LITTELFUSE INC /DE 10-K

ITEM 1. BUSINESS. GENERAL Littelfuse, Inc., was incorporated under the laws of the State of Delaware in 1991. References herein to the “Company,” “we,” “our” or “Littelfuse” refer to Littelfuse, Inc. and its subsidiaries. References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022. References herein to “2020”, “fiscal 2020” or “fiscal year 2020” refer to the fiscal year ended December 26, 2020. References herein to “2019”, “fiscal 2019” or “fiscal year 2019” refer to the fiscal year ended December 28, 2019. The Company operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31. Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the prior 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this convention, the fiscal year 2021 contained 53 weeks while each of fiscal 2020 and fiscal 2019 contained 52 weeks. OVERVIEW Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with approximately 17,000 global associates, the Company partners with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, the Company’s products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day. Segments The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial. Within these segments, the Company designs, manufactures and sells components, modules and subassemblies to empower the long-term structural themes of sustainability, connectivity and safety. Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable, connected, and safer world. The ever-increasing complexity of applications surrounding these themes continues to drive greater demand for the Company’s reliable products and a higher level of product content. As a result, the Company has evolved its presence across the industrial, transportation and electronics end markets it serves, which is relatively balanced. With a long list of target applications within each primary end market, the Company believes its balanced approach is healthy for the long-term sustainability of its business, increases diversification and creates additional growth opportunities. Across electronics end 3 Table of Contents markets, product demand is largely driven by the amplified themes of electrification, energy efficiency, automation, and connectivity. In transportation end markets, including passenger and commercial vehicles, the ongoing electronification and electrification of applications is driving increased product demand. Across industrial end markets, product demand is driven by a more sustainable ecosystem. For example, solar and wind energy, and energy storage systems that enable lower carbon emissions, the ongoing proliferation of electric vehicles and charging stations, more efficient climate control units, increasing requirements for electrical safety, and the rising demand for factory and process automation. For segment and geographical information and consolidated net sales and operating income see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report. • Electronics Segment : Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial motor drives and power conversion, automotive electronics, electric vehicle and related infrastructure, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics. • Transportation Segment: Formerly known as Automotive segment . The term “Transportation” represents a more comprehensive description of the Company’s broad range of products, and the applications and end markets it serves. Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-one suppliers and parts and aftermarket distributors in passenger vehicle, heavy duty truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets. Passenger vehicle products are used in internal combustion engine, hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and sensor products designed to monitor the occupant’s safety and environment as well as the vehicle’s powertrain. Commercial vehicle products include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine. • Industrial Segment: Consists of industrial circuit protection (industrial fuse), industrial controls (protection relay, contactors, transformers) and temperature sensors for use in various applications such as renewable energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO, mining and industrial automation. Strategy In February 2021, the Company announced its new five-year strategic plan which builds upon its strengths from its previous strategy. The Company is well-positioned within the center of the global structural growth themes of sustainability, connectivity, and safety, which will continue to drive increased demand for the company’s products across the transportation, industrial and electronics end markets that it serves. The Company is targeting average annual organic sales growth of 5-7 percent and average annual sales growth from strategic acquisitions of 5-7 percent. The Company expects to achieve this through content and share gains, expanded presence in high-growth markets and geographies, and targeting high-growth and niche applications. The Company will continue to invest in its people, as well as customer-driven innovation, eMobility, and its digital infrastructure to improve customer experience, and its operating systems. It plans to capitalize on growth opportunities where technologies and applications are converging across its product segments, while continuing to acquire and integrate businesses that fit its strategic focus areas. Recent Acquisitions • Carling Technologies: On November 30, 2021, the Company acquired Carling Technologies (“Carling”), a leader in switching, circuit protection and power distribution technologies with a strong global presence in commercial transportation, communications infrastructure and marine markets. At the time of acquisition, Carling had annualized sales of approximately $170 million. The purchase price for Carling was $315 million subject to change for working capital adjustments and the operations of Carling are included in the Transportation segment. • Hartland Controls: On January 28, 2021, the Company acquired Hartland Controls ("Hartland"), a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning ("HVAC") and other industrial and control systems applications. At the time of acquisition, Hartland had annualized sales of approximately 4 Table of Contents $70 million. The purchase price for Hartland was $111.0 million and the operations of Hartland are included in the Industrial segment. • IXYS Corporation: On January 17, 2018, the Company acquired IXYS corporation ("IXYS"), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors across the industrial, communications, consumer and medical markets. IXYS had a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The purchase price for IXYS was $856.5 million, which included consideration of cash, Littelfuse common stock, and the value of converted, or cash settled IXYS equity awards. The operations of IXYS are included in the Electronics segment. • U.S. Sensor: On July 7, 2017, the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for $24.3 million. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistor probes and assemblies across a number of industrial end markets. The operations of U.S. Sensor are included in the Industrial segment. • Monolith Semiconductor Inc. : On February 28, 2017, pursuant to a Securities Purchase Agreement between the Company and the stockholders of Monolith Semiconductor Inc. (“Monolith”), a U.S. start-up Company developing silicon carbide technology, the Company increased its investment in Monolith by acquiring approximately 62% of the outstanding common stock of Monolith for $15.0 million. During 2018, the Company acquired the remaining outstanding stock of Monolith for $9.0 million based on Monolith meeting certain technical and sales targets, and now owns 100% of Monolith. The operations of Monolith are included in the Electronics segment. Sales and Operations The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial. Net sales by segment for the periods indicated are as follows: Fiscal Year (in millions) 2021 2020 2019 Electronics $ 1,300.7 $ 937.7 $ 961.1 Transportation 528.1 395.8 428.5 Industrial 251.1 112.2 114.3 Total $ 2,079.9 $ 1,445.7 $ 1,503.9 The Company operates in three geographic regions: Asia-Pacific, the Americas, and Europe. The Company designs, manufactures products and sells to customers in all three regions. Net sales in the Company’s three geographic regions, based upon the shipped-to destination, are as follows: Fiscal Year (in millions) 2021 2020 2019 Asia-Pacific $ 955.7 $ 670.5 $ 656.8 Americas 694.3 457.8 508.4 Europe 429.9 317.4 338.7 Total $ 2,079.9 $ 1,445.7 $ 1,503.9 The Company’s products are sold worldwide through distributors, direct sales force and manufacturers’ representatives in certain regions. For the fiscal year 2021, approximately 69% of the Company’s net sales were to customers outside the United States (“U.S.”), including approximately 30% to China. The Company manufactures many of its products on fully integrated manufacturing and assembly equipment. The Company maintains product quality through a Global Quality Management System with most manufacturing sites certified under ISO 9001:2000. In addition, several of the Littelfuse manufacturing sites are also certified under IATF 16949 and ISO 14001. 5 Table of Contents Additional information regarding the Company’s sales by geographic area and long-lived assets in different geographic areas is in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report. BUSINESS ENVIRONMENT Electronics Segment The Company designs, manufactures and sells components and modules to empower the long-term mega sustainability themes. Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable, connected, and safer world. The ever-increasing complexity of applications surrounding these themes continues to drive greater demand for the Company’s reliable products and a higher level of product content. As a result, the Company has evolved its presence across the industrial, transportation and electronics end markets it serves. Circuit protection technologies in the Electronics Segment are designed to protect against harmful occurrences like voltage spikes, short circuits, power surges and electrostatic discharge. Products include fuses and fuse accessories, PTC resettable fuses, ESD suppressors, varistors, gas discharge tubes, and semiconductor products such as discrete TVS diodes, TVS diode arrays, and protection thyristors. The Company also offers a wide range of power control products used to convert and regulate energy and safely and efficiently control power across a broad spectrum of industrial applications like renewable energy and energy storage systems, motor drives and power conversion. Products include a comprehensive portfolio of semiconductor components and modules including thyristors, MOSFETs, rectifiers