What changed in this filing

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Item 1. Financial Statements

2023-11-01 compared with 2023-08-02 · 168 added, 131 removed, 695 unchanged (30% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) July 1,

(in thousands) September 30,

2023 December 31,

2 unchanged sentences

Short-term investments 229 84

Trade receivables, less allowanc es o f $ 86,968 a n d $ 83,562 at July 1, 2023 and December 31, 2022, respectively

Trade receivables, less allowanc es o f $ 88,440 and $ 83,562 at September 30, 2023 and December 31, 2022, respectively

327,500 306,578

26 unchanged sentences

34,000,000 shares authorized;

shares issued, July 1, 2023– 26,579,761 ;

shares issued, September 30, 2023– 26,613,883 ;

December 31, 2022– 26,445,618

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

Three Months Ended Six Months Ended

(in thousands, except per share data) July 1,

Three Months Ended Nine Months Ended

(in thousands, except per share data) September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Net sales $ 607,071 $ 658,880 $ 1,828,850 $ 1,900,646

8 unchanged sentences

Interest expense 10,101 8,399 29,803 17,069

Foreign exchange (gain) loss ( 1,404 ) 14,124 ( 3,079 ) 21,860

Foreign exchange loss 11,776 18,191 8,697 40,051

Other (income) expense, net ( 3,527 ) ( 698 ) ( 11,810 ) 9,789

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

(in thousands) July 1,

Three Months Ended Nine Months Ended

(in thousands) September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Net income $ 57,788 $ 75,468 $ 216,604 $ 280,002

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended

(in thousands) July 1, 2023 July 2, 2022

Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022

OPERATING ACTIVITIES

7 unchanged sentences

Stock-based compensation 20,132 19,732

(Gain) loss on investments and other assets ( 680 ) 12,506

Loss on investments and other assets 922 13,740

Deferred income taxes ( 689 ) ( 4,320 )

14 unchanged sentences

Proceeds of term loan — 300,000

Proceeds of senior notes — 100,000

Payments of senior notes payable — ( 25,000 )

6 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 7,965 ) ( 31,963 )

(Decrease) increase in cash, cash equivalents, and restricted cash ( 81,845 ) 329,461

Decrease in cash, cash equivalents, and restricted cash ( 3,348 ) ( 6,581 )

Cash, cash equivalents, and restricted cash at beginning of period 564,939 482,836

34 unchanged sentences

Balance at July 1, 2023 $ 261 $ 998,589 $ ( 258,883 ) $ ( 97,392 ) $ 1,714,381 $ 295 $ 2,357,251

Net income — — — — 57,788 — 57,788

Other comprehensive loss, net of tax — — — ( 2,134 ) — — ( 2,134 )

Stock-based compensation — 3,857 — — — — 3,857

Non-controlling interest ( 50 ) 50 —

Withheld shares on restricted share units for withholding taxes — — ( 308 ) — — — ( 308 )

Stock options exercised 1 4,587 — — — — 4,588

Cash dividends paid ($ 0.65 per share)

— — — — ( 16,183 ) — ( 16,183 )

Balance at September 30, 2023 $ 262 $ 1,007,033 $ ( 259,191 ) $ ( 99,526 ) $ 1,755,936 $ 345 $ 2,404,859

Littelfuse, Inc.

20 unchanged sentences

Balance at July 2, 2022 $ 261 $ 964,937 $ ( 252,828 ) $ ( 107,015 ) $ 1,446,457 $ 131 $ 2,051,943

Net income — — — — 75,468 — 75,468

Other comprehensive loss, net of tax — — — ( 28,188 ) — — ( 28,188 )

Stock-based compensation — 4,464 — — — — 4,464

Non-controlling interest — — — — ( 36 ) 36 —

Stock options exercised — 58 — — — — 58

Cash dividends paid ($ 0.60 per share)

— — — — ( 14,854 ) — ( 14,854 )

Balance at October 1, 2022 $ 261 $ 969,459 $ ( 252,828 ) $ ( 135,203 ) $ 1,507,035 $ 167 $ 2,088,891

See accompanying Notes to Condensed Consolidated Financial Statements.

15 unchanged sentences

Revenue Disaggregation

The following tables disaggregate the Company’s revenue by primary business units for the three and six months ended July 1, 2023 and July 2, 2022:

Three Months Ended July 1, 2023 Six Months Ended July 1, 2023

The following tables disaggregate the Company’s revenue by primary business units for the three and nine months ended September 30, 2023 and October 1, 2022:

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

(in thousands) Electronics

11 unchanged sentences

Total $ 343,933 $ 177,019 $ 86,119 $ 607,071 $ 1,052,673 $ 515,708 $ 260,469 $ 1,828,850

Three Months Ended July 2, 2022 Six Months Ended July 2, 2022

Three Months Ended October 1, 2022 Nine Months Ended October 1, 2022

(in thousands) Electronics

41 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash at July 1, 2023 and December 31, 2022 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

(in thousands) July 1, 2023 December 31, 2022

The following table provides a reconciliation of cash, cash equivalents and restricted cash at September 30, 2023 and December 31, 2022 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

(in thousands) September 30, 2023 December 31, 2022

Cash and cash equivalents $ 560,056 $ 562,588

3 unchanged sentences

Recently Issued Accounting Standards

In March 2023, the Financial Accounting Standards Board ("FASB") issued ASU No.

