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Item 8. Financial Statements and Supplementary Data

2022-02-17 compared with 2021-02-18 · 434 added, 474 removed, 1056 unchanged (46% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements

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

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Summary of Significant Accounting Policies and Other Information

Acquisitions and Dispositions

Property, Plant, and Equipment

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Stock-Based Compensation

Other Comprehensive (Loss) Income

Other Comprehensive Income (Loss)

Earnings Per Share

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Related Party Transactions

Subsequent Events

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Littelfuse, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 26, 2020 and December 28, 2019, the related consolidated statements of net income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 26, 2020, 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 December 26, 2020 and December 28, 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 26, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 26, 2020, 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 18, 2021, expressed an unqualified opinion.

(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

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

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.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the 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.

Goodwill Impairment Analysis – Automotive Sensors and Electronics - Semiconductor reporting units

The Company’s consolidated goodwill balance was $816.8 million as of December 26, 2020.

The Company tests for impairment by comparing the estimated fair value of each reporting unit to its carrying value.

If the carrying value exceeds its estimated fair value, a goodwill impairment loss is recorded for the difference.

The Company recognized a non-cash impairment loss of $33.8 million related to the Automotive Sensors reporting unit during the year ended December 26, 2020.

We identified the goodwill impairment analysis for the Automotive Sensors and Electronic - Semiconductor reporting units as a critical audit matter because management’s goodwill impairment test involved a high degree of auditor judgment due to the significant estimation required to determine the fair value of each reporting unit.

In particular, the fair value estimate was sensitive to significant assumptions, such as forecasted revenues and cash flows, discount rates, and estimated valuation multiples.

Our audit procedures related to the goodwill impairment analysis of the Automotive Sensors and Electronic - Semiconductor reporting units included the following, among others.

We tested the design and operating effectiveness of controls over the Company's goodwill impairment assessment process, including review of the valuation model and significant assumptions used.

We tested the forecasted revenues and cash flows by assessing the reasonableness of management’s forecasts compared to current results and forecasted industry trends.

With the assistance of our valuation specialists, we assessed the discount 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 used in applying the market approach, including evaluating the reasonableness of estimated valuation multiples.

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

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

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We have audited the internal control over financial reporting of Littelfuse, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 26, 2020, 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 December 26, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 26, 2020, and our report dated February 18, 2021 expressed an unqualified opinion on those financial statements.

(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

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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

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CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) December 26, 2020 December 28, 2019

(in thousands, except share and per share data) January 1, 2022 December 26, 2020

Current assets:

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Fiscal Year Ended

(in thousands, except per share data) December 26, 2020 December 28, 2019 December 29, 2018

(in thousands, except per share data) January 1, 2022 December 26, 2020 December 28, 2019

Net sales $ 2,079,928 $ 1,445,695 $ 1,503,873

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Interest expense 18,527 21,077 22,266

Foreign exchange (gain) loss ( 14,875 ) 5,224 ( 863 )

Other income, net ( 5,083 ) ( 583 ) ( 1,599 )

Foreign exchange loss (gain) 17,158 ( 14,875 ) 5,224

Other expense (income), net 8,932 ( 5,083 ) ( 583 )

Income before income taxes 341,025 161,253 165,884

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) December 26, 2020 December 28, 2019 December 29, 2018

(in thousands) January 1, 2022 December 26, 2020 December 28, 2019

Net income $ 283,806 $ 129,986 $ 139,082

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) December 26, 2020 December 28, 2019 December 29, 2018

(in thousands) January 1, 2022 December 26, 2020 December 28, 2019

OPERATING ACTIVITIES

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Amortization of intangibles 42,729 40,039 40,026

Non-cash pension settlement charges 19,855 — —

Impairment charges — 36,078 322

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Acquisitions of businesses, net of cash acquired ( 423,633 ) — ( 775 )

Proceeds from sales and maturities of short-term investments — — 1,407

Purchases of property, plant, and equipment ( 90,562 ) ( 56,191 ) ( 61,895 )

Proceeds from sale of property, plant, and equipment 15,425 4,758 6,213

Other ( 390 ) — —

Net cash used in investing activities ( 499,160 ) ( 51,433 ) ( 56,457 )

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Payments of revolving credit facility ( 30,000 ) ( 110,000 ) —

Proceeds of term loan — — 75,000

Payments of term loan ( 145,000 ) ( 10,000 ) ( 42,500 )

Proceeds from senior notes payable — — 175,000

Payments of term loan and other loans ( 2,619 ) ( 145,000 ) ( 10,000 )

Net proceeds related to stock-based award activities 13,365 18,744 7,800

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Debt issuance costs — ( 1,786 ) —

Net cash (used in) provided by financing activities ( 67,808 ) ( 146,276 ) 121,897

Effect of exchange rate changes on cash and cash equivalents 17,596 ( 1,189 ) ( 11,420 )

Increase in cash and cash equivalents 156,386 41,406 60,057

Cash and cash equivalents at beginning of year 531,139 489,733 429,676

Cash and cash equivalents at end of year $ 687,525 $ 531,139 $ 489,733

Net cash used in financing activities ( 68,984 ) ( 67,808 ) ( 146,276 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 9,889 ) 17,596 ( 1,189 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 204,689 ) 156,386 41,406

Cash, cash equivalents, and restricted cash at beginning of period 687,525 531,139 489,733

Cash, cash equivalents, and restricted cash at end of period $ 482,836 $ 687,525 $ 531,139

Supplementary Cash Flow Information

Reconciliation of cash and cash equivalents:

Cash and cash equivalents $ 478,473 $ 687,525 $ 531,139

Restricted cash included in prepaid expenses and other current assets $ 2,718 $ — $ —

Restricted cash included in other assets $ 1,645 $ — $ —

Cash paid during the period for interest $ 17,420 $ 20,095 $ 21,240

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Other comprehensive income (loss), net of tax ( 8,899 ) ( 8,899 )

Cumulative effect adjustment — — — ( 9,795 ) 9,795 — —

Stock-based compensation — 19,046 — — — — 19,046

Non-controlling interest — — — — — ( 6 ) ( 6 )

Withheld 25,940 shares on restricted share units for withholding taxes

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Stock options exercised 2 13,122 — — — — 13,124

Issuance of common stock 21 472,280 — — — — 472,301

Repurchases of common stock — — ( 95,036 ) — — — ( 95,036 )

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Stock options exercised 1 19,119 — — — — 19,120

Repurchases of common stock — — ( 22,927 ) — — — ( 22,927 )

Cash dividends paid ($ 2.02 per share)

— — — — ( 49,730 ) — ( 49,730 )

Balance at December 26, 2020 $ 259 $ 907,858 $ ( 242,366 ) $ ( 91,157 ) $ 1,034,048 $ 131 $ 1,608,773

Balance at January 1, 2022 $ 260 $ 946,588 $ ( 248,120 ) $ ( 73,463 ) $ 1,268,124 $ 131 $ 1,893,520

See accompanying Notes to Consolidated Financial Statements.

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Littelfuse, Inc.

and subsidiaries (the “Company”) is a global manufacturer of leading technologies in circuit protection, power control and sensing.

The company's products are found in automotive and commercial vehicles, industrial applications, data and telecommunications, medical devices, consumer electronics and appliances.

With its broad product portfolio of fuses, semiconductors, polymers, ceramics, relays and sensors, and extensive global infrastructure, the Company’s worldwide associates partner with its customers to design, manufacture and deliver innovative, high-quality solutions for a safer, greener and increasingly connected world.

References herein to “2020”, “fiscal 2020” or “fiscal year 2020” refer to the fiscal year ended December 26, 2020.

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.

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.

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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

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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 and include the assets, liabilities, sales and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control.

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 United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses and the accompanying notes.

The 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.

Reclassification

For fiscal year ended December 26, 2020, the Company began presenting restructuring, impairment and other charges as a separate caption in the Consolidated Statements of Net Income.

