 million during the fiscal year ended January 1, 2022 compared
to foreign exchange gains of $14.9 million during the fiscal year ended December 26, 2020, and a $19.9 million non-cash
pension settlement charge, partially offset by a $4.0 million increase in unrealized investment gains associated with our equity
investment, and lower interest expense of $2.6 million due to lower outstanding borrowings under the credit facility along with
a lower effective interest rate and a reduction in coal mining charges of $1.6 million compared to 2020.
30
Income Taxes
Income tax expense for 2021 was $57.2 million, or an effective tax rate of 16.8%, compared to income tax expense of $31.3
million, or an effective tax rate of 19.4% for 2020. The Company’s tax rates are lower than the applicable U.S. statutory tax rate
primarily due to income earned in lower tax jurisdictions, partially offset by the impact of taxes on unremitted earnings, the
GILTI tax provisions, and non-U.S. losses and expenses with no tax benefit. The effective tax rate for 2021 is lower than the
effective tax rate for 2020, primarily due to an increase in the income earned in lower tax jurisdictions in 2021 as compared to
2020, as well as the impact of the goodwill impairment charge of $33.8 million recorded in 2020, the substantial majority of
which did not result in a tax benefit. Further information regarding these items is provided in Note 14, Income Taxes, of the
Notes to Consolidated Financial Statements included in this Annual Report.
Segment Information
The Company reports its operations by the following segments: Electronics, Transportation and Industrial. Segment information
is described more fully in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this
Annual Report.
The following table is a summary of the Company’s net sales by segment:
(in millions)
Electronics
Transportation
Industrial
Total
Electronics Segment
Fiscal Year
2021
2020
Change
% Change
$
$
1,300.7 $
528.1
251.1
2,079.9 $
937.7 $
395.8
112.2
1,445.7 $
363.0
132.3
138.9
634.2
38.7 %
33.4 %
123.8 %
43.9 %
Net sales for the Electronics segment increased $363.0 million, or 38.7%, in 2021 compared to 2020 and included favorable
changes in foreign exchange rates of $14.5 million or 1.5%. The sales increase was primarily due to increased volume for the
electronics and semiconductor products businesses of $206.5 million and $156.5 million, respectively. The volume increases
were driven by broad-based demand across electronics, transportation and industrial end markets while 2020 were negatively
impacted by production disruptions and temporary plant shutdowns due to the impact of COVID-19.
Transportation Segment
Net sales in the Transportation segment increased $132.3 million, or 33.4%, in 2021 compared to 2020 and included favorable
changes in foreign exchange rates of $12.0 million or 3.0%. The sales increase was due to higher volume in passenger car
products, commercial vehicle products, and the automotive sensors businesses of $65.6 million, $59.0 million, and $7.8 million,
respectively, including the incremental net sales of $15.3 million from the Carling acquisition within the commercial vehicle
products business. These increases were due to volume growth driven by higher demand in the global auto and commercial
vehicle markets, greater content growth across passenger vehicles due to vehicle mix, including growth in electric vehicles and
some customers maintaining additional inventory of our products as compared to 2020, which had production disruptions and
temporary plant shutdowns due to the impact of COVID-19.
Industrial Segment
The Industrial segment net sales increased by $138.9 million, or 123.8%, in 2021 compared to 2020 and included favorable
changes in foreign exchange rates of $0.9 million or 0.8%. The increase in net sales was primarily due to the incremental net
sales of $100.5 million or 90% from the Hartland acquisition, growth across all product lines, and the transfer of the
temperature sensor product line totaling $4.7 million which was previously reported in the Electronics segment and moved to
Industrial segment in the third quarter of 2020. Additionally, 2020 was negatively impacted by production disruptions and
temporary plant shutdowns due to the impact of COVID-19.
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:
31
(in millions)
Asia-Pacific
Americas
Europe
Total
Asia-Pacific
Fiscal Year
2021
2020
Change
% Change
$
$
955.7 $
694.3
429.9
2,079.9 $
670.5 $
457.8
317.4
1,445.7 $
285.2
236.5
112.5
634.2
42.5 %
51.7 %
35.4 %
43.9 %
Asia-Pacific net sales increased $285.2 million, or 42.5%, in 2021 compared to 2020 and included favorable changes in foreign
exchange rates of $12.5 million. The increase in net sales was primarily due to higher volume across all segments and
businesses compared to 2020 that had production disruptions due to the impact of COVID-19.
Americas
Net sales in the Americas increased $236.5 million, or 51.7%, in 2021 compared to 2020 and included favorable changes in
foreign exchange rates of $0.7 million. The increase in net sales was primarily due to incremental sales from the Hartland and
Carling acquisitions, higher volume across all segments and businesses compared to 2020 that had production disruptions due
to the impact of COVID-19.
Europe
European net sales increased $112.5 million, or 35.4%, in 2021 compared to 2020 and included favorable changes in foreign
exchange rates of $14.2 million. The increase in net sales was primarily due to higher volume across all businesses within the
Electronics and Transportation segments compared to the 2020 that had production disruptions due to the impact of COVID-19.
32
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 26, 2020 AS COMPARED TO THE YEAR
ENDED DECEMBER 28, 2019
The fiscal year 2020 included approximately $44.0 million of non-segment charges, of which $2.3 million of charges are
acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition,
there were $41.7 million of restructuring, impairment and other charges, primarily related to the goodwill impairment charge of
$33.8 million recorded in the second quarter associated with the automotive sensors reporting unit within the Transportation
segment, employee termination costs of $5.5 million, $2.2 million of impairment charges recorded in the first quarter associated
with the announced consolidation of a manufacturing facility within the Industrial segment and other restructuring charges of
$0.2 million. See Note 8, Restructuring, Impairment and Other Charges, for further discussion.
The fiscal year 2019 included approximately $21.9 million of non-segment charges, of which $8.9 million of charges are
acquisition-related and integration charges primarily related to the IXYS acquisition and other contemplated acquisitions, and
$13.0 million of restructuring charges primarily related to employee termination costs.
Fiscal year 2020 also included approximately $14.9 million in foreign currency exchange gains primarily attributable to
changes in the value of the Euro, Philippine peso, and Chinese renminbi against the U.S. dollar, while fiscal year 2019 included
approximately $5.2 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro,
Chinese renminbi, and Japanese yen against the U.S. dollar.
(in thousands, except % change)
Net sales
Cost of sales
Gross profit
Operating expenses
Operating income
Other income, net
Income before income taxes
Income taxes
Net income
Net Sales
$
Fiscal Year
2020
1,445,695 $
944,523
501,172
338,800
162,372
2019
1,503,873 $
957,578
546,295
353,504
192,791
(5,083)
(583)
161,253
31,267
129,986
165,884
26,802
139,082
Change
% Change
(58,178)
(13,055)
(45,123)
(14,704)
(30,419)
(4,500)
(4,631)
4,465
(9,096)
(3.9) %
(1.4) %
(8.3) %
(4.2) %
(15.8) %
771.9 %
(2.8) %
16.7 %
(6.5) %
Net sales of $1,445.7 million decreased $58.2 million, or 3.9%, for 2020 compared to the prior year primarily due to lower
volume in the Transportation and Electronics segments which had net sales decreases of $32.7 million and $23.4 million,
respectively, partially offset by $7.7 million or 0.5% of favorable changes in foreign exchange rates. These decreases were
primarily driven by the production disruption due to temporary closures of manufacturing facilities resulting from government
directives due to the impact of COVID-19 and a decline in global auto production driven by the temporary closures of customer
manufacturing facilities during the first half of 2020. These sales declines were partially offset by increases in customer demand
for consumer devices for work from home needs and strength in various end market demand across all businesses in the second
half of the year. All businesses within the Transportation segment experienced lower sales in 2020 due to the production
disruptions in the first half of 2020 mentioned above, which was partially offset in the second half of the year, driven by
stronger end market demand.
Cost of Sales
Cost of sales was $944.5 million, or 65.3% of net sales, in 2020, compared to $957.6 million, or 63.7% of net sales, in 2019.
The decrease in cost of sales was primarily due to lower volume in the Electronics and Transportation segments driven by the
factors discussed above. As a percent of net sales, cost of sales increased 1.6% driven by higher freight costs of $5.6 million,
additional costs associated with government-directed plant shutdowns and supply chain constraints, supplies and other costs due
to the impact of COVID-19, and unfavorable product mix.
Gross Profit
Gross profit was $501.2 million, or 34.7% of net sales, in 2020, compared to $546.3 million, or 36.3% of net sales, in 2019. The
decrease of $45.1 million in gross profit reflected lower volume across all segments driven by the disruption across all segments
33
due to temporary closures of manufacturing facilities in the first half of the year resulting from government directives due to the
impact of COVID-19. The decrease in gross margin of 1.6% was primarily from the lower volume mentioned previously,
unfavorable price and product mix primarily in the Industrial segment. Additionally, higher freight cost of $5.6 million, costs
associated with government-directed plant shutdowns and supply chain constraints, supplies and other costs due to the impact
of COVID-19 negatively impacted gross margins.
Operating Expenses
Total operating expenses were $338.8 million, or 23.4% of net sales, for 2020 compared to $353.5 million, or 23.5% of net
sales, for 2019. The decrease in operating expenses of $14.7 million is primarily due to lower research and development
expenses of $27.5 million, or 1.7% of net sales, a reduction in discretionary expenses including travel and marketing expenses
and a $6.6 million reduction in acquisition-related and integration charges, partially offset by the second quarter goodwill
impairment charge of $33.8 million, or 2.3% of net sales, in the automotive sensors reporting unit within the Transportation
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 for 2020 was $162.4 million, a decrease of $30.4 million or 15.8% compared to $192.8 million for 2019. The
decrease in operating income is primarily due to lower gross margin across all segments and the $33.8 million goodwill
impairment charge noted above partially offset by a reduction in operating expenses described above. Operating margins
decreased from 12.8% in 2019 to 11.2% in 2020 primarily driven by the factors mentioned above. The second quarter goodwill
impairment charge of $33.8 million negatively impacted the 2020 operating margin by 2.3% which was partially offset by the
lower operating expenses and cost reductions noted above.
Income Before Income Taxes
Income before income taxes for 2020 was $161.3 million, or 11.2% of net sales compared to $165.9 million, or 11.0% of net
sales, for 2019. In addition to the factors impacting comparative results for operating income discussed above, income before
income taxes benefited from foreign exchange gains of $14.9 million during the fiscal year ended December 26, 2020 compared
to foreign exchange losses of $5.2 million during the fiscal year ended December 28, 2019. Additionally, the increase in other
income of $4.5 million was primarily due to the 2019 fiscal year impairment charges of $7.3 million for certain other
investments and a $2.6 million loss on the disposal of a business within the Electronics segment and $1.7 million increase in
unrealized investment gains associated with our equity investments, partially offset by lower interest income of $2.0 million
and a $1.2 million increase in coal mining reserves in 2020 versus 2019.
Income Taxes
Income tax expense for 2020 was $31.3 million, or an effective tax rate of 19.4% compared to income tax expense of $26.8
million, or an effective tax rate of 16.2% for 2019. The Company’s tax rates are lower than the applicable U.S. statutory tax rate
primarily due to income earned in lower tax jurisdictions, partially offset by the impact of taxes on unremitted earnings, the
GILTI tax provisions, and non-U.S. losses and expenses with no tax benefit. Changes in the amount of these items from year to
year impact the effective tax rates. In addition, the 2020 income tax expense included 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 related to non-U.S.
entities and did not result in a tax benefit, and the 2019 income tax expense included a benefit of $3.3 million from the
recognition of previously unrecognized tax benefits (and the reversal of the related accrued interest) due to a lapse in the statute
of limitations. The impact of the items discussed above resulted in an increase in the effective tax rate in 2020, as compared to
the effective tax rate in 2019. Further information regarding these items is provided in Note 14, Income Taxes, of the Notes to
Consolidated Financial Statements included in this Annual Report.
Segment Information
The Company reports its operations by the following segments: Electronics, Transportation and Industrial. Segment information
is described more fully in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this
Annual Report.
The following table is a summary of the Company’s net sales by segment:
34
(in millions)
Electronics
Transportation
Industrial
Total
Electronics Segment
Fiscal Year
2020
2019
Change
% Change
$
$
937.7 $
395.8
112.2
1,445.7 $
961.1 $
428.5
114.3
1,503.9 $
(23.4)
(32.7)
(2.1)
(58.2)
(2.4) %
(7.6) %
(1.8) %
(3.9) %
Net sales for the Electronics segment decreased $23.4 million, or 2.4%, in 2020 compared to 2019 primarily due to declines in
net sales for the semiconductor and electronics products businesses of $17.5 million and $5.9 million, respectively, driven by
the production disruption due to temporary closures of manufacturing facilities resulting from government directives due to the
impact of COVID-19 during the first half of the year. These declines were partially offset by increases in customer demand for
consumer devices for work from home needs and strength in various end markets during the second half of the year along with
favorable changes in foreign exchange rates of $3.6 million.
Transportation Segment
Net sales in the Transportation segment decreased $32.7 million, or 7.6%, in 2020 compared to 2019 due to decreased volume
in passenger car products, commercial vehicle products, and automotive sensors businesses of $18.1 million, $10.6 million, and
$4.0 million, respectively, driven by the production disruption due to temporary closures of manufacturing facilities resulting
from government directives due to the impact of COVID-19 and a decline in global auto production driven by the temporary
closures of customer manufacturing facilities during the first half of 2020. These sales declines were partially offset by
increases in end market demand across all businesses in the second half of 2020 and favorable changes in foreign exchange
rates of $4.1 million.
Industrial Segment
The Industrial segment net sales decreased slightly by $2.1 million, or 1.9%, in 2020 compared to 2019 primarily 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 in the first half of 2020, 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:
(in millions)
Asia-Pacific
Americas
Europe
Total
Asia-Pacific
Fiscal Year
2020
2019
Change
% Change
$
$
670.5 $
457.8
317.4
1,445.7 $
656.8 $
508.4
338.7
1,503.9 $
13.7
(50.6)
(21.3)
(58.2)
2.1 %
(10.0) %
(6.3) %
(3.9) %
Asia-Pacific net sales increased $13.7 million, or 2.1%, in 2020 compared to 2019. The increase in net sales was primarily due
to higher volume in the semiconductor business within the Electronics segment and favorable changes in foreign exchange rates
of $2.2 million, partially offset by lower volume in the passenger car products business within the Transportation segment due
to the production disruption associated with temporary closures of manufacturing facilities resulting from government
directives due to the impact of COVID-19 in the first half of 2020.
Americas
35
Net sales in the Americas decreased $50.6 million, or 10.0%, in 2020 compared to 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, the temporary closures of customer manufacturing facilities during the
first half of 2020 and unfavorable changes in foreign exchange rates of $0.3 million. These sales declines were partially offset
by increases in end market demand across all businesses in the second half of the year.
Europe
European net sales decreased $21.3 million, or 6.3%, in 2020 compared to 2019. The decrease in net sales was primarily due to
lower volume in the semiconductor business within the Electronics segment, lower volume in passenger car products and
commercial vehicle products businesses within the Transportation segment driven by the production disruption due to
temporary closures of manufacturing facilities resulting from government directives due to the impact of COVID-19 and the
temporary closures of customer manufacturing facilities during the first half of 2020, partially offset by increased volume in the
second half of 2020 due to higher end market demand in Electronics and Transportation businesses and favorable changes in
foreign exchange rates of $5.8 million.
Liquidity and Capital Resources
Cash and cash equivalents were $478.5 million as of January 1, 2022, a decrease of $209.1 million as compared to
December 26, 2020.
As of January 1, 2022, $326.1 million of the Company's $478.5 million cash and cash equivalents was held by non-U.S.
subsidiaries. Of the $326.1 million, at least $171.2 million can be repatriated with minimal tax consequences, although in
certain cases a non-U.S. withholding tax would be payable but subsequently refunded. With respect to the remaining
$154.9 million, the Company has recognized deferred tax liabilities on approximately $68.6 million as of January 1, 2022
because the amounts are not considered to be permanently reinvested, and the Company may access additional amounts through
loans and other means. Repatriation of some non-U.S. cash balances is restricted by local laws. Management regularly evaluates
whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future
operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, non-
U.S. or U.S. tax laws could result in changes to these judgments and the need to record additional tax liabilities.
The Company has historically supported its liquidity needs through cash flows from operations. Management expects that the
Company’s (i) current level of cash, cash equivalents, and marketable securities, (ii) current and forecasted cash flows from
operations, (iii) availability under existing funding arrangements, and (iv) access to capital in the capital markets will provide
sufficient funds to support the Company’s operations, capital expenditures, investments, and debt obligations on both a short-
term and long-term basis.
Revolving Credit Facility
On April 3, 2020, the Company amended its 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 Company made payments of $30.0 million on the amended revolving credit
facility during the fiscal year ended January 1, 2022. The balance under the facility was $100.0 million as of January 1, 2022.
Outstanding borrowings under the amended credit agreement bear interest, at the Company’s option, at either LIBOR, fixed for
interest periods of one, two, three or six-month periods, plus 1.25% 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 is 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 credit agreement includes representations, covenants and events of default
that are customary for financing transactions of this nature. The effective interest rate on outstanding borrowings under the
credit facility was 1.35% at January 1, 2022.
As of January 1, 2022, the Company had no outstanding in letters of credit and had available $600.0 million of borrowing
capacity under the revolving credit facility. At January 1, 2022, the Company was in compliance with all covenants under the
credit agreement.
36
Senior Notes
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold
€212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes
occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023
(“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December
8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is
payable semiannually on June 8 and December 8, commencing June 8, 2017.
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold
$125 million aggregate principal amount of senior notes in two series. On February 15, 2017, $25 million in aggregate principal
amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in
aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”)
(together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is
payable semiannually on February 15 and August 15, commencing August 15, 2017.
On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold
$175 million in aggregate principal amount of senior notes in two series. On January 16, 2018, $50 million aggregate principal
amount of 3.48% Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $125 million in
aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”)
(together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and
2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on
February 15 and August 15, commencing August 15, 2018.
The Company was in compliance with its debt covenants as of January 1, 2022. As of January 1, 2022, the Company met all the
conditions required to borrow under the Credit Agreement and management expects the Company to continue to meet the
applicable borrowing conditions.
Acquisitions
On January 28, 2021, the Company acquired Hartland, a manufacturer and leading supplier of electrical components used
primarily in HVAC and other industrial and control systems applications. At the time of acquisition, Hartland had annualized
sales of approximately $70 million. The total purchase price for Hartland was $111.0 million and the operations of Hartland are
included in the Industrial segment. The net cash payment of $108.5 million was funded by the Company’s cash on hand.
On November 30, 2021, the Company acquired Carling, a leader in switching, circuit protection and power distribution
technologies with a strong global presence in commercial transportation, communications infrastructure and marine markets. At
the time of acquisition, Carling had annualized sales of approximately $170 million. The purchase price for Carling was $315
million subject to change for working capital adjustments and the operations of Carling are included in the Transportation
segment. The net cash payment of $313.6 million was funded by the Company’s cash on hand.
Cash Flow Overview
Operating cash inflows are largely attributable to sales of the Company’s products. Operating cash outflows are largely
attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.
