LITTELFUSE INC /DE 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Index Page Report of Independent Registered Public Accounting Firm – Consolidated Financial Statements (PCAOB ID Number 248 ) 44 Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting 46 Consolidated Financial Statements Consolidated Balance Sheets 47 Consolidated Statements of Net Income 48 Consolidated Statements of Comprehensive Income 49 Consolidated Statements of Cash Flows 50 Consolidated Statements of Equity 51 Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies and Other Information 52 2. Acquisitions 59 3. Inventories 63 4. Property, Plant, and Equipment 63 5. Goodwill and Other Intangible Assets 64 6. Accrued Liabilities 65 7. Lease Commitments 66 8. Restructuring, Impairment and Other Charges 68 9. Debt 69 10. Fair Value of Assets and Liabilities 72 11. Benefit Plans 75 12. Stock-Based Compensation 80 13. Other Comprehensive Income (Loss) 82 14. Income Taxes 83 15. Earnings Per Share 86 16. Segment Information 86 1 7. Commitments and C ontingencies 89 18. Related Party Transactions 90 43 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Littelfuse, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Littelfuse, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of 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. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of 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 – 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 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. 44 Table of Contents Our audit procedures related to the valuation of the acquired intangible assets included the following, among others: • we tested the design and operating effectiveness of the controls over the Company’s acquisition and valuation process, including review of the valuation model, significant assumptions used, and the completeness and accuracy of the underlying data used • we tested the projected financial information including forecasted revenue growth rate by assessing the reasonableness of management’s forecasts compared to historical results and forecasted industry trends • with the assistance of our valuation specialists, we assessed the assumptions and methodologies used in developing the WACC, royalty rates, and customer attrition rates by developing a range of independent estimates and comparing those to the rates selected by management. We also involved our valuation specialists to evaluate the assumptions and methodologies used in valuing the intangible assets. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2014. Southfield, Michigan February 16, 2024 45 Table of Contents Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders Littelfuse, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Littelfuse, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of 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”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 30, 2023, and our report dated February 16, 2024 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Southfield, Michigan February 16, 2024 46 Table of Contents LITTELFUSE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents (Note 1) $ 555,513 $ 562,588 Short-term investments 235 84 Trade receivables, less allowances of $ 84,696 and $ 83,562 , respectively 287,018 306,578 Inventories (Note 3) 474,607 547,690 Prepaid income taxes and income taxes receivable 8,701 7,215 Prepaid expenses and other current assets 82,526 87,641 Total current assets 1,408,600 1,511,796 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 Total assets $ 3,995,275 $ 3,903,734 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 173,535 $ 208,571 Accrued liabilities (Note 6) 149,214 187,057 Accrued income taxes 38,725 41,793 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 (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: Common stock, par value $ 0.01 per share: 34,000,000 shares authorized; shares issued, 26,624,071 and 26,445,618 , respectively 262 261 Additional paid-in capital 1,012,325 974,097 Treasury stock, at cost: 1,711,290 and 1,685,357 shares, respectively ( 259,263 ) ( 252,866 ) Accumulated other comprehensive loss ( 55,817 ) ( 95,764 ) Retained earnings 1,782,662 1,585,466 Littelfuse, Inc. shareholders’ equity 2,480,169 2,211,194 Non-controlling interest 312 184 Total equity 2,480,481 2,211,378 Total liabilities and equity $ 3,995,275 $ 3,903,734 See accompanying Notes to Consolidated Financial Statements. 47 Table of Contents LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF NET INCOME Fiscal Year Ended (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 Cost of sales 1,462,416 1,506,984 1,308,002 Gross profit 900,241 1,006,913 771,926 Selling, general, and administrative expenses 354,655 344,813 275,457 Research and development expenses 102,429 95,602 65,940 Amortization of intangibles 65,794 55,695 42,729 Restructuring, impairment, and other charges 16,501 9,977 2,158 Total operating expenses 539,379 506,087 386,284 Operating income 360,862 500,826 385,642 Interest expense 39,866 26,216 18,527 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 Income taxes 69,113 69,738 57,219 Net income $ 259,485 $ 373,306 $ 283,806 Income per share: Basic $ 10.44 $ 15.09 $ 11.54 Diluted $ 10.34 $ 14.94 $ 11.38 Weighted average shares and equivalent shares outstanding: Basic 24,854 24,734 24,603 Diluted 25,102 24,986 24,932 See accompanying Notes to Consolidated Financial Statements. 48 Table of Contents LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended (in thousands) December 30, 2023 December 31, 2022 January 1, 2022 Net income $ 259,485 $ 373,306 $ 283,806 Other comprehensive income (loss): Pension and postemployment adjustments, net of tax ( 5,420 ) 9,735 22,213 Cash flow hedge, net of tax ( 2,148 ) 6,596 — Foreign currency translation adjustments, net of tax 47,515 ( 38,632 ) ( 4,519 ) Comprehensive income $ 299,432 $ 351,005 $ 301,500 See accompanying Notes to Consolidated Financial Statements. 49 Table of Contents LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended (in thousands) December 30, 2023 December 31, 2022 January 1, 2022 OPERATING ACTIVITIES Net income $ 259,485 $ 373,306 $ 283,806 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 71,634 65,011 55,906 Amortization of intangibles 65,794 55,695 42,729 Non-cash pension settlement charges — — 19,855 Impairment charges 4,853 4,546 — Deferred revenue 1,787 115 ( 2,570 ) Non-cash inventory charges — 15,593 8,397 Stock-based compensation 23,898 23,626 19,611 Loss (gain) on investments and other assets 291 14,024 ( 8,907 ) Deferred income taxes 46 ( 22,419 ) ( 8,020 ) Other 5,473 32,680 20,275 Changes in operating assets and liabilities: Trade receivables 24,517 ( 19,334 ) ( 10,234 ) Inventories 82,471 ( 89,235 ) ( 104,555 ) Accounts payable ( 36,277 ) ( 22,403 ) 40,481 Accrued liabilities and income taxes ( 61,022 ) ( 9,495 ) 30,793 Prepaid expenses and other assets 14,437 ( 1,992 ) ( 14,223 ) Net cash provided by operating activities 457,387 419,718 373,344 INVESTING ACTIVITIES Acquisitions of businesses, net of cash acquired ( 198,810 ) ( 532,670 ) ( 423,633 ) Purchases of property, plant, and equipment ( 86,188 ) ( 104,341 ) ( 90,562 ) Net proceeds from sale of property, plant, and equipment 832 676 15,425 Other ( 151 ) ( 62 ) ( 390 ) Net cash used in investing activities ( 284,317 ) ( 636,397 ) ( 499,160 ) FINANCING ACTIVITIES Proceeds of term loan — 300,000 — Proceeds from senior notes payable — 100,000 — Payments of senior notes payable ( 121,302 ) ( 25,000 ) — Payments of revolving credit facility — — ( 30,000 ) Repayments of other debts ( 2,697 ) ( 1,552 ) ( 2,619 ) 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 ) 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 ) (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 Cash, cash equivalents, and restricted cash at end of period $ 557,123 $ 564,939 $ 482,836 Supplementary Cash Flow Information Reconciliation of cash and cash equivalents: Cash and cash equivalents $ 555,513 $ 562,588 $ 478,473 Restricted cash included in prepaid expenses and other current assets $ — $ 802 $ 2,718 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 Cash paid during the period for income taxes, net of refunds $ 73,932 $ 93,622 $ 55,561 Capital expenditures, not yet paid $ 9,191 $ 11,725 $ 11,872 See accompanying Notes to Consolidated Financial Statements. 50 Table of Contents LITTELFUSE, INC. CONSOLIDATED STATEMENTS OF EQUITY Littelfuse, Inc. Shareholders’ Equity (in thousands, except share and per share data) Common Stock Addl. Paid in Capital Treasury Stock Accum. Other Comp. Inc. (Loss) Retained Earnings Non-controlling Interest Total Balance at December 26, 2020 $ 259 $ 907,858 $ ( 242,366 ) $ ( 91,157 ) $ 1,034,048 $ 131 $ 1,608,773 Net income — — — — 283,806 — 283,806 Other comprehensive income, net of tax — — — 17,694 — — 17,694 Stock-based compensation — 19,611 — — — — 19,611 Withheld 20,428 shares on restricted share units for withholding taxes — — ( 5,754 ) — — — ( 5,754 ) Stock options exercised 1 19,119 — — — — 19,120 Cash dividends paid ($ 2.02 per share) — — — — ( 49,730 ) — ( 49,730 ) 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 (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 — — ( 4,746 ) — — — ( 4,746 ) Stock options exercised 1 3,883 — — — — 3,884 Cash dividends paid ($ 2.26 per share) — — — — ( 55,911 ) — ( 55,911 ) 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 income, net of tax — — — 39,947 — — 39,947 Stock-based compensation — 23,898 — — — — 23,898 Non-controlling interest — — — — ( 128 ) 128 — Withheld 25,933 shares on restricted share units for withholding taxes — — ( 6,397 ) — — — ( 6,397 ) Stock options exercised 1 14,330 — — — — 14,331 Cash dividends paid ($ 2.50 per share) — — — — ( 62,161 ) — ( 62,161 ) Balance at December 30, 2023 $ 262 $ 1,012,325 $ ( 259,263 ) $ ( 55,817 ) $ 1,782,662 $ 312 $ 2,480,481 See accompanying Notes to Consolidated Financial Statements. 51 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies and Other Information Nature of Operations Littelfuse, Inc. and subsidiaries (the “Company”) is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 20 countries, and with approximately 17,000 global associates, the Company partners with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, the Company’s products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day. Fiscal Year References herein to “2023”, “fiscal 2023” or “fiscal year 2023” refer to the fiscal year ended December 30, 2023. 