In October 2023, the Financial Accounting Standards Board ("FASB") issued ASU No.

2023-06, "Disclosure Improvements".

The amendments in this update represent changes to clarify or improve the disclosure or presentation requirements of a variety of Topics in the ASC.

The Company may be affected by one or more of those amendments.

The amendments in this ASU should be applied prospectively and will not be effective until June 30, 2027.

The company is currently evaluating the potential effects of these amendments on its Condensed Consolidated Financial Statements.

In March 2023, the FASB issued ASU No.

2023-01, "Leases (Topic 842):

8 unchanged sentences

The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition.

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

The operating results of

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

On June 28, 2023, the Company entered into a definitive purchase agreement to acquire a 200mm wafer fab located in Dortmund, Germany (“Dortmund Fab”) from Elmos Semiconductor SE.

The acquisition of the Dortmund Fab is expected to close in early fiscal year 2025.

The total purchase price for the fab is approximately 93 million Euro, of which 37.2 million Euro down payment (approximately $ 40.5 million) recorded in Other long-term assets in the Condensed Consolidated Balance Sheets was paid in the third quarter after regulatory approvals and approximately 56 million Euro will be paid at closing.

The transaction is not expected to have a material impact on the Company’s fiscal year 2023 or 2024 financial results and will be reported in the Electronics-Semiconductor business within the Company’s Electronics segment.

Western Automation

On February 3, 2023, the Company completed the acquisition of Western Automation Research and Development Limited (“Western Automation”) for approximately $ 162 million in cash.

Headquartered in Galway, Ireland, Western Automation is a designer and manufacturer of electrical shock protection devices used across a broad range of high-growth end markets,

including e-Mobility off-board charging infrastructure, industrial safety and renewables.

Headquartered in Galway, Ireland, Western Automation is a designer and manufacturer of electrical shock protection devices used across a broad range of high-growth end markets, including e-Mobility off-board charging infrastructure, industrial safety and renewables.

At the time the Company and Western Automation entered into the definitive agreement, Western Automation had annualized sales of approximately $ 25 million.

22 unchanged sentences

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

Included in the Company’s Condensed Consolidated Statements of Net Income for the three and six months ended July 1, 2023 are net sales of approximately $ 4.8 million and $ 7.5 million respectively, and an income before income taxes of $ 0.3 million and $ 0.2 million, respectively, since the February 3, 2023 acquisition of Western Automation.

During the six months ended July 1, 2023, the Company incurred approximately $ 1.4 million of legal and professional fees related to the Western Automation acquisition recognized as Selling, general, and administrative expenses .

Included in the Company’s Condensed Consolidated Statements of Net Income for the three and nine months ended September 30, 2023 are net sales of $ 2.7 million and $ 10.2 million respectively, and a loss before income taxes of $ 1.0 million and $ 0.8 million, respectively, since the February 3, 2023 acquisition of Western Automation.

During the nine months ended September 30, 2023, the Company incurred approximately $ 1.2 million of legal and professional fees related to the Western Automation acquisition recognized as Selling, general, and administrative expenses .

These costs were reflected as other non-segment costs.

4 unchanged sentences

The acquisition was funded through a combination of cash on hand and debt.

The total purchase consideration of $ 523.0 million, net of cash acquired, 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 price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process.

The primary area not

yet finalized relates to the completion of the valuation of certain 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 C&K acquisition:

The total purchase consideration of $ 523.0 million, net of cash acquired, 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 final purchase price allocation of the fair value of assets acquired and liabilities assumed in the C&K acquisition:

(in thousands) Purchase Price

15 unchanged sentences

Goodwill resulting from the C&K acquisition is not expected to be deductible for tax purposes.

During the three months ended July 1, 2023, the Company recorded measurement period adjustments to increase other non-current liabilities of $ 4.2 million associated with uncertain tax positions, income taxes payable of $ 0.2 million, and reduce accrued liabilities of $ 0.3 million and deferred tax liabilities of $ 0.2 million.

During the nine months ended September 30, 2023, the Company recorded measurement period adjustments to increase other non-current liabilities of $ 4.2 million associated with uncertain tax positions, income taxes payable of $ 0.2 million, and reduce accrued liabilities of $ 0.3 million and deferred tax liabilities of $ 0.2 million.