The following describes the Company’s cash flows for the fiscal year ended January 1, 2022 and December 26, 2020:
37
(in millions)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(Decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
Cash Flow from Operating Activities
Fiscal Year
2021
2020
$
$
373.3 $
(499.2)
(69.0)
(9.9)
(204.7)
687.5
482.8 $
258.0
(51.4)
(67.8)
17.6
156.4
531.1
687.5
Net cash provided by operating activities was $373.3 million for the fiscal year 2021, an increase of $115.3 million, compared
to $258.0 million during the fiscal year 2020. The increase in net cash provided by operating activities was primarily due to
higher cash earnings partially offset by increases in working capital resulting from higher sales growth.
Cash Flow from Investing Activities
Net cash used in investing activities was $499.2 million for the fiscal year 2021, compared to $51.4 million during the fiscal
year 2020. Capital expenditures were $90.6 million, representing a decrease of $34.4 million compared to the fiscal year 2020.
Net cash paid for the Hartland and Carling acquisitions was $422.1 million during the fiscal year 2021. The Company also
received proceeds of $15.4 million from the sale of buildings within the Electronics segment during the fiscal year 2021 as
compared to proceeds of $4.8 million as a result of the sale of a property within the Industrial segment during the fiscal year
2020.
Cash Flow from Financing Activities
Net cash used in financing activities was $69.0 million for the fiscal year 2021 compared to $67.8 million for the fiscal year
2020. The Company made payments of $30.0 million on the amended revolving credit facility during the fiscal year 2021. On
March 25, 2020, the Company borrowed $100.0 million from its revolving credit facility to preserve financial flexibility and
enhance liquidity, given the increasing levels of uncertainty related to COVID-19. On April 3, 2020, the Company amended
the Credit Agreement to eliminate the $200.0 million unsecured term loan credit facility, with the remaining outstanding
balance of $140.0 million repaid in full on April 3, 2020 through a new borrowing of $140.0 million under the amended
revolving credit facility. The Company also made principal payments of $5.0 million on the term loan during fiscal year 2020
before amended the Credit Agreement. During the fiscal year 2020, the Company made payments of $110.0 million on the
amended revolving credit facility.
During the fiscal year 2020, the Company repurchased 175,110 shares of its common stock totaling $22.9 million. Additionally,
dividends paid increased $2.9 million from $46.8 million for the fiscal year 2020 to $49.7 million for the fiscal year 2021.
The following describes the Company’s cash flows for the twelve months ended December 26, 2020 and December 28, 2019:
(in millions)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
Cash Flow from Operating Activities
38
Fiscal Year
2020
2019
258.0 $
(51.4)
(67.8)
17.6
156.4
531.1
687.5 $
245.3
(56.4)
(146.3)
(1.2)
41.4
489.7
531.1
$
$
Net cash provided by operating activities was $258.0 million for the fiscal year 2020, compared to $245.3 million during the
fiscal year 2019. The increase in net cash provided by operating activities was primarily due to lower annual incentive
payments and favorable changes in net working capital partially offset by lower earnings largely due to the impact of
COVID-19.
Cash Flow from Investing Activities
Net cash used in investing activities was $51.4 million for the fiscal year 2020, compared to $56.4 million during the fiscal year
2019. Capital expenditures were $56.2 million, representing a decrease of $5.7 million compared to the fiscal year 2019. The
Company also received proceeds of $4.8 million and $6.2 million, respectively, in the fiscal year 2020 and the fiscal year 2019
primarily as a result of the sale of properties within the Industrial segment.
Cash Flow from Financing Activities
Net cash used in financing activities was $67.8 million for 2020 compared to $146.3 million for the fiscal year 2019. The
Company made principal payments of $5.0 million and $10.0 million on the term loan during fiscal year 2020 and 2019,
respectively. During fiscal year 2020, the company borrowed $100.0 million from its revolving credit facility to preserve
financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19. 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 $110.0 million on the amended revolving credit
facility during the fiscal year 2020. The balance under the facility was $130.0 million as of December 26, 2020.
For the fiscal year 2020 and 2019, the Company repurchased 175,110 and 579,916 shares of its common stock totaling $22.9
million and $95.0 million, respectively, but made payments of $99.4 million related to settled share repurchases during the
fiscal year 2019. Additionally, dividends paid increased $2.2 million from $44.7 million for the fiscal year 2019 to $46.8
million for the fiscal year 2020.
Contractual Obligations and Commitments
The following table summarizes outstanding contractual obligations and commitments as of January 1, 2022:
(in thousands)
Long-term debt(a)
Interest payments(b)
Operating lease payments(c)
Income tax obligation(d)
Purchase obligations(e)
Total
Payments Due By Period
Total
Less than
1 Year
1 to 3
Years
3 to 5
Years
Greater
than
5 Years
$
$
639,984 $
80,435
34,307
20,754
13,544
789,024 $
25,000 $
14,488
10,080
3,000
10,091
62,659 $
132,444 $
26,710
15,163
9,515
1,263
185,095 $
150,000 $
20,202
4,457
8,239
1,166
184,064 $
332,540
19,035
4,607
—
1,024
357,206
(a) Excludes offsetting issuance costs of $3.1 million. Euro denominated debt amounts are converted based on the Euro to
U.S. Dollar spot rate at year end. For more information see Note 9, Debt, of the Notes to Consolidated Financial
Statements.
(b) Amounts represent estimated contractual interest payments on outstanding debt. Rates in effect as of January 1, 2022
are used for variable rate debt. For more information see Note 9, Debt, of the Notes to Consolidated Financial Statements.
(c) For more information see Note 7, Lease Commitments, of the Notes to Consolidated Financial Statements.
(d) The Income tax obligation represents the remaining amounts payable regarding the 2017 Littelfuse Toll Charge. The
Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. For
more information see Note 14, Income Taxes, of the Notes to Consolidated Financial Statements.
39
(e) Purchase obligations include purchase commitments and commitments for capital expenditures not recognized in the
Company’s Consolidated Balance Sheets.
In addition to the above contractual obligations and commitments, the Company had the following obligations at January 1,
2022:
The Company has Company-sponsored defined benefit pension plans covering employees at various non-U.S. subsidiaries
including the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. At January 1, 2022, the Company had a
net unfunded status of $38.2 million. The Company expects to make approximately $2.6 million of contributions to the plans in
2022. For additional information, see Note 11, Benefit Plans, of the Notes to Consolidated Financial Statements.
Dividends
Cash dividends paid totaled $49.7 million, $46.8 million and $44.7 million for 2021, 2020 and 2019, respectively. On January
27, 2022, the Board of Directors of the Company declared a quarterly cash dividend of $0.53 per share, payable on March 10,
2022 to stockholders of record as of February 24, 2022.
Capital Resources
The Company expends capital to support its operating and strategic plans. Such expenditures include strategic acquisitions,
investments to maintain capital assets, develop new products or improve existing products, and to enhance capacity or
productivity. Many of the associated projects have long lead-times and require commitments in advance of actual spending.
Share Repurchase Program
On 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 (the "2019 program"). On April 29, 2020, the Company
announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's
common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program.
On April 28, 2021, the Company announced that the Board of Directors authorized a new three-year program to repurchase up
to $300 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to
replace its previous 2020 program. There are $300 million in the aggregate of shares available for purchase under the new
program as of January 1, 2022.
During the fiscal year 2021, the Company did not repurchase any shares of its common stock. During the fiscal year 2020 and
2019, the Company repurchased 175,110, and 579,916 shares of its common stock totaling $22.9 million and $95.0 million,
respectively.
Off-Balance Sheet Arrangements
As of January 1, 2022, the Company did not have any off-balance sheet arrangements, as defined under SEC rules. Specifically,
the Company was not liable for guarantees of indebtedness owed by third parties, the Company was not directly liable for the
debt of any unconsolidated entity and the Company did not have any retained or contingent interest in assets. The Company
does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities.
Recent Accounting Pronouncements
Recently issued accounting standards and their estimated effect on the Company’s Consolidated Financial Statements are
described in Note 1, Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial
Statements.
40
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to market risk from changes in interest rates, foreign exchange rates and commodity prices.
Interest Rates Risk
The Company made payments of $30.0 million on the amended revolving credit facility during the fiscal year 2021. The
balance under the facility was $100.0 million as of January 1, 2022. With variable interest rates, the Company is subject to
future interest rate fluctuations in relation to these borrowings which could potentially have a negative impact on cash flows of
the Company. A prospective increase of 100 basis points in the interest rate applicable to the Company’s outstanding
borrowings under its credit facility would result in an increase of approximately $1.0 million in annual interest expense. This
exposure would be partially if not fully offset by higher interest income from the Company's investments. The Company is not
party to any currency exchange or interest rate protection agreements as of January 1, 2022.
Foreign Exchange Rate Risk
The majority of the company’s operations consist of manufacturing and sales activities in foreign countries. The Company has
operations in China, Germany, Mexico, Philippines, U.K., Japan, Lithuania, Netherlands, Portugal, Singapore, South Korea,
Spain, and the U.S. During 2021, sales to customers outside the U.S. were approximately 69% of total net sales. During 2020,
sales to customers outside the U.S. were approximately 73% of total net sales. Substantially all sales in Europe are denominated
in euros and substantially all sales in the Asia-Pacific region are denominated in U.S. dollars, Chinese renminbi, Japanese yen,
or Korean won.
The company’s foreign exchange exposures result primarily from inter-company loans, external borrowings, sale of products in
foreign currencies, foreign currency denominated purchases, employee-related and other costs of running operations in foreign
countries. The company’s most significant foreign currency exposures are to the euro, the Chinese renminbi, Mexican peso, and
Philippine peso. Changes in foreign exchange rates could affect the company’s sales, costs, balance sheet values and earnings.
At January 1, 2022, the net value of the Company’s assets with exposure to foreign currency risk was approximately $148
million, with the largest exposure being a Japanese yen denominated inter-company loan with a Euro functional currency
subsidiary. The reduction in earnings from a hypothetical instantaneous 10% adverse change in quoted foreign currency spot
rates applied to foreign currency sensitive asset instruments would be $15 million at January 1, 2022. At January 1, 2022, the
net value of the Company’s liabilities with exposure to foreign currency risk was $389 million, with the largest exposure being
U.S. Dollar denominated inter-company loans with a Euro functional currency subsidiary. The reduction in earnings from a
hypothetical instantaneous 10% adverse change in quoted foreign currency spot rates applied to foreign currency sensitive
liability instruments would be $39 million at January 1, 2022. As a result of the mix in currencies impacting the hypothetical
10% changes, the movements in some instruments would offset movements in other instruments reducing the hypothetical
exposure to the Company.
Commodity Price Risk
The Company uses various metals in the manufacturing of its products, including copper, zinc, tin, gold, and silver. Prices of
these and other commodities can rise and result in materially higher costs of producing our products. The Company believes it
has adequate primary and secondary sources of supply for each of our key materials. While the Company is exposed to
significant changes in certain metal prices and expects higher material costs, the Company actively monitors these exposures
and may take various actions, including price increases and productivity improvements to mitigate any negative impacts of
these exposures.
Due to the continued impact from COVID-19, transportation costs increased significantly in 2021 and may further increase in
2022. The Company has taken and, in the future, may take further various actions, including price increases and changing
freight modes or other alternative solutions to mitigate the impact of rising transportation costs.
41
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index
Page
Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements (PCAOB ID Number
248)
Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting
Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Net Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies and Other Information
2. Acquisitions
3. Inventories
4. Property, Plant, and Equipment
5. Goodwill and Other Intangible Assets
6. Accrued Liabilities
7. Lease Commitments
8. Restructuring, Impairment and Other Charges
9. Debt
10. Fair Value of Assets and Liabilities
11. Benefit Plans
12. Stock-Based Compensation
13. Other Comprehensive Income (Loss)
14. Income Taxes
15. Earnings Per Share
16. Segment Information
17. Selected Quarterly Financial Data (Unaudited)
18. Related Party Transactions
43
45
46
47
48
49
50
51
57
60
60
61
63
63
64
66
68
70
75
77
78
81
81
84
85
42
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Littelfuse, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Littelfuse, Inc. (a Delaware corporation) and subsidiaries
(the “Company”) as of January 1, 2022 and December 26, 2020, the related consolidated statements of net income,
comprehensive income, equity, and cash flows for each of the three years in the period ended January 1, 2022, and the related
notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1,
2022 and December 26, 2020, and the results of its operations and its cash flows for each of the three years in the period ended
January 1, 2022, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of January 1, 2022, based on criteria established in the
2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 17, 2022 expressed an unqualified opinion.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of January 1, 2022, based on criteria established in the
2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 17, 2022, expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Business Acquisition – Carling Technologies – Valuation of acquired Intangible Assets
As discussed in Note 2, the Company acquired Carling Technologies, Inc., on November 30, 2021 for a total purchase price of
approximately $314 million, net of cash acquired. The Company allocated the purchase price, on a preliminary basis, to the
assets acquired and liabilities assumed based on their respective fair values, including identified intangible assets of $125.9
million. We identified the valuation of acquired intangible assets as a critical audit matter.
The principal considerations for our determination that the valuation of acquired intangible assets is a critical audit matter are (i)
the significant judgment by management when determining assumptions used in the fair value measurement of acquired
intangible assets (ii) the high degree of auditor judgment and subjectivity in performing procedures and evaluating
43
management’s significant assumptions relating to revenue growth, royalty rates, and customer attrition rates and (iii) the audit
effort involved the use of professionals with specialized skill and knowledge.
Our audit procedures related to the valuation of the acquired intangible assets included the following, among others:
– we tested the design and operating effectiveness of the controls over the Company’s acquisition and valuation process,
including review of the valuation model, significant assumptions used, and the completeness and accuracy of the
underlying data used
– we tested the forecasted revenues and cash flows by assessing the reasonableness of management’s forecasts compared
to historical results and forecasted industry trends
– with the assistance of our valuation specialists, we assessed the royalty, customer attrition, and revenue growth rates
by developing a range of independent estimates and comparing those to the rates selected by management. We also
involved our valuation specialists to evaluate the assumptions and methodologies used in valuing the intangible assets.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2014.
Southfield, Michigan
February 17, 2022
44
Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Littelfuse, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Littelfuse, Inc. (a Delaware corporation) and subsidiaries (the
“Company”) as of January 1, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of January 1, 2022, based on criteria established in
the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended January 1, 2022, and our report
dated February 17, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over
financial reporting of Carling Technologies, Inc., a wholly-owned subsidiary, whose financial statements reflect total assets and
revenues constituting 5% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year
ended January 1, 2022. As indicated in Management’s Report, Carling Technologies, Inc. was acquired during 2021.
Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal
control over financial reporting of Carling Technologies, Inc.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and directors of the
Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Southfield, Michigan
February 17, 2022
45
LITTELFUSE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Trade receivables, less allowances of $59,232 and $45,237, respectively
Inventories
Prepaid income taxes and income taxes receivable
Prepaid expenses and other current assets
Total current assets
Net property, plant, and equipment
Intangible assets, net of amortization
Goodwill
Investments
Deferred income taxes
Right of use assets, net
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued liabilities
Accrued income taxes
Current portion of long-term debt
Total current liabilities
Long-term debt, less current portion
Deferred income taxes
Accrued post-retirement benefits
Non-current operating lease liabilities
Other long-term liabilities
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued,
26,350,763 and 26,131,544, respectively
Additional paid-in capital
Treasury stock, at cost: 1,664,711 and 1,644,283 shares, respectively
Accumulated other comprehensive loss
Retained earnings
Littelfuse, Inc. shareholders’ equity
Non-controlling interest
Total equity
Total liabilities and equity
See accompanying Notes to Consolidated Financial Statements.
46
January 1, 2022
December 26,
2020
$
478,473 $
28
275,192
445,671
2,035
68,812
1,270,211
437,889
407,126
929,790
39,211
13,127
29,616
24,734
687,525
54
232,760
258,002
3,029
35,939
1,217,309
344,178
291,887
816,812
30,547
11,224
17,615
18,021
$ 3,151,704 $
2,747,593
$
222,039 $
159,689
27,905
25,000
434,633
611,897
81,289
37,037
22,305
71,023
145,984
110,478
19,186
—
275,648
687,034
50,134
45,802
12,950
67,252
260
946,588
(248,120)
(73,463)
1,268,124
1,893,389
131
1,893,520
$ 3,151,704 $
259
907,858
(242,366)
(91,157)
1,034,048
1,608,642
131
1,608,773
2,747,593
LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF NET INCOME
Fiscal Year Ended
December 26,
2020
1,445,695 $
944,523
501,172
January 1, 2022
$
2,079,928 $
1,308,002
771,926
December 28,
2019
1,503,873
957,578
546,295
275,457
65,940
42,729
2,158
386,284
385,642
204,507
52,538
40,039
41,716
338,800
162,372
18,527
17,158
8,932
341,025
57,219
283,806 $
21,077
(14,875)
(5,083)
161,253
31,267
129,986 $
220,448
79,997
40,026
13,033
353,504
192,791
22,266
5,224
(583)
165,884
26,802
139,082
11.54 $
11.38 $
5.33 $
5.29 $
5.66
5.60
24,603
24,932
24,371
24,592
24,576
24,818
$
$
$
(in thousands, except per share data)
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Research and development expenses
Amortization of intangibles
Restructuring, impairment, and other charges
Total operating expenses
Operating income
Interest expense
Foreign exchange loss (gain)
Other expense (income), net
Income before income taxes
Income taxes
Net income
Income per share:
Basic
Diluted
Weighted average shares and equivalent shares outstanding:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
47
LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
January 1, 2022
$
283,806 $
Year Ended
December 26,
2020
129,986 $
December 28,
2019
139,082
Pension and postemployment adjustments, net of tax
Foreign currency translation adjustments
Comprehensive income
22,213
(4,519)
301,500 $
(16,095)
31,761
145,652 $
(8,087)
(812)
130,183
$
See accompanying Notes to Consolidated Financial Statements.
48
LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Year Ended
January 1,
2022
December 26,
2020
December 28,
2019
$
283,806 $
129,986 $
139,082
Depreciation
Amortization of intangibles
Non-cash pension settlement charges
Impairment charges
Deferred revenue
Non-cash inventory charges
Stock-based compensation
(Gain) loss on investments and other assets
Deferred income taxes
Other
Changes in operating assets and liabilities:
Trade receivables
Inventories
Accounts payable
Accrued liabilities and income taxes
Prepaid expenses and other assets
Net cash provided by operating activities
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired
Purchases of property, plant, and equipment
Proceeds from sale of property, plant, and equipment
Other
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds of revolving credit facility
Payments of revolving credit facility
Payments of term loan and other loans
Net proceeds related to stock-based award activities
Cash dividends paid
Purchases of common stock
Debt issuance costs
Net cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
(Decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
55,906
42,729
19,855
—
(2,570)
8,397
19,611
(8,907)
(8,020)
20,275
(10,234)
(104,555)
40,481
30,793
(14,223)
373,344
(423,633)
(90,562)
15,425
(390)
(499,160)
—
(30,000)
(2,619)
13,365
(49,730)
—
—
(68,984)
(9,889)
(204,689)
687,525
56,139
40,039
—
36,078
(593)
—
18,129
(4,663)
(3,214)
(18,230)
(25,588)
(12,425)
28,820
6,765
6,788
258,031
—
(56,191)
4,758
—
52,477
40,026
—
322
(318)
—
19,046
4,854
(1,147)
6,638
28,497
22,094
(22,574)
(54,242)
10,573
245,328
(775)
(61,895)
6,213
—
(51,433)
(56,457)
240,000
(110,000)
(145,000)
18,744
(46,839)
(22,927)
(1,786)
(67,808)
17,596
156,386
531,139
—
—
(10,000)
7,800
(44,689)
(99,387)
—
(146,276)
(1,189)
41,406
489,733
531,139
Cash, cash equivalents, and restricted cash at end of period
$
482,836 $
687,525 $
Supplementary Cash Flow Information
Reconciliation of cash and cash equivalents:
Cash and cash equivalents
Restricted cash included in prepaid expenses and other current assets
Restricted cash included in other assets
Cash paid during the period for interest
Cash paid during the period for income taxes, net of refunds
Capital expenditures, not yet paid
See accompanying Notes to Consolidated Financial Statements.