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

The impact of this reclassification resulted in a decrease in cost of sales, selling, general and administrative expenses, and research and development expenses with the corresponding change reported in restructuring, impairment and other charges.

As a result, costs of sales, selling, general and administrative expenses, and research and development expenses were reduced by $ 4.8 million, $ 7.6 million, and $ 0.5 million, respectively, for fiscal year 2019 and costs of sales and selling, general and administrative expenses were reduced by $ 0.9 million, $ 11.7 million, respectively for fiscal year 2018.

This reclassification had no effect on the previously reported operating income and net income for the fiscal years ended December 28, 2019 and December 29, 2018.

Cash Equivalents

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 a multi-currency notional cash pool for our participating entities with a third-party bank provider.

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 accompanying consolidated balance sheets.

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) 2021 2020

Cash and cash equivalents $ 478,473 $ 687,525

Restricted cash included in prepaid expenses and other current assets 2,718 —

Restricted cash included in other assets 1,645 $ —

Total cash, cash equivalents and restricted cash $ 482,836 $ 687,525

Short-Term and Long-Term Investments

As of December 26, 2020, the Company has an investment in Polytronics Technology Corporation Ltd.

(“Polytronics”).

The Company’s Polytronics shares held at the end of fiscal 2020 and 2019 represent approximately 7.2 % of total Polytronics shares

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

outstanding, respectively.

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 € 15.7 million (approximately $ 19.2 million) at December 26, 2020 and € 11.6 million (approximately $ 12.8 million) at December 28, 2019.

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.

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All equity-level investments are less than majority owned.

The Company recognized no gains and losses and $ 0.6 million of losses from its equity method investments for the fiscal years ended December 26, 2020 and December 28, 2019, respectively.

The balance of these equity method investments was $ 11.4 million and $ 11.1 million as of the fiscal years ended December 26, 2020 and December 28, 2019, respectively.

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 balance of the Company's investments accounted for under the cost method was $ 0.5 million and $ 0.4 million for the fiscal years ended December 26, 2020 and December 28, 2019, respectively.

During the twelve months ended December 26, 2020 and December 28, 2019, the Company recorded impairment charges of $ 0.1 million and $ 7.3 million, respectively, in Other income, net in the Consolidated Statements of Net Income to adjust these certain investments to their estimated fair value.

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.

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The investment securities are measured at net asset value.

As of December 26, 2020 and December 28, 2019, the investment securities balance was $ 13.2 million and $ 10.5 million, respectively, related to the plan and are included in Other assets on the Consolidated Balance Sheets.

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

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Major overhauls that extend the useful lives of existing assets are capitalized.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the second quarter of 2020, the Company recorded a non-cash charge of $ 33.8 million to recognize the impairment of goodwill in the automotive sensors reporting unit within the Automotive segment.

The goodwill impairment charge was due to reductions in the estimated fair value for the automotive sensors reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2019 annual goodwill impairment test.

These lower future expectations were driven by projected extended declines in end market demand due to the COVID-19 pandemic.

In addition, during the second quarter of 2020, certain customers notified the Company of their decision to delay future programs along with a customer canceling an existing program.

As of December 26, 2020, the automotive sensors reporting unit had $ 9.8 million of remaining goodwill.

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.

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See Note 5, Goodwill and Other Intangible Assets, for additional information.

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 remain ing 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.

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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 December 26, 2020, 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.

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

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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 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors.

current rates and trends when it is appropriate to do so.

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 December 26, 2020 and December 28, 2019:

Fiscal Year Ended December 26, 2020

The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended January 1, 2022 and December 26, 2020:

Fiscal Year Ended January 1, 2022

(in thousands) Electronics

Segment Automotive

Segment Transportation

Segment (1) Industrial

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(in thousands) Electronics

Segment Automotive

Segment Transportation

Segment (1) Industrial

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Total $ 937,762 $ 395,764 $ 112,169 $ 1,445,695

During the fourth quarter of 2020, the Company transferred a business previously reported within the Electronics-Semiconductor reporting unit to the Electronics-Passive Products and Sensors reporting units.

This transfer aligns with how this business will be managed and is complimentary with existing electronics passive products and sensors and markets into which they sell.

The 2019 disaggregated revenue table has been reclassified to reflect this change.

This transfer had no impact to the Electronics segment results.

(1) Formerly known as Automotive segment .

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

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue and Billing

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.

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If circumstances related to specific customers change, the estimates of the recoverability of receivables could be further adjusted.

As of December 26, 2020 and December 28, 2019, the Company’s allowance for doubtful accounts was $ 1.4 million and $ 1.3 million, respectively.

Additionally, the Company had less than $ 1.0 million of trade receivables greater than 90 days past due as of December 26, 2020 and December 28, 2019, respectively.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Shipping and Handling Fees and Costs

Amounts billed to customers related to shipping and handling is classified as revenue.

Costs incurred for shipping and handling of $ 11.1 million, $ 11.0 million , and $ 12.3 million in fiscal years 2020, 2019, and 2018, respectively, are classified in selling, general, and administrative expenses.

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 f iscal years 2021, 2020, and 2019, respectively, are classified in selling, general, and administrative expenses.

Foreign Currency Translation / Remeasurement

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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 income statement was a gain of $ 14.9 million in fiscal year 2020, a loss of $ 5.2 million in fiscal year 2019, and a gain of $ 0.9 million in fiscal year 2018.

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

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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 € 2.3 million ($ 2.9 million) and € 1.0 million ($ 1.1 million) at December 26, 2020 and December 28, 2019, respectively.

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.

1 unchanged sentence

The ultimate determination can only be done after respective investigations because the concrete conditions are mostly unknown at this time.

Other Income, Net

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

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).

The Company accounts for income taxes using the asset and liability method.

17 unchanged sentences

subsidiaries.

Changes in economic and business conditions, non-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.

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

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

On December 22, 2017, the U.S.

enacted legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act").

Among other things, the Tax Act reduced the U.S.

corporate federal income tax rate from 35% to 21%, added base broadening provisions which limit deductions and address excessive international tax planning, imposed a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S.

subsidiaries and enabled repatriation of earnings of non-U.S.

subsidiaries free of U.S.

federal income tax.

In the fourth quarter of 2018, within the measurement period outlined in SEC SAB No.

118, the Company finalized its estimates of the impact of the Tax Act and recorded a charge of $ 3.2 million, including $ 2.3 million for the Toll Charge and $ 0.9 million for the net impact of other items.

In addition, the Company recorded $ 7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation.

This was reflected in the opening balance sheet as an increase to goodwill and other long-term liabilities.

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 December 26, 2020, totaling $ 20.8 million, is included in Other long-term liabilities, and the anticipated 2021 annual installment payment of $ 3.0 million is included in Accrued income taxes , on the Consolidated Balance Sheet as of December 26, 2020.

The Company did not elect to pay the 2018 IXYS Toll Charge over the eight year period provided by the Tax Act and therefore there is no 2018 IXYS Toll Charge which remains payable as of December 26, 2020.

One of the base broadening provisions of the Tax Act is commonly referred to as the “GILTI” provisions.

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 December 26, 2020, December 28, 2019, and December 29, 2018, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense .

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 expen se.

Fair Value Measurements

9 unchanged sentences

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2018-14 "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans," which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General.

The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans.

The eliminated disclosures include (a) the amounts in OCI expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits.

Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period.

This guidance is effective for financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

issued for fiscal years ending after December 15, 2020.

The Company adopted the standard as of December 26, 2020.

The adoption of this guidance did not have a material effect on the Company's Consolidated Financial Statements.

In March 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-04 Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The objective of this is to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting due to the cessation of the London Interbank Offered Rate (LIBOR).

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

The adoption of this guidance did not have a material effect on the Company's Consolidated Financial Statements.

In August 2018, the FASB issued ASU No.

2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic:

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)." ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The Company adopted the new standard on December 29, 2019.

The adoption of ASU 2018-15 did not have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU No.

