What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-16 compared with 2023-02-16 · 339 added, 337 removed, 1245 unchanged (35% of the section changed)

21 unchanged sentences

Segment Information

Commitments and C ontingencies

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 31, 2022 and January 1, 2022, the related consolidated statements of net income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 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 December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 30, 2023 and December 31, 2022, the related consolidated statements of net income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 30, 2023, 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 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, 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 30, 2023, 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 16, 2024 expressed an unqualified opinion.

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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.

Business Acquisition – C&K Switches – Valuation of acquired intangible assets

As discussed in Note 2, the Company acquired C&K Switches (“C&K”), on July 19, 2022 for a total purchase price of approximately $523 million, net of cash acquired.

Business Acquisition – Western Automation – Valuation of acquired intangible assets

As discussed in Note 2, the Company acquired Western Automation (“Western Automation”), on February 3, 2023 for a total purchase price of approximately $158 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 $68 million.

We identified the valuation of acquired C&K intangible assets as a critical accounting matter.

The principal considerations for our determination that the valuation of acquired C&K 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 the projected forecasted information including revenue growth rate, weighted average cost of capital (WACC), royalty rate, and customer attrition rate and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

We identified the valuation of acquired Western Automation intangible assets as a critical audit matter.

The principal considerations for our determination that the valuation of acquired Western Automation 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 the projected forecasted information including revenue growth rate, weighted average cost of capital (WACC), royalty rate, and customer attrition rate 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:

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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 C&K Switches, a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 3% and 3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

As indicated in Management’s Report, C&K Switches, was acquired during 2022.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of C&K Switches.

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 31, 2022 January 1, 2022

(in thousands, except share and per share data) December 30, 2023 December 31, 2022

Current assets:

Cash and cash equivalents $ 562,588 $ 478,473

Cash and cash equivalents (Note 1) $ 555,513 $ 562,588

Short-term investments 235 84

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287,018 306,578

Inventories 547,690 445,671

Inventories (Note 3) 474,607 547,690

Prepaid income taxes and income taxes receivable 8,701 7,215

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Total current assets 1,408,600 1,511,796

Net property, plant, and equipment 481,110 437,889

Intangible assets, net of amortization 593,970 407,126

Goodwill 1,186,922 929,790

Investments 24,121 39,211

Deferred income taxes 14,367 13,127

Right of use lease assets, net 57,382 29,616

Net property, plant, and equipment (Note 4) 493,153 481,110

Intangible assets, net of amortization (Note 5) 606,136 593,970

Goodwill (Note 5) 1,309,998 1,186,922

Investments (Note 1) 24,821 24,121

Deferred income taxes (Note 14) 10,486 14,367

Right of use lease assets (Note 7) 62,370 57,382

Other long-term assets 79,711 34,066

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Accounts payable $ 173,535 $ 208,571

Accrued liabilities 187,057 159,689

Accrued liabilities (Note 6) 149,214 187,057

Accrued income taxes 38,725 41,793

Current portion of long-term debt 134,874 25,000

Current portion of long-term debt (Note 9) 14,020 134,874

Total current liabilities 375,494 572,295

Long-term debt, less current portion 866,623 611,897

Deferred income taxes 100,230 81,289

Accrued post-retirement benefits 28,037 37,037

Non-current lease liabilities 45,661 22,305

Long-term debt, less current portion (Note 9) 857,915 866,623

Deferred income taxes (Note 14) 110,820 100,230

Accrued post-retirement benefits (Note 11) 34,422 28,037

Non-current lease liabilities (Note 7) 49,472 45,661

Other long-term liabilities 86,671 79,510

Total Liabilities 1,514,794 1,692,356

Commitments and Contingencies (Note 17)

Shareholders’ equity:

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Fiscal Year Ended

(in thousands, except per share data) December 31, 2022 January 1, 2022 December 26, 2020

(in thousands, except per share data) December 30, 2023 December 31, 2022 January 1, 2022

Net sales $ 2,362,657 $ 2,513,897 $ 2,079,928

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Interest expense 39,866 26,216 18,527

Foreign exchange loss (gain) 24,359 17,158 ( 14,875 )

Other expense (income), net 7,207 8,932 ( 5,083 )

Foreign exchange loss 12,299 24,359 17,158

Other (income) expense, net ( 19,901 ) 7,207 8,932

Income before income taxes 328,598 443,044 341,025

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands) December 31, 2022 January 1, 2022 December 26, 2020

(in thousands) December 30, 2023 December 31, 2022 January 1, 2022

Net income $ 259,485 $ 373,306 $ 283,806

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Cash flow hedge, net of tax ( 2,148 ) 6,596 —

Foreign currency translation adjustments ( 38,632 ) ( 4,519 ) 31,761

Foreign currency translation adjustments, net of tax 47,515 ( 38,632 ) ( 4,519 )

Comprehensive income $ 299,432 $ 351,005 $ 301,500

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) December 31, 2022 January 1, 2022 December 26, 2020

(in thousands) December 30, 2023 December 31, 2022 January 1, 2022

OPERATING ACTIVITIES

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Purchases of property, plant, and equipment ( 86,188 ) ( 104,341 ) ( 90,562 )

Proceeds from sale of property, plant, and equipment 676 15,425 4,758

Net proceeds from sale of property, plant, and equipment 832 676 15,425

Other ( 151 ) ( 62 ) ( 390 )

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Payments of senior notes payable ( 121,302 ) ( 25,000 ) —

Proceeds of revolving credit facility — — 240,000

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

Repayments of other debts ( 2,697 ) ( 1,552 ) ( 2,619 )

Payments of term loan and other loans ( 3,750 ) ( 2,619 ) ( 145,000 )

Net proceeds related to stock-based award activities ( 862 ) 13,365 18,744

Payments of term loan ( 7,500 ) ( 3,750 ) —

Net proceeds (payments) related to stock-based award activities 7,934 ( 862 ) 13,365

Debt issuance costs — ( 2,723 ) —

Cash dividends paid ( 62,161 ) ( 55,911 ) ( 49,730 )

Purchases of common stock — — ( 22,927 )

Net cash provided by (used in) financing activities 310,202 ( 68,984 ) ( 67,808 )

Net cash (used in) provided by financing activities ( 185,726 ) 310,202 ( 68,984 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 4,840 ( 11,420 ) ( 9,889 )

Increase (decrease) in cash, cash equivalents, and restricted cash 82,103 ( 204,689 ) 156,386

(Decrease) increase in cash, cash equivalents, and restricted cash ( 7,816 ) 82,103 ( 204,689 )

Cash, cash equivalents, and restricted cash at beginning of period 564,939 482,836 $ 687,525

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Restricted cash included in prepaid expenses and other current assets $ — $ 802 $ 2,718

Restricted cash included in other assets $ 1,549 $ 1,645 $ —

Restricted cash included in other long-term assets $ 1,610 $ 1,549 $ 1,645

Cash paid during the period for interest $ 37,167 $ 25,439 $ 17,420

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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

Net income — — — — 373,306 — 373,306

Other comprehensive income, net of tax — — — 17,694 — — 17,694

Other comprehensive (loss), net of tax — — — ( 22,301 ) — — ( 22,301 )

Stock-based compensation — 23,626 — — — — 23,626

Non-controlling interest — — — — ( 53 ) 53 —

Withheld 20,646 shares on restricted share units for withholding taxes

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— — — — ( 55,911 ) — ( 55,911 )

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

Balance at December 31, 2022 $ 261 $ 974,097 $ ( 252,866 ) $ ( 95,764 ) $ 1,585,466 $ 184 $ 2,211,378

Net income — — — — 259,485 — 259,485

Other comprehensive (loss), net of tax — — — ( 22,301 ) — — ( 22,301 )

Other comprehensive income, net of tax — — — 39,947 — — 39,947

Stock-based compensation — 23,898 — — — — 23,898

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References herein to “2023”, “fiscal 2023” or “fiscal year 2023” refer to the fiscal year ended December 30, 2023.