49
$
$
$
$
$
$
478,473 $
687,525 $
531,139
2,718 $
1,645 $
17,420 $
55,561 $
11,872 $
— $
— $
20,095 $
27,619 $
6,126 $
—
—
21,240
40,518
11,110
LITTELFUSE, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share
data)
Common
Stock
Addl. Paid
in Capital
Treasury
Stock
Accum.
Other
Comp. Inc.
(Loss)
Retained
Earnings
Non-
controlling
Interest
Total
Balance at December 29, 2018
$ 254 $ 835,828 $ (116,454) $ (97,924) $ 856,507 $
131 $ 1,478,342
Net income
Other comprehensive income (loss),
net of tax
Stock-based compensation
Withheld 25,940 shares on restricted
share units for withholding taxes
—
—
—
19,046
—
—
—
(4,957)
Stock options exercised
2
13,122
—
Repurchases of common stock
—
Cash dividends paid ($1.82 per share)
—
—
—
(95,036)
—
—
139,082
—
139,082
(8,899)
—
—
—
—
—
—
—
—
—
(44,688)
—
—
—
—
—
(8,899)
19,046
(4,957)
13,124
(95,036)
(44,688)
Balance at December 28, 2019
$ 256 $ 867,996 $ (216,447) $ (106,823) $ 950,901 $
131 $ 1,496,014
Net income
Other comprehensive income (loss),
net of tax
Stock-based compensation
Withheld 20,250 shares on restricted
share units for withholding taxes
—
—
—
18,129
—
—
—
—
(2,992)
Stock options exercised
3
21,733
—
Repurchases of common stock
—
Cash dividends paid ($1.92 per share)
—
—
—
(22,927)
—
—
129,986
—
129,986
15,666
—
—
—
—
—
—
—
—
—
(46,839)
—
—
—
—
—
15,666
18,129
(2,992)
21,736
(22,927)
(46,839)
Balance at December 26, 2020
$ 259 $ 907,858 $ (242,366) $ (91,157) $ 1,034,048 $
131 $ 1,608,773
Net income
Other comprehensive income (loss),
net of tax
Stock-based compensation
Withheld 20,428 shares on restricted
share units for withholding taxes
—
—
—
19,611
—
—
—
—
(5,754)
Stock options exercised
1
19,119
—
—
283,806
—
283,806
17,694
—
—
—
—
—
—
—
—
—
17,694
19,611
(5,754)
19,120
Cash dividends paid ($2.02 per share)
Balance at January 1, 2022
—
—
$ 260 $ 946,588 $ (248,120) $ (73,463) $ 1,268,124 $
(49,730)
—
—
(49,730)
—
131 $ 1,893,520
See accompanying Notes to Consolidated Financial Statements.
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies and Other Information
Nature of Operations
Littelfuse, Inc. and subsidiaries (the “Company”) is an industrial technology manufacturing company empowering a
sustainable, connected, and safer world. Across more than 15 countries, and with approximately 17,000 global associates, the
company partners with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, the
company’s products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day.
Fiscal Year
References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022. References
herein to “2020”, “fiscal 2020” or “fiscal year 2020” refer to the fiscal year ended December 26, 2020. References herein to
“2019”, “fiscal 2019” or “fiscal year 2019” refer to the fiscal year ended December 28, 2019. The Company operates on a
52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31. Therefore, the financial results of certain
fiscal years and the associated 14 week quarters will not be exactly comparable to the prior 52 week fiscal years and the
associated quarters having only 13 weeks. As a result of using this convention, the fiscal year 2021 contained 53 weeks while
each of fiscal 2020 and fiscal 2019 contained 52 weeks.
Basis of Presentation
The Consolidated Financial Statements include the accounts of Littelfuse, Inc. and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated. The Company’s Consolidated Financial Statements were prepared in
accordance with generally accepted accounting principles in the United States of America ("U.S.") and include the assets,
liabilities, sales and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company
exercises control.
Use of Estimates
The process of preparing financial statements in conformity with generally accepted accounting principles in the U.S. requires
management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the Consolidated
Financial Statements, and the reported amounts of revenues and expenses and the accompanying notes. The Company evaluates
and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in its evaluation, as
considered necessary. Actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
All highly liquid investments, with an original maturity of three months or less when purchased, are considered to be cash
equivalents. The Company maintains several pools including multicurrency notional pools and physical pools internationally
and a zero balance account ("ZBA") structure in the U.S. In the notional pools, actual cash balances are not physically
converted and are not commingled between participating legal entities. The Company will classify any overdraft balances
within accrued expenses and other current liabilities on the Consolidated Balance Sheets.
The following table provides a reconciliation of cash, cash equivalents and restricted cash at January 1, 2022 and December 26,
2020 reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the
Consolidated Statement of Cash Flows.
(in millions)
Cash and cash equivalents
Restricted cash included in prepaid expenses and other current assets
Restricted cash included in other assets
Total cash, cash equivalents and restricted cash
Short-Term and Long-Term Investments
2021
2020
478,473 $
687,525
2,718
1,645 $
—
—
482,836 $
687,525
$
$
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of January 1, 2022, the Company has an investment in Polytronics Technology Corporation Ltd. (“Polytronics”). The
Company’s Polytronics shares held at the end of fiscal 2021 and 2020 represent approximately 6.8% and 7.2% of total
Polytronics shares outstanding, respectively. The Polytronics investment is carried at fair value. The fair value of the
Polytronics investment was €23 million (approximately $26.1 million) at January 1, 2022 and €15.7 million (approximately
$19.2 million) at December 26, 2020.
As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are
accounted for under the equity method. The Company owns 45% of the outstanding equity of Powersem GmbH, a module
manufacturer based in Germany, approximately 19% of the outstanding equity of EB Tech Ltd., a company with expertise in
radiation technology based in South Korea, and approximately 24% of the outstanding common shares of Automated
Technology, Inc., a supplier located in the Philippines that provides assembly and test services. All equity-level investments are
less than majority owned. The Company recognized $1.3 million gains from its equity method investment for the fiscal year
ended January 1, 2022. The Company recognized no gains and losses from its equity method investments for the fiscal year
ended December 26, 2020. The balance of these equity method investments was $12.4 million and $11.4 million as of the fiscal
years ended January 1, 2022 and December 26, 2020, respectively. See Note 18, Related Party Transactions, for further
discussion.
The Company does not have any remaining book value of investments accounted for under the cost method as of January 1,
2022. As of December 26, 2020, the Company had a net book value of $0.5 million. During the fiscal year ended January 1,
2022, the Company impaired the remaining book value of these investments and recorded an impairment charge of
$0.5 million, and during the fiscal year ended December 26, 2020, the Company recorded $0.1 million in Other expense
(income), net in the Consolidated Statements of Net Income. See Note 10, Fair Value of Assets and Liabilities, for further
discussion.
The Company has investments related to its non-qualified Supplemental Retirement and Savings Plan. The Company maintains
accounts for participants through which participants make investment elections. The investment securities are subject to the
claims of the Company’s creditors. The investment securities are all mutual funds. The investment securities are measured at
net asset value. As of January 1, 2022 and December 26, 2020, the investment securities balance was $15.0 million and $13.2
million, respectively, related to the plan and are included in Other assets on the Consolidated Balance Sheets.
Trade Receivables
The Company performs credit evaluations of customers’ financial condition and generally does not require collateral. Credit
losses are provided for in the financial statements based upon specific knowledge of a customer’s inability to meet its financial
obligations to the Company. Historically, credit losses have consistently been within management’s expectations and have not
been a material amount. A receivable is considered past due if payments have not been received within agreed upon invoice
terms. Write-offs are recorded at the time a customer receivable is deemed uncollectible.
The Company also maintains allowances against trade receivables for the settlement of rebates and sales discounts to
customers. These allowances are based upon specific customer sales and sales discounts as well as actual historical experience.
Inventories
Inventories are stated at the lower of cost or net realizable value, which approximates current replacement cost. Cost is
principally determined using the first-in, first-out method. The Company maintains excess and obsolete reserves against
inventory to reduce the carrying value to the expected net realizable value. These reserves are based upon a combination of
factors including historical sales volume, market conditions, lower of cost or market analysis and expected realizable value of
the inventory.
Property, Plant, and Equipment
Land, buildings, and equipment are carried at cost. Depreciation is calculated using the straight-line method with useful lives of
up to 21 years for buildings, three to ten years for equipment, seven years for furniture and fixtures, five years for tooling and
three years for computer equipment. Leasehold improvements are depreciated over the lesser of their useful life or the lease
term. Maintenance and repair costs are charged to expense as incurred. Major overhauls that extend the useful lives of existing
assets are capitalized.
Goodwill
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company annually tests goodwill 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.
The Company compares each reporting unit’s fair value, estimated based on comparable company market valuations and
expected future discounted cash flows to be generated by the reporting unit, to its carrying value. The results of the annual
goodwill impairment test as of September 26, 2021 indicated that the estimated fair values for each of the seven reporting units
exceeded their respective carrying values. As of the most recent annual test conducted on September 26, 2021, the Company
noted that the excess of fair value over the carrying value, was 380%, 104%, 255%, 217%, 95%, 144%, and 231% for its
reporting units; Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial
Vehicle Products, Automotive Sensors, Relays, and Power Fuse, respectively. Relatively small changes in the Company’s key
assumptions would not have resulted in any reporting units failing the goodwill impairment test. See Note 5, Goodwill and
Other Intangible Assets, for additional information.
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 Transportation 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. As of January 1, 2022, the automotive sensors reporting unit had
$9.2 million of remaining goodwill.
The Company also performs an interim review for indicators of impairment each quarter to assess whether an interim
impairment review is required for any reporting unit. As part of its interim reviews, management analyzes potential changes in
the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected
results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including
discount rates and expected long-term growth rates, used in the last annual impairment test, could be impacted by changes in
market conditions and economic events. Based on the interim assessments as of January 1, 2022, management concluded that
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.
Long-Lived Assets
Customer relationships, trademarks and tradenames are amortized using the straight-line method over estimated useful lives that
have a range of 5 to 20 years. Patents, licenses and software are amortized using the straight-line method or an accelerated
method over estimated useful lives that have a range of 5 to 17 years. The distribution networks are amortized on either a
straight-line or accelerated basis over estimated useful lives that have a range of 4 to 10 years. Land use rights are amortized
using the straight-line method over 50 years which is the term of the land use rights.
The Company assesses potential impairments to its long-lived assets if events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based upon
the most recent information available. Estimated fair market value is generally measured by discounting estimated future cash
flows. Long-lived assets, other than goodwill and other intangible assets, that are held for sale are recorded at the lower of
carrying value or the fair market value less the estimated cost to sell.
Environmental Liabilities
Environmental liabilities are accrued based on engineering studies estimating the cost of remediating sites. Expenses related to
on-going maintenance of environmental sites are expensed as incurred. If actual or estimated probable future losses exceed the
Company’s recorded liability for such claims, the Company would record additional charges during the period in which the
actual loss or change in estimate occurred.
Pension and Other Post-retirement Benefits
The Company records annual income and expense amounts relating to its pension and post-retirement benefits plans based on
calculations which include various actuarial assumptions including discount rates, expected long-term rates of return and
compensation increases. The Company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance
sheet date (or more frequently if a significant event requiring remeasurement occurs) and modifies the assumption based on
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the
Consolidated Balance Sheets, but are generally amortized into operating earnings over future periods, with the deferred amount
recorded in accumulated other comprehensive income (loss). The Company believes that the assumptions utilized in recording
its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and
investment advisors.
Revenue Recognition
Revenue Disaggregation
The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended January 1, 2022
and December 26, 2020:
(in thousands)
Electronics
Segment
Fiscal Year Ended January 1, 2022
Transportation
Segment (1)
Industrial
Segment
Total
Electronics – Semiconductor
$
678,861 $
Electronics – Passive Products and Sensors
621,883
Passenger Car Products
Commercial Vehicle Products
Automotive Sensors
Industrial Products
Total
(in thousands)
Passenger Car Products
Commercial Vehicle Products
Automotive Sensors
Industrial Products
Total
(1) Formerly known as Automotive segment.
— $
—
266,020
160,300
101,738
— $
—
—
—
—
—
251,126
678,861
621,883
266,020
160,300
101,738
251,126
$
1,300,744 $
528,058 $ 251,126 $
2,079,928
Fiscal Year Ended December 26, 2020
Electronics
Segment
Transportation
Segment (1)
Industrial
Segment
Total
—
200,455
101,324
93,985
—
—
—
—
—
112,169
522,352
415,410
200,455
101,324
93,985
112,169
$
937,762 $
395,764 $ 112,169 $
1,445,695
—
—
—
—
—
—
—
—
Electronics – Semiconductor
$
522,352 $
— $
— $
Electronics – Passive Products and Sensors
415,410
See Note 16, 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 has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense
commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized
is less than one year.
Revenue and Billing
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 has elected the practical expedient
under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the
practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment
activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling
revenue.
Ship and Debit Program
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the
ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is
referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between
the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a
competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its
price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference
between the contracted price and the lower approved price. The Company establishes reserves for this program based on
historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a
reduction of revenue.
Return to Stock
The Company has a return to stock policy whereby certain customers, with prior authorization from the Company's
management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance
for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.
Volume Rebates
The Company offers volume-based sales incentives to certain customers to encourage greater product sales. If customers
achieve their specific quarterly or annual sales targets, they are entitled to rebates. The Company estimates the projected
amount of rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products
are sold.
Allowance for Doubtful Accounts
The Company currently measures the expected credit losses based on our historical credit loss experience. The Company has
not experienced significant recent or historical credit losses and is not forecasting any significant credit losses which would
require adjustments to our methodology. If current conditions and supportable forecasts indicate that our historical loss
experience is not reasonable and no longer supportable, the Company may adjust its historical credit loss experience and to
reflect these conditions and forecasts. The Company regularly analyzes its significant customer accounts and, when the
Company becomes aware of a customer’s inability to meet its financial obligations, the Company records a specific reserve for
bad debt to reduce the related receivable to the amount the Company reasonably believes is collectible. The Company also
analyzes all other customers based on a variety of factors including the length of time the receivables are past due, the financial
health of the customer, macroeconomic considerations and historical collection and loss experience. Historically, the allowance
for doubtful accounts has been adequate to cover bad debts. If circumstances related to specific customers change, the estimates
of the recoverability of receivables could be further adjusted.
As of January 1, 2022 and December 26, 2020, the Company’s allowance for doubtful accounts was $1.9 million and
$1.4 million, respectively. Additionally, the Company had $2.1 million and $1.0 million of trade receivables greater than 90
days past due as of January 1, 2022 and December 26, 2020, respectively.
Advertising Costs
The Company expenses advertising costs as incurred, which amounted to $2.1 million, $2.1 million, and $2.7 million in fiscal
years 2021, 2020 and 2019, respectively, and are included as a component of selling, general, and administrative expenses.
Shipping and Handling Fees and Costs
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts billed to customers related to shipping and handling are classified as revenue. Costs incurred for shipping and
handling of $15.4 million, $11.1 million, and $11.0 million in fiscal years 2021, 2020, and 2019, respectively, are classified in
selling, general, and administrative expenses.
Foreign Currency Translation / Remeasurement
The Company’s foreign subsidiaries use the local currency or the U.S. dollar as their functional currency, as appropriate. Assets
and liabilities are translated using exchange rates at the balance sheet date, and revenues and expenses are translated at
weighted average rates. Adjustments from the translation process are recognized in Shareholders’ equity as a component of
Accumulated other comprehensive income (loss). The amount of foreign currency gain or loss from remeasurement recognized
in the Consolidated Statements of Net Income was a loss of $17.2 million in fiscal year 2021, a gain of $14.9 million in fiscal
year 2020, and a loss of $5.2 million in fiscal year 2019.
Stock-Based Compensation
The Company recognizes compensation expense for the cost of awards of equity compensation using a fair value method.
Benefits of tax deductions in excess of recognized compensation expense are reported as operating cash flows. See Note 12,
Stock-Based Compensation, for additional information on stock-based compensation.
Coal Mining Liability
Included in other long-term liabilities is an accrual related to former coal mining operations at Littelfuse GmbH (formerly
known as Heinrich Industries, AG) for the amounts of €1.9 million ($2.1 million) and €2.3 million ($2.9 million) at January 1,
2022 and December 26, 2020, respectively. Management, in conjunction with an independent third-party, performs an annual
evaluation of the former coal mining operations in order to develop an estimate of the probable future obligations in regard to
remediating the dangers (such as a shaft collapse) of abandoned coal mine shafts in the former coal mining operations.
Management accrues for costs associated with such remediation efforts based on management's best estimate when such costs
are probable and reasonably able to be estimated. The ultimate determination can only be done after respective investigations
because the concrete conditions are mostly unknown at this time.
Other Expense (Income), Net
Other expense (income), net generally consists of interest income, royalties, change in fair value of available-for-sale securities,
pension non-service costs and settlements and other non-operating expense (income).
Income Taxes
The Company accounts for income taxes using the asset and liability method. Deferred taxes are recognized for the future
effects of temporary differences between financial and income tax reporting using enacted tax rates in effect for the years in
which the differences are expected to reverse. The Company recognizes deferred taxes for temporary differences, operating loss
carryforwards, and tax credit and other tax attribute carryforwards (excluding carryforwards where usage has been determined
to be remote). Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of
the deferred tax assets will not be realized. U.S. state and non-U.S. income taxes are provided on the portion of non-U.S.
income that is expected to be remitted to the U.S. and be taxable (and non-U.S. income taxes are provided on the portion of
non-U.S. income that is expected to be remitted to an upper-tier non-U.S. entity). Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
Deferred U.S. income taxes and non-U.S. taxes are not provided on the excess of the investment value for financial reporting
over the tax basis of investments in those non-U.S. subsidiaries for which such excess is considered to be permanently
reinvested in those operations. Management regularly evaluates whether non-U.S. earnings are expected to be permanently
reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its non-U.S.
subsidiaries. Changes in economic and business conditions, tax laws, or the Company’s financial situation could result in
changes to these judgments and the need to record additional tax liabilities.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than
50% likelihood of being realized upon ultimate settlement.
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on
accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the
global intangible low-taxed income provisions ("GILTI").
The Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-
term portion of this Toll Charge which remains payable as of January 1, 2022, totaling $17.8 million, is recorded in Other long-
term liabilities, and the anticipated 2022 annual installment payment of $3.0 million is included in Accrued income taxes, on the
Consolidated Balance Sheet as of January 1, 2022.