As a result of these adjustments, goodwill was increased by $ 3.9 million.

10 unchanged sentences

The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Western Automation acquisition occurred as of January 2, 2022, and had the C&K acquisition occurred as of December 27, 2020 and had Carling acquisition occurred as of December 29, 2019 or of future consolidated operating results.

For the Three Months Ended For the Six Months Ended

(in thousands, except per share amounts) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

For the Three Months Ended For the Nine Months Ended

(in thousands, except per share amounts) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Net sales $ 607,071 $ 669,956 $ 1,830,736 $ 1,376,586

4 unchanged sentences

Pro forma results presented above primarily reflect the following adjustments:

For the Three Months Ended For the Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

For the Three Months Ended For the Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Amortization (a) $ — $ ( 1,512 ) $ ( 479 ) $ ( 8,951 )

3 unchanged sentences

Interest expense (d) — 497 — 815

Income tax expense of above items ( 3 ) ( 55 ) ( 118 ) ( 1,250 )

(a) The amortization adjustment for the six months ended July 1, 2023 and three and six months ended July 2, 2022 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 three and six months ended July 1, 2023 and three and six months ended July 2, 2022, and recognition of those fees during the three and six months ended July 1, 2023.

Income tax benefit (expense) of above items 28 ( 2,644 ) ( 91 ) ( 3,893 )

(a) The amortization adjustment for the nine months ended September 30, 2023 and three and nine months ended October 1, 2022 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 three and nine months ended September 30, 2023 and three and nine months ended October 1, 2022, and recognition of those fees during the three and nine months ended September 30, 2023.

(c) The amortization of inventory step-up adjustment reflects the reversal of the amount recognized related to the Carling acquisition during the three months ended April 2, 2022.

1 unchanged sentence

(d) The interest expense adjustment reflects incremental interest expense related to the financing of the C&K acquisition.

The components of inventories at July 1, 2023 and December 31, 2022 are as follows:

(in thousands) July 1, 2023 December 31, 2022

The components of inventories at September 30, 2023 and December 31, 2022 are as follows:

(in thousands) September 30, 2023 December 31, 2022

Raw materials $ 214,588 $ 231,043

4 unchanged sentences

Property, Plant, and Equipment

The components of net property, plant, and equipment at July 1, 2023 and December 31, 2022 are as follows:

(in thousands) July 1, 2023 December 31, 2022

The components of net property, plant, and equipment at September 30, 2023 and December 31, 2022 are as follows:

(in thousands) September 30, 2023 December 31, 2022

Land and land improvements $ 21,579 $ 22,089

3 unchanged sentences

Total $ 478,906 $ 481,110

The Company recorded depreciation expense of $ 18.0 million and $ 15.7 million for the three months ended July 1, 2023 and July 2, 2022, respectively, and $ 35.6 million and $ 31.3 million for the six months ended July 1, 2023 and July 2, 2022, respectively.

The Company recorded depreciation expense of $ 17.9 million and $ 17.0 million for the three months ended September 30, 2023 and October 1, 2022, respectively, and $ 53.5 million and $ 48.3 million for the nine months ended September 30, 2023 and October 1, 2022, respectively.

Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill by segment for the six months ended July 1, 2023 are as follows:

Changes in the carrying value of goodwill by segment for the nine months ended September 30, 2023 are as follows:

(in thousands) Electronics Transportation Industrial Total

9 unchanged sentences

Currency translation 676 ( 1,616 ) ( 341 ) ( 1,281 )

Net book value of goodwill as of July 1, 2023

Gross goodwill as of July 1, 2023

Net book value of goodwill as of September 30, 2023

Gross goodwill as of September 30, 2023

913,722 232,668 179,401 1,325,791

Accumulated impairment losses as of July 1, 2023

Accumulated impairment losses as of September 30, 2023

— ( 32,892 ) $ ( 8,556 ) ( 41,448 )

1 unchanged sentence

(a) The additions resulted from the acquisitions of Western Automation and measurement period adjustment related to the C&K acquisition.

The components of other intangible assets as of July 1, 2023 and December 31, 2022 are as follows:

As of July 1, 2023

The components of other intangible assets as of September 30, 2023 and December 31, 2022 are as follows:

As of September 30, 2023

(in thousands) Gross

12 unchanged sentences

Total $ 942,995 $ 349,025 $ 593,970

During the three months ended July 1, 2023 and July 2, 2022, the Company recorded amortization expense of $ 16.9 million and $ 11.6 million, respectively.

During the six months ended July 1, 2023 and July 2, 2022, the Company recorded amortization expense of 33.8 million and $ 24.3 million, respectively.