References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022.

References herein to “2022”, “fiscal 2022” or “fiscal year 2022” refer to the fiscal year ended December 31, 2022.

References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022.

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.

Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the 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 2022 and fiscal 2023 contained 52 weeks.

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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 December 31, 2022 and January 1, 2022 reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows.

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

Fiscal Year Ended

(in millions) 2023 2022

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(“Polytronics”).

The Company’s Polytronics shares held at the end of fiscal 2022 and 2021 represent approximately 6.7 % and 6.8 % of total Polytronics shares outstanding, respectively.

The Company’s Polytronics shares held at the end of fiscal 2023 and 2022 represent approximately 6.7 % of total Polytronics shares outstanding for both years.

The Polytronics investment is carried at fair value.

The fair value of the Polytronics investment was € 10 million (approximately $ 10.7 million) at December 31, 2022 and € 23 million (approximately $ 26.1 million) at January 1, 2022.

As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are accounted for under the equity method.

The fair value of the Polytronics investment was € 9.7 million (approximately $ 10.8 million) at December 30, 2023 and € 10.0 million (approximately $ 10.7 million) at December 31, 2022.

As a result of the Company’s acquisition of IXYS Corporation ("IXYS"), the Company has equity ownerships in various investments that are accounted for under the equity method.

The Company owns 45 % of the outstanding equity of Powersem GmbH, a module manufacturer based in Germany, approximately 19 % of the outstanding equity of EB Tech Ltd., a company with expertise in radiation technology based in South Korea, and approximately 24 % of the outstanding common shares of Automated Technology, Inc., a supplier located in the Philippines that provides assem b ly and test services.

The Company recognized gains of $ 1.3 million from its equity method investment for both the fiscal years ended December 31, 2022 and January 1, 2022.

The balance of these equity method investments was $ 13.5 million and $ 12.4 million as of the fiscal years ended December 31, 2022 and January 1, 2022, respectively.

The Company recognized gains of $ 0.5 million from its equity method investment for both the fiscal years ended December 30, 2023 and December 31, 2022.

The balance of these equity method investments was $ 14.0 million and $ 13.5 million as of the fiscal years ended December 30, 2023 and December 31, 2022, respectively.

See Note 18, Related Party Transactions, for further discussion.

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The investment securities are measured at net asset value.

As of December 31, 2022 and January 1, 2022, the investment securities balance was $ 14.1 million and $ 15.0 million, respectively, related to the plan and are included in Other long-term assets on the Consolidated Balance Sheets.

As of December 30, 2023 and December 31, 2022, the investment securities balance was $ 20.1 million and $ 14.1 million, respectively, related to the plan and are included in Other long-term assets on the Consolidated Balance Sheets.

Trade Receivables

The Company performs credit evaluations of customers’ financial condition and generally does not require collateral.

Credit losses are provided for in the financial statements based upon specific knowledge of a customer’s inability to meet its financial obligations to the Company.

Historically, credit losses have consistently been within management’s expectations and have not been a material amount.

A receivable is considered past due if payments have not been received within agreed upon invoice terms.

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As of the most recent annual test conducted on October 1, 2023, the Company noted that the excess of fair value over the carrying value, was 110 %, 80 %, 126 %, 47 %, 58 %, 23 %, and 369 % for its reporting units;

Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, Relays, and Power Fuse, respectively.

Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, Industrial Controls and Sensors, and Industrial Circuit Protection, respectively.

Relatively small changes in the Company’s key assumptions would not have resulted in any reporting units failing the goodwill impairment test.

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There were no impairment charges recorded during the fiscal years of 2023, 2022, and 2021.

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended December 31, 2022 and January 1, 2022:

The following table disaggregates the Company’s revenue by primary business units for the fiscal years ended December 30, 2023 and December 31, 2022:

Fiscal Year Ended December 30, 2023

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Total $ 1,350,426 $ 678,278 $ 333,953 $ 2,362,657

Fiscal Year Ended January 1, 2022

Fiscal Year Ended December 31, 2022

(in thousands) Electronics

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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 31, 2022 and January 1, 2022, the Company’s allowance for credit losses was $ 1.6 million and $ 1.9 million, respectively.

Additionally, the Company had $ 4.8 million and $ 2.1 million of trade receivables greater than 90 days past due as of December 31, 2022 and January 1, 2022, respectively.

As of December 30, 2023 and December 31, 2022, the Company’s allowance for credit losses was $ 2.2 million and $ 1.6 million, respectively.

Additionally, the Company had $ 5.4 million and $ 4.8 million of trade receivables greater than 90 days past due as of December 30, 2023 and December 31, 2022, respectively.

Advertising Costs

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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 recognized in the Consolidated Statements of Net Income was a loss of $ 24.4 million in fiscal year 2022, a loss of $ 17.2 million in fiscal year 2021, and a gain of $ 14.9 million in fiscal year 2020.

The amount of foreign currency gain or loss recognized in the Consolidated Statements of Net Income were losses of $ 12.3 million, $ 24.4 million, and $ 17.2 million in fiscal years 2023, 2022 and 2021, respectively.

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 € 1.6 million ($ 1.7 million) and € 1.9 million ($ 2.1 million) at December 31, 2022 and January 1, 2022, respectively.

Included in accrued liabilities is an accrual related to former coal mining operations at Littelfuse GmbH (formerly known as Heinrich Industries, AG) for the amounts of € 2.5 million ($ 2.7 million) and € 1.6 million ($ 1.7 million) at December 30, 2023 and December 31, 2022, 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.

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

Other Expense (Income), Net

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

Other (Income) Expense, Net

Other (income) expense, 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 (income) expense.

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

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In accordance with guidance issued by the Financial Accounting Standards Board ("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 31, 2022 , January 1, 2022 and December 26, 2020, 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.

Thus, for the fiscal years ended December 30, 2023 , December 31, 2022 and January 1, 2022, 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

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Assets measured at fair value on a nonrecurring basis include long-lived assets held and used, long-lived assets held for sale, goodwill and other intangible assets.

The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

The fair value of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values.

The three-tier value hierarchy, which prioritizes valuation methodologies based on the reliability of the inputs, is:

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Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

Recently Adopted Accounting Standards

Recently Issued Accounting Standards

In December 2023, the FASB issued Accounting Standards Updates ("ASU") No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures".

The amendments in this update provide more transparency about income tax information through improvements to the income tax disclosure primarily related to the income tax rate reconciliation and income taxes paid information.

These requirements include:

(1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The other amendments in this update improve the effectiveness and comparability of disclosures by (3) adding disclosures of pretax income (or loss) and income tax expense (or benefit), and (4) removing disclosures that are no longer considered cost beneficial or relevant.

The guidance is effective for fiscal years beginning after December 15, 2024 with early adoption permitted.

The adoption of this guidance will modify our disclosures in our Consolidated Financial Statements.

In November 2023, 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.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures".

The amendments in this update require additional detailed and enhanced information about reportable segments' expense, including significant segment expenses and other segment items that bridge segment revenue, significant expenses to segment profit or loss.

The ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) on annual basis as well as an explanation of how CODM uses the reported measures and other disclosures.