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 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. Basis of Presentation The Consolidated Financial Statements include the accounts of Littelfuse, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company’s Consolidated Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America ("U.S.") and include the assets, liabilities, sales and expenses of all wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. Use of Estimates The process of preparing financial statements in conformity with generally accepted accounting principles in the U.S. requires management to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses and the accompanying notes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in its evaluation, as considered necessary. Actual results could differ from those estimates. Cash, Cash Equivalents and Restricted Cash All highly liquid investments, with an original maturity of three months or less when purchased, are considered to be cash equivalents. The Company maintains several pools including multicurrency notional pools and physical pools internationally and a zero balance account ("ZBA") structure in the U.S. In the notional pools, actual cash balances are not physically converted and are not commingled between participating legal entities. The Company will classify any overdraft balances within accrued expenses and other current liabilities on the Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash at 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 Cash and cash equivalents $ 555,513 $ 562,588 Restricted cash included in prepaid expenses and other current assets — 802 Restricted cash included in other assets 1,610 1,549 Total cash, cash equivalents and restricted cash $ 557,123 $ 564,939 52 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Short-Term and Long-Term Investments As of December 30, 2023, the Company has an investment in Polytronics Technology Corporation Ltd. (“Polytronics”). 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 € 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 $ 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. The Company has investments related to its non-qualified Supplemental Retirement and Savings Plan. The Company maintains accounts for participants through which participants make investment elections. The investment securities are subject to the claims of the Company’s creditors. The investment securities are all mutual funds. The investment securities are measured at net asset value. As of 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. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Write-offs are recorded at the time a customer receivable is deemed uncollectible. The Company also maintains allowances against trade receivables for the settlement of rebates and sales discounts to customers. These allowances are based upon specific customer sales and sales discounts as well as actual historical experience. Inventories Inventories are stated at the lower of cost or net realizable value, which approximates current replacement cost. Cost is principally determined using the first-in, first-out method. The Company maintains excess and obsolete reserves against inventory to reduce the carrying value to the expected net realizable value. These reserves are based upon a combination of factors including historical sales volume, market conditions, lower of cost or net realizable value of the inventory. Property, Plant, and Equipment Land, buildings, and equipment are carried at cost. Depreciation is calculated using the straight-line method with useful lives of up to 35 years for buildings, three to 20 years for equipment, seven years for furniture and fixtures, five years for tooling and three years for computer equipment. Leasehold improvements are depreciated over the lesser of their useful life or the lease term. Maintenance and repair costs are charged to expense as incurred. Major overhauls that extend the useful lives of existing assets are capitalized. Goodwill The Company annually tests goodwill for impairment on the first day of its fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. 53 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company compares each reporting unit’s fair value, estimated based on comparable company market valuations and expected future discounted cash flows to be generated by the reporting unit, to its carrying value. The results of the annual goodwill impairment test as of October 1, 2023 indicated that the estimated fair values for each of the seven reporting units exceeded their respective carrying values. As of the most recent annual test conducted on 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, 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. See Note 5, Goodwill and Other Intangible Assets, for additional information. There were no impairment charges recorded during the fiscal years of 2023, 2022, and 2021. The Company also performs an interim review for indicators of impairment each quarter to assess whether an interim impairment review is required for any reporting unit. As part of its interim reviews, management analyzes potential changes in the value of individual reporting units based on each reporting unit’s operating results for the period compared to expected results as of the prior year’s annual impairment test. In addition, management considers how other key assumptions, including discount rates and expected long-term growth rates, used in the last annual impairment test, could be impacted by changes in market conditions and economic events. Based on the interim assessments as of December 30, 2023, management concluded that no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying value. Long-Lived Assets Customer relationships, trademarks and tradenames are amortized using the straight-line method over estimated useful lives that have a range of 3 to 20 years. Patents, licenses and software are amortized using the straight-line method or an accelerated method over estimated useful lives that have a range of 4 to 17 years. The distribution networks are amortized on either a straight-line or accelerated basis over estimated useful lives that have a range of 4 to 10 years. Land use rights are amortized using the straight-line method up to 50 years which is the term of the land use rights. The Company assesses potential impairments to its long-lived assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based upon the most recent information available. Estimated fair market value is generally measured by discounting estimated future cash flows. Long-lived assets, other than goodwill and other intangible assets, that are held for sale are recorded at the lower of carrying value or the fair market value less the estimated cost to sell. Environmental Liabilities Environmental liabilities are accrued based on engineering studies estimating the cost of remediating sites. Expenses related to on-going maintenance of environmental sites are expensed as incurred. If actual or estimated probable future losses exceed the Company’s recorded liability for such claims, the Company would record additional charges during the period in which the actual loss or change in estimate occurred. Pension and Other Post-retirement Benefits The Company records annual income and expense amounts relating to its pension and post-retirement benefits plans based on calculations which include various actuarial assumptions including discount rates, expected long-term rates of return and compensation increases. The Company reviews its actuarial assumptions on an annual basis as of the fiscal year-end balance sheet date (or more frequently if a significant event requiring remeasurement occurs) and modifies the assumption based on current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the Consolidated Balance Sheets, but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors. Revenue Recognition Revenue Disaggregation 54 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 (in thousands) Electronics Segment Transportation Segment Industrial Segment Total Electronics – Semiconductor $ 767,393 $ — $ — $ 767,393 Electronics – Passive Products and Sensors 583,033 — — 583,033 Commercial Vehicle Products — 323,758 — 323,758 Passenger Car Products — 266,004 — 266,004 Automotive Sensors — 88,516 — 88,516 Industrial Products — — 333,953 333,953 Total $ 1,350,426 $ 678,278 $ 333,953 $ 2,362,657 Fiscal Year Ended December 31, 2022 (in thousands) Electronics Segment Transportation Segment Industrial Segment Total Electronics – Semiconductor $ 802,281 $ — $ — $ 802,281 Electronics – Passive Products and Sensors 690,538 — — 690,538 Passenger Car Products — 374,707 — 374,707 Commercial Vehicle Products — 249,470 — 249,470 Automotive Sensors — 91,963 — 91,963 Industrial Products — — 304,938 304,938 Total $ 1,492,819 $ 716,140 $ 304,938 $ 2,513,897 See Note 16, Segment Information, for net sales by segment and countries. The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors. The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year. Revenue and Billing The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue. 55 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ship and Debit Program Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity, distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue. Return to Stock The Company has a return to stock policy whereby certain customers, with prior authorization from the Company's management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns. Volume Rebates The Company offers volume-based sales incentives to certain customers to encourage greater product sales. If customers achieve their specific quarterly or annual sales targets, they are entitled to rebates. The Company estimates the projected amount of rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products are sold. Allowance for Credit Losses The Company currently measures the expected credit losses based on our historical credit loss experience. The Company has not experienced significant recent or historical credit losses and is not forecasting any significant credit losses which would require adjustments to our methodology. If current conditions and supportable forecasts indicate that our historical loss experience is not reasonable and no longer supportable, the Company may adjust its historical credit loss experience and to reflect these conditions and forecasts. The Company regularly analyzes its significant customer accounts and, when the Company becomes aware of a customer’s inability to meet its financial obligations, the Company records a specific reserve for bad debt to reduce the related receivable to the amount the Company reasonably believes is collectible. The Company also analyzes all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer, macroeconomic considerations and historical collection and loss experience. Historically, the allowance for credit losses has been adequate to cover bad debts. If circumstances related to specific customers change, the estimates of the recoverability of receivables could be further adjusted. As of 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 The Company expenses advertising costs as incurred, which amounted to $ 4.0 million, $ 3.8 million, and $ 2.1 million in fiscal years 2023, 2022 and 2021, respectively, and are included as a component of selling, general, and administrative expenses. Shipping and Handling Fees and Costs Amounts billed to customers related to shipping and handling are classified as revenue. Costs incurred for shipping and handlin g of $ 15.4 million, $ 13.9 million, and $ 15.4 million in fiscal years 2023, 2022, and 2021, respectively, are classified in selling, general, and administrative expenses. 