During the six months ended July 1, 2023, the Company recorded additions to intangible assets of $ 68.0 million, related to the Western Automation acquisition, the components of which were as follows:

During the three months ended September 30, 2023 and October 1, 2022, the Company recorded amortization expense of $ 16.0 million and $ 15.6 million, respectively.

During the nine months ended September 30, 2023 and October 1, 2022, the Company recorded amortization expense of $ 49.8 million and $ 39.9 million, respectively.

During the nine months ended September 30, 2023, the Company recorded additions to intangible assets of $ 68.0 million, related to the Western Automation acquisition, the components of which were as follows:

(in thousands) Weighted Average Useful Life Amount

2 unchanged sentences

Total $ 68,000

Estimated annual amortization expense related to intangible assets with definite lives as of July 1, 2023 is as follows:

Estimated annual amortization expense related to intangible assets with definite lives as of September 30, 2023 is as follows:

(in thousands)

3 unchanged sentences

Accrued Liabilities

The components of accrued liabilities as of July 1, 2023 and December 31, 2022 are as follows:

(in thousands) July 1, 2023 December 31, 2022

The components of accrued liabilities as of September 30, 2023 and December 31, 2022 are as follows:

(in thousands) September 30, 2023 December 31, 2022

Employee-related liabilities $ 68,367 $ 99,089

13 unchanged sentences

Restructuring, Impairment, and Other Charges

The Company recorded restructuring, impairment, and other charges for the three and six months ended July 1, 2023 and July 2, 2022 as follows:

Three months ended July 1, 2023 Six months ended July 1, 2023

The Company recorded restructuring, impairment, and other charges for the three and nine months ended September 30, 2023 and October 1, 2022 as follows:

Three months ended September 30, 2023 Nine months ended September 30, 2023

(in thousands) Electronics Transportation Industrial Total Electronics Transportation Industrial Total

4 unchanged sentences

Total $ 1,238 $ 1,803 $ 1,475 $ 4,516 $ 3,154 $ 7,290 $ 2,777 $ 13,221

Three months ended July 2, 2022 Six months ended July 2, 2022

Three months ended October 1, 2022 Nine months ended October 1, 2022

(in thousands) Electronics Transportation Industrial Total Electronics Transportation Industrial Total

2 unchanged sentences

Total $ 1,474 $ 1,939 $ — $ 3,413 $ 1,883 $ 2,382 $ — $ 4,265

For the three and six months ended July 1, 2023, the Company recorded total restructuring charges of $ 2.9 million and $ 4.8 million, respectively, primarily for employee termination costs.

These charges primarily related to the reorganization of certain selling and administrative functions within the Electronics segment due to the C&K acquisition and the reorganization of certain manufacturing, selling and administrative functions within the Transportation segment’s commercial vehicle business.

For the three and nine months ended September 30, 2023, the Company recorded total restructuring charges of $ 3.7 million and $ 8.5 million, respectively, primarily for employee termination costs.

These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions within the Transportation segment’s commercial vehicle business, and the reorganization of certain selling and administrative functions within the Electronics segment due to the C&K acquisition.

During the third quarter of 2023, the Company recognized a $ 0.8 million impairment charge substantially related to certain patents in a business within the Industrial segment.

In addition, during the second quarter of 2023, the Company recognized a $ 3.9 million impairment charge related to the land and building of a property in the commercial vehicle business within the Transportation segment that the Company made the decision to donate.

For the three and six months ended July 2, 2022, the Company recorded total restructuring charges of $ 0.6 million and $ 0.9 million, respectively.

For the three and nine months ended October 1, 2022, the Company recorded total restructuring charges of $ 3.4 million and $ 4.3 million, respectively.

primarily for employee termination costs.

These charges are primarily related to the reorganization of certain manufacturing, selling, and administrative functions within the Electronics segment.

The restructuring liability as of July 1, 2023 and December 31, 2022 is $ 1.7 million and $ 2.4 million, respectively.

These charges are primarily related to the reorganization of certain manufacturing, selling and administrative functions within the passenger vehicle and automotive sensor businesses in the Transportation segment and the reorganization of selling and administrative functions due to the C&K acquisition within the Electronics segment.

The restructuring liability as of September 30, 2023 and December 31, 2022 is $ 2.1 million and $ 2.4 million, respectively.

The restructuring liability is included within accrued liabilities in the Condensed Consolidated Balance Sheets.

The Company anticipates the remaining payments associated with employee terminations will primarily be completed in fiscal year 2023.

The carrying amounts of debt at July 1, 2023 and December 31, 2022 are as follows:

(in thousands) July 1, 2023 December 31, 2022

The Company anticipates the remaining payments associated with employee terminations will primarily be completed in the third quarter fiscal year 2024.

