What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 198 added, 139 removed, 706 unchanged (32% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) June 29,

(in thousands, except share and per share data) September 28,

2024 December 30,

2 unchanged sentences

Short-term investments 1,011 235

Trade receivables, less allowanc es o f $ 73,744 and $ 84,696 at June 29, 2024 and December 30, 2023, respectively

Trade receivables, less allowances of $ 76,151 and $ 84,696 at September 28, 2024 and December 30, 2023, respectively

338,758 287,018

28 unchanged sentences

34,000,000 shares authorized;

shares issued, June 29, 2024– 26,713,727 ;

shares issued, September 28, 2024– 26,749,671 ;

December 30, 2023– 26,624,071

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

Three Months Ended Six Months Ended

(in thousands, except per share data) June 29,

2023 June 29,

Three Months Ended Nine Months Ended

(in thousands, except per share data) September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Net sales $ 567,390 $ 607,071 $ 1,661,263 $ 1,828,850

8 unchanged sentences

Interest expense 9,772 10,101 29,358 29,803

Foreign exchange gain ( 315 ) ( 1,404 ) ( 5,357 ) ( 3,079 )

Foreign exchange loss 9,630 11,776 4,273 8,697

Other income, net ( 9,297 ) ( 3,527 ) ( 19,916 ) ( 11,810 )

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

(in thousands) June 29,

2023 June 29,

Three Months Ended Nine Months Ended

(in thousands) September 28,

2024 September 30,

2023 September 28,

2024 September 30,

Net income $ 58,058 $ 57,788 $ 151,976 $ 216,604

1 unchanged sentence

Defined benefit pension plan and other adjustments, net of tax 191 ( 3 ) 861 ( 156 )

Cash flow hedge, net of tax ( 18 ) 3,113 1,908 595

Cash flow hedges, net of tax ( 8,297 ) 1,546 ( 6,389 ) 2,141

Foreign currency translation adjustments 64,499 ( 3,677 ) 10,563 ( 5,747 )

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended

(in thousands) June 29, 2024 July 1, 2023

Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023

OPERATING ACTIVITIES

6 unchanged sentences

Stock-based compensation 21,428 20,132

Loss (gain) on investments and other assets 1,148 ( 680 )

(Gain) loss on investments and other assets ( 1,947 ) 922

Deferred income taxes ( 16,346 ) ( 689 )

15 unchanged sentences

Payments of term loan ( 3,750 ) ( 5,625 )

Net (payments) proceeds related to stock-based award activities ( 997 ) 2,201

Net proceeds related to stock-based award activities 5,037 6,481

Repurchases of common stock ( 40,862 ) —

8 unchanged sentences

Cash and cash equivalents $ 629,670 $ 560,056

Restricted cash included in prepaid expenses and other current assets $ — $ 771

Restricted cash included in other long-term assets $ 1,623 $ 1,535

30 unchanged sentences

Balance at June 29, 2024 $ 262 $ 1,032,974 $ ( 305,136 ) $ ( 107,175 ) $ 1,844,204 $ 358 $ 2,465,487

Net income — — — — 58,058 — 58,058

Other comprehensive gain, net of tax — — — 56,393 — — 56,393

Stock-based compensation — 4,540 — — — — 4,540

Non-controlling interest ( 82 ) ( 38 ) ( 120 )

Withheld shares on restricted share units for withholding taxes — — ( 188 ) — — — ( 188 )

Stock options exercised — 6,222 6,222

Excise tax adjustment on stock options exercised — — 65 — — — 65

Cash dividends paid ($ 0.70 per share)

— — — — ( 17,357 ) — ( 17,357 )

Balance at September 28, 2024 $ 262 $ 1,043,736 $ ( 305,259 ) $ ( 50,782 ) $ 1,884,823 $ 320 $ 2,573,100

Littelfuse, Inc.

22 unchanged sentences

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

Net income — — — — 57,788 — 57,788

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

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

Non-controlling interest — — — — ( 50 ) 50 —

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

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

Cash dividends paid ($ 0.65 per share)

— — — — ( 16,183 ) — ( 16,183 )

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

Nature of Operations

Founded in 1927, Littelfuse is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world.

Founded in 1927, Littelfuse, Inc.

("Littelfuse" or the "Company") is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world.