2018-13 "Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement." ASU 2018-13 modifies the disclosure requirements in Topic 820:

"Fair Value Measurement," based on the FASB Concepts Statement, "Conceptual Framework for Financial Reporting - Chapter 8:

Notes to Financial Statements," including consideration of costs and benefits.

The new standard removes certain disclosures, modifies other disclosures and adds additional disclosures related to fair value measurement.

The Company adopted the new standard on December 29, 2019.

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.

In June 2016, the FASB issued ASU No.

2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments." The standard, including subsequently issued amendments (ASU 2019-11 and ASU 2019-04), modifies the measurement approach for credit losses on financial instruments, including trade receivables, from an incurred loss method to a current expected credit loss method ("CECL").

The standard requires the measurement of expected credit losses to be based on relevant information, including historical experiences, current conditions and a forecast that is supportable.

The Company adopted the new standard on December 29, 2019.

The adoption of the standard did not have a material effect on our Consolidated Financial Statements.

Recently Issued Accounting Standards

In December 2019, the FASB issued 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.

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 material effect from the adoption of this guidance on the Company's Consolidated Financial Statements.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.

IXYS Corporation

On January 17, 2018, the Company acquired IXYS Corporation (“IXYS”), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power 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 acquisition of IXYS accelerated the Company’s growth across the power control market driven by IXYS’s extensive power semiconductor portfolio and technology expertise.

With IXYS, the Company was able to diversify and expand its presence within industrial electronics markets, leveraging the strong IXYS industrial OEM customer base.

The Company leveraged its power semiconductor portfolio in automotive markets to expand its global content per vehicle.

Upon completion of the acquisition, at IXYS stockholders’ election and subject to proration, each share of IXYS common stock, par value $ 0.01 per share, owned immediately prior to the effective time were canceled and extinguished and automatically converted into the right to receive:

(i) $ 23.00 in cash (subject to applicable withholding tax), without interest (referred to as the cash consideration), or (ii) 0.1265 of a share of common stock, par value $ 0.01 per share, of Littelfuse (referred to as the stock consideration).

IXYS stockholders received cash in lieu of any fractional shares of Littelfuse common stock that the IXYS stockholders would otherwise have been entitled to receive.

Additionally, each outstanding option to purchase shares of IXYS common stock granted under an IXYS equity plan were assumed by Littelfuse and converted into an option to acquire (i) a number of shares of Littelfuse common stock equal to the number of shares of IXYS common stock subject to such option immediately prior to the effective time multiplied by 0.1265 , rounded down to the nearest whole share, with (ii) an exercise price per share of Littelfuse common stock equal to the exercise price of such IXYS stock option immediately prior to the effective time divided by 0.1265 , rounded up to the nearest whole cent.

Based on the $ 207.5 per share opening price of Littelfuse common stock on January 17, 2018, the consideration IXYS stockholders received in exchange of their IXYS common stock in the acquisition had a value of $ 814.8 million comprised of $ 380.6 million of cash and $ 434.2 million of Littelfuse stock.

In addition to the consideration transferred related to IXYS common stock, the value of consideration transferred, and included in the purchase price, related to IXYS stock options that were converted to Littelfuse stock options, or cash settled, had a value of $ 41.7 million.

As a result, total consideration was valued at $ 856.5 million.

The total purchase price of $ 856.5 million has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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) Purchase Price

1 unchanged sentence

Cash, net of cash acquired $ 313,583

Cash settled stock options 3,622

Littelfuse stock 434,192

Converted stock options 38,109

Total purchase consideration 778,788

Allocation of consideration to assets acquired and liabilities assumed:

Current assets, net 155,930

Trade receivables, net 25,503

Inventories 57,450

Other current assets 3,454

Property, plant, and equipment 64,301

2 unchanged sentences

Other non-current assets 4,104

Current liabilities ( 21,723 )

Other non-current liabilities ( 37,762 )

Approximately $ 49.1 million of net receivables was included in IXYS’s current assets, All IXYS goodwill, other assets and liabilities were recorded in the Electronics segment and primarily reflected in the Americas and European geographic areas.

The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining IXYS’s products and technology with the Company’s existing electronics product portfolio.

Goodwill resulting from the IXYS acquisition is not expected to be deductible for tax purposes.

The Company recorded $ 7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation (this reflects a reduction of $ 1.0 million recorded in the fourth quarter of 2018 and $ 2.0 million recorded in the third quarter of 2018 as a consequence of revisions to the Company’s original estimates).

As a result of the Company completing its fair value analysis, in the fourth quarter of 2018, the company recorded a reduction of $ 2.6 million in certain investments held by IXYS.

Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended December 29, 2018 are net sales of approximately $ 378.2 million, and loss before income taxes of $ 22.2 million, since the January 17, 2018 acquisition of IXYS.

The Company recognized approximately $ 11.9 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the fiscal year ended December 29, 2018, of which $ 4.5 million was recognized immediately as it related to prior service periods.

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 was fully amortized as a non-cash charge to cost of goods sold during the first and second quarters of 2018, as the acquired inventory was sold, and reflected as other non-segment costs.

During the fiscal year ended December 29, 2018, the Company incurred approximately $ 11.0 million of legal and professional fees related to this acquisition which were primarily recognized as selling, general, and administrative expenses .

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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) Purchase Price

Total purchase consideration:

Cash, net of cash acquired, and restricted cash $ 108,516

Allocation of consideration to assets acquired and liabilities assumed:

Trade receivables, net 12,915

Inventories 35,808

Other current assets 2,224

Property, plant, and equipment 6,296

Intangible assets 39,660

Goodwill 38,502

Other non-current assets 3,782

Current liabilities ( 24,861 )

Other non-current liabilities ( 5,810 )

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

The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company and IXYS as though the acquisition had occurred as of January 1, 2017.

The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the IXYS acquisition occurred as of January 1, 2017 or of future consolidated operating results.

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.

For the Fiscal Year Ended

(in thousands, except per share amounts) December 29,

(in thousands, except per share amounts) January 1,

2022 December 26, 2020

Net sales $ 2,257,390 $ 1,662,896

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For the Fiscal Year Ended

(in thousands) December 29,

(in thousands) January 1, 2022 December 26, 2020

Amortization (a)

$ ( 8,770 ) $ ( 12,669 )

Depreciation ( 64 ) 253

Transaction costs (b)

5,381 ( 5,381 )

Amortization of inventory step-up (c)

Stock compensation (d)

Income tax impact of above items ( 15,446 )

(a) The amortization adjustment for the twelve months ended December 29, 2018 primarily reflects the reduction of amortization expense in the period related to the Order backlog intangible asset.

The Order backlog has a useful life of twelve months and is fully amortized in the fiscal 2017 for pro forma results.

(b) The transaction cost adjustments reflect the reversal of certain bank and attorney fees from the twelve months ended December 29, 2018.

(c) The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended December 29, 2018.

The inventory step-up was amortized over five months as the inventory was sold.

(d) The stock compensation adjustment reflects the reversal of the portion of stock compensation for IXYS stock options that were converted to Littelfuse stock options and expensed immediately during the twelve months ended December 29, 2018.

For the fiscal year ended December 26, 2020 and December 28, 2019, the Company recorded $ 0.8 million and $ 2.7 million of acquisition-related expenses associated with contemplated acquisitions within Selling, general and administrative expenses in the Consolidated Statements of Net Income.

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

8,398 ( 13,156 )

Income tax (expense) benefit of above items ( 1,021 ) 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.

The components of inventories at January 1, 2022 and December 26, 2020 are as follows:

(in thousands) 2021 2020

4 unchanged sentences

Total $ 445,671 $ 258,002

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant, and Equipment

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

The components of net property, plant, and equipment at January 1, 2022 and December 26, 2020 are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) 2021 2020

4 unchanged sentences

Total $ 437,889 $ 344,178

The Company recorded depreciation expense of $ 56.1 million, $ 52.5 million, and $ 51.0 million for the fiscal years ended December 26, 2020, December 28, 2019, and December 29, 2018, respectively.