The carrying amounts of debt at September 30, 2023 and December 31, 2022 are as follows:

(in thousands) September 30, 2023 December 31, 2022

Revolving Credit Facility $ 100,000 $ 100,000

19 unchanged sentences

Loans made under the available credit facility pursuant to the Credit Agreement ("the Credit Facility") bear interest at the Company’s option, at either Secured Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three or six-month periods, plus 1.00 % to 1.75 %, plus a SOFR adjustment of 0.10 % or at the bank’s Base Rate, as defined in the Credit Agreement, plus — % to 0.75 %, based upon the Company’s Consolidated Leverage Ratio, as defined in the Credit Agreement.

The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.10 % to 0.175 %, based on the Consolidated Leverage Ratio, as defined in the Credit Agreement.

The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.10 % to

0.175 %, based on the Consolidated Leverage Ratio, as defined in the Credit Agreement.

The Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this nature.

4 unchanged sentences

Subject to certain conditions, (i) the Company may terminate or reduce the Aggregate Revolving Commitments, as defined in the Credit Agreement, in whole or in part, and (ii) the Company may prepay the revolving loans or the term loans at any time, without premium or penalty.

During the three and six months ended July 1, 2023, the Company made payments of $ 1.9 million and $ 3.8 million on its term loan, respectively.

The revolving loan and term loan balance under the Credit Facility was $ 100.0 million and $ 292.5 million, respectively, as of July 1, 2023.

During the three and nine months ended September 30, 2023, the Company made payments of $ 1.9 million and $ 5.6 million on its term loan, respectively.

The revolving loan and term loan balance under the Credit Facility was $ 100.0 million and $ 290.6 million, respectively, as of September 30, 2023.

On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate.

The interest rate swap, with a notional value of $ 200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027.

As of July 1, 2023, the effective interest rate on revolving loan and term loan outstanding borrowings was 6.45 %.

As of July 1, 2023, the Company had $ 0.2 million outstanding letters of credit under the Credit Facility and had $ 599.8 million of borrowing capacity available under the revolving Credit Facility.

As of July 1, 2023, the Company was in compliance with all covenants under the Credit Agreement.

As of September 30, 2023, the effective interest rate on revolving loan and term loan outstanding borrowings was 6.67 %.

As of September 30, 2023, the Company had $ 0.2 million outstanding letters of credit under the Credit Facility and had $ 599.8 million of borrowing capacity available under the revolving Credit Facility.

As of September 30, 2023, 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.

27 unchanged sentences

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

At July 1, 2023, the Company was in compliance with all covenants under the Senior Notes.

At September 30, 2023, the Company was in compliance with all covenants under the Senior Notes.

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

Interest paid on all Company debt was $ 10.3 million and $ 2.3 million for the three months ended July 1, 2023 and July 2, 2022, respectively, and $ 21.3 million and $ 8.4 million for the six months ended July 1, 2023 and July 2, 2022, respectively.

Interest paid on all Company debt was $ 11.9 million and $ 8.5 million for the three months ended September 30, 2023 and October 1, 2022, respectively, and $ 33.2 million and $ 16.9 million for the nine months ended September 30, 2023 and October 1, 2022, respectively.

Fair Value of Assets and Liabilities

8 unchanged sentences

Cash Equivalents

Cash equivalents primarily consist of money market funds, which are held with an institution with sound credit rating and are highly liquid.

Cash equivalents primarily consist of money market funds, certificates of deposit, and short-term time deposits, which are held with institutions with sound credit ratings and are highly liquid.

The Company classified cash equivalents as Level 1 and are valued at cost which approximates fair value.

5 unchanged sentences

The fair value of the interest rate swap was valued using an independent third-party valuation model.

Pursuant to this model, c hanges in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive loss u ntil the underlying transactions are recognized in earnings.

The primary inputs into the valuation of the interest rate swap are interest yield curves, interest rate volatility, credit risk, credit spreads and other market information.

8 unchanged sentences

The foreign currency contract was not designated as a hedge instrument and is marked to market on a monthly basis.

As a result, changes in fair value are reported in Foreign exchange (gain) loss in the Condensed Consolidated Statements of Operations.

As a result, changes in fair value are reported in Foreign exchange loss in the Condensed Consolidated Statements of Operations.

The fair value of the foreign currency forward contract was valued using market exchange rates by a third party and classified as a Level 2 input under the fair value hierarchy.