56 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Foreign Currency Translation / Remeasurement The Company’s foreign subsidiaries use the local currency or the U.S. dollar as their functional currency, as appropriate. Assets and liabilities are translated using exchange rates at the balance sheet date, and revenues and expenses are translated at weighted average rates. Adjustments from the translation process are recognized in Shareholders’ equity as a component of Accumulated other comprehensive income (loss). The amount of foreign currency gain or loss 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 The Company recognizes compensation expense for the cost of awards of equity compensation using a fair value method. Benefits of tax deductions in excess of recognized compensation expense are reported as operating cash flows. See Note 12, Stock-Based Compensation , for additional information on stock-based compensation. Coal Mining Liability Included in 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. Management accrues for costs associated with such remediation efforts based on management's best estimate when such costs are probable and reasonably able to be estimated. The ultimate determination can only be done after respective investigations because the concrete conditions are mostly unknown at this time. Other (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. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred taxes are recognized for the future effects of temporary differences between financial and income tax reporting using enacted tax rates in effect for the years in which the differences are expected to reverse. The Company recognizes deferred taxes for temporary differences, operating loss carryforwards, and tax credit and other tax attribute carryforwards (excluding carryforwards where usage has been determined to be remote). Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. U.S. state and non-U.S. income taxes are provided on the portion of non-U.S. income that is expected to be remitted to the U.S. and be taxable (and non-U.S. income taxes are provided on the portion of non-U.S. income that is expected to be remitted to an upper-tier non-U.S. entity). Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred U.S. income taxes and non-U.S. taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in those non-U.S. subsidiaries for which such excess is considered to be permanently reinvested in those operations. Management regularly evaluates whether non-U.S. earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its non-U.S. subsidiaries. Changes in economic and business conditions, tax laws, or the Company’s financial situation could result in changes to these judgments and the need to record additional tax liabilities. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the global intangible low-taxed income provisions ("GILTI"). 57 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-term portion of this Toll Charge which remains payable as of December 30, 2023, totaling $ 8.2 million, is recorded in Other long-term liabilities , and the anticipated 2024 annual installment payment of $ 6.6 million is included in Accrued income taxes , on the Consolidated Balance Sheet as of December 30, 2023. 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 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 Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company records the fair value of its available-for-sale securities and pension plan assets on a recurring basis. Assets measured at fair value on a nonrecurring basis include long-lived assets held and used, long-lived assets held for sale, goodwill and other intangible assets. The fair value of cash and cash equivalents, 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: Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 – Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 – Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. Recently 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. 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 this guidance will modify our disclosures in our Consolidated Financial Statements. In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements". The amendments in this update represent changes to clarify or improve the disclosure or presentation requirements of a variety of Topics in the ASC. The Company may be affected by one or more of those amendments. The amendments in this ASU should be applied prospectively and will not be effective until June 30, 2027. The company is currently evaluating the potential effects of these amendments on its Consolidated Financial Statements. 58 Table of Contents 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. 2. Acquisitions 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 businesses are included in the Company’s Consolidated Financial Statements from the date of the acquisition. Dortmund Fab 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. The 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: 59 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Purchase Price Allocation 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 ) $ 158,260 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. C&K Switches On July 19, 2022, the Company acquired C&K Switches (“C&K”) for $ 540 million in cash. Founded in 1928, C&K is a leading designer and manufacturer of high-performance electromechanical switches and interconnect solutions with a strong global presence across a broad range of end markets, including industrial, transportation, datacom, and aerospace. At the time the Company and C&K entered into a definitive agreement, C&K had annualized sales of over $ 200 million. The business is reported as part of the electronics-passive products and sensors business within the Company's Electronics segment. 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 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: 60 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Purchase Price Allocation Total purchase consideration: Cash, net of cash acquired $ 523,014 Allocation of consideration to assets acquired and liabilities assumed: Trade receivables, net 20,967 Inventories 42,968 Other current assets 2,932 Property, plant, and equipment 32,791 Intangible assets 254,700 Goodwill 274,124 Other long-term assets 14,797 Current liabilities ( 47,687 ) Long-term debt ( 9,626 ) Other long-term liabilities ( 62,952 ) $ 523,014 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. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining C&K’s products and technology with the Company’s existing Electronics products portfolio. Goodwill resulting from the C&K 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 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 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. Embed On April 12, 2022, the Company acquired Embed Ltd. (“Embed”). Founded in 2005, Embed is a proven provider of embedded software and firmware developed for a broad range of applications serving transportation end markets, primarily including commercial vehicle electronification and eMobility . The business is included in the commercial vehicle business within the Company's Transportation segment. The acquisition was funded with the Company’s cash on hand. The total purchase consideration was $ 9.2 million, net of cash. Carling Technologies On November 30, 2021, the Company acquired Carling Technologies, Inc. (“Carling”), pursuant to the Stock Purchase Agreement, dated as of October 19, 2021. Founded in 1920, Carling has a leading position in switching and circuit protection technologies with a strong global presence in commercial vehicle electronification, communications infrastructure and marine markets. At the time of acquisition, Carling had annualized sales of approximately $ 170 million. The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and is reported as part of the commercial vehicle business within our Transportation segment. The purchase price for Carling Technologies was approximately $ 315.5 million subject to change for a working capital adjustment. The acquisition was funded with cash on hand. 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. 61 Table of Contents 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: (in thousands) Purchase Price Allocation Total purchase consideration: Cash, net of cash acquired $ 314,094 Allocation of consideration to assets acquired and liabilities assumed: Trade receivables, net 26,232 Inventories 56,479 Other current assets 3,765 Property, plant, and equipment 56,128 Intangible assets 126,390 Goodwill 98,377 Other long-term assets 4,007 Current liabilities ( 21,790 ) Other long-term liabilities ( 35,494 ) $ 314,094 All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are primarily reflected in the Americas, Europe and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Carling’s products and technology with the Company’s existing commercial vehicle products portfolio. Goodwill resulting from the Carling acquisition is not expected to be deductible for tax purposes. 