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.

Goodwill and Other Intangible Assets

The amounts for goodwill and changes in the carrying value by segment are as follows:

(in thousands) Electronics Automotive Industrial Total

(in thousands) Electronics Transportation

Industrial Total

Gross goodwill as of December 28, 2019 $ 650,796 $ 131,321 $ 47,266 $ 829,383

2 unchanged sentences

Changes during 2020:

Impairments ( 33,841 ) ( 33,841 )

Foreign currency translation adjustments 25,529 4,451 84 30,064

3 unchanged sentences

Changes during 2021:

Impairments — ( 33,841 ) — ( 33,841 )

Additions (a)

— 96,307 38,502 134,809

Foreign currency translation adjustments ( 16,080 ) ( 6,106 ) 179 ( 22,007 )

Gross goodwill as of December 26, 2020 676,325 138,354 47,551 862,230

Accumulated impairment losses as of December 26, 2020 — ( 36,423 ) ( 8,995 ) ( 45,418 )

Net goodwill as of December 26, 2020 $ 676,325 $ 101,931 $ 38,556 $ 816,812

Gross goodwill as of January 1, 2022 660,245 228,555 86,232 975,032

Accumulated impairment losses as of January 1, 2022 — ( 36,177 ) ( 9,065 ) ( 45,242 )

Net goodwill as of January 1, 2022 $ 660,245 $ 192,378 $ 77,167 $ 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.

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.

In addition, during the second quarter of 2020, certain customers notified the Company of the ir 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 December 26, 2020, the automotive sensors reporting unit had $ 9.8 million of remaining goodwill.

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

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:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 26, 2020

As of January 1, 2022

(in thousands) Gross

11 unchanged sentences

Total $ 563,464 $ 271,577 $ 291,887

During the year ended December 29, 2018, the Company recorded additions to other intangible assets of $ 212.7 million, for acquisitions during 2018, the components of which were as follows:

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) Weighted Average

Useful Life (Years) Amount

Patents, licenses and software 8.0 $ 51,500

Land use rights 50 $ 9,590

Patents, developed technology 9.8 $ 31,659

Customer relationships, trademarks, and tradenames 13.0 124,301

Order backlog 1.0 12,420

Total $ 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 December 26, 2020 is as follows:

Estimated annual amortization expense related to intangible assets with definite lives at January 1, 2022 is as follows:

(in thousands)

2 unchanged sentences

Total $ 407,126

Accrued Liabilities

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Liabilities

The components of accrued liabilities at January 1, 2022 and December 26, 2020 are as follows:

(in thousands) 2021 2020

2 unchanged sentences

Interest 4,402 4,517

Restructuring liability 4,195 2,679

Other customer reserves 3,858 1,143

Professional services 4,299 3,321

Deferred revenue 2,959 828

Current benefit liability 2,751 1,106

Other non-income taxes 4,280 2,126

Restructuring liability 2,944 4,195

Current benefit liability 1,248 2,751

Deferred revenue 1,105 2,959

Other customer reserves 702 3,858

Other 39,673 29,251

21 unchanged sentences

Short-term lease expenses are recognized on a straight-line basis over the lease term.

The following table presents the classification of ROU assets and lease liabilities as of December 26, 2020 and December 28, 2019:

(in thousands) Consolidated Balance Sheet Classification December 26, 2020 December 28, 2019

The following table presents the classification of ROU assets and lease liabilities as of January 1, 2022 and December 26, 2020:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) Consolidated Balance Sheet Classification January 1, 2022 December 26, 2020

Operating ROU assets Right of use assets, net $ 29,616 $ 17,615

3 unchanged sentences

The following table represents the lease costs for 2021 and 2020:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) Consolidated Statements of Net Income Classification Fiscal Year Ended December 26, 2020 Fiscal Year Ended December 28, 2019

(in thousands) Consolidated Statements of Net Income Classification Fiscal Year Ended January 1, 2022 Fiscal Year Ended December 26, 2020

Short-term lease expenses Cost of sales, SG&A expenses $ 345 $ 512

4 unchanged sentences

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 December 26, 2020

Maturity of Lease Liabilities as of January 1, 2022

(in thousands) Operating leases

2022 $ 10,080

2027 and thereafter 4,607

1 unchanged sentence

Present value of lease liabilities $ 31,323

Operating Lease Term and Discount Rate Fiscal Year Ended December 26, 2020 Fiscal Year Ended December 28, 2019

Operating Lease Term and Discount Rate Fiscal Year Ended January 1, 2022 Fiscal Year Ended December 26, 2020

Weighted-average remaining lease term (years) 4.79 3.41

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Cash Flow Information related to Leases

(in thousands) Fiscal Year Ended December 26, 2020

(in thousands) Fiscal Year Ended January 1, 2022

Cash paid for amounts included in the measurement of lease liabilities

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Leased assets obtained in exchange for operating lease liabilities 20,217

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Information

(in thousands)

Net gain from sale and leaseback transaction ( 4,058 )

Restructuring, Impairment and Other Charges

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded restructuring, impairment and other charges for fiscal years 2021, 2020, and 2019 as follows:

Fiscal Year Ended December 26, 2020

(in thousands) Electronics Automotive Industrial Total

Fiscal Year Ended January 1, 2022

(in thousands) Electronics Transportation Industrial Total

Employee terminations $ 1,124 $ 404 $ 347 $ 1,875

1 unchanged sentence

Total restructuring charges 1,124 687 347 2,158

Impairment — 33,841 2,237 36,078

Total $ 1,124 $ 687 $ 347 $ 2,158

Fiscal Year Ended December 26, 2020

(in thousands) Electronics Automotive Industrial Total

(in thousands) Electronics Transportation Industrial Total

Employee terminations $ 2,540 $ 682 $ 2,231 $ 5,453

4 unchanged sentences

Fiscal Year Ended December 28, 2019

(in thousands) Electronics Automotive Industrial Total

(in thousands) Electronics Transportation Industrial Total

Employee terminations $ 5,313 $ 4,251 $ 795 $ 10,359

3 unchanged sentences

Total $ 5,501 $ 6,287 $ 1,245 $ 13,033

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.

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 Automotive 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.

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.

For the year ended December 28, 2019, the Company recorded total restructuring charges of $ 12.7 million for employee termination costs and other restructuring charges.

These charges primarily related to the reorganization of operations and selling, general and administrative functions as well as the integration of IXYS within the Electronics segment and the reorganization of operations in the automotive sensors and commercial vehicle products businesses within the Automotive segment.

In April 2019, we announced the closure of a European manufacturing facility in the automotive sensors business within the Automotive segment.

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.

For the year ended December 29, 2018, the Company recorded total restructuring charges of $ 10.4 million for employee termination costs and other restructuring charges related to lease termination and facility closure.

These charges primarily related to the integration of IXYS and the reorganization of the IXYS Radio Pulse business within the Electronics segment and the reorganization of operations in the Commercial Vehicle Products business within the Automotive segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The restructuring reserves as of December 26, 2020 and December 28, 2019 are $ 4.2 million and $ 2.7 million, respectively.

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 December 26, 2020.

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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts of debt at January 1, 2022 and December 26, 2020 are as follows:

(in thousands)

Revolving Credit Facility $ 100,000 $ 130,000

Term Loan — 145,000

Euro Senior Notes, Series A due 2023 132,444 142,679

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Total long-term debt $ 611,897 $ 687,034

Interest paid on all Company debt was approximately $ 20.1 million, $ 21.2 million, and $ 18.5 million in fiscal year 2020, 2019, and 2018, respectively.

Revolving Credit Facility / Term Loan

On March 4, 2016, the Company entered into a five-year credit agreement (“Credit Agreement”) with a group of lenders for up to $ 700.0 million.

The Credit Agreement consisted of an unsecured revolving credit facility (“Revolving Credit Facility”) of $ 575.0 million and an unsecured term loan credit facility (“Term Loan”) of up to $ 125.0 million.