As of July 1, 2023 and December 31, 2022, the fair values of our derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets were as follows:

(in thousands) Consolidated Balance Sheet Classification July 1, 2023 December 31, 2022

As of September 30, 2023 and December 31, 2022, the fair values of our derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets were as follows:

(in thousands) Consolidated Balance Sheet Classification September 30, 2023 December 31, 2022

Derivatives Designated as Hedging Instruments

4 unchanged sentences

Foreign exchange forward contract Prepaid expenses and other current assets $ 2,862 $ 6,186

The pre-tax (gains) losses recognized on derivative financial instruments in the Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2023 and July 2, 2022 were as follows:

Three Months Ended Six Months Ended

The pre-tax (gains) losses recognized on derivative financial instruments in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and October 1, 2022 were as follows:

Three Months Ended Nine Months Ended

(in thousands) Classification of (Gain) Loss Recognized in the

Condensed Consolidated Statements of Operations July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Condensed Consolidated Statements of Operations September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Derivatives designated as cash flow hedges

1 unchanged sentence

Derivatives Not Designated as Hedging Instruments

Foreign exchange forward contract Foreign exchange (gain) loss $ ( 264 ) $ — $ ( 1,083 ) $ —

The pre-tax (gains) losses recognized on derivative financial instruments in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 1, 2023 and July 2, 2022 was as follows:

Three Months Ended Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Foreign exchange forward contract Foreign exchange loss $ 4,310 $ 3,209 $ 3,226 $ 3,209

The pre-tax gains recognized on derivative financial instruments in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and October 1, 2022 was as follows:

Three Months Ended Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Derivatives designated as cash flow hedges

4 unchanged sentences

The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value and recorded in Other long-term assets.

There we re no changes during the quarter ended July 1, 2023 to the Company’s valuation techniques used to measure asset and liability fair values o n a recurring basis.

As of July 1, 2023 and December 31, 2022, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of July 1, 2023:

There we re no changes during the quarter ended September 30, 2023 to the Company’s valuation techniques used to measure asset and liability fair values o n a recurring basis.

As of September 30, 2023 and December 31, 2022, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of September 30, 2023:

Fair Value Measurements Using

24 unchanged sentences

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and accounts receivable approximate their fair values.

The Company’s revolving and term loan debt facilities' fair values approximate book value at July 1, 2023 and December 31, 2022, 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 July 1, 2023 and December 31, 2022 were as follows:

July 1, 2023 December 31, 2022

The Company’s revolving and term

loan debt facilities' fair values approximate book value at September 30, 2023 and December 31, 2022, 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 September 30, 2023 and December 31, 2022 were as follows:

September 30, 2023 December 31, 2022

(in thousands) Carrying

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The Company recognizes interest cost, expected return on plan assets, and amortization of prior service, net within Other (income) expense, net in the Condensed Consolidated Statements of Net Income.

The components of net periodic benefit cost for the three and six months ended July 1, 2023 and July 2, 2022 were as follows:

For the Three Months Ended For the Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

The components of net periodic benefit cost for the three and nine months ended September 30, 2023 and October 1, 2022 were as follows:

For the Three Months Ended For the Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Components of net periodic benefit cost:

6 unchanged sentences

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

The Company recorded expense of $ 0.4 million and $ 0.5 million for the three months ended July 1, 2023 and July 2, 2022 , respectively, and of $ 0.8 million and $ 0.5 million for the six months ended July 1, 2023 and July 2, 2022, respectively, in Cost of Sales and Other (income) expense, net within the Condensed Consolidated Statements of Net Income.

The pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were nominal and $ 0.1 million for the three months ended July 1, 2023 and July 2, 2022, respectively, and nominal and $ 0.2 million f or the six months ended July 1, 2023 and July 2, 2022, respectively.

The Company recorded expense of $ 0.4 million and $ 0.5 million for the three months ended September 30, 2023 and October 1, 2022 , respectively, and $ 1.1 million and $ 1.5 million for the nine months ended September 30, 2023 and October 1, 2022, respectively, in Cost of Sales and Other (income) expense, net within the Condensed Consolidated Statements of Net Income.

The pre-tax (gains) losses amount recognized in other comprehensive (loss) income as components of net periodic benefit costs for these plans were nominal and $ 0.1 million for the three months ended September 30, 2023 and October 1, 2022, respectively, and $( 0.1 ) million and $ 0.3 million f or the nine months ended September 30, 2023 and October 1, 2022, respectively.

Other Comprehensive (Loss) Income

1 unchanged sentence

(in thousands) Three Months Ended

July 1, 2023 Three Months Ended

September 30, 2023 Three Months Ended

October 1, 2022

Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

3 unchanged sentences

Total change in other comprehensive (loss) income $ ( 2,270 ) $ 136 $ ( 2,134 ) $ ( 26,604 ) $ ( 1,584 ) $ ( 28,188 )

(in thousands) Six Months Ended

July 1, 2023 Six Months Ended

(in thousands) Nine Months Ended

September 30, 2023 Nine Months Ended

October 1, 2022

Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

Defined benefit pension plan adjustments $ ( 122 ) $ ( 31 ) $ ( 153 ) 1,045 ( 96 ) $ 949