and fast recovery diodes, IGBTs and wide band gap devices. The 2018 acquisition of IXYS expanded the Company's power semiconductor portfolio in medium and high-power industrial applications and technology expertise. The Company expects to continue to diversify and expand its presence within the industrial market, leveraging the strong IXYS industrial OEM customer base. As products become increasingly sophisticated, smarter and more connected, the need for complex sensor technologies continues to grow. Sensor products in the Electronics Segment are used in a wide variety of applications including appliances, building and home automation, industrial controls, and commercial vehicles. Transportation Segment The Company is a primary supplier of fuses and circuit protection technologies to global automotive OEMs, through sales made to Tier One automotive suppliers, main-fuse box, and wire harness manufacturers that incorporate the fuses into their products, as well as automotive component parts manufacturers, and automotive parts distributors. The Company also sells its fuses in the replacement parts market, with its products being sold through merchandisers, discount stores, and service stations, as well as under private label by national firms. Passenger vehicle products are used in internal combustion engine, hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, high-voltage fuses, and sensor products designed to monitor the occupant’s safety and environment as well as the vehicle’s powertrain. The Company’s commercial vehicle business includes a variety of products including power distribution modules and units, low and high current switches, circuit breakers, relays, battery management products, ignition key switches, and trailer connectors. These products are used in applications serving a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine. Products are sold directly to a mix of OEMs, Tier One suppliers, aftermarket channels, as well as through general distribution. The acquisition of Carling Technologies significantly expanded the Company's switching, circuit protection and power distribution product portfolios. The Company expects to continue to expand its presence within transportation end markets, leveraging its strong OEM, Tier One and distributor customer base and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments. Industrial Segment The Company designs and sells a broad range of power fuses and holders, protection relays and controls, temperature sensors and other circuit protection products, contactors and transformers, for use in various industrial applications such as renewable energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO, mining and industrial automation. These products are used to protect personnel and equipment from excessive currents, over voltages, and electrical shock hazards. 6 Table of Contents Products are sold direct to OEMs, and through electrical distributors and electronics distribution channels. The 2021 acquisition of Hartland expanded the Company’s contactors and transformers product portfolios. The Company expects to continue to expand its presence within industrial end markets, leveraging its strong customer base, and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments. PRODUCT DESIGN AND DEVELOPMENT The Company employs scientific, engineering, and other personnel to continually improve its existing product lines and to develop new products at its research, product design, and development (“R&D”) and engineering facilities with primary locations in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Taiwan (China), United Kingdom ("U.K."), and the U.S. The Company maintains a staff of engineers, chemists, material scientists and technicians whose primary responsibility is to design and develop new products. Proposals for the development of new products are initiated primarily by sales, marketing, and product management personnel with input from customers. The entire product development process usually ranges from a few months to a few years based on the complexity of development, with continuous efforts to reduce the development cycle. During fiscal years 2021, 2020, and 2019, the Company expended $65.9 million, $52.5 million, and $80.0 million, respectively, on R&D. PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY The Company generally relies on patents, trademarks, licenses, and nondisclosure agreements to protect its intellectual property and proprietary products. In cases where it is deemed necessary by management, key employees are required to sign an agreement that they will maintain the confidentiality of the Company’s proprietary information and trade secrets. The Company owns a large portfolio of patents worldwide and new products are continually being developed to replace older products. The Company regularly applies for patent protection on such new products. While, in the aggregate, the Company’s patents are important in the operation of its businesses, the Company believes that the loss by expiration or otherwise of any one patent or group of patents would not materially affect its business. MANUFACTURING The Company’s manufacturing facilities are in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Portugal, the U.K., and the U.S. The Company performs the majority of its own fabrication and maintains in-house capabilities for metal stamping, surface mount