In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI
inclusions as a period cost if and when incurred. Thus, for the fiscal years ended January 1, 2022, December 26, 2020 and
December 28, 2019, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions,
and any current year impact was recorded as a part of the current portion of income tax expense.
Fair Value Measurements
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Fair value is determined based on the
exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants. The Company records the
fair value of its available-for-sale securities and pension plan assets on a recurring basis. Assets measured at fair value on a
nonrecurring basis include long-lived assets held and used, long-lived assets held for sale, goodwill and other intangible assets.
The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their
carrying values. The three-tier value hierarchy, which prioritizes valuation methodologies based on the reliability of the inputs,
is:
Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices
for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets
that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with
reasonably available assumptions made by other market participants.
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.
2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes" as part of its initiative to reduce
complexity in the accounting standards. The guidance is effective for fiscal years beginning after December 15, 2020 with early
adoption permitted. The adoption of ASU 2019-12 did not have a material impact on our Consolidated Financial Statements.
Recently Issued Accounting Standards
In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets
and Contract Liabilities from Contracts with Customers". The standard requires an entity (acquirer) recognize and measure
contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The guidance is
effective for fiscal years beginning after December 15, 2022 with early adoption permitted. The Company does not expect a
material impact from the adoption of this guidance on the Company's Consolidated Financial Statements.
In November 2021, the FASB issued ASU No. 2021-10, " Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance". The standard, requires annual disclosures about transactions with a government that are
accounted for by applying a grant or contribution accounting model by analogy: 1) Information about the nature of the
transactions and the related accounting policy used to account for the transactions; 2) The line items on the balance sheet and
income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; 3)
Significant terms and conditions of the transactions, including commitments and contingencies. The guidance is effective for
fiscal years beginning after December 15, 2021 with early adoption permitted. The Company does not expect a material impact
from the adoption of this guidance on the Company's Consolidated Financial Statements.
57
2. Acquisitions
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,”
in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of
the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.
Carling Technologies
On November 30, 2021, the Company completed the previously announced acquisition of Carling Technologies, Inc.
(“Carling”), pursuant to the Stock Purchase Agreement, dated as of October 19, 2021. Founded in 1920, Carling has a leading
position in switching and circuit protection technologies with a strong global presence in commercial vehicle, marine and
datacom/telecom infrastructure markets. At the time of acquisition, Carling had annualized sales of approximately $170 million.
The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and is reported as
part of the commercial vehicle business within our Transportation segment. The purchase price for Carling Technologies was
approximately $315 million subject to change for a working capital adjustment.
The acquisition was funded with cash on hand. The total purchase consideration of $313.6 million, net of cash, has been
allocated, on a preliminary basis, to assets acquired and liabilities assumed, as of the completion of the acquisition, based on
preliminary estimated fair values. The purchase consideration is subject to change for the final working capital adjustments. The
purchase price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are
still in process. The primary areas that are not yet finalized relate to the completion of the valuations of certain property, plant
and equipment, intangible assets and acquired income tax assets and liabilities. As a result, these allocations are subject to
change during the purchase price allocation period as the valuations are finalized.
The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities
assumed in the Carling acquisition:
(in thousands)
Total purchase consideration:
Cash, net of cash acquired
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables, net
Inventories
Other current assets
Property, plant, and equipment
Intangible assets
Goodwill
Other non-current assets
Current liabilities
Other non-current liabilities
Purchase Price
Allocation
$
313,583
25,503
57,450
3,454
64,301
125,890
92,366
4,104
(21,723)
(37,762)
$
313,583
All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are primarily reflected in the
Americas, Europe and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the
Company’s expected future product sales and synergies from combining Carling’s products and technology with the
Company’s existing commercial vehicle products portfolio. Goodwill resulting from the Carling acquisition is not expected to
be deductible for tax purposes.
Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended January 1, 2022 are net sales of
$15.3 million, and a loss before income taxes of $1.2 million, since the November 30, 2021 acquisition of Carling.
As required by purchase accounting rules, the Company recorded a $6.4 million step-up of inventory to its fair value as of the
acquisition date based on the preliminary valuation. The step-up is being amortized as a non-cash charge to cost of goods sold
during the fourth quarter of 2021 and first quarter of 2022, as the acquired inventory is sold, and reflected as other non-segment
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
costs. The Company recognized a non-cash charge of $1.6 million to cost of goods sold during the fiscal year ended January 1,
2022.
For the fiscal year ended January 1, 2022, the Company incurred approximately $4.5 million of legal and professional fees
related to the Carling acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as
other non-segment costs.
Hartland Controls
On January 28, 2021, the Company acquired Hartland Controls ("Hartland"), a manufacturer and leading supplier of electrical
components used primarily in heating, ventilation, air conditioning ("HVAC") and other industrial and control systems
applications. At the time of acquisition, Hartland had annualized sales of approximately $70 million. The purchase price for
Hartland was $111.0 million and the operations of Hartland are included in the Industrial segment.
The total purchase consideration of $108.5 million, net of cash, cash equivalents, and restricted cash has been allocated to assets
acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values. As of January 1, 2022,
the Company had restricted cash of $1.7 million in an escrow account for general indemnification purposes.
The following table summarizes the final purchase price allocation of the fair value of assets acquired and liabilities assumed in
the Hartland acquisition:
(in thousands)
Total purchase consideration:
Cash, net of cash acquired, and restricted cash
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables, net
Inventories
Other current assets
Property, plant, and equipment
Intangible assets
Goodwill
Other non-current assets
Current liabilities
Other non-current liabilities
Purchase Price
Allocation
$
108,516
12,915
35,808
2,224
6,296
39,660
38,502
3,782
(24,861)
(5,810)
$
108,516
All Hartland goodwill, other assets and liabilities were recorded in the Industrial segment and are primarily reflected in the
Americas and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s
expected future product sales and synergies from combining Hartland’s products and technology with the Company’s existing
industrial products portfolio. Goodwill resulting from the Hartland acquisition is not expected to be deductible for tax purposes.
Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended January 1, 2022 are net sales of
$100.5 million and a loss before income taxes of $2.8 million since the January 28, 2021 acquisition of Hartland.
The Company recorded a $6.8 million step-up of inventory to its fair value as of the acquisition date based on the valuation.
The step-up was fully amortized as a non-cash charge to cost of goods sold during the first and second quarters of 2021, as the
acquired inventory was sold, and is reflected as other non-segment costs. For the fiscal year ended January 1, 2022, the
Company recognized a charge of $6.8 million for the amortization of this fair value inventory step-up.
For the fiscal year ended January 1, 2022, the Company incurred approximately $0.8 million of legal and professional fees
related to the Hartland acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as
other non-segment costs.
Pro Forma Results
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company, Hartland
and Carling as though the acquisition had occurred as of December 29, 2019. The pro forma amounts presented are not
necessarily indicative of either the actual consolidated results had the Hartland and Carling acquisitions occurred as of
December 29, 2019 or of future consolidated operating results.
(in thousands, except per share amounts)
Net sales
Income before income taxes
Net income
Net income per share — basic
Net income per share — diluted
Pro forma results presented above primarily reflect the following adjustments:
(in thousands)
Amortization(a)
Depreciation
Transaction costs(b)
Amortization of inventory step-up(c)
Income tax (expense) benefit of above items
For the Fiscal Year Ended
January 1,
2022
December 26,
2020
1,662,896
$
2,257,390 $
357,090
296,030
12.03
11.87
141,491
115,078
4.72
4.68
For the Fiscal Year Ended
January 1,
2022
December 26,
2020
$
(8,770) $
(12,669)
(64)
5,381
8,398
(1,021)
253
(5,381)
(13,156)
6,706
(a) The amortization adjustment for the twelve months ended January 1, 2022 and December 26, 2020 primarily reflects
incremental amortization resulting from the measurement of intangibles at their fair values.
(b) The transaction cost adjustments reflect the reversal of certain legal and professional fees from the twelve months
ended January 1, 2022 and recognition of those fees during the twelve months ended December 26, 2020.
(c) The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve
months ended January 1, 2022 and the recognition of the amortization during the twelve months ended December 26,
2020. The inventory step-up is amortized over four months for both acquisitions.
For the fiscal year ended January 1, 2022 and December 26, 2020, the Company recorded $6.2 million and $0.8 million of
acquisition-related expenses associated with completed and contemplated acquisitions within Selling, general and
administrative expenses in the Consolidated Statements of Net Income.
3. Inventories
The components of inventories at January 1, 2022 and December 26, 2020 are as follows:
(in thousands)
Raw materials
Work in process
Finished goods
Inventory reserves
Total
4. Property, Plant, and Equipment
2021
2020
168,409 $
117,506
195,656
(35,900)
445,671 $
85,394
92,783
114,641
(34,816)
258,002
$
$
The components of net property, plant, and equipment at January 1, 2022 and December 26, 2020 are as follows:
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Land
Building
Equipment
Accumulated depreciation and amortization
Total
2021
2020
$
$
23,470 $
151,297
779,559
(516,437)
437,889 $
22,851
123,497
678,220
(480,390)
344,178
The Company recorded depreciation expense of $55.9 million, $56.1 million, and $52.5 million for the fiscal years ended
January 1, 2022, December 26, 2020, and December 28, 2019, respectively.
5. Goodwill and Other Intangible Assets
The amounts for goodwill and changes in the carrying value by segment are as follows:
(in thousands)
Gross goodwill as of December 28, 2019
Accumulated impairment losses as of December 28,
2019
Electronics
Transportation
Industrial
Total
$
650,796 $
131,321 $
47,266 $
829,383
—
—
(8,794)
(8,794)
Net goodwill as of December 28, 2019
$
650,796 $
131,321 $
38,472 $
820,589
Changes during 2020:
Impairments
Foreign currency translation adjustments
Gross goodwill as of December 26, 2020
Accumulated impairment losses as of December 26,
2020
Net goodwill as of December 26, 2020
Changes during 2021:
Additions (a)
Foreign currency translation adjustments
Gross goodwill as of January 1, 2022
Accumulated impairment losses as of January 1, 2022
Net goodwill as of January 1, 2022
$
25,529
676,325
(33,841)
4,451
138,354
84
47,551
(33,841)
30,064
862,230
—
676,325 $
$
(36,423)
101,931 $
(8,995)
38,556 $
(45,418)
816,812
—
(16,080)
660,245
—
660,245 $
96,307
(6,106)
228,555
(36,177)
192,378 $
38,502
179
86,232
(9,065)
77,167 $
134,809
(22,007)
975,032
(45,242)
929,790
(a) The additions primarily resulted from the acquisitions of Carling and Hartland.
The Company tests its goodwill annually for impairment on the first day of its fiscal fourth quarter, or more frequently if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
value. During the second quarter of 2020, the Company recorded a non-cash charge of $33.8 million to recognize the
impairment of goodwill in the automotive sensors reporting unit within the Transportation 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 January 1,
2022, the automotive sensors reporting unit had $9.2 million of remaining goodwill.
The components of intangible assets at January 1, 2022 and December 26, 2020 are as follows:
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Land use rights
Patents, licenses and software
Distribution network
Customer relationships, trademarks, and tradenames
Total
(in thousands)
Land use rights
Patents, licenses and software
Distribution network
Customer relationships, trademarks, and tradenames
Total
As of January 1, 2022
Gross
Carrying
Value
Accumulated
Amortization
Net Book
Value
19,542 $
164,556
43,361
487,710
715,169 $
1,906 $
101,307
40,591
164,239
308,043 $
17,636
63,249
2,770
323,471
407,126
As of December 26, 2020
Gross
Carrying
Value
Accumulated
Amortization
Net Book
Value
10,280 $
137,210
43,910
372,064
563,464 $
2,007 $
92,868
38,980
137,722
271,577 $
8,273
44,342
4,930
234,342
291,887
$
$
$
$
During the year ended January 1, 2022, the Company recorded additions to other intangible assets of $165.6 million, for
acquisitions during 2021, the components of which were as follows:
(in thousands, except weighted average useful life)
Land use rights
Patents, developed technology
Customer relationships, trademarks, and tradenames
Total
Weighted Average
Useful Life (Years)
50
9.8
13.0
2021
$
$
$
Amount
9,590
31,659
124,301
165,550
For intangible assets with definite lives, the Company recorded amortization expense of $42.7 million, $40.0 million, and $40.0
million in 2021, 2020, and 2019, respectively.
Estimated annual amortization expense related to intangible assets with definite lives at January 1, 2022 is as follows:
(in thousands)
2022
2023
2024
2025
2026
2027 and thereafter
Total
Amount
50,035
45,569
42,151
41,776
33,245
194,350
407,126
$
$
62
6. Accrued Liabilities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of accrued liabilities at January 1, 2022 and December 26, 2020 are as follows:
(in thousands)
Employee-related liabilities
Operating lease liability
Interest
Professional services
Other non-income taxes
Restructuring liability
Current benefit liability
Deferred revenue
Other customer reserves
Other
Total
2021
2020
92,018 $
9,018
4,402
4,299
4,280
2,944
1,248
1,105
702
39,673
159,689 $
50,689
6,811
4,517
3,321
2,126
4,195
2,751
2,959
3,858
29,251
110,478
$
$
Employee-related liabilities consist primarily of payroll, sales commission, bonus, employee benefit accruals and workers’
compensation. Bonus accruals include amounts earned pursuant to the Company’s primary employee incentive compensation
plans. Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities.
7. Lease Commitments
Under ASC 842, a contract contains a lease if there is an identified asset and the Company has the right to control the asset. The
Company determines whether a contract contains a lease at contract inception. The Company leases office and production space
under various non-cancellable operating leases that expire no later than 2031. 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 has elected to use the available
practical expedient to account for the lease and non-lease components of its leases as a single component. As the Company
elected not to separate lease and non-lease components and instead to account for them as a single lease component, the
variable lease cost primarily represents variable payments such as common area maintenance and utilities.
The Company does not have a published credit rating because it has no publicly traded debt; therefore, the Company is
generating its incremental borrowing rate ('IBR"), using a synthetic credit rating model that compares its credit quality to other
rated companies based on certain financial metrics and ratios. The reference rate will be based on the yield curve of companies
with similar credit quality based on the metrics and adjusted for currency in regions where we have significant operations.
All leases with an initial term of 12 months or less that do not include an option to extend or purchase the underlying asset that
the Company is reasonably certain to exercise (“short-term leases”) are not recorded on the Consolidated Balance Sheets. Short-
term lease expenses are recognized on a straight-line basis over the lease term.
The following table presents the classification of ROU assets and lease liabilities as of January 1, 2022 and December 26, 2020:
63
Leases
(in thousands)
Assets
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet
Classification
January 1, 2022
December 26, 2020
Operating ROU assets
Right of use assets, net
Liabilities
Current operating lease liabilities
Accrued liabilities
$
$
Non-current operating lease liabilities
Non-current operating lease liabilities
Total lease liabilities
$
29,616 $
17,615
9,018 $
22,305
31,323 $
6,811
12,950
19,761
The following table represents the lease costs for 2021 and 2020:
Leases
(in thousands)
Consolidated Statements of Net Income
Classification
Fiscal Year Ended
January 1, 2022
Short-term lease expenses
Variable lease expenses
Operating lease rent
expenses
Total operating lease costs
Cost of sales, SG&A expenses
Cost of sales, SG&A expenses
Cost of sales, SG&A expenses
Cost of sales, SG&A expenses
$
$
Fiscal Year Ended
December 26, 2020
512
1,307
345 $
1,165
9,929
11,439 $
8,591
10,410
The Company leases certain office and warehouse space as well as certain machinery and equipment under non-cancellable
operating leases. Rent expense under these leases was $11.4 million, $10.4 million, and $10.1 million in 2021, 2020, and 2019,
respectively.
Maturity of Lease Liabilities as of January 1, 2022
(in thousands)
Operating leases
2022
2023
2024
2025
2026
2027 and thereafter
Total lease payments
Present value of lease liabilities
$
$
$
10,080
7,840
7,323
3,135
1,322
4,607
34,307
31,323
Operating Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Weighted-average discount rate
Fiscal Year Ended
January 1, 2022
Fiscal Year Ended
December 26, 2020
4.79
4.27 %
3.41
5.06 %
Cash Flow Information related to Leases
(in thousands)
Cash paid for amounts included in the measurement of lease
liabilities
Operating cash flow payments for operating leases
Leased assets obtained in exchange for operating lease liabilities
Other Information
(in thousands)
Net gain from sale and leaseback transaction
8. Restructuring, Impairment and Other Charges
64
Fiscal Year Ended
January 1, 2022
$
(10,150)
20,217
(4,058)
The Company recorded restructuring, impairment and other charges for fiscal years 2021, 2020, and 2019 as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Employee terminations
Other restructuring charges
Total restructuring charges
Total
(in thousands)
Employee terminations
Other restructuring charges
Total restructuring charges
Impairment
Total
(in thousands)
Employee terminations
Other restructuring charges
Total restructuring charges
Impairment
Total
Electronics
$
1,124 $
—
1,124
1,124 $
$
Electronics
$
2,540 $
—
2,540
—
2,540 $
5,313 $
188
5,501
—
5,501 $
Electronics
$
$
$
Fiscal Year Ended January 1, 2022
Transportation
Industrial
Total
404 $
283
687
687 $
347
—
347
347
$
$
1,875
283
2,158
2,158
Fiscal Year Ended December 26, 2020
Transportation
Industrial
Total
682 $
175
857
33,841
34,698 $
2,231
10
2,241
2,237
4,478
$
$
5,453
185
5,638
36,078
41,716
Fiscal Year Ended December 28, 2019
Transportation
Industrial
Total
4,251 $
1,714
5,965
322
6,287 $
795
450
1,245
—
1,245
$
$
10,359
2,352
12,711
322
13,033
2021
For the year ended January 1, 2022, the Company recorded total restructuring charges of $2.2 million, primarily for employee
termination costs. These charges primarily related to the reorganization of certain manufacturing, selling and administrative
functions within the Electronics and Transportation segments.
2020
For the year ended December 26, 2020, the Company recorded total restructuring charges of $5.6 million, primarily for
employee termination 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 $36.1 million of impairment charges, which included a $33.8 million
goodwill impairment charge associated with the automotive sensors reporting unit within the Transportation segment in the
second quarter of 2020 and a $2.2 million impairment charge related to the land and building associated with the Company’s
previously announced consolidation of a manufacturing facility within the Industrial segment in the first quarter of 2020. See
Note 5, Goodwill and Other Intangible Assets for further discussion regarding the goodwill impairment charge.
2019
For the year ended December 28, 2019, the Company recorded total restructuring charges of $12.7 million for employee
termination costs and other restructuring charges. These charges primarily related to the reorganization of operations and
selling, general and administrative functions as well as the integration of IXYS within the Electronics segment and the
reorganization of operations in the automotive sensors and commercial vehicle products businesses within the Transportation
segment.
In April 2019, we announced the closure of a European manufacturing facility in the automotive sensors business within the
Transportation segment. The Company recorded $1.7 million of employee termination costs and $1.4 million of other
restructuring and impairment charges associated with this plant closure.