The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The guidance is effective for fiscal years beginning after December 15, 2023 with early adoption permitted.

The adoption of ASU 2021-10 did not have a material impact on the Company's Consolidated Financial Statements.

The adoption of this guidance will modify our disclosures in our Consolidated Financial Statements.

In October 2023, 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) to 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 adoption of ASU 2021-08 did not have a material impact on the Company's Consolidated Financial Statements.

Recently Issued Accounting Standards

In December 2022, the FASB issued ASU No.

2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848".

the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The amendments in this Update are effective for all entities upon issuance of this Update.

On June 30, 2022, the Company amended and restated its Credit Agreement, replacing LIBOR-based interest benchmarks with Secured Overnight Financing Rate ("SOFR") based floating-rate loans.

The Company's loans under the available credit facility are SOFR based floating-rate loans.

The Company does not expect any effect from the adoption of this guidance on the Company's Consolidated Financial Statements.

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 Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2023, the FASB issued ASU No.

2023-01, "Leases (Topic 842):

Common Control Arrangements".

The standard requires that leasehold improvements associated with common control leases be:

1) Amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease.

However, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group.

2) Accounted for as a transfer between entities under common control through an adjustment to equity (or net assets for not-for-profit entities) if, and when, the lessee no longer controls the use of the underlying asset.

Additionally, those leasehold improvements are subject to the impairment guidance in Topic 360, Property, Plant, and Equipment.

This standard is effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years.

The Company does not expect any material effect on the Company's Consolidated Financial Statements.

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

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

The operating results of the acquired businesses are included in the Company’s 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) was made with cash on hand and recorded in Other long-term assets in the Consolidated Balance Sheets was paid in the third quarter after regulatory approvals and approximately 56 million Euro will be paid at closing.

The transaction did not have a material impact on the Company’s fiscal year 2023 financial results and is not expected to have material impact on the Company's 2024 financial results and will be reported in the 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.

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

business is reported within the Company’s Industrial segment.

The acquisition was funded with cash on hand.

The total purchase consideration of $ 158.3 million, net of cash, 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 Western Automation acquisition:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) Purchase Price

Total purchase consideration:

Cash, net of cash acquired $ 158,260

Allocation of consideration to assets acquired and liabilities assumed:

Trade receivables, net 3,359

Inventories 3,678

Other current assets 718

Property, plant, and equipment 1,328

Intangible assets 68,000

Goodwill 93,937

Other long-term assets 573

Current liabilities ( 4,335 )

Other long-term liabilities ( 8,998 )

All Western Automation assets and liabilities were recorded in the Industrial segment and are primarily reflected in the Europe geographic area.

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

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

For the fiscal year ended December 30, 2023 , the Company recorded measurement period adjustments to decrease accrued warranty liabilities of $ 0.9 million.

As a result of these adjustments, goodwill was decreased by $ 0.9 million.

Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended December 30, 2023 are net sales of $ 13.2 million , and a loss before income taxes of $ 1.3 million, since the February 3, 2023 acquisition of Western Automation.

For the fiscal year ended December 30, 2023, the Company incurre d $ 1.2 million of legal and professional fees related to the Western Automation acquisition recognized as Selling, general, and administrative expenses and reflected as other non-segment costs.

On July 19, 2022, the Company acquired C&K Switches (“C&K”) for $ 540 million in cash.

3 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 purchase price allocation of the fair value of assets acquired and liabilities assumed in the C&K acquisition:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) Purchase Price

8 unchanged sentences

Goodwill 274,124

Other non-current assets 14,797

Other long-term assets 14,797

Current liabilities ( 47,687 )

Long-term debt ( 9,626 )

Other non-current liabilities ( 59,026 )

Other long-term liabilities ( 62,952 )

All C&K goodwill, other assets and liabilities were recorded in the Electronics segment and are reflected in the Americas, Europe and Asia-Pacific geographic areas.

1 unchanged sentence

Goodwill resulting from the C&K 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 December 31, 2022 are net sales of $ 81.7 million , and a loss before income taxes of $ 4.2 million, since the July 19, 2022 acquisition of C&K.

For the fiscal year ended December 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.

As required by purchase accounting rules, the Company recorded a $ 10.8 million step-up of inventory to its fair value as of the acquisition date.

The step-up was amortized as a non-cash charge to cost of sales during the fiscal year ended December 31, 2022, as the acquired inventory was sold, and is reflected as other non-segment costs.

The step-up was amortized as a non-cash charge to cost of sales during the third and fourth quarter of 2022 as the acquired inventory was sold and reflected as other non-segment costs.

For the fiscal year ended December 31, 2022, the Company incurred $ 9.1 million of legal and professional fees related to the C&K acquisition recognized as Selling, general, and administrative expenses and reflected as other non-segment costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On April 12, 2022, the Company acquired Embed Ltd.

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The total purchase consideration of $ 314.1 million, net of cash, has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9 unchanged sentences

Goodwill 98,377

Other non-current assets 4,007

Other long-term assets 4,007

Current liabilities ( 21,790 )

Other non-current liabilities ( 35,494 )

Other long-term liabilities ( 35,494 )

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.

1 unchanged sentence

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

During the fiscal year ended December 31, 2022, the Company paid $ 0.5 million related to the final working capital adjustment and made measurement period adjustments to reduce the fair value of property, plant and equipment of $ 8.2 million, inventories of $ 1.0 million, and an increase in net accounts receivable of $ 0.7 million, intangible assets attributable to customer relationships of $ 0.5 million, other current assets of $ 0.3 million, other non-current liabilities of $ 0.3 million.

As a result of these adjustments along with a corresponding reduction of deferred tax liabilities of $ 2.5 million, goodwill was increased by $ 6.0 million.

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.

The step-up was 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 was sold, and is reflected as other non-segment costs.

The Company recognized

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

a non-cash charge of $ 4.8 million and $ 1.6 million to cost of goods sold during the fiscal years ended December 31, 2022 and January 1, 2022, respectively.

The Company recognized a non-cash charge of $ 4.8 million and $ 1.6 million to cost of goods sold during the fiscal years ended December 31, 2022 and January 1, 2022, respectively.

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 systems applications, and eMobility.

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 December 31, 2022, the Company had restricted cash of $ 0.8 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.

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 $ 6.8 million 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 incurred appro ximately $ 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, C&K as though the acquisition had occurred as of December 27, 2020, and Hartland and Carling as though the acquisitions had occurred as of December 29, 2019.

The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company and Western Automation as though the acquisition had occurred as of January 2, 2022, and C&K as though the acquisition had occurred as of December 27, 2020, and Carling as though the acquisitions had occurred as of December 29, 2019.

The Company has not included pro forma results of operations for Embed as its operations were not material to the Company.

The pro forma amounts presented are not necessarily indicative of either the actual consolidated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

results had the C&K acquisition occurred as of December 27, 2020 and had the Hartland and Carling acquisitions occurred as of December 29, 2019 or of future consolidated operating results.

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 C&K acquisition occurred as of December 27, 2020 and had the 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 31,

2022 January 1, 2022 December 26, 2020

(in thousands, except per share amounts) December 30, 2023 December 31, 2022

Net sales $ 2,364,543 $ 2,665,028

4 unchanged sentences

Pro forma results presented above primarily reflect the following adjustments:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Fiscal Year Ended

(in thousands) December 31,

2022 January 1, 2022 December 26, 2020

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

Amortization (a) $ ( 479 ) $ ( 10,388 )

4 unchanged sentences

Income tax (expense) benefit of above items ( 91 ) ( 4,701 )

(a) The amortization adjustment for the twelve months ended December 31, 2022, 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 December 31, 2022 and January 1, 2022, respectively, and recognition of those fees during the twelve months ended January 1, 2022 and December 26, 2020, respectively.