assembly, plating (silver, nickel, zinc, and oxides) and thermoplastic molding. In addition, the Company fabricates semiconductor wafers for certain applications and maintains in-house capability for epitaxy fabrication, die attach, and wafer probe testing. After sub-components are readied for assembly, final assembly is accomplished on fully automatic and semi-automatic assembly machines. Quality assurance and operations personnel, using techniques such as statistical process control, perform tests, checks and measurements during the production process to maintain the highest levels of product quality, including safety and reliability, and customer satisfaction. Additionally, the Company utilizes external wafer foundries and subcontracted test and assembly facilities for a portion of its semiconductor business. The principal raw materials for the Company’s products include copper and copper alloys, resin and heat-resistant plastics, zinc, melamine, glass, silver, gold, raw silicon, solder, rubber, and various gases. The Company’s strategy is to prequalify suppliers for quality assurance and supply continuity, and when possible, to localize supply sources close to its manufacturing sites. This helps to minimize the transportation of materials, and ultimately reduces the Company’s environmental footprint by decreasing emissions, consistent with its sustainability strategy. For critical materials, the Company looks to diversify its supplier base by prequalifying second sources. SALES AND MARKETING The Company goes to market through selling organizations consisting of worldwide direct sales personnel, distribution partners and manufacturers’ representatives. The direct sales force closely works with global OEM, Tier One automotive, consulting engineers, and major end customers to design-in and sell all of the Company’s products. The distributors provide fulfillment for a majority of customers including those partnered with electronic manufacturing services ("EMS"). The Company has sales offices and direct sales channels in a number of countries around the world. Electronics Segment 7 Table of Contents Our Electronics segment products are used across a variety of applications. While certain of our products require less design support for our customers, many of our products are incorporated into applications with complex design technical support requirements. Most Electronics segment products are sold through our direct salesforce or through our channel distribution partners. The fulfillment of these products is primarily through our broad line distribution partners, including global distributors such as Arrow Electronics, Inc., Future Electronics and TTI, Inc., regional and high service distributors, including Digi-Key and Mouser, as well as directly to OEM's. Transportation Segment The Company primarily uses a direct sales force to service all of the major automotive and commercial vehicle OEMs, system suppliers, and Tier One automotive and aftermarket customers globally. In selected areas, the Company also uses distributors to service smaller customers and to provide supply chain fulfillment for certain customers. The Company also leverages its transportation customer relationships to sell products from the Electronics segment into transportation end markets, primarily to Tier One automotive customers. These revenues are reported in the Electronics segment. Industrial Segment The Company markets and sells its Industrial segment products direct to OEMs, and through electrical distributors and electronics distribution channels to various end customers including electrical contractors, factories, municipalities, and utilities. CUSTOMERS The Company directly sells to over 6,900 customers and distributors worldwide. Sales to Arrow Electronics, Inc., which were reported in our Electronics, Transportation and Industrial segments, were 10.7%, 10.4% and 10.7% of consolidated net sales in 2021, 2020, and 2019, respectively. No other single customer accounted for more than 10% of net sales during any of the last three years. During fiscal 2021, 2020, and 2019, net sales to customers outside the U.S. accounted for approximately 69%, 73%, and 71%, respectively, of the Company’s total net sales. CYBERSECURITY The Company relies on its information technology systems and networks in connection with many of its business activities. Some of these networks and systems are managed directly by the Company, while others are managed by third-party service providers and are not under the Company's day-to-day control. We oversee the services provided by the third-party service providers. We continually evaluate ourselves for appropriate business continuity and disaster recovery planning, with test scenarios that include simulations and penetration tests. Our networks are monitored by intrusion detection services, and our systems and applications are routinely tested for vulnerabilities and are operated with an appropriate patch management program. We employ a skilled IT workforce to implement our cybersecurity programs and to handle specific security responsibilities. Our IT workforce is trained to address security and compliance-related issues as they arise. COMPETITION The Company’s products compete with similar products of other manufacturers, some of which may have substantially greater financial resources than the Company. In the Electronics segment, the Company’s competitors include