The restructuring reserves as of January 1, 2022 and December 26, 2020 are $2.9 million and $4.2 million, respectively. The
restructuring reserves are included within accrued liabilities. Payments associated with employee terminations reflected in the
above table were substantially completed by January 1, 2022. The Company anticipates that the remaining payments associated
with employee terminations will be completed in fiscal 2022.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Debt
The carrying amounts of debt at January 1, 2022 and December 26, 2020 are as follows:
(in thousands)
Revolving Credit Facility
Euro Senior Notes, Series A due 2023
Euro Senior Notes, Series B due 2028
U.S. Senior Notes, Series A due 2022
U.S. Senior Notes, Series B due 2027
U.S. Senior Notes, Series A due 2025
U.S. Senior Notes, Series B due 2030
Other
Unamortized debt issuance costs
Total debt
Less: Current maturities
Total long-term debt
2021
2020
100,000 $
132,444
107,540
25,000
100,000
50,000
125,000
—
(3,087)
636,897
(25,000)
611,897 $
130,000
142,679
115,850
25,000
100,000
50,000
125,000
2,619
(4,114)
687,034
—
687,034
$
$
Interest paid on all Company debt was approximately $17.4 million, $20.1 million, and $21.2 million in fiscal year 2021, 2020,
and 2019, respectively.
Revolving Credit Facility
On March 25, 2020, the company borrowed $100.0 million from its existing revolving credit facility to preserve financial
flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19. The Company paid $5.0
million of principal payments on the term loan before the Company amended the credit agreement on April 3, 2020 as
discussed below.
On April 3, 2020, the Company amended its 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 Company made payments of $30.0 million on the amended revolving credit
facility during the fiscal year ended January 1, 2022. The balance under the facility was $100.0 million as of January 1, 2022.
Outstanding borrowings under the amended credit agreement bear interest, at the Company’s option, at either LIBOR, fixed for
interest periods of one, two, three or six-month periods, plus 1.25% 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 is 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 credit agreement includes representations, covenants and events of default
that are customary for financing transactions of this nature. The effective interest rate on outstanding borrowings under the
credit facility was 1.35% at January 1, 2022.
As of January 1, 2022, the Company had no outstanding in letters of credit and had available $600.0 million of borrowing
capacity under the revolving credit facility. At January 1, 2022, the Company was in compliance with all covenants under the
credit agreement.
Senior Notes
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold
€212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes
occurred on December 8, 2016 for €117 million in aggregate amount of 1.14% Senior Notes, Series A, due December 8, 2023
(“Euro Senior Notes, Series A due 2023”), and €95 million in aggregate amount of 1.83% Senior Notes, Series B due December
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 2022 and
2027, the “Senior Notes”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 will be payable 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 January 1, 2022,
the Company was in compliance with all covenants under the Senior Notes.
The Company may redeem the Senior Notes upon the satisfaction of certain conditions and the payment of a make-whole
amount to noteholders, and are required to offer to repurchase the Senior Notes at par following certain events, including a
change of control.
Debt Issuance Costs
During fiscal year 2020, the Company paid debt issuance costs of $1.8 million in relation to the amended the Credit Agreement
on April 3, 2020 which, along with the remaining balance of debt issuance costs of the previous credit facility, are being
amortized over the life of the amended Credit Agreement.
Debt Maturities
Scheduled maturities of the Company’s long-term debt for each of the five years succeeding January 1, 2022 and thereafter are
summarized as follows:
(in thousands)
2022
2023
2024
2025
2026
2027 and thereafter
Scheduled
Maturities
$
$
25,000
132,444
—
150,000
—
332,540
639,984
67
10. Fair Value of Assets and Liabilities
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements
based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market
data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based
on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value
measurement as follows:
Level 1—Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets;
Level 2—Valuations based upon quoted prices for similar instruments, prices for identical or similar instruments in
markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and
Level 3—Valuations based upon one or more significant unobservable inputs.
Following is a description of the valuation methodologies used for instruments measured at fair value and their classification in
the valuation hierarchy.
Cash Equivalents
Cash equivalents primarily consist of money market funds, which are held with an institution with sound credit rating and are
highly liquid. The Company classified cash equivalents as Level 1 and are valued at cost, which approximates fair value.
Investments in Equity Securities
Investments in equity securities listed on a national market or exchange are valued at the last sales price and classified within
Level 1 of the valuation hierarchy. Such securities are further detailed in Note 1, Summary of Significant Accounting Policies
and Other Information.
Other Investments
The Company has certain convertible debt and convertible preferred stock investments that are accounted for under the cost
method reflected in Investments and Other assets in the Consolidated Balance Sheets. During the fiscal year ended January 1,
2022, the Company impaired the remaining book value of these investments and recorded an impairment charge of
$0.5 million, and during the fiscal year ended December 26, 2020, the Company recorded $0.1 million in Other expense
(income), net in the Consolidated Statements of Net Income. As o fJanuary 1, 2022 and December 26, 2020, the balances of
these investments were zero and $0.5 million, respectively. The fair value of these investments are measured on a nonrecurring
basis 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.
Defined Benefit Plan Assets / Non-qualified Supplemental Retirement and Savings Plan Investments
See Note 11, Benefit Plans, for description of valuation methodologies and investment balances for defined benefit plan assets
and investments related to the Company’s Non-Qualified Supplemental Retirement and Savings Plan.
Foreign currency exchange forward contract
There were no changes during 2021 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 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 expense (income),
net during the fiscal year 2020. The fair value of the foreign currency forward contract was valued using market exchange rates
and classified as a Level 2 input under the fair value hierarchy. As of January 1, 2022 and December 26, 2020, the Company
held no non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.
68
The following table presents assets measured at fair value by classification within the fair value hierarchy as of January 1, 2022:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Cash Equivalents
Investments in equity securities
Mutual funds
Total:
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
$
12,475 $
— $
— $
26,070
15,021
—
—
—
—
53,566 $
— $
— $
Total
12,475
26,070
15,021
53,566
The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 26,
2020:
(in thousands)
Cash Equivalents
Investments in equity securities
Mutual funds
Total:
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
$
73,461 $
19,186
13,249
105,896 $
— $
—
—
— $
— $
—
—
— $
Total
73,461
19,186
13,249
105,896
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, trade receivables and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash
equivalents, short-term investments and trade receivables approximate their fair values. The Company’s revolving and term
loan debt facilities’ fair values approximate book value at January 1, 2022 and December 26, 2020, 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 January 1, 2022 and December 26, 2020 were as follows:
(in thousands)
Euro Senior Notes, Series A due 2023
Euro Senior Notes, Series B due 2028
USD Senior Notes, Series A due 2022
USD Senior Notes, Series B due 2027
USD Senior Notes, Series A due 2025
USD Senior Notes, Series B due 2030
January 1, 2022
December 26, 2020
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
$
132,444 $
107,540
25,000
100,000
50,000
125,000
134,119 $
110,837
25,055
104,828
51,720
131,837
142,679 $
115,850
25,000
100,000
50,000
125,000
144,323
123,588
25,437
109,552
53,474
138,036
The Company recognized impairment charges of $1.9 million for the land and building and $0.3 million for a certain patent as a
result of the Company’s announcement to consolidate a manufacturing facility within the Industrial segment during the first
quarter of 2020. See Note 8, Restructuring, Impairment and Other Charges, for further discussion. The fair value of the land
and building was valued using a real estate appraisal and classified as a Level 3 input under the fair value hierarchy.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair value as of the measurement date, net book value as of the end of the year and related 2020 goodwill impairment for
assets measured at fair value on a nonrecurring basis subsequent to initial recognition during the years ended December 26,
2020 were as follows:
(in thousands)
Goodwill
Fiscal Year Ended December 26, 2020
December 26, 2020
Impairment Charge
Estimated Fair Value
Measurement (Level 3)
Carrying Value
$33,841
$8,953
$
9,832
See Note 5, Goodwill and Other Intangible Assets for further discussion regarding goodwill impairment charges.
11. Benefit Plans
The Company has Company-sponsored and mandatory defined benefit pension plans covering employees in the United
Kingdom ("U.K."), Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits
provided under the plans is generally based on years of service and final average pay.
On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an
insurance company is required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan
participants, or their designated beneficiaries. Due to the signing of the group annuity contract being a significant change in one
of the U.K. pension plans, 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 to bring the pension benefit obligation to the purchase price of the
group annuity contract, and unamortized actuarial loss within other comprehensive income (loss) during the second quarter of
2020. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the
second quarter of 2020. The Company completed the buy-out of this U.K. pension plan during the fourth quarter of 2021 and as
a result recorded a non-cash pension settlement charge of $19.9 million (£14.9 million), inclusive of the accelerated recognition
of prior service cost of $0.5 million (£0.4 million). The purchase of this group annuity contract reduced the Company’s
outstanding pension benefit obligation by $47.1 million, representing 35% of the total obligations of the Company’s qualified
pension plans.
Benefit plan related information is as follows for the years 2021 and 2020:
(in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Net actuarial (gain) loss
Benefits paid from the plan assets
Benefits paid directly by the Company
(Settlements) and Curtailments
Acquisitions
Effect of exchange rate movements
Plan amendment and other
Benefit obligation at end of year
Change in plan assets at fair value:
Fair value of plan assets at beginning of year
Actual (loss) return on plan assets
Employer contributions
Benefits paid from the plan assets
Settlements
Effect of exchange rate movements
Fair value of plan assets at end of year
Net amount unfunded status
70
2021
2020
148,992 $
2,785
1,761
(11,016)
(3,121)
(2,692)
(48,927)
1,797
(3,218)
209
86,570 $
100,478 $
(2,824)
2,150
(3,121)
(47,111)
(1,247)
48,325
(38,245) $
116,921
2,462
2,173
25,306
(2,808)
(2,302)
102
—
7,462
(324)
148,992
78,502
7,053
12,918
(2,808)
—
4,813
100,478
(48,514)
$
$
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts recognized in the Consolidated Balance Sheets as of January 1, 2022 and December 26, 2020 consist of the following:
(in thousands)
Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets
Current benefit liability
Noncurrent benefit liability
Net liability recognized
2021
2020
$
$
40 $
(1,248)
(37,037)
(38,245) $
39
(2,751)
(45,802)
(48,514)
The amounts included in accumulated other comprehensive loss in the Consolidated Balance Sheets, excluding tax effects, that
have not yet been recognized as components of net periodic benefit costs as of January 1, 2022 and December 26, 2020 were as
following:
(in thousands)
Net actuarial loss
Prior service cost
2020
2021
$
9,221 $
3,340
12,561 $
37,285
3,937
41,222
Total
$
The pre-tax amounts recognized in other comprehensive income (loss) in 2021 were as follows:
(in thousands)
Amortization of:
Prior service cost
Net actuarial loss
Amount arising during the period:
Prior service cost
Net actuarial loss
Net settlement loss and accelerated prior service costs
Foreign currency adjustments
Total
2021
$
179
1,136
(209)
6,734
19,855
966
28,661
$
In the fourth quarter of 2021, the Company recorded a non-cash pension settlement charge of $19.9 million (£14.9 million),
inclusive of the accelerated recognition of prior service cost of $0.5 million (£0.4 million). In addition, the net actuarial loss and
change in benefit obligation arising during 2021 as compared to 2020 were also impacted by higher discount rates in 2021 as
compared to 2020.
The components of net periodic benefits costs for the fiscal years 2021, 2020, and 2019 are as follows:
(in thousands)
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service and net actuarial loss
Net periodic benefit cost
Net settlement loss
Total expense for the year
2021
2020
2019
$
$
2,785 $
1,761
(1,458)
1,315
4,403
19,855
24,258 $
2,462 $
2,173
(1,972)
963
3,626
236
3,862 $
2,040
3,169
(3,187)
243
2,265
260
2,525
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Weighted average assumptions used to determine net periodic benefit cost for the fiscal years 2021, 2020, and 2019 are as
follows:
Discount rate
Expected return on plan assets
Compensation increase rate
2021
2020
2019
1.2 %
1.4 %
4.9 %
2.3 %
3.7 %
4.7 %
3.1 %
4.5 %
4.6 %
The accumulated benefit obligation for the plans was $75.7 million and $137.7 million as of January 1, 2022 and December 26,
2020, respectively.
The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations
in excess of plan assets as of January 1, 2022 and December 26, 2020:
(in thousands)
Projected benefit obligation
Fair value of plan assets
2021
2020
$
86,228 $
47,942
148,992
100,439
The following table provides a summary of under-funded or unfunded pension benefit plans with accumulated benefit
obligations in excess of plan assets as of January 1, 2022 and December 26, 2020:
(in thousands)
Accumulated benefit obligation
Fair value of plan assets
2021
2020
$
68,643 $
39,060
130,453
92,248
Weighted average assumptions used to determine benefit obligations as of January 1, 2022, December 26, 2020 and
December 28, 2019 are as follows:
Discount rate
Compensation increase rate
2021
2020
2019
3.1 %
4.8 %
1.2 %
4.9 %
2.3 %
4.7 %
Expected benefit payments to be paid to participants for the fiscal year ending are as follows:
(in thousands)
2022
2023
2024
2025
2026
2027-2031 and thereafter
Expected Benefit
Payments
$
3,514
3,652
3,561
4,068
4,320
26,449
The Company expects to make approximately $2.6 million of contributions to the plans and pay $1.8 million of benefits
directly in 2022.
The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. For the fiscal
year ended January 1, 2022, December 26, 2020, and December 28, 2019, the Company recorded $2.1 million, $2.0 million,
$1.4 million expense, respectively, in Cost of Sales and Other expense (income), net within the Consolidated Statements of Net
Income. As of January 1, 2022 and December 26, 2020, the Company reported benefit liabilities of $4.1 million and $3.5
million for these plans, of which $1.5 million and $1.2 million was recorded in Accrued liabilities and $2.6 million and $2.3
million was recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively. For the fiscal year ended
January 1, 2022 and December 26, 2020, the pre-tax amounts recognized in other comprehensive income (loss) for these plans
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
were $0.3 million and $0.1 million, respectively. For the fiscal year ended January 1, 2022 and December 26, 2020, the amount
reclassified from accumulated other comprehensive income (loss) were $0.7 million and $0.7 million, respectively.
Defined Benefit Plan Assets
Based upon analysis of the target asset allocation and historical returns by type of investment, the Company has assumed that
the expected long-term rate of return will be 1.4% on plan assets. Assets are invested to maximize long-term return taking into
consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets
were invested as follows, and were not materially different from the target asset allocation:
Cash and cash equivalents, and other
Equity securities
Fixed income securities
Bulk annuity contract
Asset Allocation
2021
2020
15 %
19 %
66 %
— %
100 %
7 %
9 %
31 %
53 %
100 %
The Company segregated its plan assets by the following major categories and level for determining their fair value as of
January 1, 2022 and December 26, 2020. All plan assets that are valued using the net asset value per share (“NAV”) practical
expedient have not been included within the fair value hierarchy but are separately disclosed.
Cash and cash equivalents – Carrying value approximates fair value. As such, these assets were classified as Level 1. The
Company also invests in certain short-term investments which are valued using the amortized cost method. Lastly, the
Company has certain pooled pension funds that have short-term investments with third party mutual funds that are valued at
unit value per share at measurement date. As such, these assets were classified as Level 2.
Equity – The values of individual equity securities were based on quoted prices in active markets. As such, these assets are
classified as Level 1. The Company has certain pooled pension funds which have mutual funds with underlying investments in
certain equity securities that are not quoted on active markets; therefore, they were classified as Level 2.
Fixed income – Fixed income securities are typically priced based on a last trade basis and are exchange-traded. Accordingly,
the Company classified fixed income securities as Level 1. The Company has certain pooled pension funds which have mutual
funds with underlying investments in fixed income securities and funds priced based on a valuation model rather than a last
trade basis and are not exchange-traded. As such, they were classified as Level 2. The Company also invests in certain fixed
income funds which are valued at NAV.
Insurance Contracts and other – This category includes pooled pension funds which have mutual funds with underlying
investments in other assets and liabilities including alternatives priced based on a valuation model and are not exchange-traded.
These were classified as Level 2. This category includes also insurance contracts that are valued by the re-insurer with the
valuation inputs being not highly observable or traded on an open market. Accordingly, insurance contracts were categorized
as Level 3. Lastly, this category includes other assets and liabilities including futures or swaps.
Bulk Annuity Contract – Bulk annuity contract includes a U.K insurance policy issued by an authorized U.K. life insurer. This
bulk annuity contract is valued by the re-insurer with the valuation inputs being not highly observable or traded on an open
market. Accordingly, this contract was categorized as Level 3. The Company has no bulk annuity contract pension assets as of
January 1, 2022.
For any Level 2 and Level 3 plan assets, management reviews significant investments on a periodic basis including
investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the
reliability of third-party pricing estimates.
The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable
value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different
methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in assets in
which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment
would be redeemed at an amount different than the NAV.
The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value
hierarchy as of January 1, 2022:
(in thousands)
Fair Value Measurements Using
Level 2
Level 3
Level 1
NAV
Total
Insurance contracts and other
$
— $
1,917 $
343 $
— $
Cash and cash equivalents
Equities
Fixed income
384
2,559
5,999
4,632
6,604
20,280
—
—
—
—
—
5,607
Total pension plan assets
$
8,942 $
33,433 $
343 $
5,607 $
2,260
5,016
9,163
31,886
48,325
The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value
hierarchy as of December 26, 2020:
(in thousands)
Fair Value Measurements Using
Level 2
Level 3
Level 1
NAV
Total
Insurance contracts and other
$
— $
1,880 $
685 $
— $
Cash and cash equivalents
Equities
Fixed income
Bulk annuity contract
654
1,719
6,164
3,868
6,904
19,433
—
—
—
53,093
—
—
6,078
2,565
4,522
8,623
31,675
53,093
Total pension plan assets
$
8,537 $
32,085 $
53,778 $
6,078 $
100,478
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2021 due to the
following:
(in thousands)
Balance at December 26, 2020
Level 3 assets transferred in from Level 1 and 2 assets valued at NAV:
Settlements
Actual loss on plan assets
Benefits paid from the plan assets
Foreign currency adjustments
Balance at January 1, 2022
Defined Contribution Plan
Level 3
$
53,778
(47,111)
(4,943)
(1,238)
(143)
343
$
The Company also maintains a 401(k) savings plan covering substantially all U.S. employees. The Company matches 100% of
the employee’s annual contributions for the first 4% of the employee’s eligible compensation. The Company may provide an
additional discretionary match to participants and made discretionary matches of 2% of the employee’s eligible compensation
for each of the fiscal year ended January 1, 2022, December 26, 2020 and December 28, 2019. Employees are immediately
vested in their contributions plus actual earnings thereon, as well as the Company contributions. Company matching
contributions amounted to $5.0 million, $4.6 million, and $5.6 million in 2021, 2020, and 2019, respectively.
Non-qualified Supplemental Retirement and Savings Plan
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
investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
under the plan from its general assets. As of January 1, 2022, there was $15.0 million of marketable securities related to the
plan included in Other assets and $15.0 million of accrued compensation benefits included in Other long-term liabilities. The
marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily
determinable fair value. The Company made matching contributions to the plan of $0.2 million, $0.5 million, and $0.4 million
in 2021, 2020, and 2019, respectively.
12. Stock-Based Compensation
Equity Plans: The Company has equity-based compensation plans authorizing the granting of stock options, restricted shares,
restricted share units, and other stock rights to employees and directors. As of January 1, 2022, there were 0.8 million shares
available for issuance of future awards under the Company’s equity-based compensation plans.