Across more than 20 countries, and with approximate l y 16,000 g lob al associates, the Company partners with customers to design and deliver innovative, reliable solutions.

10 unchanged sentences

Revenue Disaggregation

The following tables disaggregate the Company’s revenue by primary business units for the three and six months ended June 29, 2024 and July 1, 2023:

Three Months Ended June 29, 2024 Six Months Ended June 29, 2024

The following tables disaggregate the Company’s revenue by primary business units for the three and nine months ended September 28, 2024 and September 30, 2023:

Three Months Ended September 28, 2024 Nine Months Ended September 28, 2024

(in thousands) Electronics

11 unchanged sentences

Total $ 304,188 $ 171,381 $ 91,821 $ 567,390 $ 900,932 $ 510,711 $ 249,620 $ 1,661,263

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

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

(in thousands) Electronics

10 unchanged sentences

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

See Note 14, Segment Information, for net sales by segment and countries.

See Note 14, Segment Information, for net sales by segment and country.

Revenue Recognition

15 unchanged sentences

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.

This program allows the distributors 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.

10 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash at June 29, 2024 and December 30, 2023 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

(in thousands) June 29, 2024 December 30, 2023

The following table provides a reconciliation of cash, cash equivalents, and restricted cash at September 28, 2024 and December 30, 2023 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

(in thousands) September 28, 2024 December 30, 2023

Cash and cash equivalents $ 629,670 $ 555,513

22 unchanged sentences

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.

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.

(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.

3 unchanged sentences

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.

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 an annual basis as well as an explanation of how the CODM uses the reported measures and other disclosures.

38 unchanged sentences

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

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

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

These costs were reflected as other non-segment costs.

2 unchanged sentences

The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Western Automation acquisition occurred as of January 2, 2022, or of future consolidated operating results.

For the Three Months Ended For the Six Months Ended

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

(in thousands, except per share amounts) Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Net sales $ 607,071 $ 1,830,736

4 unchanged sentences

Pro forma results presented above primarily reflect the following adjustments:

For the Three Months Ended For the Six Months Ended

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

(in thousands) Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Amortization (a) $ — $ ( 479 )

Transaction costs (b) ( 224 ) 1,203

Income tax expense of above items ( 3 ) ( 118 )

(a) The amortization adjustment for the six months ended July 1, 2023 primarily reflects incremental amortization resulting from the measurement of intangibles at their fair values.

(b) The transaction cost adjustments reflect the reversal of certain legal and professional fees from the three and six months ended July 1, 2023, and recognition of those fees during the three and six months ended July 2, 2022.

The components of inventories at June 29, 2024 and December 30, 2023 are as follows:

(in thousands) June 29, 2024 December 30, 2023

Income tax benefit (expense) of above items 28 ( 91 )

(a) The amortization adjustment for the nine months ended September 30, 2023 primarily reflects incremental amortization resulting from the measurement of intangibles at their fair values.

(b) The transaction cost adjustments reflect the reversal of certain legal and professional fees from the three and nine months ended September 30, 2023.

The components of inventories at September 28, 2024 and December 30, 2023 are as follows:

(in thousands) September 28, 2024 December 30, 2023

Raw materials $ 202,119 $ 201,984

4 unchanged sentences

Property, Plant, and Equipment

The components of net property, plant, and equipment at June 29, 2024 and December 30, 2023 are as follows:

(in thousands) June 29, 2024 December 30, 2023

The components of net property, plant, and equipment at September 28, 2024 and December 30, 2023 are as follows:

(in thousands) September 28, 2024 December 30, 2023

Land and land improvements $ 18,442 $ 22,212

3 unchanged sentences

Total $ 481,592 $ 493,153

The Company recorded depreciation expense of $ 17.1 million and $ 18.0 million for the three months ended June 29, 2024 and July 1, 2023, respectively, and $ 33.7 million and $ 35.6 million for the six months ended June 29, 2024 and July 1, 2023, respectively.