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 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. Pro Forma Results 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 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 30, 2023 December 31, 2022 Net sales $ 2,364,543 $ 2,665,028 Income before income taxes 330,114 486,285 Net income 260,812 402,470 Net income per share — basic 10.49 16.27 Net income per share — diluted 10.39 16.11 Pro forma results presented above primarily reflect the following adjustments: 62 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Fiscal Year Ended (in thousands) December 30, 2023 December 31, 2022 Amortization (a) $ ( 479 ) $ ( 10,388 ) Depreciation — 1,979 Transaction costs (b) 1,203 7,905 Amortization of inventory step-up (c) — 15,593 Interest expense (d) — 815 Income tax (expense) benefit of above items ( 91 ) ( 4,701 ) (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. 3. Inventories The components of inventories at December 30, 2023 and December 31, 2022 are as follows: (in thousands) 2023 2022 Raw materials $ 201,984 $ 231,043 Work in process 137,688 134,792 Finished goods 195,886 226,215 Inventory reserves ( 60,951 ) ( 44,360 ) Total $ 474,607 $ 547,690 4. 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 Land and land improvements $ 22,212 $ 22,089 Building and building improvements 202,764 191,733 Machinery and equipment 859,060 812,540 Accumulated depreciation and amortization ( 590,883 ) ( 545,252 ) Total $ 493,153 $ 481,110 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. 63 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Goodwill and Other Intangible Assets The amounts for goodwill and changes in the carrying value by segment are as follows: (in thousands) Electronics Transportation Industrial Total Gross goodwill as of January 1, 2022 $ 660,245 $ 228,555 $ 86,232 $ 975,032 Accumulated impairment losses as of January 1, 2022 — ( 36,177 ) ( 9,065 ) ( 45,242 ) Net goodwill as of January 1, 2022 $ 660,245 $ 192,378 $ 77,167 $ 929,790 Changes during 2022: Additions (a) 270,245 14,886 — $ 285,131 Foreign currency translation adjustments ( 21,323 ) ( 8,648 ) ( 1,343 ) ( 31,314 ) Gross goodwill as of December 31, 2022 909,167 234,793 84,889 1,228,849 Accumulated impairment losses as of December 31, 2022 — ( 33,401 ) ( 8,526 ) ( 41,927 ) Net goodwill as of December 31, 2022 $ 909,167 $ 201,392 $ 76,363 $ 1,186,922 Changes during 2023: Additions (b) 3,879 — 93,937 97,816 Foreign currency translation adjustments 23,459 2,322 291 26,072 Gross goodwill as of December 30, 2023 936,505 237,115 179,117 1,352,737 Accumulated impairment losses as of December 30, 2023 — ( 34,004 ) ( 8,735 ) ( 42,739 ) Net goodwill as of December 30, 2023 $ 936,505 $ 203,111 $ 170,382 $ 1,309,998 (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. 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 (in thousands) Gross Carrying Value Accumulated Amortization Net Book Value Land use rights $ 17,621 $ 2,786 $ 14,835 Patents, licenses and software 275,337 163,799 111,538 Distribution network 43,210 43,210 — Customer relationships, trademarks, and tradenames 689,244 209,481 479,763 Total $ 1,025,412 $ 419,276 $ 606,136 As of December 31, 2022 (in thousands) Gross Carrying Value Accumulated Amortization Net Book Value Land use rights $ 17,938 $ 2,299 $ 15,639 Patents, licenses and software 259,603 140,208 119,395 Distribution network 41,733 40,955 778 Customer relationships, trademarks, and tradenames 623,721 165,563 458,158 Total $ 942,995 $ 349,025 $ 593,970 64 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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: 2023 (in thousands, except weighted average useful life) Weighted Average Useful Life (Years) Amount Patents, licenses and software 6.7 $ 11,500 Customer relationships, trademarks, and tradenames 14.7 56,500 Total $ 68,000 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. Estimated annual amortization expense related to intangible assets with definite lives at December 30, 2023 is as follows: (in thousands) Amount 2024 $ 63,673 2025 63,303 2026 52,311 2027 50,203 2028 49,583 2029 and thereafter 327,063 Total $ 606,136 6. Accrued Liabilities The components of accrued liabilities at December 30, 2023 and December 31, 2022 are as follows: (in thousands) 2023 2022 Employee-related liabilities $ 72,635 $ 99,089 Current lease liability 12,110 12,841 Other non-income taxes 7,855 10,594 Interest 6,387 4,449 Other customer reserves 5,998 5,064 Professional services 5,282 7,160 Deferred revenue 2,198 2,593 Restructuring liability 2,141 2,434 Current benefit liability 1,482 1,318 Other 33,126 41,515 Total $ 149,214 $ 187,057 Employee-related liabilities consist primarily of payroll, sales commission, bonus, employee benefit accruals and workers’ compensation. Bonus accruals include amounts earned pursuant to the Company’s primary employee incentive compensation plans. Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities. 65 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Lease Commitments Under ASC 842, a contract contains a lease if there is an identified asset and the Company has the right to control the asset. The Company determines whether a contract contains a lease at contract inception. The Company leases office and production space under various non-cancellable operating leases that expire no later than 2035. 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. Certain leases include rental payments adjusted periodically for inflation. The lease agreements do not contain any material residual value guarantee or material restrictive covenants. The Company has elected to use the available practical expedient to account for the lease and non-lease components of its leases as a single component. As the Company elected not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. The Company does not have a published credit rating because it has no publicly traded debt; therefore, the Company is generating its incremental borrowing rate ("IBR"), using a synthetic credit rating model that compares its credit quality to other rated companies based on certain financial metrics and ratios. The reference rate will be based on the yield curve of companies with similar credit quality based on the metrics and adjusted for currency in regions where we have significant operations. All leases with an initial term of 12 months or less that do not include an option to extend or purchase the underlying asset that the Company is reasonably certain to exercise (“short-term leases”) are not recorded on the Consolidated Balance Sheets. Short-term lease expenses are recognized on a straight-line basis over the lease term. The following table presents the classification of 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 30, 2023 December 31, 2022 Operating Leases 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 Non-current operating lease liabilities Non-current lease liabilities 49,180 44,963 Total operating lease liabilities $ 60,856 $ 56,657 Finance Leases Right of use assets - finance lease Right of use lease assets $ 1,379 $ 2,481 Current finance lease liabilities Accrued liabilities 434 1,147 Non-current finance lease liabilities Non-current lease liabilities 292 698 Total finance lease liabilities $ 726 $ 1,845 66 Table of Contents 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 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 (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. 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 2024 $ 14,850 $ 442 2025 9,833 295 2026 8,126 1 2027 7,042 — 2028 6,727 — 2029 and thereafter 30,934 — Total lease payments $ 77,512 $ 738 Less: Imputed interest ( 16,656 ) ( 12 ) Present value of lease liabilities $ 60,856 $ 726 Fiscal Year Ended December 30, 2023 December 31, 2022 Weighted-average remaining lease term (years) Operating leases 8.38 6.84 Finance leases 1.69 1.90 Weighted-average discount rate Operating leases 5.39 % 4.84 % Finance leases 1.90 % 1.43 % 67 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fiscal Year Ended (in thousands) December 30, 2023 December 31, 2022 January 1, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow - payments on operating leases $ ( 14,518 ) $ ( 12,298 ) $ ( 10,150 ) Operating cash flow - interest payments on finance leases ( 19 ) ( 13 ) — Financing cash flow - payments on finance lease obligations ( 1,164 ) ( 719 ) — Leased assets obtained in exchange of new lease obligations, including leases acquired: Operating leases $ 16,689 $ 37,760 $ 20,217 Finance leases — 2,502 — There were no sale leaseback transactions for the fiscal years ended December 30, 2023 and December 31, 2022. The net gain recorded from a sale leaseback transaction was $ 4.1 million for the fiscal year ended January 1, 2022. 8. Restructuring, Impairment and Other Charges The Company recorded restructuring, impairment and other charges for fiscal years 2023, 2022, and 2021 as follows: Fiscal Year Ended December 30, 2023 (in thousands) Electronics Transportation Industrial Total Employee terminations $ 4,162 $ 3,649 $ 894 $ 8,705 Other restructuring charges 342 976 1,625 2,943 Total restructuring charges 4,504 4,625 2,519 11,648 Impairment 111 3,870 872 4,853 Total $ 4,615 $ 8,495 $ 3,391 $ 16,501 Fiscal Year Ended December 31, 2022 (in thousands) Electronics Transportation Industrial Total Employee terminations $ 2,792 $ 2,694 $ 283 $ 5,769 Other restructuring charges 276 1,076 — 1,352 Total restructuring charges 3,068 3,770 283 7,121 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 Employee terminations $ 1,124 $ 404 $ 347 $ 1,875 Other restructuring charges — 283 — 283 Total restructuring charges $ 1,124 $ 687 $ 347 $ 2,158 2023 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. 2022 68 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2022, the Company recorded total restructuring charges of $ 7.1 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 passenger car and automotive sensor businesses and the reorganization of selling and administrative functions within the Electronics segment due to the C&K acquisition. 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. See Note 5, Goodwill and Other Intangible Assets for further discussion regarding the intangible asset impairment charge. 2021 For the year ended January 1, 2022, the Company recorded total restructuring charges of $ 2.2 million, primarily for employee termination costs. These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions within the Electronics and Transportation segments. 