Stock options generally vest over a three-year period and are exercisable over either a seven or ten-year period commencing
from the date of the grant. Restricted shares and share units granted by the Company generally vest over three years. Stock
options and restricted share units may have accelerated vesting upon meeting certain qualified conditions.
The following table provides a reconciliation of outstanding stock options for the fiscal year ended January 1, 2022.
Outstanding December 26, 2020
Granted
Exercised
Forfeited
Outstanding January 1, 2022
Exercisable January 1, 2022
Shares Under
Option
Weighted
Average
Price
666,949 $
57,928
(151,015)
(10,636)
563,226
240,030
148.01
267.66
126.61
151.93
165.98
148.66
Weighted
Average
Remaining
Contract Life
(Years)
Aggregate
Intrinsic
Value
(000’s)
4.7 $
3.7
83,749
39,850
The following table provides a reconciliation of non-vested restricted share and share unit awards ("RSU") for the fiscal year
ended January 1, 2022.
Nonvested December 26, 2020
Granted
Vested
Forfeited
Nonvested January 1, 2022
Weighted
Average
Grant-Date
Fair Value
Shares
172,002 $
63,237
(72,904)
(5,676)
156,659
152.25
264.69
162.59
162.85
192.44
The total intrinsic value of options exercised during 2021, 2020, and 2019 was $23.8 million, $20.6 million, and $12.5 million,
respectively. The total fair value of the vested RSU shares was $18.9 million, $9.5 million, and $15.5 million for 2021, 2020,
and 2019, respectively. The total amount of share-based liabilities paid was $1.3 million, $0.5 million and $0.9 million for
2021, 2020, and 2019, respectively.
The Company recognizes compensation cost of all share-based awards as an expense on a straight-line basis over the vesting
period of the awards. At January 1, 2022, the unrecognized compensation cost for options and restricted shares was $21.9
million before tax, and will be recognized over a weighted average period of 1.8 years. Compensation cost included as a
component of cost of sales, research and development and selling, general, and administrative expenses for all equity
compensation plans discussed above was $21.4 million, $19.1 million, and $19.9 million for 2021, 2020, and 2019,
respectively. The total related income tax benefit recognized in the Consolidated Statements of Net Income was $3.3 million,
$3.1 million and $3.3 million for 2021, 2020, and 2019, respectively.
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company uses the Black-Scholes option valuation model to determine the fair value of stock option awards granted. The
weighted average fair value of and related assumptions for options granted are as follows:
Weighted average fair value of options granted
Assumptions:
Risk-free interest rate
Expected dividend yield
Expected stock price volatility
Expected life of options (years)
2021
$74.04
0.66%
0.72%
35.0%
4.4
2020
$38.09
0.30%
1.27%
33.0%
4.7
2019
$47.63
2.33%
0.86%
27.0%
4.4
Expected volatilities are based on the historical volatility of the Company’s stock price. The expected life of options is based on
historical data for options granted by the Company. The risk-free rates are based on yields available at the time of grant on U.S.
Treasury bonds with maturities consistent with the expected life assumption. Historical nonvested forfeiture information is the
basis for the forfeiture rate assumptions.
The fair value of RSU is determined based on the Company's stock price on the grant date reduced by the present value of
expected dividends through the vesting period.
Preferred Stock: The Board of Directors may authorize the issuance of preferred stock from time to time in one or more series
with such designations, preferences, qualifications, limitations, restrictions, and optional or other special rights as the Board
may fix by resolution.
Share Repurchase Program
On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the
Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program"). On April 29, 2020, the Company
announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's
common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program.
On April 28, 2021, the Company announced that the Board of Directors authorized a new three-year program to repurchase up
to $300 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to
replace its previous 2020 program. There are $300 million in the aggregate of shares available for purchase under the new
program as of January 1, 2022.
During the fiscal year 2021, the Company did not repurchase any shares of its common stock. During the fiscal year 2020 and
2019, the Company repurchased 175,110 and 579,916 shares of its common stock totaling $22.9 million and $95.0 million,
respectively.
76
13. Other Comprehensive Income (Loss)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in other comprehensive income (loss) by component for fiscal years 2021, 2020, and 2019 were as follows:
January 1, 2022
Fiscal Year Ended
December 26, 2020
December 28, 2019
(in thousands)
Pre-tax
Tax
Net of tax
Pre-tax
Tax
Net of tax
Pre-tax
Tax
Net of tax
Defined benefit
pension plan and
other adjustments
Foreign currency
translation
adjustments (1)
Total change in other
comprehensive
income (loss)
$ 27,481 $ (5,268) $ 22,213 $ (19,513) $ 3,418 $ (16,095) $ (9,149) $ 1,062 $ (8,087)
(6,967) 2,448
(4,519) 34,707
(2,946) 31,761
(1,476)
664
(812)
$ 20,514 $ (2,820) $ 17,694 $ 15,194 $ 472 $ 15,666 $ (10,625) $ 1,726 $ (8,899)
(1) The tax shown above within the foreign currency translation adjustments is the U.S. tax associated with the foreign
currency translation adjustments of earnings of non-U.S. subsidiaries which have been previously taxed in the U.S. and are not
permanently reinvested.
Accumulated Other Comprehensive Income (Loss) (“AOCI”): The following table sets forth the changes in the components of
AOCI by component for fiscal years 2021, 2020, and 2019:
(in thousands)
Balance at December 29, 2018
2019 activity
Balance at December 28, 2019
2020 activity
Balance at December 26, 2020
2021 activity
Balance at January 1, 2022
Pension and
postretirement
liability and
reclassification
adjustments
Foreign
currency
translation
adjustments
Accumulated
other
comprehensive
income (loss)
$
(9,959) $
(8,087)
(18,046)
(16,095)
(34,141)
22,213
(11,928)
(87,965) $
(812)
(88,777)
31,761
(57,016)
(4,519)
(61,535)
(97,924)
(8,899)
(106,823)
15,666
(91,157)
17,694
(73,463)
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). In the fourth quarter of 2021, the Company recorded a non-cash pension settlement charge of
$19.9 million (£14.9 million), inclusive of the accelerated recognition of prior service cost of $0.5 million (£0.4 million). See
Note 11, Benefits Plans for further discussion.
Amounts reclassified from accumulated other comprehensive income (loss) to earnings for fiscal years 2021, 2020, and 2019
were as follows:
Fiscal Year Ended
(in thousands)
Pension and postemployment and other plans:
Amortization of prior service, net actuarial loss, and other
Net settlement loss and accelerated prior service costs
Total
January 1, 2022 December 26, 2020 December 28, 2019
$
$
2,006 $
19,855
21,861 $
1,694 $
236
1,930 $
372
260
632
The Company recognizes the amortization of prior service costs and net settlement loss in other expense (income), net within
the Consolidated Statements of Net Income.
77
14. Income Taxes
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on
accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the
global intangible low-taxed income provisions ("GILTI").
The Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-
term portion of this Toll Charge which remains payable as of January 1, 2022, totaling $17.8 million, is recorded in Other long-
term liabilities, and the anticipated 2022 annual installment payment of $3.0 million is included in Accrued income taxes, on the
Consolidated Balance Sheet as of January 1, 2022.
In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI
inclusions as a period cost if and when incurred. Thus, for the fiscal years ended January 1, 2022, December 26, 2020 and
December 28, 2019, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions,
and any current year impact was recorded as a part of the current portion of income tax expense.
Domestic and foreign income (loss) before income taxes is as follows:
(in thousands)
Domestic
Foreign
Income before income taxes
2021
2020
2019
$
$
13,746 $
327,279
341,025 $
(16,732) $
177,985
161,253 $
(11,970)
177,854
165,884
Federal, state and foreign income tax expense (benefit) consists of the following:
(in thousands)
Current:
Federal
State
Foreign
Subtotal
Deferred:
Federal and State
Foreign
Subtotal
Provision for income taxes
2021
2020
2019
$
$
4,832 $
1,401
59,006
65,239
(9,658)
1,638
(8,020)
57,219 $
437 $
203
33,841
34,481
(5,354)
2,140
(3,214)
31,267 $
(3,495)
834
30,610
27,949
1,839
(2,986)
(1,147)
26,802
The current federal tax benefit for 2019 includes a benefit of $3.3 million from the recognition of previously unrecognized tax
benefits (and the reversal of the related accrued interest) due to a lapse in the statute of limitations.
A reconciliation between income taxes computed on income before income taxes at the federal statutory rate and the provision
for income taxes is provided below:
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Tax expense at statutory rate of 21%
Non-U.S. income tax rate differential
Non-U.S. losses and expenses with no tax benefit
Tax on unremitted earnings
Certain changes in unrecognized tax benefits and related accrued interest
Net impact associated with the GILTI tax provisions
State and local taxes, net of federal tax benefit
Tax impact of non-deductible goodwill impairment charge
Other, net
Provision for income taxes
2021
2020
2019
$
$
71,615 $
(31,414)
7,820
7,585
4,263
(238)
(172)
—
(2,240)
57,219 $
33,863 $
(19,730)
2,774
3,955
2,160
3,731
(584)
5,642
(544)
31,267 $
34,836
(22,457)
6,570
2,136
(1,468)
6,469
1,080
—
(364)
26,802
Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the
tax bases of the company’s assets and liabilities. Significant components of the company’s deferred tax assets and liabilities at
January 1, 2022 and December 26, 2020, are as follows:
(in thousands)
Deferred tax assets:
Accrued expenses and reserves
Domestic and non-U.S. net operating loss carryforwards
Domestic and non-U.S. interest expense carryforwards
Excess of tax basis over the book basis for intangible assets and goodwill
Capitalized expenses
U.S. research and other general business tax credit carryforwards
U.S. foreign tax credit carryforwards
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Excess of book basis over the tax basis for intangible assets and goodwill
Tax on unremitted earnings
Unrealized foreign currency exchange gains
Excess of book basis over the tax basis for property, plant, and equipment
Total deferred tax liabilities
Net deferred tax liabilities
2021
2020
36,168 $
27,818
16,089
5,636
4,878
1,104
980
183
92,856
(34,869)
57,987
31,123
24,763
10,352
—
4,178
3,724
772
117
75,029
(13,131)
61,898
98,046
15,467
73
12,563
126,149
68,162 $
76,472
14,223
5,719
4,394
100,808
38,910
$
$
The deferred tax asset valuation allowance is mainly related to certain U.S. and non-U.S. net operating loss and non-U.S.
interest expense carryforwards which are not expected to be realized. The remaining U.S. and non-U.S. net operating loss and
interest expense carryforwards either have no expiration date or are expected to be utilized prior to expiration. No deferred tax
asset nor valuation allowance has been recorded for certain U.S. and non-U.S. net operating loss carryforwards for which the
possibility of usage has been determined to be remote.
The Company paid income taxes of $58.2 million, $35.2 million, and $47.6 million in 2021, 2020, and 2019, respectively, and
received income tax refunds of $2.6 million, $7.6 million, and $7.1 million in 2021, 2020, and 2019, respectively.
Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of
investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those
operations. The Company believes the determination of the amount of such deferred income taxes is impractical as it would
depend upon income tax laws and circumstances at the time of the hypothetical distributions or dispositions. As of January 1,
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2022, unremitted earnings of the Company’s non-U.S. subsidiaries were approximately $884 million. A distribution of such
earnings will generally not be subject to U.S. federal income tax. The Company recognized deferred tax liabilities of $15.5
million ($15.3 million for non-U.S. taxes net of related U.S. foreign tax credits, and $0.2 million for U.S. state taxes) as of
January 1, 2022 and $14.2 million ($13.9 million for non-U.S. taxes net of related U.S. foreign tax credits, and $0.3 million for
U.S. state taxes) as of December 26, 2020, related to taxes on certain non-U.S. earnings which are not considered to be
permanently reinvested.
The Company has two subsidiaries in China which benefit from lower tax rates due to “tax holidays” which apply for three-year
periods. The tax holiday for one of the subsidiaries expires at the end of 2022, and for the other subsidiary the tax holiday will
expire at the end of 2023. Together, the tax holidays contributed $7.8 million in tax benefits, or $0.31 per diluted share, during
2021. Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire.
There can be no assurance that future extensions will be granted.
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of January 1, 2022, December 26, 2020,
and December 28, 2019 is as follows:
(in thousands)
Balance at December 28, 2019
Additions for tax positions taken in the current year
Decreases due to a lapse in the statute of limitations
Other
Balance at December 26, 2020
Additions for tax positions related to pre-acquisition periods of acquired subsidiaries
Additions for tax positions taken in the current year
Additions for tax positions taken in the prior year
Other
Balance at January 1, 2022
Unrecognized
Tax Benefits
16,721
$
700
(103)
119
17,437
3,260
1,587
1,100
61
23,445
The January 1, 2022 total in the table above represents the net amount of tax benefits that, if recognized, would favorably affect
the effective tax rate in future periods. Of this amount, only an insignificant amount may be recognized in 2022 based upon the
possible lapse in the statute of limitations. None of the positions included in unrecognized tax benefits are related to tax
positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such
deductibility.
The company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense.
The company recognized such interest expense of $1.6 million, $1.6 million (net of a $0.6 million decrease due to a lapse in the
statute of limitations), and $1.3 million (net of a $0.6 million decrease due to a lapse in the statute of limitations) in 2021, 2020,
and 2019, respectively. Accrued interest for such matters included in Other long-term liabilities within the Consolidated
Balance Sheets was $10.4 million and $8.8 million as of January 1, 2022 and December 26, 2020, respectively.
The U.S. federal statute of limitations remains open for the Company for the 2017 tax year (with respect to the Toll Charge) and
later years. Non-U.S. and U.S. state statutes of limitations generally range from three to seven years, although certain
jurisdictions do not have a statute expiration. Tax examinations occur from time to time, including examinations currently in
process in Korea, the Netherlands, the Philippines, and certain U.S. states. The company does not expect to recognize a
significant amount of additional tax expense as a result of concluding these examinations. During 2021, the Company received
a notice of assessment for approximately $3 million from the Canadian tax authorities. The Company has objected to and
appealed the assessment, and does not expect to recognize a significant amount of additional tax expense upon conclusion of
such appeal.
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
(in thousands, except per share amounts)
Numerator:
Net income as reported
2021
2020
2019
$
283,806 $
129,986 $
139,082
Denominator:
Weighted average shares outstanding
Basic
Effect of dilutive securities
Diluted
Earnings Per Share:
Basic earnings per share
Diluted earnings per share
24,603
329
24,932
24,371
221
24,592
24,576
242
24,818
$
$
11.54 $
11.38 $
5.33 $
5.29 $
5.66
5.60
Potential shares of common stock attributable to stock options and restricted shares excluded from the earnings per share
calculation because their effect would be anti-dilutive were 20,139, 222,526, and 129,658 shares in 2021, 2020, and 2019,
respectively.
During the fiscal year 2021, the Company did not repurchase any shares of its common stock. During the fiscal year 2020 and
2019, the Company repurchased 175,110, and 579,916 shares of its common stock totaling $22.9 million and $95.0 million,
respectively. See Note 12 Stock-Based Compensation for further discussion.
16. Segment Information
The Company and its subsidiaries design, manufacture and sell component, modules and subassemblies to empower the long-
term structural themes of sustainability, connectivity and safety. The Company reports its operations by the following segments:
Electronics, Transportation, and Industrial. An operating segment is defined as a component of an enterprise that engages in
business activities from which it may earn revenues and incur expenses, and about which separate financial information is
regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is
the Company’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the
performance of each operating segment using information about its revenue and operating income (loss) before interest and
taxes, but does not evaluate the operating segments using discrete balance sheet information.
Sales, marketing, and research and development expenses are charged directly into each operating segment. Purchasing,
logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back
to the three operating segments. The Company does not report inter-segment revenue because the operating segments do not
record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments current
results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income,
interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such
costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the
segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting
policies for segment reporting are the same as for the Company as a whole.
•
Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse
accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”)
suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as
discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon
and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate
bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial
motor drives and power conversion, automotive electronics, electric vehicle and related infrastructure, power supplies,
data centers and telecommunications, medical devices, alternative energy and energy storage, building and home
automation, appliances, and mobile electronics.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•
•
Transportation Segment: Formerly known as Automotive segment. The term “Transportation” represents a more
comprehensive description of the Company’s broad range of products, and the applications and end markets it serves.
Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment
manufacturers (“OEMs”), Tier-one suppliers and parts and aftermarket distributors in passenger vehicle, heavy duty
truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets.
Passenger vehicle products are used in internal combustion engine, hybrid and electric vehicles including blade fuses,
battery cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and sensor products designed to
monitor the occupant’s safety and environment as well as the vehicle’s powertrain. Commercial vehicle products
include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving
a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine.
Industrial Segment: Consists of industrial circuit protection (industrial fuse), industrial controls (protection relay,
contactors, transformers) and temperature sensors for use in various applications such as renewable energy and energy
storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO,
mining and industrial automation.
The Company has provided this segment information for all comparable prior periods. Segment information is summarized as
follows:
(in thousands)
Net sales
Electronics
Transportation
Industrial
Total net sales
Depreciation and amortization
Electronics
Transportation
Industrial
Other
Total depreciation and amortization
Operating income (loss)
Electronics
Transportation
Industrial
Other(a)
Total operating income
Interest expense
Foreign exchange loss (gain)
Other expense (income), net
Income before income taxes
2021
2020
2019
1,300,744 $
528,058
251,126
2,079,928 $
937,762 $
395,764
112,169
1,445,695 $
961,080
428,533
114,260
1,503,873
61,512 $
29,015
8,108
—
98,635 $
62,702 $
28,995
4,481
—
96,178 $
60,345
27,922
4,236
—
92,503
309,633 $
65,979
22,621
(12,591)
385,642
18,527
17,158
8,932
341,025 $
152,695 $
41,655
11,996
(43,974)
162,372
21,077
(14,875)
(5,083)
161,253 $
145,594
46,719
22,407
(21,929)
192,791
22,266
5,224
(583)
165,884
$
$
$
$
$
$
(a) Included in “Other” Operating income (loss) for 2021 was $8.4 million of purchase accounting inventory step-up charges,
$7.0 million of legal and professional fees and other integration expenses related to Carling, Hartland and other contemplated
acquisitions, and $2.2 million of restructuring, impairment and other charges, primarily related to employee termination costs.
See Note 8, Restructuring, Impairment and Other Charges, for further discussion. In addition, there was a gain of $5.0 million
recorded for the sale of buildings within the Electronics segment.
Included in “Other” Operating income (loss) for 2020 is $2.3 million of acquisition-related and integration charges related to
the IXYS acquisition and other contemplated acquisitions. In addition, there were $41.7 million of restructuring, impairment
and other charges, primarily related to the goodwill impairment charge of $33.8 million recorded in the second quarter
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
associated with the automotive sensors reporting unit within the Transportation segment, employee termination costs of
$5.5 million, $2.2 million of impairment charges recorded in the first quarter associated with the announced consolidation of a
manufacturing facility within the Industrial segment and other restructuring charges of $0.2 million.
Included in “Other” Operating income (loss) for 2019 is $8.9 million of acquisition-related and integration charges related to
the IXYS acquisition and other contemplated acquisitions. In addition, there were $13.0 million of restructuring charges
primarily related to employee termination costs.
The Company’s net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended 2021, 2020,
and 2019 are as follows:
(in thousands)
Net sales
U.S.