The Company recorded depreciation expense of $ 17.3 million and $ 17.9 million for the three months ended September 28, 2024 and September 30, 2023, respectively, and $ 51.0 million and $ 53.5 million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Goodwill and Other Intangible Assets

Changes in the carrying value of goodwill by segment for the six months ended June 29, 2024 are as follows:

Changes in the carrying value of goodwill by segment for the nine months ended September 28, 2024 are as follows:

(in thousands) Electronics Transportation Industrial Total

7 unchanged sentences

Foreign currency translation adjustments 3,581 1,881 2,288 7,750

Net goodwill as of June 29, 2024

Gross goodwill as of June 29, 2024

Net goodwill as of September 28, 2024

Gross goodwill as of September 28, 2024

940,086 239,777 181,237 1,361,100

Accumulated impairment losses as of June 29, 2024

Accumulated impairment losses as of September 28, 2024

— ( 34,785 ) ( 8,567 ) ( 43,352 )

Total $ 940,086 $ 204,992 $ 172,670 $ 1,317,748

The components of other intangible assets as of June 29, 2024 and December 30, 2023 are as follows:

As of June 29, 2024

The components of other intangible assets as of September 28, 2024 and December 30, 2023 are as follows:

As of September 28, 2024

(in thousands) Gross

12 unchanged sentences

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

During the three months ended June 29, 2024 and July 1, 2023, the Company recorded amortization expense of $ 15.7 million and $ 16.9 million, respectively.

During the six months ended June 29, 2024 and July 1, 2023, the Company recorded amortization expense of $ 31.6 million and $ 33.8 million, respectively.

Estimated annual amortization expense related to intangible assets with definite lives as of June 29, 2024 is as follows:

During the three months ended September 28, 2024 and September 30, 2023, the Company recorded amortization expense of $ 15.9 million and $ 16.0 million, respectively.

During the nine months ended September 28, 2024 and September 30, 2023, the Company recorded amortization expense of $ 47.4 million and $ 49.8 million, respectively.

Estimated annual amortization expense related to intangible assets with definite lives as of September 28, 2024 is as follows:

(in thousands)

3 unchanged sentences

Accrued Liabilities

The components of accrued liabilities as of June 29, 2024 and December 30, 2023 are as follows:

(in thousands) June 29, 2024 December 30, 2023

The components of accrued liabilities as of September 28, 2024 and December 30, 2023 are as follows:

(in thousands) September 28, 2024 December 30, 2023

Employee-related liabilities $ 71,614 $ 72,635

3 unchanged sentences

Professional services 4,938 5,282

Restructuring liability 5,490 2,141

Other customer reserves 4,815 5,998

Restructuring liability 4,461 2,141

Current hedge liability 4,307 —

Deferred revenue 1,614 2,198

6 unchanged sentences

Restructuring, Impairment, and Other Charges

The Company recorded restructuring, impairment, and other charges for the three and six months ended June 29, 2024 and July 1, 2023 as follows:

Three Months Ended June 29, 2024 Six Months Ended June 29, 2024

The Company recorded restructuring, impairment, and other charges for the three and nine months ended September 28, 2024 and September 30, 2023 as follows:

Three Months Ended September 28, 2024 Nine Months Ended September 28, 2024

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

4 unchanged sentences

Total $ 1,235 $ 591 $ 14 $ 1,840 $ 6,479 $ 3,402 $ 448 $ 10,329

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

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

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

4 unchanged sentences

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

For the three and six months ended June 29, 2024, the Company recorded total restructuring charges of $ 5.3 million and $ 7.6 million, respectively, primarily for employee termination costs.

For the three and nine months ended September 28, 2024, the Company recorded total restructuring charges of $ 1.8 million and $ 9.4 million, respectively, primarily for employee termination costs.

These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions within the semiconductor business in the Electronics segment and the reorganization of certain selling and administrative functions within the commercial vehicle business in the Transportation segment.

In addition, during the first quarter of 2024, the Company recognized a $ 0.9 million impairment charge related to certain machinery and equipment in the commercial vehicle business within the Transportation segment.

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

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

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

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

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

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

The restructuring reserves as of both June 29, 2024 and December 30, 2023 is $ 5.5 million and $ 2.1 million, respectively.

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

The Company anticipates the remaining payments associated with employee terminations will primarily be completed in the first quarter fiscal year 2025.

The carrying amounts of debt at June 29, 2024 and December 30, 2023 are as follows:

(in thousands) June 29, 2024 December 30, 2023

The restructuring reserves as of September 28, 2024 and December 30, 2023 are $ 4.5 million and $ 2.1 million, respectively.