Defined benefit pension plan and other adjustments $ ( 125 ) $ ( 31 ) $ ( 156 ) $ 1,718 $ ( 170 ) $ 1,548

Cash flow hedge 2,817 ( 676 ) 2,141 9,300 ( 2,232 ) 7,068

Foreign currency translation adjustments (a) ( 6,098 ) 351 ( 5,747 ) ( 72,671 ) 2,315 ( 70,356 )

Total change in other comprehensive (loss) income $ ( 1,136 ) $ ( 492 ) $ ( 1,628 ) $ ( 35,049 ) $ 1,497 $ ( 33,552 )

Total change in other comprehensive loss $ ( 3,406 ) $ ( 356 ) $ ( 3,762 ) $ ( 61,653 ) $ ( 87 ) $ ( 61,740 )

(a) The tax shown above within the foreign currency translation adjustments is the U.S.

2 unchanged sentences

and are not permanently reinvested.

The following tables set forth the changes i n accumulated other comprehensive loss by compon ent for the six months ended July 1, 2023 and July 2, 2022:

The following tables set forth the changes i n accumulated other comprehensive loss by compon ent for the nine months ended September 30, 2023 and October 1, 2022:

(in thousands) Defined benefit pension plan and other adjustments Cash flow hedge Foreign currency

3 unchanged sentences

Activity in the period ( 156 ) 2,141 ( 5,747 ) ( 3,762 )

Balance at July 1, 2023 $ ( 2,346 ) $ 7,191 $ ( 102,237 ) $ ( 97,392 )

Balance at September 30, 2023 $ ( 2,349 ) $ 8,737 $ ( 105,914 ) $ ( 99,526 )

(in thousands) Defined benefit pension plan and other adjustments Cash flow hedge Foreign currency translation adjustment Accumulated other comprehensive loss

1 unchanged sentence

Activity in the period 1,548 7,068 ( 70,356 ) ( 61,740 )

Balance at July 2, 2022 $ ( 10,979 ) $ ( 541 ) $ ( 95,495 ) $ ( 107,015 )

Amounts reclassified from accumulated other comprehensive loss to e arnings for the three and six months ended July 1, 2023 and July 2, 2022 were as follows:

Three Months Ended Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Balance at October 1, 2022 $ ( 10,380 ) $ 7,068 $ ( 131,891 ) $ ( 135,203 )

Amounts reclassified from accumulated other comprehensive loss to e arnings for the three and nine months ended September 30, 2023 and October 1, 2022 were as follows:

Three Months Ended Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Pension and Postemployment plans:

1 unchanged sentence

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

The effective tax rate for the three and six months ended July 1, 2023 was 18.0 % and 18.3 %, respectively, compared to the effective tax rate for the three and six months ended July 2, 2022 of 20.6 % and 16.1 %, respectively.

The effective tax rate for the second quarter of 2023 is lower than the effective tax rate for the comparable 2022 period, primarily due to the impact of foreign exchange losses with no related tax benefit in the 2022 period.

The effective tax rate for the first six months of 2023 is higher than the effective tax rate for the comparable 2022 period, primarily due to the impact of a one-time deduction in the first quarter of 2022 that resulted in a net benefit of $ 7.2 million from the dissolution of one of the Company’s affiliates.

The effective tax rate for the three and nine months ended September 30, 2023 was 23.3 % and 19.7 %, respectively, compared to the effective tax rate for the three and nine months ended October 1, 2022 of 21.4 % and 17.6 %, respectively.

The effective tax rate for the third quarter of 2023 is higher than the effective tax rate for the comparable 2022 period, primarily due to less income earned in lower tax jurisdictions in the 2023 period, as compared to the 2022 period.

The effective tax rates for both periods are higher than the statutory tax rate due to the impact of foreign exchange losses with no related tax benefit.

The effective tax rate for the first nine months of 2023 is higher than the effective tax rate for the comparable 2022 period, primarily due to the impact of a one-time deduction in the first quarter of 2022 that resulted in a net benefit of $ 7.2 million from the dissolution of one of the Company’s affiliates.

The effective tax rates for both periods were lower than the applicable U.S.

2 unchanged sentences

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

Three Months Ended Six Months Ended

(in thousands, except per share amounts) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Three Months Ended Nine Months Ended

(in thousands, except per share amounts) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Net income as reported $ 57,788 $ 75,468 $ 216,604 $ 280,002

6 unchanged sentences

Diluted earnings per share $ 2.30 $ 3.02 $ 8.63 $ 11.21

Potential shares of common stock relating to stock options and restricted share units excluded from the earnings per share calculation because their effect would be anti-dilutive were 110,598 and 88,130 for the three months ended July 1, 2023 and July 2, 2022, respectively, and 102,283 and 72,970 for the six months ended July 1, 2023 and July 2, 2022, respectively.