In addition, the Company had the ability, from time to time, to increase the size of the Revolving Credit Facility and the Term Loan by up to an additional $ 150.0 million, in the aggregate, in each case in minimum increments of $ 25.0 million, subject to certain conditions and the agreement of participating lenders.

On October 13, 2017, the Company amended the Credit Agreement to increase the Revolving Credit Facility from $ 575.0 million to $ 700.0 million and increase the Term Loan from $ 125.0 million to $ 200.0 million and to extend the expiration date from March 4, 2021 to October 13, 2022.

The Credit Agreement also includes the option for the Company to increase the size of the Revolving Credit Facility and the Term Loan by up to an additional $ 300.0 million, in the aggregate, subject to the satisfaction of certain conditions set forth in the Credit Agreement.

Term Loans may be made in up to two advances.

The first advance of $ 125.0 million occurred on October 13, 2017 and the second advance of $ 75.0 million occurred on January 16, 2018.

For the Term Loan, the Company was required to make quarterly principal payments of 1.25 % of the original term loan ($ 2.5 million quarterly) through maturity, with the remaining balance due on October 13, 2022.

Interest paid on all Company debt was approximatel y $ 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 March 25, 2020, the company borrowed $ 100.0 million from the revolving credit facility to preserve financial flexibility and enhance liquidity, given the increasing levels of uncertainty related to COVID-19.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On April 3, 2020, the Company amended the Credit Agreement to effect certain changes, including, among others:

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;

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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 $ 110.0 million on the amended revolving credit facility during the fiscal year ended December 26, 2020.

The balance under the facility was $ 130.0 million as of December 26, 2020.

Outstanding borrowings under the Credit Agreement bear interest, at the Company’s option, at either LIBOR fixed for interest periods of one, two, three or six-month periods plus 1.25 % 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 in the agreement.

The Company was also required to pay commitment fees on unused portions of the credit agreement ranging from 0.125 % to 0.20 %, based on the Consolidated Leverage Ratio, as defined in the agreement.

The 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 1.65 % at December 26, 2020.

As of December 26, 2020, the Company had no amounts outstanding in letters of credit and had available $ 383.5 million of borrowing capacity under the Revolving Credit Facility.

At December 26, 2020, the Company was in compliance with all covenants under the Credit Agreement.

The amended credit agreement also allows the Company to increase the size of the revolving credit facility or enter into o ne 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 natu re.

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.

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”).

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.

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In addition, the Company is required to satisfy certain financial covenants and tests relating to, among other matters, interest coverage and leverage.

At December 26, 2020, the Company was in compliance with all covenants under the Senior Notes.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company paid debt issuance costs of $ 0.9 million in relation to the $ 175 million Note Purchase Agreement that was entered on November 15, 2017 during fiscal year 2018.

Debt Maturities

Scheduled maturities of the Company’s long-term debt for each of the five years succeeding December 26, 2020 and thereafter are summarized as follows:

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 $ 25,000

2027 and thereafter 332,540

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Assets and Liabilities

13 unchanged sentences

Other Investments

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has certain convertible debt and convertible preferred stock investments that are accounted for under the cost method reflected in Investments and Other assets in the Consolidated Balance Sheets.

During the fiscal year ended December 26, 2020 and December 28, 2019, the Company recorded impairment charges of $ 0.1 million and $ 7.3 million, respectively, in Other income, net in the Consolidated Statements of Net Income to adjust these certain investments to their estimated fair value.

As of December 26, 2020 and December 28, 2019, the balances of these investments were $ 0.5 million and $ 0.4 million, respectively.

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.

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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 income, net during the fiscal year 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 December 26, 2020 and December 28, 2019, the Company held no non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 26, 2020:

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents assets measured at fair value by classification within the fair value hierarchy as of January 1, 2022:

Fair Value Measurements Using

13 unchanged sentences

$ 105,896 $ — $ — $ 105,896

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition to the methods and assumptions used for the financial instruments recorded at fair value as discussed above, the following methods and assumptions are used to estimate the fair value of other financial instruments that are not marked to market on a recurring basis.

1 unchanged sentence

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 December 26, 2020 and December 28, 2019, as the rates on these borrowings are variable in nature.

The carrying value and estimated fair values of the Company’s Euro Senior Notes, Series A and Series B and USD Senior Notes, Series A and Series B, as of December 26, 2020 and December 28, 2019 were as follows:

December 26, 2020 December 28, 2019

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:

January 1, 2022 December 26, 2020

(in thousands)

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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.

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

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:

Fiscal Year Ended December 26, 2020 December 26, 2020

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See Note 5, Goodwill and Other Intangible Assets for further discussion regarding goodwill impairment charges.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefit Plans

1 unchanged sentence

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 will be required to directly pay and administer pension payments to certain of the Company’s U.K.

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.

The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $ 55 million, representing approximately 37 % of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand.

In connection with this transaction, the Company will record a one-time non-cash settlement charge in the second half of 2021 currently estimated between $ 18 million and $ 22 million, reflecting the accelerated recognition of unamortized actuarial losses in the plan.

The actual settlement charge could differ from this estimate due to final data and plan wind-up expenses.

Due to the signing of the group annuity contract being a significant change in 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.

Additionally, the Company made a cash contribution of $ 10.4 million (£ 8.4 million) under this agreement during the second quarter.

Additionally, the Company made a cash contribution of $ 10.4 million (£ 8.4 million) under this agreement during the second quarter 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:

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Interest cost 1,761 2,173

Net actuarial loss 25,306 11,286

Net actuarial (gain) loss ( 11,016 ) 25,306

Benefits paid from the plan assets ( 3,121 ) ( 2,808 )

Benefits paid directly by the Company ( 2,692 ) ( 2,302 )

Curtailments and Settlements 102 ( 1,924 )

(Settlements) and Curtailments ( 48,927 ) 102

Acquisitions 1,797 —

Effect of exchange rate movements ( 3,218 ) 7,462

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Fair value of plan assets at beginning of year $ 100,478 $ 78,502

Actual return on plan assets 7,053 8,222

Actual (loss) return on plan assets ( 2,824 ) 7,053

Employer contributions 2,150 12,918

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Net amount unfunded status $ ( 38,245 ) $ ( 48,514 )

Amounts recognized in the Consolidated Balance Sheets as of December 26, 2020 and December 28, 2019 consist of the following:

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)

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Net liability recognized $ ( 38,245 ) $ ( 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 December 26, 2020 and December 28, 2019 were as following:

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)

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Total $ 12,561 $ 41,222

The pre-tax amounts recognized in other comprehensive income (loss) in 2020 as components of net periodic benefit costs were as follows:

The pre-tax amounts recognized in other comprehensive income (loss) in 2021 were as follows:

(in thousands)

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Net actuarial loss 6,734

Net settlement loss 236

Net settlement loss and accelerated prior service costs 19,855

Foreign currency adjustments 966

Total $ 28,661

Due to the signing of the group annuity contract being a significant change in this 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 addition, the net actuarial loss and increase in benefit obligation arising during 2020 and 2019 were also impacted by lower discount rates in both 2020 and 2019 compared to previous years and changes in foreign exchange rates.

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:

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Compensation increase rate 4.9 % 4.7 % 4.6 %

The accumulated benefit obligation for the plans was $ 137.7 million and $ 111.3 million at December 26, 2020 and December 28, 2019, respectively.

The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations in excess of plan assets as of December 26, 2020 and December 28, 2019:

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)

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Fair value of plan assets 47,942 100,439

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 December 26, 2020 and December 28, 2019:

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)

1 unchanged sentence

Fair value of plan assets 39,060 92,248

Weighted average assumptions used to determine benefit obligations as of December 26, 2020, December 28, 2019 and December 29, 2018 are as follows:

Weighted average assumptions used to determine benefit obligations as of January 1, 2022, December 26, 2020 and December 28, 2019 are as follows:

2021 2020 2019

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The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans.