Eaton Corporation, Bourns Inc., TDK, ON Semiconductor Corporation, Infineon Technologies, STMicroelectronics NV, Semtech Corporation, and Vishay Intertechnology Inc. In the Transportation segment, the Company’s competitors include Eaton Corporation, Pacific Engineering, MTA (Meccanotecnica Codognese), CTS Corporation, Amphenol Corporation, Sensata Technologies Holding NV, and TE Connectivity Ltd. In the Industrial segment, the Company’s major competitors include Eaton Corporation, GE Multilin, and Mersen. The Company believes that it globally competes on the basis of innovative products, the breadth of its product line, the quality, design and performance of its products based on their reliability, consistency and safety, its technical capabilities and application expertise, and the responsiveness of its customer service. BACKLOG The backlog of unfilled orders at January 1, 2022 was approximately $1,657.1 million, compared to $709.9 million at December 26, 2020 with the increase primarily driven by all segments and acquisition. Substantially all the orders currently in backlog are scheduled for delivery in 2022. 8 Table of Contents HUMAN CAPITAL MANAGEMENT A passion for engineering excellence and an innovative spirit have been a part of what it means to work at Littelfuse since its founding in 1927. The Company hires bright minds who want to make a big impact and are committed to improve the safety, reliability and performance of our customers’ products. As the Company's human capital is critical to its success, the Company strives to make Littelfuse a safe, diverse, and inclusive workplace, provide competitive compensation, benefits, and health and wellness programs, offer appropriate training and promote community involvement. Employee Data At January 1, 2022, the Company had approximately 17,000 full-time, part-time and temporary employees; of which 53% are female and 47% are male; and of which 52%, 37% and 11% are located in the Americas, Asia-Pacific region, and Europe, respectively. Core Values Littelfuse core values – Customer Focus, Teamwork, Results Driven, Integrity and Innovation – guide conversations, decisions, and interactions for our business. Together, they are the foundation of the Company's working relationships both internally and externally and the Company asks each of associates to exemplify these high standards every day. Governance & Oversight The Chief Human Resources Officer ("CHRO") is responsible for developing and executing the Company’s human capital strategy. This includes establishing and implementing the Company's global policies and programs for leadership and employee development, compensation, benefits, workforce planning, human resources systems, and ensuring effective and efficient internal company operations. The CHRO is responsible for developing and integrating the Company’s diversity, inclusion, and belonging strategy in its business operations. The Chief Executive Officer ("CEO") and CHRO regularly update the Company's board of directors on human capital matters. Leadership and Employee Development The Company is committed to identifying and developing our next generation of leaders. The Company's talent review and succession planning processes support the development of the Company's talent pipeline, as well as the diversity of its talent. The Company is focused on both the recruitment of diverse candidates and the development of the Company's diverse employees to provide the opportunity to advance their careers and move into leadership positions within the Company. Globally, the Company conducts enterprise-wide talent review processes with the CEO, business unit and function leaders focusing on the Company's high-performing and high-potential talent, diverse talent, and the succession for the Company's most critical roles. Also, the Company's board of directors reviews and assesses management development plans for senior executives and the succession plans relating to those positions. From the Company's production lines to its engineering labs, the office or distribution center, the contributions of the Company's talented teams make a critical difference. The Company's goal is to ensure that every employee is provided with the appropriate resources and opportunities to enjoy a successful and rewarding career at Littelfuse. The Company's training programs cover topics including job-skills, enterprise six-sigma, Lean manufacturing, information security, and ethics and compliance. All global associates are required to take the Company's annual Code of Conduct training, which is made available in local languages for the Company's global workforce. The Company also has regional development programs that assist the Company's current and future leaders to develop leadership skills and grow their careers in Littelfuse. Diversity and Inclusion As part of driving sustainable success, The Company values and celebrates diversity in every aspect of work with customers, stakeholders, suppliers and each other. The Company's commitment to diversity and equity empowers its associates to innovate, deliver bold solutions and drive growth with the multifaceted insight that comes from true community. The Company believes that when everyone is included, everyone wins. Our Diversity, Inclusion and Belonging Council focuses on enhancing the diversity across the Company's stakeholders through bold solutions, to drive sustainable success across the company. In addition, the Company also has a number of employee resource groups, each sponsored by a member of our executive leadership team, that enhance its inclusive and diverse culture. 