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

The Company anticipates the remaining payments associated with employee terminations will primarily be completed in the first quarter of fiscal year 2025.

The carrying amounts of debt at September 28, 2024 and December 30, 2023 are as follows:

(in thousands) September 28, 2024 December 30, 2023

Revolving credit facility $ 100,000 $ 100,000

25 unchanged sentences

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

During the three and six months ended June 29, 2024, the Company made payments of $ 1.9 million and $ 3.8 million respectively, on its term loan.

The revolving loan and term loan balance under the Credit Facility was $ 100.0 million and $ 285.0 million, respectively, as of June 29, 2024.

During the nine months ended September 28, 2024, the Company made payments of $ 3.8 million on its term loan.

The revolving loan and term loan balance under the Credit Facility was $ 100.0 million and $ 285.0 million, respectively, as of September 28, 2024.

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 June 29, 2024, the effective interest rate on unhedged portion of the outstanding borrowings under the credit facility was 6.69 %, and 4.13 % on the hedged portion.

As of June 29, 2024, the Company had $ 0.2 million outstanding letters of credit under the Credit Facility and had $ 599.8 million of borrowing capacity available under the revolving credit facility.

As of June 29, 2024, the Company was in compliance with all covenants under the Credit Agreement.

As of September 28, 2024, the effective interest rate on unhedged portion of the outstanding borrowings under the credit facility was 6.60 %, and 4.13 % on the hedged portion.

As of September 28, 2024, the Company had $ 0.1 million outstanding letters of credit under the Credit Facility and had $ 599.9 million of borrowing capacity available under the revolving credit facility.

As of September 28, 2024, the Company was in compliance with all covenants under the Credit Agreement.

On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold € 212 million aggregate principal amount of senior notes in two series.

28 unchanged sentences

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

At June 29, 2024, the Company was in compliance with all covenants under the Senior Notes.

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

Interest paid on all Company debt was $ 6.4 million and $ 10.3 million for the three months ended June 29, 2024 and July 1, 2023, respectively, and $ 19.6 million and $ 21.3 million for the six months ended June 29, 2024 and July 1, 2023, respectively.

As of September 28, 2024, 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 note holders and are required to offer to repurchase the Senior Notes at par following certain events, including a change of control.

Interest paid on all Company debt was $ 10.5 million and $ 11.9 million for the three months ended September 28, 2024 and September 30, 2023, respectively, and $ 30.1 million and $ 33.2 million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Fair Value of Assets and Liabilities

13 unchanged sentences

Derivatives Designated as Hedging Instruments

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction.

In addition, the Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures.

For highly effective cash flow hedges, ASC 815 requires the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness to be recorded in other comprehensive income.

No components of the Company's hedging instruments were excluded from the assessment of hedge effectiveness.

Zero Cost Collar Agreement

In July 2024, the Company implemented a hedging program to manage foreign currency risk exposure related to fluctuations between the U.S.

dollar and Mexican peso.

These foreign currency zero cost collars are designated as cash flow hedges for a portion of our Mexican peso-denominated manufacturing expenses, predominantly salary expenses, vendor payments, and utility expenses.

The July 2024 collars mature in August 2025 at a weighted-average ceiling of 19.435 and a weighted-average floor of 18.000 .

The August 2024 collars mature in September 2025 at a weighted-average ceiling of 21.000 and a weighted-average floor of 19.655 .

If the spot rate is between the weighted-average ceiling and floor rates on the date of maturity, then the Company would not owe or receive any payments under these collars.

The Company plans to continue executing zero cost collars with 14-month rolling maturities as an ongoing strategy to hedge peso-denominated manufacturing expenses.

The fair value of the collars was determined using an independent third-party valuation model.

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

For the three months ended September 28, 2024 , the Company recorded a pre-tax unrealized loss on the collars of $ 4.0 million.

The Company estimates that approximately $ 4.2 million of pre-tax losses currently recorded in accumulated other comprehensive loss will be recognized in earnings over the next 12 months.

The amounts included in accumulated other comprehensive income will be reclassified to earnings should the hedge no longer be considered effective.

No amount of ineffectiveness was included in net income for the three months ended September 28, 2024.

The Company will continue to assess the effectiveness of the hedge on an ongoing basis.