For the fiscal year ended December 26, 2020, December 28, 2019, and December 29, 2018, the Company recorded $ 2.0 million, $ 1.4 million, $ 1.8 million expense, respectively, in Cost of Sales and Other income, net within the Consolidated Statements of Net Income.

As of December 26, 2020 and December 28, 2019, the Company reported benefit liabilities of $ 3.5 million and $ 2.8 million for these plans, of which $ 1.2 million and $ 0.9 million was recorded in Accrued liabilities and $ 2.3 million and $ 1.9 million was recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively.

For fiscal year ended December 26, 2020 and December 28, 2019, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $ 0.1 million and $ 0.6 million, respectively.

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

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

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Bulk annuity contract — % 53 %

The Company segregated its plan assets by the following major categories and level for determining their fair value as of December 26, 2020 and December 28, 2019.

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.

1 unchanged sentence

As such, these assets were classified as Level 1.

The Company also invests in certain short-term investments which are valued using the amortized cost method and at NAV.

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.

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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 was categorized as Level 3.

Lastly, this category includes other assets and liabilities including futures or swaps valued at NAV.

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.

2 unchanged sentences

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.

2 unchanged sentences

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 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 Company believes that the NAV is representative of fair value at the reporting

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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:

Fair Value Measurements Using

5 unchanged sentences

Fixed income 5,999 20,280 — 5,607 31,886

Bulk annuity contract — — 53,093 — 53,093

Total pension plan assets $ 8,942 $ 33,433 $ 343 $ 5,607 $ 48,325

3 unchanged sentences

Level 1 Level 2 Level 3 NAV Total

Equities $ 1,796 $ — $ — $ 19,139 $ 20,935

Fixed income 4,535 — — 51,711 56,246

Insurance contracts and other $ — $ 1,880 $ 685 $ — $ 2,565

Cash and cash equivalents 654 3,868 — — 4,522

Equities 1,719 6,904 — — 8,623

Fixed income 6,164 19,433 — 6,078 31,675

Bulk annuity contract 53,093 53,093

Total pension plan assets $ 8,537 $ 32,085 $ 53,778 $ 6,078 $ 100,478

3 unchanged sentences

Level 3 assets transferred in from Level 1 and 2 assets valued at NAV:

Bulk annuity contract added during the year 53,093

Actual return on plan assets 76

Balance at December 26, 2020 $ 53,778

Settlements ( 47,111 )

Actual loss on plan assets ( 4,943 )

Benefits paid from the plan assets ( 1,238 )

Foreign currency adjustments ( 143 )

Balance at January 1, 2022 $ 343

Defined Contribution Plan

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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 December 26, 2020, December 28, 2019 and December 29, 2018.

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 contributi ons plus actual earnings thereon, as well as the Company contributions.

3 unchanged sentences

The Company maintains accounts for participants through which participants make investment elections.

The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits under the plan from its general assets.

As of December 26, 2020, there was $ 13.2 million of marketable securities related to the plan included in Other assets and $ 13.2 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

The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determinable fair value.

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.

2 unchanged sentences

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 December 26, 2020, there were 0.9 million shares available for issuance of future awards under the Company’s equity-based compensation plans.

Stock options generally vest over a three , four or five-year period and are exercisable over either a seven or ten-year period commencing from the date of the grant.

Restricted shares and share units granted by the Company generally vest over three to four years .

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.

Upon completion of the IXYS acquisition, IXYS outstanding options were assumed by the Company and converted into options of 499,027 shares.

See Note 2, Acquisitions and Dispositions , for further discussion.

The following table provides a reconciliation of outstanding stock options for the fiscal year ended December 26, 2020.

The following table provides a reconciliation of outstanding stock options for the fiscal year ended January 1, 2022.

Option Weighted

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Forfeited ( 10,636 ) 151.93

Outstanding December 26, 2020 666,949 148.01 5.1 $ 69,126

Exercisable December 26, 2020 296,409 133.00 3.7 35,172

The following table provides a reconciliation of non-vested restricted share and share unit awards ("RSU") for the fiscal year ended December 26, 2020.

Outstanding January 1, 2022 563,226 165.98 4.7 $ 83,749

Exercisable January 1, 2022 240,030 148.66 3.7 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.

Shares Weighted Average

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Forfeited ( 5,676 ) 162.85

Nonvested December 26, 2020 172,002 152.25

Nonvested January 1, 2022 156,659 192.44

The total intrinsic value of options exercised during 2021, 2020, and 2019 was $ 23.8 million, $ 20.6 million, and $ 12.5 million, respectively.

2 unchanged sentences

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 December 26, 2020, the unrecognized compensation cost for options and restricted shares was $ 22.6 million before tax, and will be recognized over a weighted average period of 2.0 years.

Compensation cost included as a component of cost of sales, research and development and selling, general, and administrative expenses for all equity

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

compensation plans discussed above was $ 19.1 million, $ 19.9 million, and $ 28.2 million for 2020, 2019, and 2018, respectively.

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 w as $ 3.3 million , $ 3.1 million and $ 3.3 million for 2021, 2020, and 2019, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company uses the Black-Scholes option valuation model to determine the fair value of stock option awards granted.

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Share Repurchase Program

The Company’s Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company’s common stock under a program for the period May 1, 2018 to April 30, 2019 ("2018 program").

On April 26, 2019, the Company's Board of Directors authorized to a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program") to replace its previous expired 2018 program.

On April 23, 2020, the Company's Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program.

There are 1,000,000 shares remaining available for purchase under the 2020 program as of December 26, 2020.

During the fiscal year 2020, 2019, and 2018, the Company repurchased 175,110 , 579,916 , and 391,972 shares of its common stock totaling $ 22.9 million, $ 95.0 million, and $ 67.9 million, respectively.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Fiscal Year Ended

December 26, 2020 December 28, 2019 December 29, 2018

January 1, 2022 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

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Foreign currency translation adjustments (1) ( 6,967 ) 2,448 ( 4,519 ) 34,707 ( 2,946 ) 31,761 ( 1,476 ) 664 ( 812 )

Total change in other comprehensive (loss) income $ 15,194 $ 472 $ 15,666 $ ( 10,625 ) $ 1,726 $ ( 8,899 ) $ ( 24,414 ) $ ( 47 ) $ ( 24,461 )

Total change in other comprehensive income (loss) $ 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.

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(in thousands)

Pension and postretirement liability and reclassification adjustments Gain (loss) on investments Foreign currency translation adjustments Accumulated other comprehensive income (loss)

Pension and postretirement liability and reclassification adjustments Foreign currency translation adjustments Accumulated other comprehensive income (loss)

Balance at December 29, 2018 $ ( 9,959 ) $ ( 87,965 ) $ ( 97,924 )

Cumulative effect adjustment (a)

— ( 9,795 ) — ( 9,795 )

2019 activity ( 8,087 ) ( 812 ) ( 8,899 )

877 — ( 25,338 ) ( 24,461 )

Balance at December 28, 2019 ( 18,046 ) ( 88,777 ) ( 106,823 )

2 unchanged sentences

2021 activity 22,213 ( 4,519 ) 17,694

Balance at December 26, 2020 ( 34,141 ) — ( 57,016 ) ( 91,157 )

(a) The Company adopted ASU 2016-01 on December 31, 2017 on a modified retrospective basis, recognizing the cumulative effect as a $ 9.8 million increase to retained earnings.

See Note 1, Summary of Significant Accounting Policies and Other Information , for further discussion.

Balance at January 1, 2022 ( 11,928 ) ( 61,535 ) ( 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).

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:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended

(in thousands) December 26, 2020 December 28, 2019 December 29, 2018

(in thousands) January 1, 2022 December 26, 2020 December 28, 2019

Pension and postemployment and other plans:

Amortization of prior service, net actuarial loss, and other $ 2,006 $ 1,694 $ 372

Net settlement loss 236 260 238

Net settlement loss and accelerated prior service costs 19,855 236 260

Total $ 21,861 $ 1,930 $ 632

The Company recognizes the amortization of prior service costs and settlement loss and curtailment gain in other income, net within the Consolidated Statements of Net Income.