9 Table of Contents One example is the Company's Women’s Initiative Network (WiN). WiN was established to provide a forum to inspire and accelerate associate advancement and development through networking, mentoring, coaching and education. Compensation and Benefits The Company provides compensation and benefits programs designed to be both competitive and equitable, in order to attract, retain and motivate highly qualified associates. The components of the Company's compensation program vary by region and employee-type, and include items such as base salary, performance-based bonus plans, equity awards, paid time off, and tuition reimbursement. Global programs include a combination of statutory and additional supplemental benefits in the areas of health, welfare and retirement. Health, Safety and Wellness The Company is committed to the safety, health, human rights, and well-being of our employees. The Company continuously evaluates opportunities to raise safety and health standards through the Company's environmental, health, and safety teams. Compliance audits and internal processes are in place to stay ahead of workplace hazards, and the Company strives for a zero-injury workplace and to further our strong culture of safety. The Company further supports the mental and physical well-being of the Company's employees through a range of wellness programs that promote a healthy lifestyle. During the COVID-19 pandemic, the Company has prioritized the health and safety of its associates and their families. In an effort to protect the health and safety of our associates, the Company has taken proactive steps in our facilities globally to implement safety procedures including hygiene and disinfection protocols, social distancing, and providing transportation alternatives for employees to get to work and personal protective equipment. Community Involvement The Company encourages and sponsors employees to donate their time and other resources to improve the communities where they live and work. The Company's teams around the globe regularly engage in local community outreach, sponsoring activities and initiatives that align with its overall community involvement strategy. The causes the Company supports include science, technology, engineering and mathematics ("STEM") education, community improvement and environmental stewardship. SUSTAINABILITY The Company is focused on creating long-term value for customers, employees, investors, and the communities where they live and work through sustainable business practices. Many of the Company's key end markets are linked to sustainable applications such as electric vehicles and charging infrastructure, renewable energy, and power management. Sustainable end markets have been a focus of the Company for decades and the Company published its first Sustainability Report in 2021, as the Company aims to further communicate its commitment and progress towards key internal sustainability initiatives. The initial focus areas in the Company's Sustainability Report include: • business ethics • innovation • climate change and greenhouse gas emissions • training, education, and career development • water and wastewater management • sustainable supply chain • health and safety in the workplace • diversity and equal opportunity • community involvement • economic performance • energy management • waste and hazardous material management Additional information on how the Company manages each of these topics and the sustainability program progress is available in the Company's Sustainability Report, located on the Company's website at https://www.littelfuse.com/about-us/sustainability.aspx. The contents of the Company's Sustainability Report and website are not incorporated by reference in this Annual Report on Form 10-K. ENVIRONMENTAL REGULATION 10 Table of Contents The Company is subject to numerous foreign, federal, state, and local regulations relating to air and water quality, the disposal of hazardous waste materials, safety and health. Compliance with applicable environmental regulations has not significantly changed the Company’s competitive position, capital spending or earnings in the past and the Company does not presently anticipate that compliance with such regulations will change its competitive position, capital spending or earnings for the foreseeable future. The Company believes that it is currently in compliance in all material respects with applicable environmental laws and regulations. Littelfuse GmbH, which was acquired by the Company in May 2004, is responsible for maintaining closed coal mines in Germany from legacy operations. The Company is compliant with German regulations pertaining to the maintenance of the mines and has an accrual related to certain of these coal mine shafts based on an engineering study estimating the cost of remediating the dangers (such as a shaft collapse) of certain of these closed coal mine shafts in Germany. The accrual is reviewed annually and calculated based upon the estimated costs of remediating the shafts. Further information regarding the coal mine liability accrual is provided in Note 1, Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial Statements included in this Annual Report.