The primary inputs into the valuation of the collars are interest yield curves, interest rate volatilities, foreign exchange rates, foreign exchange volatilities, credit risk, credit spreads and other market information.

The collars are classified within Level 2 of the fair value hierarchy, since all significant inputs are corroborated by market observable data.

Interest Rate Swap

2 unchanged sentences

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

For the three and nine months ended September 28, 2024 , the Company recorded a pre-tax unrealized loss on the interest rate swap of $ 5.9 million and $ 3.3 million, respectively.

The Company estimates that approximately $ 1.8 million of pre-tax gain currently recorded in accumulated other comprehensive loss will be recognized in earnings over the next 12 months.

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.

10 unchanged sentences

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

As of June 29, 2024 and December 30, 2023, the fair values of the Company's derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets were as follows:

(in thousands) Condensed Consolidated Balance Sheet Classification June 29, 2024 December 30, 2023

The Company does not enter into derivative financial instruments for trading purposes.

As of September 28, 2024 and December 30, 2023, the fair values of the Company's derivative financial instrument and their classifications on the Condensed Consolidated Balance Sheets were as follows:

(in thousands) Condensed Consolidated Balance Sheet Classification September 28, 2024 December 30, 2023

Derivatives designated as hedging instruments

2 unchanged sentences

Other long-term assets $ 713 $ 2,140

The pre-tax gains recognized on derivative financial instruments in the Condensed Consolidated Statements of Net Income for the three and six months ended June 29, 2024 and July 1, 2023 were as follows:

Three Months Ended Six Months Ended

(in thousands) Classification of Gain Recognized in the Condensed Consolidated Statements of Net Income June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Zero cost collar agreement:

Designated as cash flow hedge Prepaid expenses and other current assets $ 60 $ —

Accrued liabilities $ 4,307 $ —

Other long-term liabilities $ 1 $ —

The pre-tax (gains) losses recognized on derivative financial instruments in the Condensed Consolidated Statements of Net Income for the three and nine months ended September 28, 2024 and September 30, 2023 were as follows:

Three Months Ended Nine Months Ended

(in thousands) Classification of (Gains) Losses Recognized in the Condensed Consolidated Statements of Net Income September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Derivatives designated as cash flow hedges

Interest rate swap agreement Interest expense $ ( 1,282 ) $ ( 1,252 ) $ ( 3,850 ) $ ( 3,246 )

Zero cost collar agreement Cost of sales $ 409 $ — $ 409 $ —

Derivatives not designated as hedging instruments

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

The pre-tax losses (gains) recognized on derivative financial instruments in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 29, 2024 and July 1, 2023 was as follows:

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

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

The pre-tax losses (gains) recognized on derivative financial instruments in the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 28, 2024 and September 30, 2023 was as follows:

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Derivatives designated as cash flow hedges

Interest rate swap agreement $ 5,857 $ ( 2,034 ) $ 3,346 $ ( 2,817 )

The pre-tax gain of $ 4.2 million from accumulated other comprehensive loss to earnings is expected to be recognized during the next twelve months.

Zero cost collar agreement $ 4,003 $ — $ 4,003 $ —

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.

1 unchanged sentence

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 in the Condensed Consolidated Balance Sheets .

There we re no changes during the quarter ended June 29, 2024 to the Company’s valuation techniques used to measure asset and liability fair values o n a recurring basis.

As of June 29, 2024 and December 30, 2023, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of June 29, 2024:

There we re no changes during the quarter ended September 28, 2024 to the Company’s valuation techniques used to measure asset and liability fair values o n a recurring basis.

As of September 28, 2024 and December 30, 2023, the Company did not hold any non-financial assets or liabilities that are required to be measured at fair value on a recurring basis.

The following table presents assets measured at fair value by classification within the fair value hierarchy as of September 28, 2024:

Fair Value Measurements Using

24 unchanged sentences

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

The Company’s revolving and term loan debt facilities' fair values approximate book value at June 29, 2024 and December 30, 2023, 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 June 29, 2024 and December 30, 2023 were as follows:

June 29, 2024 December 30, 2023

The Company’s revolving and term loan debt facilities' fair values approximate book value at September 28, 2024 and December 30, 2023, as the rates on these borrowings are variable in nature.