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 substantially completed in fiscal 2024. 9. Debt The carrying amounts of debt at December 30, 2023 and December 31, 2022 are as follows: (in thousands) 2023 2022 Revolving Credit Facility $ 100,000 $ 100,000 Term Loan 288,750 296,250 Euro Senior Notes, Series A due 2023 — 124,716 Euro Senior Notes, Series B due 2028 105,246 101,265 U.S. Senior Notes, Series B due 2027 100,000 100,000 U.S. Senior Notes, Series A due 2025 50,000 50,000 U.S. Senior Notes, Series B due 2030 125,000 125,000 U.S. Senior Notes, due 2032 100,000 100,000 Other 6,709 9,113 Unamortized debt issuance costs ( 3,770 ) ( 4,847 ) Total debt 871,935 1,001,497 Less: Current maturities ( 14,020 ) ( 134,874 ) Total long-term debt $ 857,915 $ 866,623 Interest paid on all Company debt was $ 37.2 million, $ 25.4 million, and $ 17.4 million in fiscal year 2023, 2022, and 2021, respectively. Revolving Credit Facility and Term Loan On June 30, 2022, the Company amended and restated its Credit Agreement, dated as of April 3, 2020 (as so amended and restated, the “Credit Agreement”) to effect certain changes, including, among other changes: (i) adding a $ 300 million unsecured term loan credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins; and (iv) extending the maturity date to June 30, 2027 (the “Maturity Date”). Pursuant to the Credit Agreement, the Company may, from time to time, increase the size of the revolving credit facility or enter into one or more tranches of term loans in minimum increments of $ 25 million if there is no event of default and the Company is in compliance with certain financial covenants. Loans made under the available credit facility pursuant to the Credit Agreement ("the Credit Facility") bear interest at the Company’s option, at either SOFR, fixed for interest periods of one, two, three or six-month periods, plus 1.00 % to 1.75 %, plus a SOFR adjustment of 0.10 % or at the bank’s Base Rate, as defined in the Credit Agreement, plus 0.00 % to 0.75 %, based upon the Company’s Consolidated Leverage Ratio, as defined in the Credit Agreement. The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.10 % to 0.175 %, based on the Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this nature. 69 Table of Contents 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. The Company borrowed $ 300.0 million under a term loan on June 30, 2022. The principal balance of the term loans must be repaid in quarterly installments on the last day of each calendar quarter in the amount of $ 1.9 million commencing September 30, 2022, through June 30, 2024, and in the amount of $ 3.8 million commencing September 30, 2024, through March 31, 2027, with the remaining outstanding principal balance payable in full on the Maturity Date. Accrued interest on the loans is payable in arrears on each interest payment date applicable thereto and at such other times as may be specified in the Credit Agreement. Subject to certain conditions, (i) the Company may terminate or reduce the Aggregate Revolving Commitments, as defined in the Credit Agreement, in whole or in part, and (ii) the Company may prepay the revolving loans or the term loans at any time, without premium or penalty. During the fiscal year ended December 30, 2023, the Company made term loan payments of $ 7.5 million. The revolving loan and term loan balance under the Credit Facility was $ 100.0 million and $ 288.8 million, respectively, as of December 30, 2023. On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $ 200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027. As of 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. Senior Notes On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold € 212 million aggregate principal amount of senior notes in two series. The funding date for the Euro denominated senior notes occurred on December 8, 2016 for € 117 million in aggregate amount of 1.14 % Senior Notes, Series A, due December 8, 2023 (“Euro Senior Notes, Series A due 2023”), and € 95 million in aggregate amount of 1.83 % Senior Notes, Series B due December 8, 2028 (“Euro Senior Notes, Series B due 2028”) (together, the “Euro Senior Notes”). Interest on the Euro Senior Notes is payable semiannually on June 8 and December 8, commencing June 8, 2017. 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. On February 15, 2017, $ 25 million in aggregate principal amount of 3.03 % Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $ 100 million in aggregate principal amount of 3.74 % Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017. During the fiscal year ended December 31, 2022, the Company paid off $ 25.0 million of U.S. Senior Notes, Series A due 2022. On November 15, 2017, the Company entered into a Note Purchase Agreement pursuant to which the Company issued and sold $ 175 million in aggregate principal amount of senior notes in two series. On January 16, 2018, $ 50 million aggregate principal amount of 3.48 % Senior Notes, Series A, due February 15, 2025 (“U.S. Senior Notes, Series A due 2025”) and $ 125 million in aggregate principal amount of 3.78 % Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030”) were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is payable on February 15 and August 15, commencing on August 15, 2018. On May 18, 2022, the above note purchase agreements were amended to, among other things, update certain terms, including financial covenants to be consistent with the terms of the restated Credit Agreement and the 2022 Purchase Agreement, as defined below. On May 18, 2022, the Company entered into a Note Purchase Agreement (“2022 Purchase Agreement”) pursuant to which the Company issued and funded on July 18, 2022 $ 100 million in aggregate principal amount of 4.33 % Senior Notes, due June 30, 2032 (“U.S. Senior Notes, due 2032”) (together with the U.S. Senior Notes due 2025 and 2030, the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”). Interest on the U.S. Senior Notes due 2032 is payable semiannually on June 30 and December 30, commencing on December 30, 2022. 70 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Senior Notes have not been registered under the Securities Act, or applicable state securities laws. The Senior Notes are general unsecured senior obligations and rank equal in right of payment with all existing and future unsecured unsubordinated indebtedness of the Company. The Senior Notes are subject to certain customary covenants, including limitations on the Company’s ability, with certain exceptions, to engage in mergers, consolidations, asset sales and transactions with affiliates, to engage in any business that would substantially change the general business of the Company, and to incur liens. In addition, the Company is required to satisfy certain financial covenants and tests relating to, among other matters, interest coverage and leverage. At December 30, 2023, the Company was in compliance with all covenants under the Senior Notes. The Company may redeem the Senior Notes upon the satisfaction of certain conditions and the payment of a make-whole amount to noteholders, and are required to offer to repurchase the Senior Notes at par following certain events, including a change of control. 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, are being amortized over the life of the amended and restated Credit Agreement. Debt Maturities Scheduled maturities of the Company’s long-term debt for each of the five years succeeding December 30, 2023 and thereafter are summarized as follows: (in thousands) Scheduled Maturities 2024 $ 14,020 2025 67,779 2026 16,160 2027 447,500 2028 105,246 2029 and thereafter 225,000 $ 875,705 71 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Fair Value of Assets and Liabilities For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair value measurement as follows: Level 1 —Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets; Level 2 —Valuations based upon quoted prices for similar instruments, prices for identical or similar instruments in markets that are not active, or model-derived valuations, all of whose significant inputs are observable, and Level 3 —Valuations based upon one or more significant unobservable inputs. There were no transfers in or out of Level 1, Level 2 and Level 3 during the year ended December 30, 2023 . Following is a description of the valuation methodologies used for instruments measured at fair value and their classification in the valuation hierarchy. Cash Equivalents Cash equivalents primarily consist of money market funds, 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. Investments in Equity Securities Investments in equity securities listed on a national market or exchange are valued at the last sales price and classified within Level 1 of the valuation hierarchy. Such securities are further detailed in Note 1, Summary of Significant Accounting Policies and Other Information . Derivatives Designated as Hedging Instruments On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate. The interest rate swap, with a notional value of $ 200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027. The fair value of the interest rate swap was valued using an independent third-party valuation model. Pursuant to this model, c hanges in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive (loss) income until the underlying transactions are recognized in earnings. The primary inputs into the valuation of the interest rate swap are interest yield curves, interest rate volatility, credit risk, credit spreads and other market information. The interest rate swap is classified within Level 2 of the fair value hierarchy, since all significant inputs are corroborated by observable market data. The use of derivatives creates exposure to credit risk relating to potential losses that could be recognized in the event that the counterparties to these instruments fail to perform their obligations under the contracts. The Company seeks to minimize this risk by limiting our counterparties to major financial institutions with acceptable credit ratings and monitoring the total value of positions with individual counterparties. 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. Derivatives Not Designated as Hedging Instruments On July 14, 2022, the Company entered into a foreign currency exchange forward contract to mitigate the currency fluctuation risk between the Euro and U.S. dollar on its Euro denominated Senior Notes, Series A due 2023. 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. 