Potential shares of common stock relating to stock options and restricted share units excluded from the earnings per share calculation because their effect would be anti-dilutive were 80,828 and 92,052 for the three months ended September 30, 2023 and October 1, 2022, respectively, and 106,156 and 84,027 for the nine months ended September 30, 2023 and October 1, 2022, respectively.

Share Repurchase Program

On April 28, 2021, the Company announced that the Board of Directors authorized a new three year program to repurchase up to $ 300.0 million in the aggregate of shares of the Company’s common stock for the period May 1, 2021 to April 30, 2024 to replace its previous 2020 program.

The Company did no t repurchase shares of its common stock for the three and six months ended July 1, 2023, and July 2, 2022.

The Company did no t repurchase shares of its common stock for the three and nine months ended September 30, 2023, and October 1, 2022.

Related Party Transactions

10 unchanged sentences

One member of the Company's Board of Directors serves on the Board of Directors of ATEC.

Three Months Ended July 1, 2023 Three Months Ended July 2, 2022

Three Months Ended September 30, 2023 Three Months Ended October 1, 2022

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

1 unchanged sentence

Purchase material/service from related party 1.2 0.1 2.0 — 0.1 2.9

Six Months Ended July 1, 2023 Six Months Ended July 2, 2022

Nine Months Ended September 30, 2023 Nine Months Ended October 1, 2022

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

1 unchanged sentence

Purchase material/service from related party 3.3 0.3 7.6 0.3 0.3 8.8

July 1, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

19 unchanged sentences

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 charging infrastructure, aerospace, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics.

medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics.

• Transportation Segment:

5 unchanged sentences

Segment information is summarized as follows:

Three Months Ended Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Three Months Ended Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

Electronics $ 343,933 $ 397,629 $ 1,052,673 $ 1,121,626

14 unchanged sentences

Interest expense 10,101 8,399 29,803 17,069

Foreign exchange (gain) loss ( 1,404 ) 14,124 ( 3,079 ) 21,860

Foreign exchange loss 11,776 18,191 8,697 40,051

Other (income) expense, net ( 3,527 ) ( 698 ) ( 11,810 ) 9,789

Income before income taxes $ 75,295 $ 95,978 $ 269,649 $ 339,715

(a) Included in “Other” Operating income for the second quarter of 2023 was $ 3.9 million ($ 7.2 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, and $ 2.9 million ($ 4.8 million year-to-date) of restructuring charges, primarily related to employee termination costs.

(a) Included in “Other” Operating income for the third quarter of 2023 was $ 3.7 million ($ 8.5 million year-to-date) of restructuring charges, primarily related to employee termination costs, and $ 1.8 million ($ 9.0 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions.

During the third quarter of 2023, the Company recognized a $ 0.8 million impairment charge substantially related to certain patents in a business within the Industrial segment.

In addition, during the second quarter of 2023, the Company recognized a $ 3.9 million impairment charge related to the land and building in the commercial vehicle business within the Transportation segment.

See Note 7, Restructuring, Impairment, and Other Charges, for further discussion.

Included in “Other” Operating income for the second quarter of 2022 was $ 4.8 million ($ 8.6 million year-to-date) of legal and professional fees and other integration expenses related to the acquisition of C&K and other integration expenses related to completed and contemplated acquisitions, and $ 0.6 million ($ 0.8 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs, and $ 4.8 million year-to-date of purchase accounting inventory step-up charges.

Included in “Other” Operating income for the third quarter of 2022 was $ 6.8 million ($ 11.6 million year-to-date) of purchase accounting inventory step-up charges, $ 6.2 million ($ 14.8 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, and $ 3.4 million ($ 4.3 million year-to-date) of restructuring, impairment and other charges, primarily related to employee termination costs.

See Note 7, Restructuring, Impairment, and Other Charges, for further discussion.

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

Three Months Ended Six Months Ended

(in thousands) July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Three Months Ended Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

United States $ 217,904 $ 244,907 $ 635,892 $ 689,888

4 unchanged sentences

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

(in thousands) July 1, 2023 December 31, 2022

(in thousands) September 30, 2023 December 31, 2022

Long-lived assets

4 unchanged sentences

Philippines 74,004 77,240

Other countries (a)

54,633 51,697

Other countries 53,954 51,697

Total long-lived assets $ 478,906 $ 481,110

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

Six Months Ended

(in thousands) July 1, 2023 July 2, 2022

Nine Months Ended

(in thousands) September 30, 2023 October 1, 2022

Additions to long-lived assets

4 unchanged sentences

Philippines 5,245 13,118

Other countries (a)

Other countries 8,138 4,269

Total additions to long-lived assets $ 61,221 $ 75,012

1 unchanged sentence

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-Q

Item 1. Financial Statements