The carrying value and estimated fair values of the Company’s Euro Senior Notes, Series A and Series B and USD Senior Notes, Series A and Series B, as of September 28, 2024 and December 30, 2023 were as follows:

September 28, 2024 December 30, 2023

(in thousands) Carrying

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

The components of net periodic benefit cost for the three and six months ended June 29, 2024 and July 1, 2023 were as follows:

For the Three Months Ended For the Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

The components of net periodic benefit cost for the three and nine months ended September 28, 2024 and September 30, 2023 were as follows:

For the Three Months Ended For the Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Components of net periodic benefit cost:

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The Company expects to make approximately $ 2.2 million of contributions to the plans and pay $ 2.1 million of benefits directly in 2024.

On October 4, 2024, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company will be required to pay pension payments to the Company’s United Kingdom pension plan to match required pension payments until a later buyout, at which point the insurance company will directly pay and administer the benefits to the plan's participants, or to their designated beneficiaries.

The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $ 23 million, representing approximately 31 % of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand.

In connection with this transaction, the Company currently expects to record a one-time non-cash settlement charge in 2026 estimated between $ 6 million and $ 8 million, reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan.

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

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

The Company recorded expense of $ 0.7 million and $ 0.4 million for the three months ended June 29, 2024 and July 1, 2023 , respectively, and $ 1.4 million and $ 0.8 million for the six months ended June 29, 2024 and July 1, 2023, respectively, in Cost of sales and Other income, net within the Condensed Consolidated Statements of Net Income.

The pre-tax (gains) losses amount recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $ 0.3 million and nominal for the three months ended June 29, 2024 and July 1, 2023, respectively, and $ 0.6 million and nominal for the six months ended June 29, 2024 and July 1, 2023, respectively.

The Company recorded expense of $ 0.6 million and $ 0.4 million for the three months ended September 28, 2024 and September 30, 2023 , respectively, and $ 2.0 million and $ 1.1 million for the nine months ended September 28, 2024 and September 30, 2023, respectively, in Cost of sales and Other income, net within the Condensed Consolidated Statements of Net Income.

The pre-tax (gains) losses amount recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $ 0.3 million and nominal for the three months ended September 28, 2024 and September 30, 2023, respectively, and $ 0.9 million and $( 0.1 ) million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Other Comprehensive Income (Loss)

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(in thousands) Three Months Ended

June 29, 2024 Three Months Ended

September 28, 2024 Three Months Ended

September 30, 2023

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

Defined benefit pension plan and other adjustments $ 205 $ ( 14 ) $ 191 $ ( 3 ) $ — $ ( 3 )

Cash flow hedge ( 23 ) 5 ( 18 ) 4,096 ( 983 ) 3,113

Cash flow hedges ( 9,860 ) 1,563 ( 8,297 ) 2,034 ( 488 ) 1,546

Foreign currency translation adjustments (a) 66,331 ( 1,832 ) 64,499 ( 4,301 ) 624 ( 3,677 )

Total change in other comprehensive (loss) income $ ( 21,229 ) $ 162 $ ( 21,067 ) $ ( 13,915 ) $ ( 996 ) $ ( 14,911 )

(in thousands) Six Months Ended

June 29, 2024 Six Months Ended

Total change in other comprehensive income (loss) $ 56,676 $ ( 283 ) $ 56,393 $ ( 2,270 ) $ 136 $ ( 2,134 )

(in thousands) Nine Months Ended

September 28, 2024 Nine Months Ended

September 30, 2023

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

Defined benefit pension plan and other adjustments $ 901 $ ( 40 ) $ 861 $ ( 125 ) $ ( 31 ) $ ( 156 )

Cash flow hedge 2,511 ( 603 ) 1,908 783 ( 188 ) 595

Cash flow hedges ( 7,349 ) 960 ( 6,389 ) 2,817 ( 676 ) 2,141

Foreign currency translation adjustments (a) 11,619 ( 1,056 ) 10,563 ( 6,098 ) 351 ( 5,747 )

Total change in other comprehensive (loss) income $ ( 51,505 ) $ 147 $ ( 51,358 ) $ ( 1,136 ) $ ( 492 ) $ ( 1,628 )

Total change in other comprehensive income (loss) $ 5,171 $ ( 136 ) $ 5,035 $ ( 3,406 ) $ ( 356 ) $ ( 3,762 )

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

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and are not permanently reinvested.