72 Table of Contents 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 Interest rate swap agreement: Designated as cash flow hedge Prepaid expenses and other current assets $ 3,712 $ 3,939 Other long-term assets $ 2,140 $ 4,740 Derivatives not designated as hedging instruments 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 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 expense, net $ ( 4,551 ) ( 100 ) Derivatives not designated as hedging instruments 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 Interest rate swap agreement $ 2,827 $ ( 8,679 ) A pre-tax gain of $ 3.7 million fr om accumulated other comprehensive income (loss) to earnings is expected to be recognized during the next twelve months. Mutual Funds The Compa ny has a non-qualified Supplemental Retirement and Savings Plan that provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains investment accounts for participants through which participants make investment elections. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value and recorded in Other long-term assets on the Consolidated Balance sheet. 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 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. 73 Table of Contents 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: Fair Value Measurements Using (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Cash equivalents $ 415,788 $ — $ — $ 415,788 Investments in equity securities 10,832 — — 10,832 Mutual funds 20,148 — — 20,148 Total: $ 446,768 $ — $ — $ 446,768 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 (in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Cash equivalents $ 304,101 $ — $ — $ 304,101 Investments in equity securities 10,653 — — 10,653 Mutual funds 14,094 — — 14,094 Total: $ 328,848 $ — $ — $ 328,848 In addition to the methods and assumptions used for the financial instruments recorded at fair value as discussed above, the following methods and assumptions are used to estimate the fair value of other financial instruments that are not marked to market on a recurring basis. The Company’s other financial instruments include cash and cash equivalents, short-term investments, trade receivables and its long-term debt. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, short-term investments and trade receivables approximate their fair values. The Company’s revolving and term loan debt facilities’ fair values approximate book value at 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) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Euro Senior Notes, Series A due 2023 $ — $ — $ 124,716 $ 122,270 Euro Senior Notes, Series B due 2028 105,246 96,532 101,265 87,119 USD Senior Notes, Series B due 2027 100,000 96,127 100,000 93,764 USD Senior Notes, Series A due 2025 50,000 49,070 50,000 48,145 USD Senior Notes, Series B due 2030 125,000 115,687 125,000 112,028 USD Senior Notes, due 2032 100,000 93,228 100,000 90,131 Impairments 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 74 Table of Contents 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. See Note 5, Goodwill and Other Intangible Assets, for further discussion. Additionally, the Company recorded a non-cash impairment charge of $ 1.7 million for certain machinery and equipment within Electronics segment due to a decision to cease further production of a product line during the fourth quarter of 2022. The fair value of the patent, technology and machinery and equipment were measured on a nonrecurring basis using Level 3 inputs under the fair value hierarchy. The Company's accounting and finance management determines the valuation policies and procedures for Level 3 fair value measurements and is responsible for the development and determination of unobservable inputs. 11. Benefit Plans The Company has Company-sponsored and mandatory defined benefit pension plans covering employees in the United Kingdom ("U.K."), Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits provided under the plans is generally based on years of service and final average pay. On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company is required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan participants, or their designated beneficiaries. The Company completed the buy-out of this U.K. pension plan during the fourth quarter of 2021 and as a result recorded a non-cash pension settlement charge of $ 19.9 million (£ 14.9 million), inclusive of the accelerated recognition of prior service cost of $ 0.5 million (£ 0.4 million). Benefit plan related information is as follows for the years 2023 and 2022: (in thousands) 2023 2022 Change in benefit obligation: Benefit obligation at beginning of year $ 64,526 $ 86,570 Service cost 2,774 3,072 Interest cost 3,795 2,529 Net actuarial loss (gain) 4,312 ( 19,327 ) Benefits paid from the plan assets ( 1,933 ) ( 1,474 ) Benefits paid directly by the Company ( 2,035 ) ( 1,853 ) Settlements ( 1,687 ) ( 1,565 ) Acquisitions — 3,812 Effect of exchange rate movements 3,769 ( 5,839 ) Plan amendment and other — ( 1,399 ) Benefit obligation at end of year $ 73,521 $ 64,526 Change in plan assets at fair value: Fair value of plan assets at beginning of year $ 35,433 $ 48,325 Actual gain (loss) on plan assets 1,358 ( 9,217 ) Employer contributions 1,821 2,288 Benefits paid from the plan assets ( 1,933 ) ( 1,474 ) Settlements ( 463 ) — Acquisitions — — Effect of exchange rate movements 1,480 ( 4,489 ) Fair value of plan assets at end of year 37,696 35,433 Net amount unfunded status $ ( 35,825 ) $ ( 29,093 ) 75 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Amounts recognized in the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022 consist of the following: (in thousands) 2023 2022 Amounts recognized in the Consolidated Balance Sheets consist of: Noncurrent assets $ 79 $ 262 Current benefit liability ( 1,482 ) ( 1,318 ) Noncurrent benefit liability ( 34,422 ) ( 28,037 ) 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 30, 2023 and December 31, 2022 were as follows: (in thousands) 2023 2022 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 (loss) income in 2023 and 2022 were as follows: 2023 2022 (in thousands) Amortization of: Prior service cost $ 94 $ 150 Net actuarial (gain) loss ( 49 ) 228 Amount arising during the period: 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 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: (in thousands) 2023 2022 2021 Components of net periodic benefit cost: Service cost $ 2,774 $ 3,072 $ 2,785 Interest cost 3,795 2,529 1,761 Expected return on plan assets ( 1,879 ) ( 1,507 ) ( 1,458 ) Amortization of prior service and net actuarial loss 45 378 1,315 Net periodic benefit cost 4,735 4,472 4,403 Net settlement (gain) loss ( 266 ) ( 820 ) 19,855 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). 76 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Weighted average assumptions used to determine net periodic benefit cost for the fiscal years 2023, 2022, and 2021 are as follows: 2023 2022 2021 Discount rate 5.8 % 3.1 % 1.2 % Expected return on plan assets 5.2 % 3.3 % 1.4 % Compensation increase rate 4.7 % 4.8 % 4.9 % 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) 2023 2022 Projected benefit obligation $ 73,029 $ 42,676 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 30, 2023 and December 31, 2022: (in thousands) 2023 2022 Accumulated benefit obligation $ 53,400 $ 26,540 Fair value of plan assets 28,032 4,948 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 Discount rate 5.6 % 5.8 % 3.1 % Compensation increase rate 4.8 % 4.7 % 4.8 % Expected benefit payments to be paid to participants for the fiscal year ending are as follows: (in thousands) Expected Benefit Payments 2024 $ 3,678 2025 4,359 2026 4,303 2027 4,399 2028 5,291 2029-2032 and thereafter 34,525 The Company expects to make approximately $ 2.2 million of contributions to the plans and pay $ 2.1 million of benefits directly in 2024. 77 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. 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 Based upon analysis of the target asset allocation and historical returns by type of investment, the Company has assumed that the expected long-term rate of return will be 5.2 % on plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation: Asset Allocation 2023 2022 Cash and cash equivalents, and other 3 % 13 % Equity securities 7 % 14 % Fixed income securities 90 % 73 % 100 % 100 % 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. Cash and cash equivalents – Carrying value approximates fair value. As such, these assets were classified as Level 1. The Company also invests in certain short-term investments which are valued using the amortized cost method. Lastly, the Company has certain pooled pension funds that have short-term investments with third party mutual funds that are valued at unit value per share at measurement date. As such, these assets were classified as Level 2. Equity – The values of individual equity securities were based on quoted prices in active markets. As such, these assets are classified as Level 1. The Company has certain pooled pension funds which have mutual funds with underlying investments in certain equity securities that are not quoted on active markets; therefore, they were classified as Level 2. Fixed income – Fixed income securities are typically priced based on a last trade basis and are exchange-traded. Accordingly, the Company classified fixed income securities as Level 1. The Company has certain pooled pension funds which have mutual funds with underlying investments in fixed income securities and funds priced based on a valuation model rather than a last trade basis and are not exchange-traded. As such, they were classified as Level 2. The Company also invests in certain fixed income funds which are valued at NAV. Insurance Contracts and other – This category includes pooled pension funds which have mutual funds with underlying investments in other assets and liabilities including alternatives priced based on a valuation model and are not exchange-traded. These were classified as Level 2. This category includes also insurance contracts that are valued by the re-insurer with the valuation inputs being not highly observable or traded on an open market. Accordingly, insurance contracts were categorized as Level 3. Lastly, this category includes other assets and liabilities including futures or swaps. For any Level 2 and Level 3 plan assets, management reviews significant investments on a periodic basis including investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the reliability of third-party pricing estimates. 