On December 22, 2017, the U.S.

enacted legislation referred to as the "Tax Act".

Among other things, the Tax Act reduced the U.S.

corporate federal income tax rate from 35% to 21%, added base broadening provisions which limit deductions and address excessive international tax planning, imposed a Toll Charge on accumulated earnings of certain non-U.S.

subsidiaries and enabled repatriation of earnings of non-U.S.

subsidiaries free of U.S.

federal income tax.

In the fourth quarter of 2018, within the measurement period outlined in SEC SAB No.

In addition, the Company recorded $ 7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation.

This was reflected in the opening balance sheet as an increase to goodwill and other long-term liabilities.

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 December 26, 2020, totaling $ 20.8 million, is recorded in Other long-term liabilities, and the anticipated 2021 annual installment payment of $ 3.0 million is included in Accrued income taxes , on the Consolidated Balance Sheet as of December 26, 2020.

One of the base broadening provisions of the Tax Act is commonly referred to as the “GILTI” provisions.

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.

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").

T he Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act.

In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred.

Thus, for the fiscal years ended December 26, 2020, December 28, 2019 and December 29, 2018, deferred taxes were computed without consideration of the possible future impact of the GILTI provisions, and any current year impact was recorded as a part of the current portion of income tax expense.

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:

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Income before income taxes $ 341,025 $ 161,253 $ 165,884

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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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.

The current federal tax benefit for 2018 includes the benefit of current year losses (which served to partially offset the amount of the IXYS Toll Charge that would otherwise have been payable).

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:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

2 unchanged sentences

income tax rate differential ( 31,414 ) ( 19,730 ) ( 22,457 )

Tax impact of non-deductible goodwill impairment charge 5,642 — —

Tax on unremitted earnings 3,955 2,136 4,660

Net impact associated with the GILTI tax provisions 3,731 6,469 5,075

losses and expenses with no tax benefit 7,820 2,774 6,570

Tax on unremitted earnings 7,585 3,955 2,136

Certain changes in unrecognized tax benefits and related accrued interest 4,263 2,160 ( 1,468 )

Net impact associated with the GILTI tax provisions ( 238 ) 3,731 6,469

State and local taxes, net of federal tax benefit ( 172 ) ( 584 ) 1,080

Nondeductible professional fees 236 195 1,001

2017 Toll Charge (2018 adjustment) — — 2,278

Provisional Tax Act impact other than Toll Charge (2018 adjustment) — — 966

Tax impact of non-deductible goodwill impairment charge — 5,642 —

Other, net ( 2,240 ) ( 544 ) ( 364 )

1 unchanged sentence

Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting bases and the tax bases of the company’s assets and liabilities.

Significant components of the company’s deferred tax assets and liabilities at December 26, 2020 and December 28, 2019, are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the company’s deferred tax assets and liabilities at January 1, 2022 and December 26, 2020, are as follows:

(in thousands) 2021 2020

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net operating loss carryforwards 27,818 24,763

Domestic and non-U.S.

interest expense carryforwards 16,089 10,352

research credit carryforwards 3,724 2,581

Excess of tax basis over the book basis for intangible assets and goodwill 5,636 —

Capitalized expenses 4,878 4,178

research and other general business tax credit carryforwards 1,104 3,724

foreign tax credit carryforwards 980 772

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Net deferred tax liabilities $ 68,162 $ 38,910

The deferred tax asset valuation allowance is related to certain non-U.S.

The deferred tax asset valuation allowance is mainly related to certain U.S.

net operating loss and non-U.S.

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The remaining U.S.

net operating loss and non-U.S.

interest expense carryforwards either have no expiration date or are expected to be utilized prior to expiration.

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.

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The Company believes the determination of the amount of such deferred income taxes is impractical as it would depend upon income tax laws and circumstances at the time of the hypothetical distributions or dispositions.

As of December 26, 2020, unremitted earnings of the Company’s non-U.S.

subsidiaries was approximately $ 767 million.

As of January 1,

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.

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foreign tax credits, and $ 0.2 million for U.S.

state taxes) as of December 26, 2020 and $ 13.0 million ($ 12.6 million for non-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.

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earnings which are not considered to be permanently reinvested.

Some of these non-U.S.

taxes will provide a U.S.

federal income tax benefit as a foreign tax credit, and the amounts as of December 26, 2020 and December 28, 2019 are net of such benefit.

The Company has two subsidiaries in China which benefit from lowered income tax rates due to “tax holidays” which apply for three-year periods, subject to extension.

The tax holiday for one of these subsidiaries expired at the end of 2020, and it will seek an extension.

Such tax holidays contributed $ 4.1 million in tax benefits, or $ 0.17 per diluted share, during 2020.

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

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 26, 2020, December 28, 2019, and December 29, 2018 is as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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)

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Balance at December 26, 2020 17,437

Additions for tax positions related to pre-acquisition periods of acquired subsidiaries

Additions for tax positions taken in the current year 1,587

Decreases due to a lapse in the statute of limitations ( 103 )

Balance at December 26, 2020 17,437

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, $ 1.3 million (net of a $ 0.6 million decrease due to a lapse in the statute of limitations), and $ 1.5 million (net of a $ 0.3 million decrease due to a lapse in the statute of limitations) in 2020, 2019, and 2018, respectively.

Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $ 8.8 million and $ 7.2 million as of December 26, 2020 and December 28, 2019, respectively.

The amount of unrecognized tax benefits included in Other long-term liabilities within the Consolidated Balance Sheets was $ 17.4 million and 16.7 million as of December 26, 2020 and December 28, 2019, respectively.

The December 26, 2020 total represents the net amount of tax benefits that, if recognized, would favorably affect the effective tax rate in future periods.

Additions for tax positions taken in the prior year 1,100

Balance at January 1, 2022 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.

federal statute of limitations remains open for the Company for the 2017 tax year and later years.

federal statute of limitations remains open for the IXYS pre-acquisition tax period ending January 17, 2018.

The company recognizes accrued interest and pe nalties 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, respec tively.

federal statute of limitations remains open for the Company for the 2017 tax year (with respect to the Toll Charge) and later years.

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 Italy, the Philippines, and Hong Kong.

Tax examinations occur from time to time, including examinations currently in process in Korea, the Netherlands, the Philippines, and certain U.S.

The company does not expect to recognize a significant amount of additional tax expense as a result of concluding these examinations.

The Company has been informed that it will receive a notice of assessment from the Canadian tax authorities as a consequence of concluding their recent audit.

Although the exact amount of the assessment is not known, it is estimated to approximate $ 3 million.

The Company believes the assessment is in error and intends to appeal.

The Company does not expect to recognize a significant amount of additional tax expense upon conclusion of such appeal.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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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.

On January 17, 2018, the Company acquired IXYS through a combination of cash, Littelfuse common stock, and the value of converted, or cash settled IXYS equity awards.

The Company issued approximately 2.1 million shares of Littelfuse common stock and converted IXYS equity awards into approximately 0.5 million Littelfuse equity awards.

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.

Segment Information

The Company and its subsidiaries design, manufacture and sell components and modules for circuit protection, power control and sensing throughout the world.

The Company 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, Automotive, and Industrial.

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.

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Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes;

semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, metal-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

oxide-semiconductor field effect transistors (“MOSFETs”) and silicon carbide diodes;

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, building and home automation, appliances, and mobile electronics.

• Automotive Segment:

Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-I suppliers and parts distributors in passenger car, heavy duty truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets.

Passenger car fuse products for internal combustion engine, hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, and high-voltage fuses.

Commercial vehicle products include fuses, switches, relays, and power distribution modules used in applications serving a number of end markets, including heavy truck, construction, agriculture and material handling.

Automotive sensor products include a wide range of automotive and commercial vehicle products designed to monitor the passenger compartment occupant's safety and environment as well as the vehicle’s powertrain.