(c) The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended December 31, 2022 and January 1, 2022, respectively, and the recognition of the amortization during the twelve months ended January 1, 2022 and December 26, 2020, respectively.

(a) The amortization adjustment for the twelve months ended December 30, 2023 and December 31, 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 twelve months ended December 30, 2023 and December 31, 2022, respectively, and recognition of those fees during the twelve months ended December 31, 2022.

(c) The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended December 31, 2022.

The inventory step-up is amortized over four months for all acquisitions, as the inventory was sold.

(d) The interest expense adjustment reflects lower interest expense associated with the financing of the C&K acquisition that replaced higher pre-acquisition debt.

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

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

(in thousands) 2023 2022

4 unchanged sentences

Total $ 474,607 $ 547,690

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant, and Equipment

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

Property, Plant, and Equipment, net

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

(in thousands) 2023 2022

4 unchanged sentences

Total $ 493,153 $ 481,110

The Company recorded depreciation expense of $ 65.0 million, $ 55.9 million, and $ 56.1 million for the fiscal years ended December 31, 2022, January 1, 2022, and December 26, 2020, respectively.

The Company recorded depreciation expense of $ 71.6 million, $ 65.0 million, and $ 55.9 million for the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Other Intangible Assets

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Industrial Total

Gross goodwill as of December 26, 2020

Gross goodwill as of January 1, 2022

$ 660,245 $ 228,555 $ 86,232 $ 975,032

Accumulated impairment losses as of December 26, 2020

Accumulated impairment losses as of January 1, 2022

— ( 36,177 ) ( 9,065 ) ( 45,242 )

Net goodwill as of December 26, 2020

Net goodwill as of January 1, 2022

$ 660,245 $ 192,378 $ 77,167 $ 929,790

3 unchanged sentences

Foreign currency translation adjustments ( 21,323 ) ( 8,648 ) ( 1,343 ) ( 31,314 )

Gross goodwill as of January 1, 2022

Gross goodwill as of December 31, 2022

909,167 234,793 84,889 1,228,849

Accumulated impairment losses as of January 1, 2022

Accumulated impairment losses as of December 31, 2022

— ( 33,401 ) ( 8,526 ) ( 41,927 )

Net goodwill as of January 1, 2022

Net goodwill as of December 31, 2022

$ 909,167 $ 201,392 $ 76,363 $ 1,186,922

9 unchanged sentences

$ 936,505 $ 203,111 $ 170,382 $ 1,309,998

(a) The additions resulted from the acquisitions of Carling and Hartland.

(b) The additions resulted from the acquisitions of C&K, Embed and Carling.

(a) The additions resulted from the acquisitions of C&K, Embed and Carling.

(b) The additions resulted from the acquisitions of Western Automation and C&K.

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.

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 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.

The components of intangible assets at December 31, 2022 and January 1, 2022 are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no impairment charges recorded during the fiscal years of 2023, 2022 and 2021.

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

As of December 30, 2023

5 unchanged sentences

Total $ 1,025,412 $ 419,276 $ 606,136

The Company reclassified $ 50.3 million and $ 31.1 million of gross carrying value and accumulated amortization, respectively, from customer relationships, trademarks and tradenames to patents, licenses and software as of December 31, 2022.

This reclassification had no consolidated financial impact on net book value of intangible assets.

As of January 1, 2022

As of December 31, 2022

(in thousands) Gross

4 unchanged sentences

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

During the year ended December 31, 2022, the Company recorded additions to other intangible assets of $ 254.7 million related to the C&K acquisition, the components of which were as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

This reclassification had no consolidated financial impact on net book value of intangible assets.

During the year ended December 30, 2023, the Company recorded additions to other intangible assets of $ 68.0 million related to Western Automation, the components of which were as follows:

(in thousands, except weighted average useful life) Weighted Average

Useful Life (Years) Amount

Patents, developed technology 12.0 $ 55,700

Patents, licenses and software 6.7 $ 11,500

Customer relationships, trademarks, and tradenames 14.7 56,500

1 unchanged sentence

For intangible assets with definite lives, the Company recorded amortization expense of $ 65.8 million, $ 55.7 million, and $ 42.7 million in 2023, 2022, and 2021, respectively.

During the fourth quarter of 2022, the Company recorded a $ 2.9 million non-cash impairment charge for certain acquired technology and patent intangible assets due to a change in use and projected cash flows within the Electronics segment.

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

3 unchanged sentences

Total $ 606,136

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Liabilities

The components of accrued liabilities at December 31, 2022 and January 1, 2022 are as follows:

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

(in thousands) 2023 2022

2 unchanged sentences

Other non-income taxes 7,855 10,594

Professional services 7,160 4,299

Other customer reserves 5,064 702

Interest 6,387 4,449

Other customer reserves 5,998 5,064

Professional services 5,282 7,160

Deferred revenue 2,198 2,593

6 unchanged sentences

Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease Commitments

2 unchanged sentences

The Company leases office and production space under various non-cancellable operating leases that expire no later than 2035.

Ce rtain real estate leases include one or more options to renew.

Certain real estate leases include one or more options to renew.

The exercise of lease renewal options is at the Company's sole discretion.

Options to extend the lease are included in the lease term when it is reasonably certain the Company will exercise the option.

The Company also has production equipment, office equipment and vehicles under operating leases and finance leases that were acquired through the C&K acquisition.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is reasonably certain of exercise.

The Company also has production equipment, office equipment and vehicles under operating leases and finance leases that were acquired through the C&K acquisition.The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is reasonably certain of exercise.

Certain leases include rental payments adjusted periodically for inflation.

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

The following table presents the classification of right of use assets and lease liabilities as of December 31, 2022 and January 1, 2022:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the classification of right of use assets and lease liabilities as of December 30, 2023 and December 31, 2022:

Fiscal Year Ended

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

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

Operating Leases

Right of use assets - operating lease Right of use lease assets, net $ 54,901 $ 29,616

Right of use assets - operating lease Right of use lease assets $ 60,991 $ 54,901

Current operating lease liabilities Accrued liabilities 11,676 11,694

2 unchanged sentences

Finance Leases

Right of use assets - finance lease Right of use lease assets, net $ 2,481 $ —

Right of use assets - finance lease Right of use lease assets $ 1,379 $ 2,481

Current finance lease liabilities Accrued liabilities 434 1,147

1 unchanged sentence

Total finance lease liabilities $ 726 $ 1,845

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table represents the lease costs for 2023, 2022, and 2021:

Fiscal Year Ended

(in thousands) Consolidated Statements of Net Income Classification December 31, 2022 January 1, 2022 December 26, 2020

Operating lease expenses Cost of sales, SG&A expenses $ 14,071 $ 9,929 $ 8,591

(in thousands) Consolidated Statements of Net Income Classification December 30, 2023 December 31, 2022 January 1, 2022

Operating lease expenses Cost of sales, Selling, general, and administrative expenses $ 15,817 $ 14,071 $ 9,929

Finance lease:

Finance lease expenses Cost of sales 219 112 —

Interest on lease liabilities Other expenses 13 — —

Short-term lease expenses Cost of sales, SG&A expenses 1,130 345 512

Variable lease expenses Cost of sales, SG&A expenses 1,091 1,165 1,307

Total lease costs Cost of sales, SG&A expenses $ 16,417 $ 11,439 $ 10,410

Interest on lease liabilities Other (income) expenses, net 19 13 —

Short-term lease expenses Cost of sales, Selling, general, and administrative expenses 1,229 1,130 345

Variable lease expenses Cost of sales, Selling, general, and administrative expenses 1,034 1,091 1,165

Total lease costs Cost of sales, Selling, general, and administrative expenses $ 18,318 $ 16,417 $ 11,439

The Company leases certain office and warehouse space as well as certain machinery and equipment under non-cancellable operating leases.

The Company acquired through the C&K acquisition certain machinery and equipment under finance leases.

Rent expense under these leases was $ 18.3 million , $ 16.4 million , and $ 11.4 million in 2023, 2022, and 2021, respectively.

Maturity of Lease Liabilities as of December 30, 2023

(in thousands) Operating leases Finance Leases

2023 $ 13,966 $ 1,166

(in thousands)

Operating leases Finance Leases

2024 $ 14,850 $ 442

4 unchanged sentences

Present value of lease liabilities $ 60,856 $ 726

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended

December 31, 2022 January 1, 2022

December 30, 2023 December 31, 2022

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 1.90 % 1.43 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Year Ended

(in thousands) December 31, 2022 January 1, 2022 December 26, 2020

(in thousands) December 30, 2023 December 31, 2022 January 1, 2022

Cash paid for amounts included in the measurement of lease liabilities

16 unchanged sentences

Total $ 4,615 $ 8,495 $ 3,391 $ 16,501

Fiscal Year Ended January 1, 2022

Fiscal Year Ended December 31, 2022

(in thousands) Electronics Transportation Industrial Total

2 unchanged sentences

Total restructuring charges 3,068 3,770 283 7,121

Fiscal Year Ended December 26, 2020

Impairment 2,856 — — 2,856

Total $ 5,924 $ 3,770 $ 283 $ 9,977

Fiscal Year Ended January 1, 2022

(in thousands) Electronics Transportation Industrial Total

2 unchanged sentences

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

Impairment — 33,841 2,237 36,078

Total $ 2,540 $ 34,698 $ 4,478 $ 41,716

For the year ended December 30, 2023, the Company recorded total restructuring charges of $ 11.6 million, 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, the reorganization of certain selling and administrative functions within the Electronics segment due to the C&K acquisition, and reorganization of certain manufacturing, selling and administrative functions within the Industrial segment.

During 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, a $ 0.9 million impairment charge substantially related to certain patents in a business within the Industrial segment, and a $ 0.1 million impairment related to certain machinery and equipment in the semiconductor business within the Electronics segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

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 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.

The restructuring reserves as of December 31, 2022 and January 1, 2022 are $ 2.4 million and $ 2.9 million, respectively.

The restructuring reserves as of December 30, 2023 and December 31, 2022 are $ 2.1 million and $ 2.4 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 30, 2023.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company anticipates that the remaining payments associated with employee terminations will be substantially completed in fiscal 2024.

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

(in thousands)

3 unchanged sentences

Euro Senior Notes, Series B due 2028 105,246 101,265

Senior Notes, Series A due 2022 — 25,000

Senior Notes, Series B due 2027 100,000 100,000

18 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the Credit Agreement, revolving loans may be borrowed, repaid and reborrowed until the Maturity Date, at which time all amounts borrowed must be repaid.

7 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022, the effective interest rate on outstanding borrowings under the credit facility was 5.42 %.

As of December 31, 2022, the Company had no outstanding in letters of credit and had available $ 600.0 million of borrowing capacity under the revolving credit facility.

As of December 30, 2023, the effective interest rate on unhedged portion of the outstanding borrowings under the credit facility was 6.71 %, and 4.13 % on the hedged portion.

As of December 30, 2023, the Company had $ 0.2 million outstanding in letters of credit and had available $ 599.8 million of borrowing capacity under the revolving credit facility.

At December 30, 2023, the Company was in compliance with all covenants under the credit agreement.

2 unchanged sentences

Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017.

During the fiscal year ended December 30, 2023, the Company paid off € 117 million of Euro Senior Notes, Series A due 2023.

On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $ 125 million aggregate principal amount of senior notes in two series.

21 unchanged sentences

Senior Notes due 2032 is payable semiannually on June 30 and December 30, commencing on December 30, 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Senior Notes have not been registered under the Securities Act, or applicable state securities laws.

4 unchanged sentences

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 2022, the Company paid debt issuance costs of $ 2.7 million in connection with the amended and restated Credit Agreement, dated June 30, 2022 which, along with the remaining balance of debt issuance costs of the previous credit facility noted in below, are being amortized over the life of the amended and restated Credit Agreement.

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.

During fiscal year 2022, the Company paid debt issuance costs of $ 2.7 million in connection with the amended and restated Credit Agreement, dated June 30, 2022 which, along with the remaining balance of debt issuance costs of the previous credit facility, are being amortized over the life of the amended and restated Credit Agreement.

Debt Maturities

14 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.

2 unchanged sentences

Such securities are further detailed in Note 1, Summary of Significant Accounting Policies and Other Information .

Other Investments

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

During the fiscal year ended January 1, 2022, the Company impaired the remaining book value of these investments and recorded an impairment charge of $ 0.5 million in Other expense (income), net in the Consolidated Statements of Net Income.

As of December 31, 2022 and January 1, 2022, the balances of these investments were zero .

Derivatives Designated as Hedging Instruments

8 unchanged sentences

In the event of a default by one of our counterparties, the Company may not receive payments provided for under the terms of our derivatives.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives Not Designated as Hedging Instruments

1 unchanged sentence

dollar on its Euro denominated Senior Notes, Series A due 2023.

The notional value of the forward contract at July 14, 2022 was € 117.0 million and expires on December 7, 2023.

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 loss (gain) in the Consolidated Statements of Net Income.

The notional value of the forward contract at July 14, 2022 was € 117 million and expired on December 7, 2023 with the final settlement value of $ 6.3 million which the Company used to convert USD to Euro to pay down the € 117 million of Euro Senior Notes, Series A due 2023.

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

As a result, changes in fair value during 2023 and 2022 are reported in Foreign exchange loss in the Consolidated Statements of Net Income.

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

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

(in thousands) Consolidated Balance Sheet Classification Fiscal Year Ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Fiscal Year Ended

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

Derivatives designated as hedging instruments

4 unchanged sentences

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

The pre-tax gains recognized on derivative financial instruments in the Consolidated Statements of Operations for the fiscal year ended December 31, 2022 were as follows:

(in thousands) Classification of Gain Recognized in the Consolidated Statements of Operations Fiscal Year Ended December 31, 2022

The pre-tax gains recognized on derivative financial instruments in the Consolidated Statements of Operations for the fiscal year ended December 30, 2023 and December 31, 2022 were as follows:

Fiscal Year Ended

(in thousands) Classification of Gain Recognized in the Consolidated Statements of Operations December 30, 2023 December 31, 2022

Derivatives designated as cash flow hedges

Interest rate swap agreement Interest expenses, net $ ( 100 )

Interest rate swap agreement Interest expense, net $ ( 4,551 ) ( 100 )

Derivatives not designated as hedging instruments

Foreign exchange forward contract Foreign exchange loss (gain) $ ( 6,128 )

The pre-tax gain recognized on derivative financial instruments in the Consolidated Statements of Comprehensive Income for the fiscal year ended December 31, 2022 was as follows:

(in thousands) Fiscal Year Ended December 31, 2022

Foreign exchange forward contract Foreign exchange gain $ ( 52 ) ( 6,128 )

The pre-tax loss (gain) recognized on derivative financial instruments in the Consolidated Statements of Comprehensive Income for the fiscal year ended December 30, 2023 and December 31, 2022 was as follows:

Fiscal Year Ended

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

Derivatives designated as cash flow hedges

5 unchanged sentences

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

As of December 31, 2022 and January 1, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 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.

Defined Benefit Plan Assets / Non-qualified Supplemental Retirement and Savings Plan Investments

See Note 11, Benefit Plans, for description of valuation methodologies and investment balances for defined benefit plan assets and investments related to the Company’s Non-Qualified Supplemental Retirement and Savings Plan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

6 unchanged sentences

$ 446,768 $ — $ — $ 446,768

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

The following table presents assets measured at fair value by classification within the fair value hierarchy as of December 31, 2022:

Fair Value Measurements Using

8 unchanged sentences

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 31, 2022 and January 1, 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 December 31, 2022 and January 1, 2022 were as follows:

December 31, 2022 January 1, 2022

The Company’s revolving and term loan debt facilities’ fair values approximate book value at December 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 December 30, 2023 and December 31, 2022 were as follows:

December 30, 2023 December 31, 2022

(in thousands)

4 unchanged sentences

Euro Senior Notes, Series B due 2028 105,246 96,532 101,265 87,119

USD Senior Notes, Series A due 2022 — — 25,000 25,055

USD Senior Notes, Series B due 2027 100,000 96,127 100,000 93,764

2 unchanged sentences

USD Senior Notes, due 2032 100,000 93,228 100,000 90,131

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

impairment related to certain machinery and equipment in the semiconductor business within the Electronics segment.

See Note 8, Restructuring, Impairment and Other Charges, for further discussion.

During the fourth quarter of 2022, the Company recorded a $ 2.9 million intangible asset impairment charge in Restructuring, impairment, and other charges in the Consolidated Statements of Net Income, f or certain acquired technology and patent intangible assets due to a change in use and projected cash flows within the Electronics segment.

16 unchanged sentences

Interest cost 3,795 2,529

Net actuarial gain ( 19,327 ) ( 11,016 )

Net actuarial loss (gain) 4,312 ( 19,327 )

Benefits paid from the plan assets ( 1,933 ) ( 1,474 )

7 unchanged sentences

Fair value of plan assets at beginning of year $ 35,433 $ 48,325

Actual loss on plan assets ( 9,217 ) ( 2,824 )

Actual gain (loss) on plan assets 1,358 ( 9,217 )

Employer contributions 1,821 2,288

1 unchanged sentence

Settlements ( 463 ) —

Acquisitions — —

Effect of exchange rate movements 1,480 ( 4,489 )

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in the Consolidated Balance Sheets as of December 31, 2022 and January 1, 2022 consist of the following:

Amounts recognized in the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022 consist of the following:

(in thousands)

4 unchanged sentences

Net liability recognized $ ( 35,825 ) $ ( 29,093 )

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 31, 2022 and January 1, 2022 were as follows:

(in thousands)

Net actuarial (gain) loss $ ( 631 ) $ 9,221

Net actuarial loss (gain) $ 4,182 $ ( 631 )

Prior service cost 1,440 1,496

Total $ 5,622 $ 865

The pre-tax amounts recognized in other comprehensive income (loss) in 2022 and 2021 were as follows:

The pre-tax amounts recognized in other comprehensive (loss) income in 2023 and 2022 were as follows:

(in thousands)

1 unchanged sentence

Prior service cost $ 94 $ 150

Net actuarial loss 228 1,136

Net actuarial (gain) loss ( 49 ) 228

Amount arising during the period:

Prior service cost (credit) 1,399 ( 209 )

Net actuarial gain 9,899 6,734

Net settlement (gain) loss ( 820 ) 19,855

Prior service cost — 1,399

Net actuarial (loss) gain ( 4,202 ) 9,899

Net curtailment and settlement gain ( 266 ) ( 820 )

Foreign currency adjustments ( 334 ) 840

Total $ ( 4,757 ) $ 11,696

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 gain and change in benefit obligation during 2022 as compared to 2021 were also impacted by higher discount rates in 2022 as compared to 2021.

The net actuarial (loss) gain during 2023 as compared to 2022 were impacted by higher discount rates in 2023 as compared to 2022.

The components of net periodic benefit costs for the fiscal years 2023, 2022, and 2021 are as follows:

9 unchanged sentences

Total expense for the year $ 4,469 $ 3,652 $ 24,258

The Company completed the buy-out of this U.K.

pension plan during the fourth quarter of 2021 and as a result 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).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

Compensation increase rate 4.7 % 4.8 % 4.9 %

The accumulated benefit obligation for the plans was $ 53.9 million and $ 75.7 million as of December 31, 2022 and January 1, 2022, 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 31, 2022 and January 1, 2022:

The accumulated benefit obligation for the plans was $ 60.6 million and $ 53.9 million as of December 30, 2023 and December 31, 2022, 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 30, 2023 and December 31, 2022:

(in thousands)

1 unchanged sentence

Fair value of plan assets 37,124 13,650

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 31, 2022 and January 1, 2022:

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 30, 2023 and December 31, 2022:

(in thousands)

1 unchanged sentence

Fair value of plan assets 28,032 4,948

Weighted average assumptions used to determine benefit obligations as of December 31, 2022, January 1, 2022 and December 26, 2020 are as follows:

Weighted average assumptions used to determine benefit obligations as of December 30, 2023, December 31, 2022 and January 1, 2022 are as follows:

2023 2022 2021

7 unchanged sentences

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

For the fiscal years ended December 31, 2022, January 1, 2022, and December 26, 2020, the Company recorded $ 1.9 million, $ 2.1 million, $ 2.0 million expense, respectively, in Cost of Sales and Other expense (income), net within the Consolidated Statements of Net Income.

As of December 31, 2022 and January 1, 2022, the Company reported benefit liabilities of $ 4.0 million and $ 4.1 million for these plans, of which $ 1.5 million and $ 1.5 million was recorded in Accrued liabilities and $ 2.5 million a nd $ 2.6 million w as recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively.

For the fiscal years ended December 31, 2022 and January 1, 2022, the pre-tax amounts recognized in other comprehensive income (loss) for these plans were $ 0.5 million and $ 0.3 million, respectively.

For the fiscal year ended December 31, 2022, the expense reclassified from accumulated other comprehensive income (loss) to earnings was $ 1.7 million, including $ 1.3 million net settlement loss.

For the fiscal year ended January 1, 2022, the expense reclassified from accumulated other comprehensive income (loss) to earnings was $ 0.7 million.

For the fiscal years ended December 30, 2023, December 31, 2022, and January 1, 2022, the Company recorded $ 1.5 million, $ 1.9 million, $ 2.1 million expense, respectively, in Cost of Sales and Other (income) expense, net within the Consolidated Statements of Net Income.

As of December 30, 2023 and December 31, 2022, the Company reported benefit liabilities of $ 4.8 million and $ 4.0 million for these plans, of which $ 1.7 million and $ 1.5 million was recorded in Accrued liabilities and $ 3.1 million a nd $ 2.5 million w as recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively.

For the fiscal years ended December 30, 2023 and December 31, 2022, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $ 1.3 million and $ 0.5 million, respectively.

For the fiscal year ended December 30, 2023, the expense reclassified from accumulated other comprehensive loss to earnings was $ 0.4 million, including $ 0.5 million net settlement loss.

For the fiscal year ended December 31, 2022, the expense reclassified from accumulated other comprehensive loss to earnings was $ 1.7 million, including $ 1.3 million net settlement loss.