78 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in assets in which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment would be redeemed at an amount different than the NAV. The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 30, 2023: Fair Value Measurements Using (in thousands) Level 1 Level 2 Level 3 NAV Total Insurance contracts and other $ — $ — $ 133 $ — $ 133 Cash and cash equivalents 310 933 — — 1,243 Equities 2,609 — — — 2,609 Fixed income 6,425 21,909 — 5,377 33,711 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 December 31, 2022: Fair Value Measurements Using (in thousands) Level 1 Level 2 Level 3 NAV Total Insurance contracts and other $ — $ 1,153 $ 328 $ — $ 1,481 Cash and cash equivalents 594 2,475 — — 3,069 Equities 2,425 2,435 — — 4,860 Fixed income 5,930 14,940 — 5,153 26,023 Total pension plan assets $ 8,949 $ 21,003 $ 328 $ 5,153 $ 35,433 The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2023 and 2022 due to the following: (in thousands) Level 3 Balance at January 1, 2022 $ 343 Level 3 assets transferred in from Level 1 and 2 assets valued at NAV: Settlements 2 Actual loss on plan assets 3 Foreign currency adjustments ( 20 ) Balance at December 31, 2022 $ 328 Level 3 assets transferred in from Level 1 and 2 assets valued at NAV: Employer contribution 2 Actual return on assets 15 Benefits paid from the plan assets ( 221 ) Foreign currency adjustments 9 Balance at December 30, 2023 $ 133 Defined Contribution Plan The Company also maintains a 401(k) savings plan covering substantially all U.S. employees. The Company matches 100 % of the employee’s annual contributions for the first 4 % of the employee’s eligible compensation. The Company may provide an additional discretionary match to participants and made discretionary matches of 2 % of the employee’s eligible compensation for each of the fiscal year ended December 30, 2023, December 31, 2022 and January 1, 2022. Employees are immediately 79 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS vested in their contributi ons plus actual earnings thereon, as well as the Company contributions. Company matching contributions amounted to $ 7.7 million, $ 5.5 million, and $ 5.0 million in 2023, 2022, and 2021, respectively. Non-qualified Supplemental Retirement and Savings Plan The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits under the plan from its general assets. As of December 30, 2023, there was $ 20.1 million of marketable securities related to the plan included in Other assets and $ 20.1 million of accrued compensation benefits included in Other long-term liabilities . The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value. The Company made matching contributions to the plan of $ 0.6 million, $ 0.2 million, and $ 0.2 million in 2023, 2022, and 2021, respectively. 12. Stock-Based Compensation Equity Plans : The Company has equity-based compensation plans authorizing the granting of stock options, restricted shares, restricted share units, and other stock rights to employees and directors. 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. Stock options generally vest over a three-year period and are exercisable over either a seven or ten-year period commencing from the date of the grant. Restricted shares and share units granted by the Company generally vest over three years . Stock options and restricted share units may have accelerated vesting upon meeting certain qualified conditions. The following table provides a reconciliation of outstanding stock options for the fiscal year ended December 30, 2023. Shares Under Option Weighted Average Price Weighted Average Remaining Contract Life (Years) Aggregate Intrinsic Value (000’s) Outstanding December 31, 2022 617,856 $ 176.79 Granted 87,633 240.94 Exercised ( 97,941 ) 146.32 Forfeited ( 9,191 ) 166.63 Outstanding December 30, 2023 598,357 191.33 3.9 $ 45,627 Exercisable December 30, 2023 434,678 172.69 3.2 41,246 The following table provides a reconciliation of non-vested restricted share and share unit awards ("RSU") for the fiscal year ended December 30, 2023. Shares Weighted Average Grant-Date Fair Value Nonvested December 31, 2022 168,286 $ 213.65 Granted 93,310 236.56 Vested ( 88,760 ) 193.21 Forfeited ( 12,338 ) 229.09 Nonvested December 30, 2023 160,498 237.09 The total intrinsic value of options exercised during 2023, 2022, and 2021 was $ 12.2 million, $ 3.7 million, and $ 23.8 million, respectively. The total fair value of the vested RSU shares was $ 19.8 million, $ 15.4 million, and $ 18.9 million for 2023, 2022, 80 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS and 2021, respectively. The total amount of share-based liabilities paid was $ 2.2 million, $ 1.1 million and $ 1.3 million for 2023, 2022, and 2021, respectively. The Company recognizes compensation cost of all share-based awards as an expense on a straight-line basis over the vesting period of the awards. At December 30, 2023, the unrecognized compensation cost for options and restricted shares was $ 22.1 million before tax, and will be recognized over a weighted average period of 1.8 years. Compensation cost included as a component of cost of sales, research and development and selling, general, and administrative expenses for all equity compensation plans discussed above was $ 25.7 million, $ 24.6 million, and $ 21.4 million for 2023, 2022, and 2021, respectively. The total related income tax benefit recognized in the Consolidated Statements of Net Income was $ 3.8 million, $ 3.5 million and $ 3.3 million for 2023, 2022, and 2021, respectively. The Company uses the Black-Scholes option valuation model to determine the fair value of stock option awards granted. The weighted average fair value of and related assumptions for options granted are as follows: 2023 2022 2021 Weighted average fair value of options granted $ 77.40 $ 70.39 $ 74.04 Assumptions: Risk-free interest rate 3.67 % 2.83 % 0.66 % Expected dividend yield 1.00 % 0.92 % 0.72 % Expected stock price volatility 36.0 % 35.0 % 35.0 % Expected life of options (years) 4.4 4.4 4.4 Expected volatilities are based on the historical volatility of the Company’s stock price. The expected life of options is based on historical data for options granted by the Company. The risk-free rates are based on yields available at the time of grant on U.S. Treasury bonds with maturities consistent with the expected life assumption. Historical nonvested forfeiture information is the basis for the forfeiture rate assumptions. The fair value of RSU is determined based on the Company's stock price on the grant date reduced by the present value of expected dividends through the vesting period. Preferred Stock : The Board of Directors may authorize the issuance of preferred stock from time to time in one or more series with such designations, preferences, qualifications, limitations, restrictions, and optional or other special rights as the Board may fix by resolution. Share Repurchase Program On April 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. 81 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. Other Comprehensive Income (Loss) Changes in other comprehensive income (loss) by component for fiscal years 2023, 2022, and 2021 were as follows: Fiscal Year Ended 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 Defined benefit pension plan and other adjustments $ ( 5,911 ) $ 491 $ ( 5,420 ) $ 11,560 $ ( 1,825 ) $ 9,735 $ 27,481 $ ( 5,268 ) $ 22,213 Cash flow hedge ( 2,827 ) 679 ( 2,148 ) 8,679 ( 2,083 ) 6,596 — — — Foreign currency translation adjustments (1) 48,227 ( 712 ) 47,515 ( 39,619 ) 987 ( 38,632 ) ( 6,967 ) 2,448 ( 4,519 ) Total change in other comprehensive income (loss) $ 39,489 $ 458 $ 39,947 $ ( 19,380 ) $ ( 2,921 ) $ ( 22,301 ) $ 20,514 $ ( 2,820 ) $ 17,694 (1) The tax shown above within the foreign currency translation adjustments is the U.S. tax associated with the foreign currency translation adjustments of earnings of non-U.S. subsidiaries which have been previously taxed in the U.S. and are not permanently reinvested. Accumulated Other Comprehensive Loss (“AOCI”) : The following table sets forth the changes in the components of AOCI by component for fiscal years 2023, 2022, and 2021: (in thousands) Pension and postretirement liability and reclassification adjustments Cash flow hedge Foreign currency translation adjustments Accumulated other comprehensive income (loss) 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 ) 2022 activity 9,735 6,596 ( 38,632 ) ( 22,301 ) Balance at December 31, 2022 ( 2,193 ) 6,596 ( 100,167 ) ( 95,764 ) 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. 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). See Note 11, Benefits Plans for further discussion. 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 30, 2023 December 31, 2022 January 1, 2022 Pension and postemployment and other plans: 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. 82 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. Income Taxes The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a one-time tax (the “Toll Charge”) on accumulated earnings of certain non-U.S. subsidiaries and included base broadening provisions commonly referred to as the global intangible low-taxed income provisions ("GILTI"). T he Company elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. The long-term portion of this Toll Charge which remains payable as of December 30, 2023, totaling $ 8.2 million, is recorded in Other long-term liabilities , and the anticipated 2024 annual installment payment of $ 6.6 million is included in Accrued income taxes , on the Consolidated Balance Sheet as of December 30, 2023. 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 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: (in thousands) 2023 2022 2021 Domestic $ 40,571 $ 32,462 $ 13,746 Foreign 288,027 410,582 327,279 Income before income taxes $ 328,598 $ 443,044 $ 341,025 Federal, state and foreign income tax expense (benefit) consists of the following: (in thousands) 2023 2022 2021 Current: Federal $ 8,188 $ 12,423 $ 4,832 State 2,880 2,183 1,401 Foreign 57,999 77,551 59,006 Subtotal 69,067 92,157 65,239 Deferred: Federal and State 1,751 ( 9,182 ) ( 9,658 ) Foreign ( 1,705 ) ( 13,237 ) 1,638 Subtotal 46 ( 22,419 ) ( 8,020 ) Provision for income taxes $ 69,113 $ 69,738 $ 57,219 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: (in thousands) 2023 2022 2021 Tax expense at statutory rate of 21% $ 69,006 $ 93,039 $ 71,615 Non-U.S. income tax rate differential ( 25,623 ) ( 41,731 ) ( 31,414 ) Non-U.S. 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. tax on Non-U.S. income, including GILTI 4,739 2,546 ( 238 ) State and local taxes, net of federal tax benefit 1,503 215 ( 172 ) 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 83 Table of Contents 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 30, 2023 and December 31, 2022, are as follows: (in thousands) 2023 2022 Deferred tax assets: Accrued expenses and reserves $ 39,299 $ 49,138 Net operating loss carryforwards 36,941 30,403 Interest expense carryforwards 34,205 33,507 Capitalized expenses 16,872 11,632 U.S. foreign tax credit carryforwards 3,561 3,385 U.S. research and other general business tax credit carryforwards 1,468 2,076 Excess of tax basis over the book basis for intangible assets and goodwill — 404 Deferred tax assets 132,346 130,545 Less: Valuation allowance ( 41,542 ) ( 37,001 ) Total deferred tax assets 90,804 93,544 Deferred tax liabilities: Excess of book basis over the tax basis for intangible assets and goodwill 148,659 143,542 Excess of book basis over the tax basis for property, plant, and equipment 22,570 18,489 Tax on unremitted earnings 18,621 16,282 Unrealized foreign currency exchange gains 1,288 1,094 Total deferred tax liabilities 191,138 179,407 Net deferred tax liabilities $ 100,334 $ 85,863 The deferred tax asset valuation allowance is mainly related to certain U.S. and non-U.S. net operating loss and non-U.S. interest expense carryforwards which are not more likely that not to be realized. The remaining U.S. and non-U.S. net operating loss and interest expense carryforwards either have no expiration date or are expected to be utilized prior to expiration (which begin expiring in 2025). No deferred tax asset nor valuation allowance has been recorded for certain U.S. and non-U.S. net operating loss carryforwards for which the possibility of usage has been determined to be remote. The Company paid income taxes of $ 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. 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. The Company believes the determination of the amount of such deferred income taxes is impractical as it would depend upon income tax laws and circumstances at the time of the hypothetical distributions or dispo sitions. As of December 30, 2023, unremitted earnings of the Company’s non-U.S. subsidiaries were approximately $ 1.5 billion. A distribution of such earnings will generally not be subject to U.S. federal income tax. 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, 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. Together, the tax holidays contributed $ 5.8 million in tax benefits, or $ 0.23 per diluted share, during 2023. Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire. There can be no assurance that future extensions will be granted. 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: 84 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands) Unrecognized Tax Benefits Balance at January 1, 2022 $ 23,445 Additions for tax positions related to pre-acquisition periods of acquired subsidiaries 6,726 Additions for tax positions taken in the current year 2,153 Decreases for tax positions taken in the prior year ( 957 ) Decreases for lapses in statute of limitations ( 758 ) Other ( 235 ) Balance at December 31, 2022 $ 30,374 Additions for tax positions related to pre-acquisition periods of acquired subsidiaries 1,975 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 ) Other ( 42 ) 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. Of this amount, approximately $ 7.8 million may be recognized in 2024 based upon the possible lapse in the statute of limitations. None of the positions included in unrecognized tax benefits are related to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of income tax expense. The Company recognized such interest expense of $ 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 $ 14.4 million and $ 11.8 million as of December 30, 2023 and December 31, 2022, respectively. The U.S. federal statute of limitations remains open for the Company for the 2017 tax year (with respect to the Toll Charge) and later years. Non-U.S. and U.S. state statutes of limitations generally range from three to seven years, although certain jurisdictions do not have a statute expiration. Tax examinations occur from time to time, including examinations currently in process in Germany, the Netherlands, Singapore, and certain U.S. states. The Company does not expect to recognize a significant amount of additional tax expense as a result of concluding these examinations. 85 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: (in thousands, except per share amounts) 2023 2022 2021 Numerator: Net income as reported $ 259,485 $ 373,306 $ 283,806 Denominator: Weighted average shares outstanding Basic 24,854 24,734 24,603 Effect of dilutive securities 248 252 329 Diluted 25,102 24,986 24,932 Earnings Per Share: Basic earnings per share $ 10.44 $ 15.09 $ 11.54 Diluted earnings per share $ 10.34 $ 14.94 $ 11.38 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. The Company did not repurchase any shares of its common stock during the fiscal year 2023, 2022, and 2021, respectively. 16. Segment Information The Company and its subsidiaries design, manufacture and sell component, modules and subassemblies to empower the long-term structural themes of sustainability, connectivity and safety. The Company reports its operations by the following segments: Electronics, Transportation, and Industrial. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is the Company’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes, but does not evaluate the operating segments using discrete balance sheet information. Sales, marketing, and research and development expenses are charged directly into each operating segment. Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the three operating segments. The Company does not report inter-segment revenue because the operating segments do not record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments current results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income, interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole. • Electronics Segment : Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, electromechanical switches and interconnect solutions, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate bipolar transistors (“IGBT”) technologies. The segment covers a broad range of end markets, including industrial motor drives and power conversion, automotive electronics, electric vehicle and related charging infrastructure, aerospace, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics. 86 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • Transportation Segment: 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 and bus, construction, agriculture, material handling and marine. • Industrial Segment: 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: (in thousands) 2023 2022 2021 Net sales Electronics $ 1,350,426 $ 1,492,819 $ 1,300,744 Transportation 678,278 716,140 528,058 Industrial 333,953 304,938 251,126 Total net sales $ 2,362,657 $ 2,513,897 $ 2,079,928 Depreciation and amortization Electronics $ 79,345 $ 68,195 $ 61,512 Transportation 42,514 43,756 29,015 Industrial 15,569 8,755 8,108 Total depreciation and amortization $ 137,428 $ 120,706 $ 98,635 Operating income (loss) Electronics $ 300,581 $ 431,616 $ 309,633 Transportation 33,634 63,539 65,979 Industrial 54,800 48,853 22,621 Other (a) ( 28,153 ) ( 43,182 ) ( 12,591 ) Total operating income 360,862 500,826 385,642 Interest expense 39,866 26,216 18,527 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 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. 87 Table of Contents 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. 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: (in thousands) 2023 2022 2021 Net sales U.S. $ 820,735 $ 912,498 $ 639,381 China 546,786 638,978 620,211 Other countries (a) 995,136 962,421 820,336 Total net sales $ 2,362,657 $ 2,513,897 $ 2,079,928 Long-lived assets U.S. $ 73,126 $ 76,325 $ 57,923 China 139,736 129,094 122,867 Mexico 102,218 107,119 107,283 Germany 47,217 39,635 39,055 Philippines 73,217 77,240 74,918 Other countries 57,639 51,697 35,843 Total long-lived assets $ 493,153 $ 481,110 $ 437,889 Additions to long-lived assets U.S. $ 9,502 $ 14,603 $ 7,690 China 32,805 35,297 26,396 Mexico 13,920 26,514 28,707 Germany 10,279 5,255 8,519 Philippines 6,156 14,847 19,342 Other countries 10,992 7,678 5,654 Total additions to long-lived assets $ 83,654 $ 104,194 $ 96,308 (a) Each country included in other countries are less than 10% of net sales. For the year ended December 30, 2023, approximately 65 % of the Company’s net sales were to customers outside the U.S. (exports and foreign operations), including approximately 23 % 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. No other single customer accounted for more than 10% of net sales during the last three years. 88 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. 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. and non-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. 89 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. Related Party Transactions As a result of the Company’s acquisition of IXYS, the Company has equity ownerships in various investments that are accounted for under the equity method. The following is a description of the investments and related party transactions. Powersem GmbH: The Company owns 45 % of the outstanding equity of Powersem GmbH (“Powersem”), a module manufacturer based in Germany. EB-Tech Co., Ltd.: The Company owns approximately 19 % of the outstanding equity of EB-Tech Co., Ltd. (“EB Tech”), a company with expertise in radiation technology based in South Korea. Automated Technology (Phil), Inc. : The Company owns approximately 24 % of the outstanding common shares of Automated Technology (Phil), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. Fiscal Year Ended December 30, 2023 December 31, 2022 (in millions) Powersem EB Tech ATEC Powersem EB Tech ATEC Sales to related party $ 2.1 $ — $ — $ — $ — $ — Purchase of material/services from related party 4.3 0.4 9.0 0.3 0.4 11.5 Accounts receivable balance — — — — — — Accounts payable balance $ 0.5 $ — $ 1 $ — $ — $ 1.8 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.