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.

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 power fuses, protection relays and controls, temperature sensor and other circuit protection products for use in various industrial applications such as oil, gas, mining, renewables and energy storage, electric vehicle infrastructure, non-residential construction, HVAC systems, industrial safety, power conversion, elevators and other industrial equipment.

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.

3 unchanged sentences

Electronics $ 1,300,744 $ 937,762 $ 961,080

Automotive 395,764 428,533 479,791

Transportation 528,058 395,764 428,533

Industrial 251,126 112,169 114,260

2 unchanged sentences

Electronics $ 61,512 $ 62,702 $ 60,345

Automotive 28,995 27,922 23,333

Transportation 29,015 28,995 27,922

Industrial 8,108 4,481 4,236

Other — — 12,420

Total depreciation and amortization $ 98,635 $ 96,178 $ 92,503

1 unchanged sentence

Electronics $ 309,633 $ 152,695 $ 145,594

Automotive 41,655 46,719 54,982

Transportation 65,979 41,655 46,719

Industrial 22,621 11,996 22,407

2 unchanged sentences

Interest expense 18,527 21,077 22,266

Foreign exchange (gain) loss ( 14,875 ) 5,224 ( 863 )

Other income, net ( 5,083 ) ( 583 ) ( 1,599 )

Foreign exchange loss (gain) 17,158 ( 14,875 ) 5,224

Other expense (income), net 8,932 ( 5,083 ) ( 583 )

Income before income taxes $ 341,025 $ 161,253 $ 165,884

(a) 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 associated with the automotive sensors reporting unit within the Automotive 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

manufacturing facility within the Industrial segment and other restructuring charges of $ 0.2 million.

(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

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.

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

In addition, there were $ 5.8 million of employee termination costs, impairment and other restructuring charges and acquisition-related expenses for other contemplated acquisitions which included $ 2.2 million of impairment charges primarily related to the impairment of a building and a trade name associated with the exit of the Custom business within the Industrial segment.

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:

1 unchanged sentence

2021 2020 2019

United States $ 392,544 $ 440,461 $ 511,544

$ 639,381 $ 392,544 $ 440,461

China 620,211 438,000 416,385

3 unchanged sentences

Long-lived assets

United States $ 46,132 $ 58,081 $ 58,691

$ 57,923 $ 46,132 $ 58,081

China 122,867 85,876 88,306

5 unchanged sentences

Additions to long-lived assets

United States $ 4,170 $ 5,864 $ 5,567

$ 7,690 $ 4,170 $ 5,864

China 26,396 10,074 10,400

5 unchanged sentences

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

For the year ended December 26, 2020, approximately 73 % of the Company’s net sales were to customers outside the United States (exports and foreign operations), including approximately 30 % to China.

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.

2 unchanged sentences

(exports and foreign operations), including approximately 28 % to China.

Sales to Arrow Electronics, Inc., which were included in the Electronics, Automotive, and Industrial segments, were 10.4 %, 10.7 %, and 10.7 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of consolidated net sales in 2020, 2019, and 2018 respectively.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Selected Quarterly Financial Data (Unaudited)

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.

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.

2 unchanged sentences

Gross profit 199,492 214,572 197,396 160,466 138,083 138,831 99,902 124,356

Operating income 65,014 64,558 ( 11,950 ) 44,750 32,317 47,167 52,634 60,673

Net income 58,977 55,356 ( 8,991 ) 24,644 22,654 35,647 43,792 36,989

Net income per share

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 $ 2.11 $ 3.74 $ 3.34 $ 2.35 $ 2.41 $ 2.27 $ ( 0.37 ) $ 1.01

Diluted $ 2.08 $ 3.69 $ 3.30 $ 2.32 $ 2.39 $ 2.25 $ ( 0.37 ) $ 1.00

(1) The prior year gross profit amounts have been reclassified to reflect a change in classification of certain costs presented on the Company’s Consolidated Statements of Income.

See Note 1, Summary of Significant Accounting Policies and Other Information for further information and this change had no impact on previously reported operating income and net income amounts.

(a) In the fourth quarter of 2020, the Company recorded $ 0.7 million in acquisition-related and integration costs and $ 0.8 million in restructuring, impairment and other charges.

(b) In the third quarter of 2020, the Company recorded $ 1.3 million in restructuring, impairment and other charges, $ 0.3 million in acquisition-related and integration costs, and $ 0.1 million of impairment charges on certain other investments.

(c) In the second quarter of 2020, the Company recorded a goodwill impairment charge of $ 33.8 million associated with the automotive sensors reporting unit within the Automotive 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.

(d) In the first quarter of 2020, the Company recorded $ 4.0 million in restructuring, impairment and other charges and $ 1.2 million in acquisition-related and integration costs.

(e) In the fourth quarter of 2019, the Company recorded $ 1.9 million in acquisition-related and integration costs and $ 2.1 million in restructuring, impairment and other costs, and $ 4.2 million impairment charges related to certain other investments, partially offset by a $ 3.3 million benefit for previously unrecognized tax benefits in respect of which the statute of limitation has expired.

(f) In the third quarter of 2019, the Company recorded $ 3.2 million in acquisition-related and integration costs and $ 2.5 million in restructuring and impairment charges.

(g) In the second quarter of 2019, the Company recorded $ 5.7 million in restructuring and impairment charges, $ 1.5 million in acquisition-related and integration costs, and $ 0.4 million costs primarily related to a sale of building and $ 0.2 million impairment charges related to a certain other investment.

(h) In the first quarter of 2019, the Company recorded $ 2.8 million impairment charges to certain other investments, $ 2.6 million loss on the disposal of a business, $ 2.7 million in restructuring costs, $ 2.4 million in acquisition-related and integration costs, and $ 0.3 million gain primarily related to the final payments for the acquisition of Monolith.

(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) In the fourth quarter of 2020, the Company recorded $ 0.7 million in acquisition-related and integration costs and $ 0.8 million in restructuring, impairment and other costs.

(f) In the third quarter of 2020, the Company recorded $ 1.3 million in restructuring, impairment and other charges, $ 0.3 million in acquisition-related and integration costs, and $ 0.1 million of impairment charges on certain other investments.

(g) In the second quarter of 2020, the Company recorded a goodwill impairment charge of $ 33.8 million associated with 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) In the first quarter of 2020, the Company recorded $ 4.0 million in restructuring, impairment and other charges and $ 1.2 million in acquisition-related and integration costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12 unchanged sentences

Fiscal Year Ended

December 26, 2020 December 29, 2019

January 1, 2022 December 26, 2020

(in millions) Powersem EB Tech ATEC Powersem EB Tech ATEC

Sales to related party $ 0.2 $ — $ — $ 1.5 $ — $ —

Purchase material/service from related party 2.7 — 8.7 3.2 0.4 7.9

Purchase of material/services from related party 3.0 0.4 12.6 2.7 — 8.7

Accounts receivable balance — — — 0.1 — —

Accounts payable balance $ — $ — $ 1.8 $ 0.1 $ — $ 0.2

Additionally, the Company has certain cost method investments in VTOOL Ltd.

and Securepush Ltd.

with a total book value of $ 0.5 million as of December 26, 2020 and one member of the Company’s Board of Directors is currently an investor and a director of VTOOL Ltd.

and Securepush Ltd.

On April 26, 2019, the Company sold its subsidiary Microwave Technology, LLC.

(“MWT”) resulting in a loss on disposal of $ 2.6 million reflected in Other income, net in the Consolidated Statements of Net Income.

The operations of MWT were included in the Electronics segment.

One member of the Company’s Board of Directors is an owner of a company that purchased MWT.

Subsequent Events

On January 28, 2021, the Company acquired Hartland Controls, a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning (HVAC) and other industrial and control systems applications with annualized sales of approximately $ 70 million.

The cash purchase price for Hartland Controls was approximately $ 113 million and the operations of Hartland Controls will be included in the Industrial segment.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data