Defined Benefit Plan Assets

6 unchanged sentences

Fixed income securities 90 % 73 %

The Company segregated its plan assets by the following major categories and level for determining their fair value as of December 31, 2022 and January 1, 2022.

The Company segregated its plan assets by the following major categories and level for determining their fair value as of December 30, 2023 and December 31, 2022.

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.

33 unchanged sentences

Total pension plan assets $ 9,344 $ 22,842 $ 133 $ 5,377 $ 37,696

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:

The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 31, 2022:

Fair Value Measurements Using

8 unchanged sentences

(in thousands)

Balance at December 26, 2020 $ 53,778

Balance at January 1, 2022 $ 343

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

1 unchanged sentence

Actual loss on plan assets 3

Benefits paid from the plan assets ( 1,238 )

Foreign currency adjustments ( 20 )

Balance at January 1, 2022 $ 343

Balance at December 31, 2022 $ 328

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

1 unchanged sentence

Actual return on assets 15

Benefits paid from the plan assets ( 221 )

Foreign currency adjustments 9

3 unchanged sentences

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 31, 2022, January 1, 2022 and December 26, 2020.

Employees are immediately

12 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.

During the fiscal year 2023, the Company designated an additional 0.7 million shares for the Company's equity-based compensation plans.

As of December 30, 2023, there were 1.2 million shares available for issuance of future awards under the Company’s equity-based compensation plans.

7 unchanged sentences

(Years) Aggregate

Outstanding January 1, 2022 563,226 $ 165.98

Outstanding December 31, 2022 617,856 $ 176.79

Granted 87,633 240.94

6 unchanged sentences

Grant-Date Fair Value

Nonvested January 1, 2022 156,659 $ 192.44

Nonvested December 31, 2022 168,286 $ 213.65

Granted 93,310 236.56

28 unchanged sentences

Share Repurchase 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") .

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 December 31, 2022.

On April 28, 2021, the Company announced that the Board of Directors authorized a 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.

There are $ 300 million in the aggregate of shares available for purchase under the program as of December 30, 2023.

During the fiscal years 2023, 2022 and 2021 , the Company did not repurchase any shares of its common stock.

During the fiscal year 2020 , the Company repurchased 175,110 shares of its common stock totaling $ 22.9 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

Fiscal Year Ended

December 31, 2022 January 1, 2022 December 26, 2020

December 30, 2023 December 31, 2022 January 1, 2022

(in thousands) Pre-tax Tax Net of tax Pre-tax Tax Net of tax Pre-tax Tax Net of tax

7 unchanged sentences

and are not permanently reinvested.

Accumulated Other Comprehensive Income (Loss) (“AOCI”) :

Accumulated Other Comprehensive Loss (“AOCI”) :

The following table sets forth the changes in the components of AOCI by component for fiscal years 2023, 2022, and 2021:

3 unchanged sentences

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

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

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

Balance at January 1, 2022 ( 11,928 ) — ( 61,535 ) ( 73,463 )

1 unchanged sentence

Balance at December 31, 2022 ( 2,193 ) 6,596 ( 100,167 ) ( 95,764 )

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).

2023 activity ( 5,420 ) ( 2,148 ) 47,515 39,947

Balance at December 30, 2023 ( 7,613 ) 4,448 ( 52,652 ) ( 55,817 )

The Company completed the buy-out of a U.K.

See Note 11, Benefits Plans for further discussion.

Amounts reclassified from accumulated other comprehensive income (loss) to earnings for fiscal years 2022, 2021, and 2020 were as follows:

Amounts reclassified from accumulated other comprehensive loss to earnings for fiscal years 2023, 2022, and 2021 were as follows:

Fiscal Year Ended

(in thousands) December 31, 2022 January 1, 2022 December 26, 2020

(in thousands) December 30, 2023 December 31, 2022 January 1, 2022

Pension and postemployment and other plans:

Amortization of prior service, net actuarial loss, and other $ 785 $ 2,006 $ 1,694

Amortization of prior service, net actuarial (gain) loss, and other $ ( 43 ) $ 785 $ 2,006

Net settlement loss and accelerated prior service costs 247 477 19,855

Total $ 204 $ 1,262 $ 21,861

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

3 unchanged sentences

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 31, 2022, January 1, 2022, and December 26, 2020, 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 December 30, 2023, December 31, 2022, and January 1, 2022, 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:

15 unchanged sentences

Provision for income taxes $ 69,113 $ 69,738 $ 57,219

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

3 unchanged sentences

income tax rate differential ( 25,623 ) ( 41,731 ) ( 31,414 )

One-time tax deductions for stock of subsidiaries ( 11,495 ) — —

Tax on unremitted earnings 10,870 7,585 3,955

losses and expenses with no tax benefit 11,261 10,660 7,820

Tax on unremitted earnings 6,394 10,870 7,585

Net impact associated with U.S.

1 unchanged sentence

income, including GILTI 4,739 2,546 ( 238 )

Certain changes in unrecognized tax benefits and related accrued interest 1,839 4,263 2,160

State and local taxes, net of federal tax benefit 1,503 215 ( 172 )

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

Certain changes in unrecognized tax benefits and related accrued interest ( 172 ) 1,839 4,263

One-time tax deductions for stock of subsidiaries — ( 11,495 ) —

Other, net 2,005 3,795 ( 2,240 )

Provision for income taxes $ 69,113 $ 69,738 $ 57,219

For fiscal year ended December 31, 2022, the Company classified certain amounts in “Net impact associated with U.S.

tax on Non-U.S.

income, including GILTI,” that in prior years were classified in “Other, net”.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 31, 2022 and January 1, 2022, are as follows:

Significant components of the Company’s deferred tax assets and liabilities at December 30, 2023 and December 31, 2022, are as follows:

(in thousands) 2023 2022

19 unchanged sentences

net operating loss and non-U.S.

interest expense carryforwards which are not expected to be realized.

interest expense carryforwards which are not more likely that not to be realized.

The remaining U.S.

net operating loss and 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 (which begin expiring in 2025).

No deferred tax asset nor valuation allowance has been recorded for certain U.S.

1 unchanged sentence

The Company paid income taxes of $ 81.1 million, $ 96.8 million, and $ 58.2 million in 2023, 2022, and 2021, respectively, and received income tax refunds of $ 7.2 million, $ 3.2 million, and $ 2.6 million in 2023, 2022, and 2021, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those subsidiaries for which such excess is considered to be permanently reinvested in those operations.

4 unchanged sentences

federal income tax.

The Company recognized deferred tax liabilities of $ 16.3 million ($ 16.1 million for non-U.S.

taxes net of related U.S.

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

state taxes) as of December 31, 2022 and $ 15.5 million ($ 15.3 million for non-U.S.

taxes net of related U.S.

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

state taxes) as of January 1, 2022, related to taxes on certain non-U.S.

The Company recognized deferred tax liabilities of $ 18.6 million as of December 30, 2023 and $ 16.3 million as of December 31, 2022, related to taxes on certain non-U.S.

earnings which are not considered to be permanently reinvested.

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

The tax holiday for one of the subsidiaries expired at the end of 2022, and for the other subsidiary the tax holiday will expire at the end of 2023.

The tax holiday for one of the subsidiaries expired at the end of 2022, but was later extended for an additional three years, retroactive to include all of 2023, as well as 2024 and 2025, and for the other subsidiary the tax holiday expired at the end of 2023.

The Company intends to seek an extension for the expired tax holiday.

2 unchanged sentences

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 December 31, 2022, January 1, 2022, and December 26, 2020 is as follows:

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 30, 2023, December 31, 2022, and January 1, 2022 is as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

Unrecognized Tax Benefits

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

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

Balance at January 1, 2022 $ 23,445

5 unchanged sentences

Balance at December 31, 2022 $ 30,374

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

Additions for tax positions taken in the current year 1,200

Decreases for tax positions taken in the prior year ( 792 )

Decreases for lapses in statute of limitations ( 1,051 )

Decreases for settlements ( 215 )

Balance at December 30, 2023 $ 31,449

The December 30, 2023 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.

3 unchanged sentences

The Company recognized such interest expense of $ 0.5 million (net of a $ 1.7 million decrease due to a lapse in the statute of limitations), $ 1.4 million (net of a $ 0.2 million decrease due to a lapse in the statute of limitations) and $ 1.6 million (net of a $ 0.6 million decrease due to a lapse in the statute of limitations) in 2023, 2022, and 2021, respectively.

Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $ 11.8 million and $ 10.4 million as of December 31, 2022 and January 1, 2022, respectively.

Accrued interest for such matters included in Other long-term liabilities within the Consolidated Balance Sheets was $ 14.4 million and $ 11.8 million as of December 30, 2023 and December 31, 2022, respectively.

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 Canada, Germany, the Netherlands, Singapore, the U.S., and certain U.S.

Tax examinations occur from time to time, including examinations currently in process in Germany, the Netherlands, Singapore, 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.

13 unchanged sentences

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 110,002 , 87,425 , and 20,139 shares in 2023, 2022, and 2021, respectively.

During the fiscal year 2022 and 2021, the Company did not repurchase any shares of its common stock.

During the fiscal year 2020, the Company repurchased 175,110 shares of its common stock totaling $ 22.9 million.

See Note 12 Stock-Based Compensation for further discussion.

The Company did not repurchase any shares of its common stock during the fiscal year 2023, 2022, and 2021, respectively.

Segment Information

13 unchanged sentences

Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Electronics Segment :

3 unchanged sentences

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.

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 vehicle, material handling, agricultural, construction and other commercial vehicle end markets.

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 and bus, off-road and recreational vehicles, material handling equipment, agricultural machinery, construction equipment 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.

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 and bus, construction, agriculture, material handling and marine.

• Industrial Segment:

Consists of industrial circuit protection (industrial fuses), industrial controls (protection relays, contactors, and 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.

Consists of industrial circuit protection (industrial fuses), industrial controls (protection relays, contactors, transformers, residual current devices, ground fault circuit interrupters, residual current monitors, and arc fault detection devices) and temperature sensors for use in various applications such as renewable energy and energy storage systems, industrial safety, factory automation, electr ic vehicle infrastructure, HVAC systems, non-residential construction, MRO, and mining.

The Company has provided this segment information for all comparable prior periods.

Segment information is summarized as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

16 unchanged sentences

Interest expense 39,866 26,216 18,527

Foreign exchange loss (gain) 24,359 17,158 ( 14,875 )

Other expense (income), net 7,207 8,932 ( 5,083 )

Foreign exchange loss 12,299 24,359 17,158

Other (income) expense, net ( 19,901 ) 7,207 8,932

Income before income taxes $ 328,598 $ 443,044 $ 341,025

(a) Included in “Other” Operating income (loss) for 2022 was $ 17.6 million of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, $ 15.6 million of purchase accounting inventory step-up charges, and $ 10.0 million of restructuring, impairment and other charges, primarily related to employee termination costs and a $ 2.9 million non-cash impairment charge for certain acquired technology and patent intangible assets due to a change in use and projected cash flows within the Electronics segment in the fourth quarter of 2022.

(a) Included in “Other” Operating income for the 2023 was $ 11.7 million of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, and $ 11.6 million of restructuring charges, primarily related to employee termination costs.

During 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, $ 0.9 million impairment charge substantially related to certain patents in a business within the Industrial segment, and a $ 0.1 million impairment related to certain machinery and equipment in the semiconductor business within the Electronics segment.

See Note 8, Restructuring, Impairment and Other Charges, for further discussion.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in “Other” Operating income for 2022 was $ 17.6 million of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, $ 15.6 million of purchase accounting inventory step-up charges, and $ 10.0 million of restructuring, impairment and other charges, primarily related to employee termination costs and a $ 2.9 million non-cash impairment charge for certain acquired technology and patent intangible assets due to a change in use and projected cash flows within the Electronics segment in the fourth quarter of 2022.

See Note 8, Restructuring, Impairment and Other Charges, for further discussion.

Included in “Other” Operating income 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 $ 10.0 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 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.

The Company’s net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended 2023, 2022, and 2021 are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

24 unchanged sentences

(exports and foreign operations), including approximately 23 % 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 31, 2022, approximately 64 % of the Company's net sales were to customers outside the U.S.

(exports and foreign operations), including approximately 25 % 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.

Sales to Arrow Electronics, Inc., which were included in the Electronics, Transportation, and Industrial segments, were 11.2 %, 11.5 %, and 10.7 % of consolidated net sales in 2023, 2022, and 2021 respectively.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

Off-Balance Sheet Arrangements

As of December 30, 2023, the Company did not have any off-balance sheet arrangements, as defined under SEC rules.

Specifically, the Company was not liable for guarantees of indebtedness owed by third parties, the Company was not directly liable for the debt of any unconsolidated entity and the Company did not have any retained or contingent interest in assets.

The Company does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Product Warranty Liabilities

Our policy is to accrue for warranty claims when a loss is both probable and estimable.

Liabilities for warranty claims have historically not been material and in limited instances, customer may make claims for costs they incurred or other damages related to a claim.

Environmental Remediation Liabilities

Refer to Note 1:

Summary of Significant Accounting Policies and Other Information related to environmental liabilities.

Our operations and facilities are subject to U.S.

laws and regulations governing the protection of the environment and our employees, including those governing air emissions, chemical usage, water discharges, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites.

We could incur significant costs, including cleanup costs, fines, civil or criminal sanctions, or third-party property damage or personal injury claims, in the event of violations or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities.

Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future.

We are, however, not aware of any threatened or pending material environmental investigations, lawsuits, or claims involving the Company or its operations.

Legal Proceedings

In the ordinary course of business, the Company may be involved in a number of claims and litigation matters.

While it is not feasible to predict the outcome of these matters, based upon our experience and current information known to us, we do not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on our results of operations, financial position, and/or cash flows.

The Company accounts for litigation and claims losses in accordance with FASB ASC Topic 450, Contingencies where loss contingency provisions are recognized for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss.

These estimates require the application of considerable judgment and are refined each accounting period as additional information becomes known.

We are often initially unable to develop a best estimate of loss and therefore the minimum amount, which could be an immaterial amount, is recognized.

As information becomes known, either the minimum loss amount is increased, or a best estimate can be made, resulting in additional loss provisions.

A best estimate may be changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected.

Pending Litigation and Claims

There are no material pending litigation or claims outstanding as of December 30, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Related Party Transactions

9 unchanged sentences

(“ATEC”), a supplier located in the Philippines that provides assembly and test services.

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

Fiscal Year Ended

December 31, 2022 January 1, 2022

December 30, 2023 December 31, 2022

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

3 unchanged sentences

Accounts payable balance $ 0.5 $ — $ 1 $ — $ — $ 1.8

Subsequent Events

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

Western Automation has annualized sales of approximately $ 25 million and will be reported within the company’s Industrial segment.

The company does not expect the acquisition to have a material impact to its 2023 financial results.The Company financed the transaction with cash on hand.

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