China
Other countries(a)
Total net sales
Long-lived assets
U.S.
China
Mexico
Germany
Philippines
Other countries
Total long-lived assets
Additions to long-lived assets
U.S.
China
Mexico
Germany
Philippines
Other countries
Total additions to long-lived assets
2021
2020
2019
639,381 $
620,211
820,336
2,079,928 $
392,544 $
438,000
615,151
1,445,695 $
440,461
416,385
647,027
1,503,873
57,923 $
122,867
107,283
39,055
74,918
35,843
437,889 $
46,132 $
85,876
70,125
37,976
66,994
37,075
344,178 $
7,690 $
26,396
28,707
8,519
19,342
5,654
96,308 $
4,170 $
10,074
9,977
5,600
19,612
1,775
51,208 $
58,081
88,306
73,096
36,025
51,738
37,371
344,617
5,864
10,400
13,827
4,017
22,944
9,314
66,366
$
$
$
$
$
$
(a) Each country included in other countries are less than 10% of net sales.
For the year ended January 1, 2022, approximately 69% of the Company’s net sales were to customers outside the U.S. (exports
and foreign operations), including approximately 30% to China. For the year ended December 26, 2020, approximately 73% of
the Company's net sales were to customers outside the U.S. (exports and foreign operations), including approximately 30% to
China. For the year ended December 28, 2019, approximately 71% of the Company's net sales were to customers outside the
U.S. (exports and foreign operations), including approximately 28% to China. Sales to Arrow Electronics, Inc., which were
included in the Electronics, Transportation, and Industrial segments, were 10.7%, 10.4%, and 10.7% of consolidated net sales in
2021, 2020, and 2019 respectively. No other single customer accounted for more than 10% of net sales during the last three
years.
83
17. Selected Quarterly Financial Data (Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The quarterly periods for 2021 are for the 14-weeks ended January 1, 2022, 13-weeks ended September 25, 2021, June 26,
2021, and March 27, 2021, respectively. The quarterly periods for 2020 are for the 13-weeks ended December 26, 2020,
September 26, 2020, June 27, 2020, and March 28, 2020, respectively.
(in thousands, except per share data)
2021
2020
4Q(a)
3Q(b)
2Q(c)
1Q(d)
4Q(e)
3Q(f)
2Q(g)
1Q(h)
Net sales
Gross profit
$ 553,065 $ 539,581 $ 523,488 $ 463,794 $ 400,696 $ 391,566 $ 307,337 $ 346,096
199,492
214,572
197,396
160,466
138,083
138,831
99,902
124,356
Operating income (loss)
92,797
120,107
96,257
76,481
65,014
64,558
(11,950) 44,750
Net income (loss)
51,944
92,054
82,095
57,713
58,977
55,356
(8,991) 24,644
Net income (loss) per share
Basic
Diluted
$
$
2.11 $
3.74 $
3.34 $
2.35 $
2.41 $
2.27 $
(0.37) $
2.08 $
3.69 $
3.30 $
2.32 $
2.39 $
2.25 $
(0.37) $
1.01
1.00
(a)
In the fourth quarter of 2021, the Company recorded non-cash pension settlement charge of 19.9 million, $4.1 million
gain related to a sale of building, $3.6 million in acquisition-related and integration costs, $1.6 million for purchase accounting
inventory adjustments associated with the acquisition of Carling, $0.7 million charge for an asset retirement obligation related
to the disposal of a business in 2019, $0.2 million in restructuring, impairment and other charges, and $0.2 million increase in
coal mining reserves.
(b)
In the third quarter of 2021, the Company recorded $2.0 million in acquisition-related and integration costs, $0.8
million in restructuring, impairment and other charges and $0.1 million charge for an asset retirement obligation related to the
disposal of a business in 2019.
(c)
In the second quarter of 2021, the Company recorded $3.3 million for purchase accounting inventory adjustments
associated with the acquisition of Hartland, and $1.0 million loss recorded during the second quarter of 2021 for a total year-to-
date gain of $0.9 million from the sale of a building within the Electronics segment, $0.8 million in employee termination costs
and other restructuring charges, $0.5 million in acquisition-related and integration costs, and $0.5 million of impairment
charges on certain other investments.
(d)
In the first quarter of 2021, the Company recorded the Company recorded $3.5 million for purchase accounting
inventory adjustments associated with the acquisition of Hartland, $1.9 million gain related to a sale of building, $0.8 million in
acquisition-related and integration costs, and $0.4 million in restructuring, impairment and other charges.
(e)
$0.8 million in restructuring, impairment and other costs.
In the fourth quarter of 2020, the Company recorded $0.7 million in acquisition-related and integration costs and
(f)
$0.3 million in acquisition-related and integration costs, and $0.1 million of impairment charges on certain other investments.
In the third quarter of 2020, the Company recorded $1.3 million in restructuring, impairment and other charges,
In the second quarter of 2020, the Company recorded a goodwill impairment charge of $33.8 million associated with
(g)
the automotive sensors reporting unit within the Transportation segment, $1.8 million in employee termination costs and other
restructuring charges, $1.8 million increase to coal mining reserve, $0.2 million charge for an asset retirement obligation related
to the disposal of a business in 2019, and $0.1 million in acquisition-related and integration costs.
(h)
$1.2 million in acquisition-related and integration costs.
In the first quarter of 2020, the Company recorded $4.0 million in restructuring, impairment and other charges and
84
18. Related Party Transactions
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are
accounted for under the equity method. The following is a description of the investments and related party transactions.
Powersem GmbH: The Company owns 45% of the outstanding equity of Powersem GmbH (“Powersem”), a module
manufacturer based in Germany.
EB-Tech Co., Ltd.: The Company owns approximately 19% of the outstanding equity of EB-Tech Co., Ltd. (“EB
Tech”), a company with expertise in radiation technology based in South Korea.
Automated Technology (Phil), Inc.: The Company owns approximately 24% of the outstanding common shares of
Automated Technology (Phil), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test
services. One member of the Company's Board of Directors serves on the Board of Directors of ATEC.
(in millions)
Sales to related party
Accounts receivable balance
Accounts payable balance
Purchase of material/services from related party
Fiscal Year Ended
January 1, 2022
December 26, 2020
Powersem
EB Tech
ATEC
Powersem EB Tech
ATEC
$
0.2 $
— $ — $
1.5 $
— $
3.0
—
0.4
—
12.6
—
2.7
0.1
—
—
$
— $
— $
1.8 $
0.1 $
— $
—
8.7
—
0.2
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be
disclosed in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and
communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
the Company recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and the Company is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 15d-15(b), the Company carried out an evaluation, under the supervision and with the participation of
its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to SEC Rule 13a-15 as of the end of the period covered by this
report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures were effective as of January 1, 2022.
Management’s Report on Internal Control over Financial Reporting
Section 404 of the Sarbanes-Oxley Act of 2002 requires management to include in this Annual Report on Form 10-K a report
on management’s assessment of the effectiveness of the Company’s internal control over financial reporting, as well as an
attestation report from the Company’s independent registered public accounting firm on the effectiveness of the Company’s
internal control over financial reporting. Management is responsible for establishing and maintaining adequate internal control
over financial reporting as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f). The Company’s internal control
system was designed to provide reasonable assurance to its management and the Board of Directors regarding the preparation
and fair presentation of published financial statements.
85
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined
effective can provide only reasonable assurance with respect to financial statement preparation and presentation. A material
weakness is a deficiency, or a combination of deficiencies, in the internal control over financial reporting such that there is a
reasonable possibility that a material misstatement of the annual or interim financial statement will not be prevented or detected
on a timely basis.
The Company’s management, including its Principal Executive Officer and Principal Financial Officer, assessed the
effectiveness of the Company’s internal control over financial reporting as of January 1, 2022, based upon the updated
framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in 1992 and updated in May 2013. Based on this assessment, the Company’s management concluded
that, as of January 1, 2022, the Company’s internal control over financial reporting was effective.
On November 30, 2021, the Company completed the acquisition of Carling Technologies, as discussed in Note 2 –
Acquisitions. Management has excluded Carling’s internal controls over financial reporting from its assessment of the
effectiveness of internal controls over financial reporting as of January 1, 2022. Carling’s net sales and total assets (excluding
goodwill and intangible assets, which were integrated into the Company’s control environment) represent approximately 1%
and 5%, respectively, of the consolidated financial statement amounts as of, and for the fiscal year ended, January 1, 2022.
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the 12 months or fiscal quarter ended January 1, 2022, that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
86
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Except as set forth below, the information required by this item will be contained in the Company’s Proxy Statement related to
our 2021 Annual Meeting of Stockholders (the "proxy statement") and is incorporated herein by reference.
Information concerning directors and nominees for director is set forth in the section titled “Proposal No. 1 - Election of
Directors” in the Company’s proxy statement and is incorporated herein by reference.
Information concerning the Company’s Audit Committee and Audit Committee financial expert is set forth in the sections titled
"Board Committees" and “Director Independence; Financial Experts” in the Company's proxy statement and is incorporated
herein by reference.
Information concerning the procedures by which security holders may recommend nominees to the Company’s Board of
Directors is set forth in the section titled “Director Nominations” in the Company’s proxy statement and is incorporated herein
by reference.
Information concerning compliance with Section 16 of the Securities Exchange Act of 1934 is set forth in the section titled
“Delinquent Section 16(a) Reports” in the Company’s proxy statement and is incorporated herein by reference.
Information regarding the Executive Officers of the Company can be found in Part I of this Annual Report on Form 10-K under
the caption "Information about our Executive Officers."
Code of Ethics
The company has adopted a Code of Conduct (Code of Ethics) that applies to all of the Company’s employees including the
Company’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and persons performing
similar functions. It has posted the text of the Code of Conduct on its website at https://investor.littelfuse.com/corporate-
governance/governance-overview and intends to disclose on such website any amendments to, or waivers from the Code of
Conduct. The company’s website is not incorporated by reference into this Annual Report.
ITEM 11. EXECUTIVE COMPENSATION.
Information concerning compensation of the Company’s executive officers and directors for the fiscal year ended January 1,
2022, is set forth in the sections titled “Compensation Discussion and Analysis,” “Compensation Tables,” "Compensation
Committee Report," "CEO Pay Ratio," "Potential Payments Upon Termination or Change in Control" and “Director
Compensation” in the Company’s proxy statement and is incorporated herein by reference, except the section titled
“Compensation Committee Report” is hereby “furnished” and not “filed” with this Annual Report on Form 10-K.
Information concerning compensation committee interlocks is set forth in the section titled “Compensation Committee
Interlocks and Insider Participation” in the Company’s proxy statement and is incorporated herein by reference.
COMPENSATION PLAN INFORMATION
We have two equity compensation plans that have been approved by our stockholders: the Littelfuse, Inc. Long-Term Incentive
Plan that was approved by our stockholders at the April 2017 annual stockholder meeting and the Deferred Compensation Plan
for Non-Employee Directors that was approved by our stockholders at the May 2005 annual stockholder meeting.
Pursuant to our acquisition of IXYS Corporation on January 17, 2018, we assumed four equity compensation plans that have
not been approved by our stockholders and pursuant to which we may continue to grant equity awards: IXYS Corporation 2009
Equity Incentive Plan, IXYS Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS
Corporation 2016 Equity Incentive Plan (together, the "IXYS Plans"). We also assumed two expired equity compensation plans
that have not been approved by our stockholders and pursuant to which we have outstanding equity awards: the Zilog, Inc. 2002
Omnibus Stock Incentive Plan and Zilog, Inc. 2004 Omnibus Stock Incentive Plan (together the "Zilog Plans"). The IXYS
Corporation 2009 Equity Incentive Plan expired in June 2019 and equity awards remain outstanding under it.
87
Information about our equity compensation plans that were either approved or not approved by our stockholders as of
January 1, 2022, is as follows:
Number of securities
to
be issued upon
exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants, and rights
(1)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in the first
column)
650,680
(2)
80,115
(3)
730,795
$131.47
$99.14
$127.92
598,766 (4)
193,848 (5)
792,614
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total
(1) The weighted average exercise price does not take into account the shares issuable upon the vesting of outstanding
restricted stock units, which have no exercise price.
(2) Includes 161,815 shares reserved for issuance upon vesting of outstanding restricted stock units and 488,865 outstanding
stock options granted under the Littelfuse, Inc. Long-Term Incentive Plan.
(3) Includes 5,754 shares reserved for issuance upon vesting of outstanding restricted stock units under the IXYS Plans and
74,361 outstanding stock options granted under the IXYS Plans and Zilog Plan. Below is a brief description of the
material features of the compensation plans acquired pursuant to the acquisition of IXYS Corporation.
(4) Includes 554,119 shares that remain available for future issuance under the Littelfuse, Inc. Long-Term Incentive Plan and
44,647 shares that remain available for future issuance under the Deferred Compensation Plan for Non-Employee
Directors.
(5) Includes 24,926 shares that remain available for future issuance under the IXYS Corporation 2013 Equity Incentive Plan,
and 168,922 shares that remain available for future issuance under the IXYS Corporation 2016 Equity Incentive Plan.
IXYS Plans
In connection with the acquisition of IXYS Corporation, we assumed the IXYS Corporation 2009 Equity Incentive Plan, IXYS
Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS Corporation 2016 Equity
Incentive Plan and outstanding unvested stock options originally granted by IXYS Corporation under the IXYS Plans that were
held by continuing employees. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse
stock options, with adjustments made to the exercise price of the stock options and the number of shares subject to stock
options as agreed upon in the Acquisition Agreement. These unvested options vest in accordance with their original terms,
generally vesting in equal annual installments over a four-year period from the original grant date. The options, once granted,
generally expire ten years from the date of grant. Under the IXYS Plans, we may grant to former employees of IXYS
Corporation or its subsidiaries restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price
that is no less than the fair market value on the date of grant. Equity awards granted under the IXYS Plans following the
acquisition have been on similar terms and consistent with grants made pursuant to the Littelfuse, Inc Long-Term Incentive
Plan. The IXYS Corporation 2009 and 2011 Equity Incentive Plans expired in June 2019 and June 2021 respectively, with no
additional grants made after the expiration date. As of January 1, 2022, 193,848 shares remained available for issuance under
the IXYS Plans.
Zilog Plan
In connection with the acquisition of IXYS Corporation, we assumed the Zilog, Inc. 2004 Omnibus Stock Incentive Plan and
outstanding stock options originally granted by IXYS Corporation under the Zilog Plan that were held by continuing employees
of Zilog. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse stock options, with
adjustments made to the exercise price of the stock options and the number of shares subject to stock options as agreed upon in
the Acquisition Agreement. These options vested in accordance with their original terms, generally in equal annual installments
over a four-year period from the original grant date. The options generally expire ten years from the date of grant. The Zilog
2004 Omnibus Stock Incentive Plan expired in February 2014 and no additional grants have been made thereunder. Therefore,
88
as of January 1, 2022, no shares remain available for issuance of new awards under the Zilog Plan and 12,486 stock options
remain outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
Information concerning the security ownership of certain beneficial owners, the Company’s directors and executive officers as
of March 1, 2022, is set forth in the section titled “Ownership of Littelfuse, Inc. Common Stock” in the Company’s proxy
statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
Information concerning the independence of the Company’s directors, certain relationships and related transactions during 2021
and the Company’s policies with respect to such transactions is set forth in the sections titled "Director Independence; Financial
Experts", “Related Person Transactions Policy”, “Related Party Transactions” in the Company’s proxy statement and is
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Information concerning principal accountant fees and services is set forth in the section titled “Audit Related Matters” in the
Company’s proxy statement and is incorporated herein by reference.
89
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
Financial Statements and Schedules
1. The following Financial Statements are filed as a part of this report:
i.
ii.
iii.
vi.
v.
vi.
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as of January 1, 2022 and December 26, 2020
Consolidated Statements of Net Income for the fiscal years ended January 1, 2022,
December 26, 2020 and December 28, 2019
Consolidated Statements of Comprehensive Income for the fiscal years ended January 1, 2022,
December 26, 2020 and December 28, 2019
Consolidated Statements of Cash Flows for the fiscal years ended January 1, 2022,
December 26, 2020 and December 28, 2019
Consolidated Statements of Equity for the fiscal years ended January 1, 2022, December 26,
2020 and December 28, 2019
vii. Notes to Consolidated Financial Statements
2. The following Financial Statement Schedule is submitted herewith for the periods indicated therein.
i.
Schedule II - Valuation and Qualifying Accounts and Reserves
Page
43 - 45
46
47
48
49
50
51 - 85
91
All other schedules for which provision is made in the applicable accounting regulations of the Securities and
Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been
omitted.
3. Exhibits. See Exhibit Index
Item 16. FORM 10-K SUMMARY
None.
93
90
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Description
(in thousands)
Fiscal year ended January 1, 2022
Allowance for losses on accounts receivable
Reserves for sales discounts and allowances
Fiscal year ended December 26, 2020
Allowance for losses on accounts receivable
Reserves for sales discounts and allowances
Fiscal year ended December 28, 2019
Allowance for losses on accounts receivable
Reserves for sales discounts and allowances
Balance at
Beginning
of Year
Charged to
Costs and
Expenses
(a)
Deductions
(b)
Other (c)
Balance at
End
of Year
$
$
$
$
$
$
(362) $
1,400 $
43,837 $ 152,153 $ (137,920) $
82 $
790 $
(748) $
1,910
57,322
1,310 $
(329) $
1,170 $
40,733 $ 113,709 $ (112,401) $
(751) $
1,796 $
1,400
43,837
1,062 $
(172) $
34,976 $ 133,434 $ (127,330) $
410 $
10 $
(347) $
1,310
40,733
Includes provision for doubtful accounts, sales returns and sales discounts granted to customers.
(a)
(b) Represents uncollectible accounts written off, net of recoveries and credits issued to customers.
(c) Represents business acquisitions and foreign currency translation adjustments.
91
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Littelfuse, Inc.
By: /s/ David W. Heinzmann
David W. Heinzmann,
President and Chief Executive Officer
Date: February 17, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant on February 16, 2022 and in the capacities indicated.
/s/ Gordon Hunter
Gordon Hunter
/s/ David W. Heinzmann
David W. Heinzmann
/s/ Kristina A. Cerniglia
Kristina A. Cerniglia
/s/ Tzau-Jin Chung
Tzau-Jin Chung
/s/ Cary T. Fu
Cary T. Fu
/s/ Anthony Grillo
Anthony Grillo
/s/ William P. Noglows
William P. Noglows
/s/ Maria C. Green
Maria C. Green
/s/ Nathan Zommer
Nathan Zommer
/s/ Meenal A. Sethna
Meenal A. Sethna
/s/ Jeffrey G. Gorski
Jeffrey G. Gorski
Chairman of the Board of Directors
Director, President and Chief Executive Officer
(Principal Executive Officer)
Director
Director
Director
Director
Director
Director
Director
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Corporate Controller and Chief Accounting Officer
(Principal Accounting Officer)
92
The following documents listed below that have been previously filed with the SEC (1934 Act File No. 0-20388) are
incorporated herein by reference:
EXHIBIT INDEX
Exhibit No.
2.1
2.2
2.3*
3.1
3.2
3.3
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
Description
Agreement and Plan of Merger, dated August 25, 2017, as
amended by Amendment No. 1, dated December 4, 2017, by
and among IXYS Corporation, Littelfuse, Inc., Iron Merger Co.,
Inc., and IXYS Merger Co., LLC.