The following tables set forth the changes i n accumulated other comprehensive loss by compon ent for the six months ended June 29, 2024 and July 1, 2023:

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

The following tables set forth the changes i n accumulated other comprehensive income (loss) by compon ent for the nine months ended September 28, 2024 and September 30, 2023:

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

translation adjustment Accumulated other

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Activity in the period 861 ( 6,389 ) 10,563 5,035

Balance at June 29, 2024 $ ( 6,943 ) $ 6,356 $ ( 106,588 ) $ ( 107,175 )

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

Balance at September 28, 2024 $ ( 6,752 ) $ ( 1,941 ) $ ( 42,089 ) $ ( 50,782 )

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

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

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

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

Amounts reclassified from accumulated other comprehensive loss to e arnings for the three and six months ended June 29, 2024 and July 1, 2023 were as follows:

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

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

Amounts reclassified from accumulated other comprehensive income (loss) to e arnings for the three and nine months ended September 28, 2024 and September 30, 2023 were as follows:

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Pension and postemployment plans:

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

The effective tax rate for the three and six months ended June 29, 2024 was 25.6 % and 19.6 %, compared to the effective tax rate for the three and six months ended July 1, 2023 of 18.0 % and 18.3 %.

The effective tax rate for the three and nine months ended September 28, 2024 was 25.3 % and 21.9 %, respectively, compared to the effective tax rate for the three and nine months ended September 30, 2023 of 23.3 % and 19.7 %, respectively.

The effective tax rates for 2024 are higher than the effective tax rates for the comparable 2023 periods primarily due to decreases in the income earned in lower tax jurisdictions in 2024 as compared to 2023.

The effective tax rate for the three months ended June 29, 2024 is higher than the statutory tax rate primarily due to the proportion of pre-tax income that is earned in higher tax jurisdictions.

The effective tax rate for the six months ended June 29, 2024 is lower than the statutory tax rate primarily due to the lapse in the statute of limitations for previously unrecognized tax benefits recognized in the first quarter.

The effective tax rates for 2023 are lower than the statutory tax rate primarily due to income earned in lower tax jurisdictions.

The effective tax rates for the three months ended September 28, 2024 and September 30, 2023 are higher than the statutory tax rate primarily due to the impact of foreign exchange losses with no related tax benefit.

Additionally, for the 2024 period, the effective tax rate was also higher due to the proportion of pre-tax income that is earned in higher tax jurisdictions.

The effective tax rate for the nine months ended September 28, 2024 is higher than the statutory tax rate primarily due to the proportion of pre-tax income that is earned in higher tax jurisdictions, partially offset by previously unrecognized tax benefits recognized in the first quarter due to the lapse in the statute of limitations.

The effective tax rate for the nine months ended September 30, 2023 is lower than the statutory tax rate primarily due to income earned in lower tax jurisdictions.

Earnings Per Share

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

Three Months Ended Six Months Ended

(in thousands, except per share amounts) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Three Months Ended Nine Months Ended

(in thousands, except per share amounts) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net income as reported $ 58,058 $ 57,788 $ 151,976 $ 216,604

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Diluted earnings per share $ 2.32 $ 2.30 $ 6.07 $ 8.63

Potential shares of common stock relating to stock options and restricted share units are excluded from the earnings per share calculation because their effect would be anti-dilutive were 141,729 and 110,598 for the three months ended June 29, 2024 and July 1, 2023, respectively, and 129,096 and 102,283 for the six months ended June 29, 2024 and July 1, 2023, respectively.

Potential shares of common stock relating to stock options and restricted share units are excluded from the earnings per share calculation because their effect would be anti-dilutive were 124,197 and 80,828 for the three months ended September 28, 2024 and September 30, 2023, respectively, and 136,635 and 106,156 for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Share Repurchase Program

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On April 25, 2024, the Company's Board of Directors authorized a new three year program to repurchase up to $ 300.0 million in the aggregate of shares of the Company's stock for the period May 1, 2024 to April 30, 2027 ("2024 program") to replace the expired 2021 program.

During the three and six months ended June 29, 2024, the Company repurchased 109,031 and 179,311 shares of its common stock totaling $ 24.7 million and $ 40.9 million, respectively, of which $ 38.9 million was pursuant to the 2021 program and $ 2.0 million was pursuant to the 2024 program.