Stock Purchase Agreement, dated October 19, 2021, by and
between Littelfuse, Inc., the Shareholders of Carling
Technologies, Inc., and Christopher T. Sorenson, as Sellers’
Representative
First Amendment to Stock Purchase Agreement, dated
November 29, 2021, by and between Littelfuse, Inc., the
Shareholders of Carling Technologies, Inc., and Christopher T.
Sorenson
Certificate of Incorporation dated November 25, 1991, as
amended April 25, 1997.
Certificate of Designations of Series A Preferred Stock.
Bylaws, as amended and restated January 24, 2019.
Description of Securities of Littelfuse, Inc.
Form of Stock Option Award Agreement under the Littelfuse,
Inc. Outside Directors' Equity Plan.++
Form of Restricted Stock Unit Award Agreement under the
Littelfuse, Inc. Outside Directors' Equity Plan.++
Form of Stock Option Award Agreement under the Littelfuse,
Inc. Equity Incentive Compensation Plan .++
Form of Restricted Stock Unit Award Agreement (Outside
Director) under the Littelfuse, Inc. Long-Term Incentive Plan.+
+
Form of Stock Option Award Agreement under the Littelfuse,
Inc. Long-Term Incentive Plan.++
Littelfuse, Inc. Annual Incentive Plan, effective January 1,
2014. ++
Form of Stock Option Award Agreement (Executive) under the
Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Stock Option Award Agreement (Outside Director –
2016 Grant) under the Littelfuse, Inc. Long-Term Incentive
Plan. ++
Form of Restricted Stock Unit Award Agreement (Tier II
Management) under the Littelfuse, Inc. Long-Term Incentive
Plan. ++
Form of Restricted Stock Unit Award Agreement (Outside
Director – 2016 Grant) under the Littelfuse, Inc. Long-Term
Incentive Plan. ++
Incorporated by Reference Herein
Form Exhibit Filing Date
File No.
S-4/A Annex A 12/11/2017 333-22114
8-K
2.1
10/20/2021
0-20388
10-K
8-K
8-K
10-K
8-K
8-K
8-K
S-8
3.1
4.2
3.1
4.1
2/27/2017
0-20388
12/1/1995
1/25/2019
2/21/2020
0-20388
0-20388
0-20388
0-20388
99.3
5/1/2008
99.4
5/1/2008
0-20388
10.2
4/28/2009
0-20388
4.4
5/19/2010
0-20388
S-8
4.6
5/19/2010
0-20388
DEF14A
A
3/17/2014
0-20388
10-Q
10.3
5/6/2016
0-20388
10-Q
10.4
5/6/2016
0-20388
10-Q
10.6
5/6/2016
0-20388
10-Q
10.7
5/6/2016
0-20388
Letter Agreement entered into between Littelfuse, Inc. and
David W. Heinzmann. Effective January 1, 2017. ++
Littelfuse, Inc. 3.03% Senior Note, Series A, due February 15,
2022, and 3.74% Senior Note, Series B, due February 15, 2027
Note Purchase Agreement.
8-K
8-K
10.2
11/16/2016
0-20388
10.1
12/9/2016
0-20388
Littelfuse, Netherland C.V. 1.14% Senior Note, Series A, due
December 8, 2023, and 1.83% Senior Note, Series B, due
December 8, 2028 Note Purchase Agreement.
8-K
10.2
12/9/2016
0-20388
93
Exhibit No.
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
Description
Subsidiary Guaranty Agreement, dated December 8, 2016.
Subsidiary Guaranty Agreement, dated as of February 15, 2017.
Restated Littelfuse, Inc. Supplemental Retirement and Savings
Plan, effective January 1, 2017. ++
Amended and Restated Littelfuse, Inc. Long-Term Incentive
Plan. ++
Form of 2017 Stock Option Award Agreement. ++
Employment offer letter between Littelfuse, Inc. and Jeffrey
Gorski, dated June 28, 2017. ++
U.S. Subsidiary Guarantor Supplement, dated as of October 13,
2017, made by Iron Merger Co., Inc. in favor of the note
purchasers and the other holders.
U.S. Subsidiary Guarantor Supplement, dated as of October 13,
2017, made by IXYS Merger Co., LLC in favor of the note
purchasers and the other holders.
Cross Border Subsidiary Guarantor Supplement, dated as of
October 13, 2017, made by Iron Merger Co., Inc. in favor of the
note purchasers and the other holders.
Cross Border Subsidiary Guarantor Supplement, dated as of
October 13, 2017, made by IXYS Merger Co., LLC in favor of
the note purchasers and the other holders.
Note Purchase Agreement, dated November 15, 2017, among
Littelfuse, Inc. and note purchasers listed on the signature pages
thereto.
Form of 3.78% Senior Note, Series B, due February 15, 2030.
Form of 3.48% Senior Note, Series A, due February 15, 2025,
Subsidiary Guaranty Agreement, dated as of January 16, 2018,
made by LFUS LLC, Littelfuse Commercial Vehicle, LLC, Iron
Merger Co., Inc., IXYS Merger Co., LLC and SymCom, Inc. in
favor of the note purchasers and the other holders.
Littelfuse, Inc. Executive Severance Policy. ++
Form of Indemnity Agreement between Nathan Zommer and
IXYS Corporation. ++
IXYS Corporation 2009 Equity Incentive Plan++
IXYS Corporation 2011 Equity Incentive Plan++
IXYS Corporation 2013 Equity Incentive Plan++
IXYS Corporation 2016 Equity Incentive Plan++
Zilog, Inc. 2004 Omnibus Stock Incentive Plan++
Notice of Stock Option Grant and Agreement for the IXYS
Corporation 2009 Equity Incentive Plan++
Form of Nonqualified Stock Option Agreement for Stock
Options pursuant to the Zilog, Inc. 2004 Omnibus Stock
Incentive Plan++
Notice of Stock Option Grant and Agreement for IXYS
Corporation 2011 Equity Incentive Plan++
Notice of Stock Option Grant and Agreement for IXYS
Corporation 2013 Equity Incentive Plan++
Notice of Stock Option Grant and Agreement for IXYS
Corporation 2016 Equity Incentive Plan++
Incorporated by Reference Herein
Form Exhibit Filing Date
File No.
8-K
8-K
10.4
10.2
12/9/2016
2/15/2017
10-K
10.50
2/27/2017
0-20388
0-20388
0-20388
8-K
8-K
8-K
8-K
10.1
5/1/2017
0-20388
10.3
10.1
5/1/2017
8/14/2017
0-20388
0-20388
10.5
10/16/2017
0-20388
8-K
10.6
10/16/2017
0-20388
8-K
10.7
10/16/2017
0-20388
8-K
10.8
10/16/2017
0-20388
8-K
10.1
11/15/2017
0-20388
8-K
8-K
8-K
4.2
4.1
11/15/2017
0-20388
11/15/2017
0-20388
10.2
1/18/2018
0-20388
8-K
10-K
10.4
10.3
1/18/2018
0-20388
6/12/2008
000-26124
S-8
S-8
S-8
S-8
S-8
4.4
4.5
4.6
4.7
4.9
1/19/2018 333-221147
1/19/2018 333-221147
1/19/2018 333-221147
1/19/2018 333-221147
1/19/2018 333-221147
10-Q
10.4
8/10/2009
000-26124
10-K
10.28
6/11/2010
000-26124
10-Q
10.2
8/5/2011
000-26124
10-Q
10.6
8/9/2013
000-26124
10-Q
10.1
11/3/2016
000-26124
94
Exhibit No.
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
Description
U.S. Subsidiary Guarantor Supplement, dated as of March 14,
2018, made by Clare Capital, Inc., Clare Components, Inc.,
Clare Electronics, Inc., Clare Instruments, Inc., Clare Services,
Inc., Clare Technologies, Inc., Directed Energy, Inc., IXYS
Buckeye, LLC, IXYS Integrated Circuits Division AV Inc.,
IXYS Integrated Circuits Divisions Inc., IXYS Long Beach,
Inc., IXYS USA, Inc., Microwave Technology, Inc., Pele
Technology, Inc., Reaction Technology Incorporation and
Zilog, Inc. in favor of the note purchasers and the other holders.
Cross Border Subsidiary Guarantor Supplement, dated as of
March 14, 2018, made by Clare Capital, Inc., Clare
Components, Inc., Clare Electronics, Inc., Clare Instruments,
Inc., Clare Services, Inc., Clare Technologies, Inc., Directed
Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits
Division AV Inc., IXYS Integrated Circuits Divisions Inc.,
IXYS Long Beach, Inc., IXYS USA, Inc., Microwave
Technology, Inc., Pele Technology, Inc., Reaction Technology
Incorporation and Zilog, Inc. in favor of the note purchasers and
the other holders.
Note Purchase Agreement Subsidiary Guarantor Supplement,
dated as of March 14, 2018, made by Clare Capital, Inc., Clare
Components, Inc., Clare Electronics, Inc., Clare Instruments,
Inc., Clare Services, Inc., Clare Technologies, Inc., Directed
Energy, Inc., IXYS Buckeye, LLC, IXYS Integrated Circuits
Division AV Inc., IXYS Integrated Circuits Divisions Inc.,
IXYS Long Beach, Inc., IXYS USA, Inc., Microwave
Technology, Inc., Pele Technology, Inc., Reaction Technology
Incorporation and Zilog, Inc. in favor of the note purchasers and
the other holders.
U.S. Subsidiary Guarantor Supplement, dated as of August 22,
2018, made by Reaction Technology Epi, LLC and Reaction
Tech RE, LLC in favor of the note purchasers and the other
holders.
Cross Border Subsidiary Guarantor Supplement, dated as of
August 22, 2018, made by Reaction Technology Epi, LLC and
Reaction Tech RE, LLC in favor of the note purchasers and the
other holders.
Note Purchase Agreement Subsidiary Guarantor Supplement,
dated as of August 22, 2018, made by Reaction Technology
Epi, LLC and Reaction Tech RE, LLC in favor of the note
purchasers and the other holders.
U.S. Subsidiary Guarantor Supplement, dated as of October 22,
2018, made by Littelfuse International Holding, LLC, Littelfuse
Holding, LLC and Monolith Semiconductor, Inc. in favor of the
note purchasers and the other holders.
U.S. (November 2017) Subsidiary Guarantor Supplement, dated
as of October 22, 2018, made by Littelfuse International
Holding, LLC, Littelfuse Holding, LLC and Monolith
Semiconductor, Inc. in favor of the note purchasers and the
other holders.
Cross Border Assumption Agreement, dated as of October 3,
2018, made by each of New Dutch B.V. and IXYS Dutch B.V.
in favor of the note purchasers and the other holders.
Cross Border Subsidiary Guarantor Supplement, dated as of
October 22, 2018, made by Littelfuse International Holding,
LLC, Littelfuse Holding, LLC and Monolith Semiconductor,
Inc. in favor of the note purchasers and the other holders.
Amended and Restated Employment Agreement entered into
between Littelfuse Europe GmbH and Alexander Conrad,
effective April 1, 2019. ++
95
Incorporated by Reference Herein
Form Exhibit Filing Date
File No.
10-Q
10.2
05/02/2018
0-20388
10-Q
10.3
05/02/2018
0-20388
10-Q
10.4
05/02/2018
0-20388
10-Q
10.3
10/31/2018
0-20388
10-Q
10.4
10/31/2018
0-20388
10-Q
10.5
10/31/2018
0-20388
10-K
10.104
02/22/2019
0-20388
10-K
10.105
02/22/2019
0-20388
10-K
10.106
02/22/2019
0-20388
10-K
10.107
02/22/2019
0-20388
10-K
10.77
02/21/2020
0-20388
Exhibit No.
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
10.65
10.66
10.67
10.68
10.69
10.70
10.71
10.72
Description
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.
Form of Restricted Stock Unit Award Agreement (Tier I) under
the Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Option Award Agreement (Tier I) under the Littelfuse,
Inc. Long-Term Incentive Plan. ++
Form of Restricted Stock Unit Award Agreement (Non-
Employee Director) under the Littelfuse, Inc. Long-Term
Incentive Plan. ++
Form of Option Award Agreement (Non-Employee Director)
under the Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Restricted Stock Unit Award Agreement (Tier II) under
the Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Restricted Stock Unit Award Agreement (IXYS Tier
II) under the IXYS Corporation Equity Incentive Plan. ++
Form of Retention Stock Option Award Agreement under the
Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Retention Stock Option Award Agreement under the
IXYS Corporation Equity Incentive Plan. ++
Form of Retention Restricted Stock Unit Award Agreement
under the Littelfuse, Inc. Long-Term Incentive Plan. ++
Form of Retention Restricted Stock Unit Award Agreement
under the IXYS Corporation Equity Incentive Plan. ++
Amended and Restated Littelfuse Deferred Compensation Plan
for Non-Employee Directors. ++
First Amendment to the Littelfuse, Inc. Supplemental
Retirement and Savings Plan, effective January 1, 2019.++
Second Amendment to the Littelfuse, Inc. Supplemental
Retirement and Savings Plan, effective January 1, 2020.++
Third Amendment to the Littelfuse, Inc. Supplemental
Retirement and Savings Plan, effective January 1, 2020.++
Form Tier I Change of Control Agreement, effective January 1,
2021.++
Form Tier II Change of Control Agreement, effective January 1,
2021.++
Hartland Credit Agreement Joinder Agreement
Subsidiary Guarantor Supplement (Domestic NPA) - Hartland
Subsidiaries
Subsidiary Guarantor Supplement (Cross-Border NPA) -
Hartland Subsidiaries
Subsidiary Guarantor Supplement (Fall 2017 NPA) - Hartland
Subsidiaries
Employment offer letter between Littelfuse, Inc. and Maggie
Chu, dated April 28, 2021 ++
96
Incorporated by Reference Herein
Form Exhibit Filing Date
File No.
8-K
10.1
4/7/2020
0-20388
8-K
8-K
8-K
10.1
4/24/2020
0-20388
10.2
4/24/2020
0-20388
10.3
4/24/2020
0-20388
8-K
10.4
4/24/2020
0-20388
10-Q
10.6
4/29/2020
0-20388
10-Q
10.7
4/29/2020
0-20388
10-Q
10.8
7/29/2020
0-20388
10-Q
10.9
7/29/2020
0-20388
10-Q
10.10
7/29/2020
0-20388
10-Q
10.11
7/29/2020
0-20388
10-Q
10.1
10/28/2020
0-20388
10-K
10.68
2/18/2021
0-20388
10-K
10.69
2/18/2021
0-20388
10-K
10.70
2/18/2021
0-20388
10-K
10.71
2/18/2021
0-20388
10-K
10.72
2/18/2021
0-20388
10-Q
10-Q
10.1
10.2
4/28/2021
4/28/2021
0-20388
0-20388
10-Q
10.3
4/28/2021
0-20388
10-Q
10.4
4/28/2021
0-20388
10-Q
10.1
7/28/2021
0-20388
Incorporated by Reference Herein
Form Exhibit Filing Date
File No.
Exhibit No.
10.73*
10.74*
10.75*
10.76*
Description
Carling Technologies, Inc. Credit Agreement Joinder
Agreement.
Subsidiary Guarantor Supplement (Domestic NPA) – Carling
Technologies, Inc. Subsidiaries.
Subsidiary Guarantor Supplement (Cross-Border NPA) -
Carling Technologies, Inc. Subsidiaries.
Subsidiary Guarantor Supplement (Fall 2017 NPA) - Carling
Technologies, Inc. Subsidiaries.
10.77*
Summary of Non-Employee Director Compensation.++
21.1*
23.1*
31.1*
31.2*
32.1+++
Subsidiaries.
Consent of Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
101.INS*
XBRL Instance Document.
101.SCH*
XBRL Taxonomy Extension Schema Document.
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
104
The cover page on this Annual Report on Form 10-K for the
fiscal year ended January 1, 2022, formatted in Inline XBRL
and contained in Exhibit 101.
* Filed with this Report.
+ Exhibits and schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. Littelfuse agrees to furnish a supplemental
copy of an omitted exhibit or schedule to the SEC upon request.
++ Management contract or compensatory plan or arrangement.
+++ Furnished with this Report.
97
EXECUTIVE OFFICERS
DAVID W. HEINZMANN
President and
Chief Executive Officer
MEENAL A. SETHNA
Executive Vice President and
Chief Financial Officer
RYAN K. STAFFORD
Executive Vice President,
Mergers and Acquisitions,
Chief Legal Officer and Corporate Secretary
MAGGIE CHU
Senior Vice President and
Chief Human Resources Officer
BOARD OF DIRECTORS
KRISTINA A. CERNIGLIA
Senior Vice President and
Chief Financial Officer
Hillenbrand, Inc.
TZAU-JIN CHUNG
Founding Senior Partner
Core Industrial Partners, LLC
CARY T. FU
Co-Founder and
Retired Chairman
Benchmark Electronics, Inc.
MARIA C. GREEN
Retired Senior Vice President and
General Counsel
Ingersoll-Rand plc
ANTHONY GRILLO
Founder
Ascribe Opportunities Management, LLC
MATTHEW J. COLE
Senior Vice President,
eMobility and Corporate Strategy
ALEXANDER CONRAD
Senior Vice President and
General Manager, Passenger Vehicle
Business
DEEPAK NAYAR
Senior Vice President and
General Manager, Electronics Business
DAVID W. HEINZMANN
President and
Chief Executive Officer
Littelfuse, Inc.
GORDON HUNTER
Chairman of the Board
Retired President and Chief Executive Officer
Littelfuse, Inc.
WILLIAM P. NOGLOWS
Chairman of the Board
CMC Materials, Inc.
DR. NATHAN ZOMMER
Founder, former Chairman and
Chief Executive Officer
IXYS Corporation
CORPORATE INFORMATION
ANNUAL MEETING
The Annual Meeting of Littelfuse, Inc. will be held at 9:00 a.m. Central Daylight Time on April 28, 2022.
Due to the ongoing public heath impact of the COVID-19 outbreak, and to support the health and well-
being of our stockholders, this year's Annual Meeting will be a virtual meeting held via live webcast
on the internet. Stockholders will be able to attend the Annual Meeting and submit questions during
the live webcast by visiting www.virtualshareholdermeeting.com/LFUS2022 and entering the 16-digit
control number included in the Notice of Internet Availability of Proxy Materials, on the proxy card or
in the instructions that accompanied the proxy materials. Proxy materials and a copy of this report will
be mailed or made available via the Internet in advance of the meeting to all stockholders of record
as of March 1, 2022.
COMMON STOCK
Littelfuse, Inc. common stock is traded on the NASDAQ® Global Select Market under the symbol
LFUS.
STOCKHOLDER INFORMATION
In addition to annual reports to stockholders, copies of the Company’s filings with the Securities and
Exchange Commission are available on the Investor Relations section of the Company’s website at:
investor.littelfuse.com.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Grant Thornton LLP
27777 Franklin Road
Suite 800
Southfield, MI 48034
TRANSFER AGENT
EQ Shareowner Services
1110 Centre Pointe Curve
Suite 101
Mendota Heights, MN 55120
1.800.468.9716
LITTELFUSE WORLD HEADQUARTERS
Littelfuse, Inc.
8755 West Higgins Road
Suite 500
Chicago, IL 60631
+1.773.628.1000
Littelfuse.com
© 2022 Littelfuse, Inc.