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

The Company did no t repurchase shares of its common stock for the three months ended September 28, 2024.

During the nine months ended September 28, 2024, the Company repurchased 179,311 shares of its common stock totaling $ 40.9 million, of which, $ 38.9 million was pursuant to the 2021 program and $ 2.0 million was pursuant to the 2024 program.

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

Segment Information

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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 Company’s President and Chief Executive Officer (“CEO”).

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.

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Segment information is summarized as follows:

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Electronics $ 304,188 $ 343,933 $ 900,932 $ 1,052,673

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Interest expense 9,772 10,101 29,358 29,803

Foreign exchange gain ( 315 ) ( 1,404 ) ( 5,357 ) ( 3,079 )

Foreign exchange loss 9,630 11,776 4,273 8,697

Other income, net ( 9,297 ) ( 3,527 ) ( 19,916 ) ( 11,810 )

Income before income taxes $ 77,716 $ 75,295 $ 194,564 $ 269,649

(a) Included in “Other” Operating income for the second quarter of 2024 includes $ 5.3 million ($ 7.6 million year-to-date) of restructuring charges primarily related to employee termination costs.

(a) Included in “Other” Operating income for the third quarter of 2024 includes $ 1.8 million ($ 9.4 million year-to-date) of restructuring charges primarily related to employee termination cost, and $ 1.0 million ($ 2.8 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions.

During the first quarter of 2024, the Company recognized a $ 0.9 million impairment charge related to certain machinery and equipment in the commercial vehicle business within the Transportation segment.

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

In addition, during the second quarter of 2024, the Company recognized $ 0.8 million ($ 1.8 million year-to-date) of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, partially offset by a gain of $ 0.7 million ($ 1.0 million year-to-date) recorded for the sale of two buildings within the Transportation segment.

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

During the third quarter of 2024, the Company recorded a gain of $ 0.5 million related to the sale of a land use right within the Electronics segment.

In addition, the Company recognized a gain of $ 1.0 million for the sale of two buildings within the Transportation segment during the first half of 2024.

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

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

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

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The Company’s net sales by country were as follows, classified according to the country where the customer is located:

Three Months Ended Six Months Ended

(in thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

United States $ 211,940 $ 217,904 $ 604,198 $ 635,892

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The Company’s long-lived assets represent net property, plant, and equipment, and are classified according to the country where the asset is located were as follows:

(in thousands) June 29, 2024 December 30, 2023

(in thousands) September 28, 2024 December 30, 2023

Long-lived assets

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

Six Months Ended

(in thousands) June 29, 2024 July 1, 2023

Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023

Additions to long-lived assets

9 unchanged sentences

Off-Balance Sheet Arrangements

As of June 29, 2024, the Company did not have any off-balance sheet arrangements, as defined under SEC rules.

As of September 28, 2024, 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.

11 unchanged sentences

Accordingly, no accrual has been made yet for this matter.

Factors that will

impact the amount of such losses include the per vehicle cost of fuse replacement, the determination of the relative liability among the customer, the Company, and any relevant third parties, as well as actual insurance recoveries .

Factors that will impact the amount of such losses include the per vehicle cost of fuse replacement, the determination of the relative liability among the customer, the Company, and any relevant third parties, as well as actual insurance recoveries .

Environmental Remediation Liabilities

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Pending Litigation and Claims

There are no material pending litigation or claims outstanding as of June 29, 2024.

There are no material pending litigation or claims outstanding as of September 28, 2024.

Related Party Transactions

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

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

Three Months Ended June 29, 2024 Three Months Ended July 1, 2023

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

Three Months Ended September 28, 2024 Three Months Ended September 30, 2023

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

1 unchanged sentence

Purchase material/service from related party 0.6 0.2 0.6 1.2 0.1 2.0

Six Months Ended June 29, 2024 Six Months Ended July 1, 2023

Nine Months Ended September 28, 2024 Nine Months Ended September 30, 2023

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

1 unchanged sentence

Purchase material/service from related party 3.0 0.6 3.5 3.3 0.3 7.6

June 29, 2024 December 30, 2023

September 28, 2024 December 30, 2023

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

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements