What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-02-16 · 248 added, 196 removed, 462 unchanged (49% of the section changed)

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2024 EXECUTIVE OVERVIEW

Net sales were $2,362.7 million, which decreased by $151.2 million or 6.0% in 2023 compared to 2022 including $0.7 million favorable changes in foreign exchange rates.

The decrease was primarily driven by lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment that more than offset $91.9 million or 3.7% of incremental net sales from the C&K acquisition within the Electronics segment and $13.2 million or 0.5% of net sales from the Western Automation acquisition within the Industrial segment.

Net sales were $2,190.8 million, which decreased by $171.9 million, or 7.3%, in 2024 compared to 2023 including $7.9 million of unfavorable changes in foreign exchange rates.

The decrease in net sales was primarily due to lower volume of $163.7 million in the Electronics segment primarily driven by reduced demand and inventory rebalancing in the semiconductor business.

The Company recognized net income of $100.2 million, or $4.00 per diluted share, in 2024 compared to net income of $259.5 million, or $10.34 per diluted share in 2023.

The decrease in net income was primarily due to lower operating income of $131.0 million in the Electronics segment and $29.9 million in the Transportation segment mainly driven by the commercial vehicle business.

Net cash provided by operating activities was $457.4 million for the fiscal year ended December 30, 2023 representing an increase of $37.7 million as compared to the fiscal year ended December 31, 2022.

The increase in net cash provided by operating activities was primarily due to reductions in working capital partially offset by lower cash earnings.

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.

On February 3, 2023, the Company completed the acquisition of 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 Company financed the transaction with cash on hand.

Risks Related to Market Conditions

The Company continues to operate in a challenging macro environment, including but not limited to, supply chain disruptions, varying regional dynamics, and some pockets of end market softness.

The ongoing war in Ukraine has had a minimal impact on the Company, as the Company suspended sales into and purchases from Russia.

The Company does not have any direct operations in Ukraine or Russia.

The decrease in net income was primarily due to lower operating income of $130.7 million in the Electronics segment due to lower sales in the semiconductor business and $92.6 million of non-cash impairment charges.

The non-cash impairment charges included $47.8 million for the impairment of intangible assets primarily related to certain acquired customer relationships, developed technology, and tradename in the Industrial controls and sensors reporting unit within the Industrial segment, and $36.1 million and $8.6 million of non-cash goodwill impairment charges associated with the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

Net cash provided by operating activities was $367.6 million for the fiscal year 2024, a decrease of $89.8 million, compared to $457.4 million during the fiscal year 2023.

The decrease in net cash provided by operating activities was primarily due to lower cash earnings.

Based on the Company’s assessment, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, as of December 28, 2024, the Company’s internal control over financial reporting was not effective due to the identification of the material weaknesses described below.

In making this assessment, management has concluded that we did not design and maintain an effective control environment commensurate with our financial reporting requirements.

Specifically, at certain of our non-U.S.

manufacturing locations we lacked sufficiently skilled operational and accounting personnel to ensure that internal control responsibilities were performed and aligned with internal control objectives.

The material weakness in the control environment contributed to an additional material weakness related to the design and operating effectiveness of control activities over the existence of inventory at these locations.

The Company did not maintain effective controls related to inventory cycle counts to validate existence of inventory, and consequently, the completeness and accuracy of the data used in evaluating the appropriateness of the valuation of inventory and related reserves.

These material weaknesses resulted in corrections through cumulative out-of-period adjustments as described in notes to the consolidated financial statements as of and for the year ended December 28, 2024.

The material weaknesses resulted in immaterial corrections to previously released financial results.

For a description of the material weaknesses identified by management and the remediation efforts being implemented for the material weaknesses, see “Part II, Item 9A - Controls and Procedures.” for further discussion.

On December 31, 2024, the Company completed the acquisition of a 200mm wafer fab located in Dortmund, Germany ("Dortmund Fab") from Elmos Semiconductor SE.

The total purchase price for the Dortmund Fab was approximately 94 million Euro, of which a 37.2 million Euro down payment (approximately $40.5 million) was made in the third quarter of 2023 and recorded in Prepaid expenses and other current assets in the Consolidated Balance Sheets after regulatory approvals.

The payment of 56.7 million Euro was paid at closing in the beginning of the fiscal year 2025.

The transaction did not have any impact on the Company's 2024 financial results and reported in the Electronics-Semiconductor business within the Company’s Electronics segment.

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 33% of the total obligations of the Company’s qualified pension plans, and was 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 has been notified by one of its customers of a product recall potentially due to certain fuses provided by Littelfuse and incorporated in such products.

The Company is currently working with its customer to investigate the cause and level of responsibility for this recall.

The Company has determined pursuant to ASC 450, "Contingencies " that a loss is reasonably possible.

However, the Company continues to evaluate this matter and the ultimate costs of the recall and range of the potential loss cannot be determined at this time.

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 .

Further, the global trade policies and tensions could create additional complexities.

Our international presence subjects us to risks associated with international trade conflicts between the United States and its trade partners, including, without limitation, China, Mexico and Canada, particularly with regard to tariffs and import/export controls.

These factors in turn could require us to materially increase prices to our customers which may reduce demand, or, if we do not or are unable to increase prices, could result in lower margins on products sold.

Changes in U.S.

trade policy have resulted in, and could result in more, U.S.

trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries.

Additionally, continued geo-political issues may result in customers outside the U.S.

seeking to source products from local suppliers, which could result in lower sales or lost customers.

Vision and Strategy

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Within transportation end markets, the Company’s products are found in passenger vehicles and commercial vehicles, like material handling equipment, heavy-duty truck and bus, off-road and recreational vehicles, construction equipment, agricultural machinery, rail, marine and aerospace.

The Company is a key enabler of electrification, or eMobility, across these transportation applications.

The Company is a key enabler of electrification across these transportation applications.

The Company is also a key enabler of electronification advancements across these transportation applications.

The Company continues to advance its existing customer relationships with OEM, Tier One and channel partners while driving product content growth for advanced, high-growth applications.

Within industrial end markets, the Company’s products are found in renewable energy and energy storage applications, HVAC, factory automation and industrial safety, industrial motor drives and power conversion, EV charging infrastructure, and heavy and general industrial type applications.

Within industrial end markets, the Company’s products are found in renewable energy and energy storage applications, HVAC, factory automation and industrial safety, industrial motor drives and power conversion, electric vehicle charging infrastructure, and heavy and general industrial type applications.

The Company utilizes its deep technical engineering capabilities and design support to drive product content growth across high-growth applications like renewables, energy storage, HVAC, and industrial automation and safety.

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Built upon that framework, the Company has positioned itself around the structural growth themes of sustainability, connectivity, and safety, which will continue to drive increased demand for the Company’s innovative, reliable solutions across the transportation, industrial and electronics end markets that it serves.

The Company’s five-year strategic plan, built around these structural growth themes, is focused on delivering top-tier shareholder returns by driving double-digit sales growth, best-in-class profitability, earnings per share growth, strong cash flow generation, and deploying capital to drive value creation.

generation, and deploying capital to drive value creation.

The Company pursues the following major strategic objectives, which are summarized below, along with more specific areas of focus.

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Critical Estimates and Significant Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principle ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company’s most critical accounting policies are those that are most important to the portrayal of its financial condition and results of operations, and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

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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.

As a result of the 2024 annual goodwill impairment test, the Company recorded non-cash charges of $36.1 million and $8.6 million to reflect the impairment of goodwill for the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

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

The goodwill impairment charge for the Industrial controls and sensors reporting unit was due to a reduction in the estimated fair value of the reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2023 annual goodwill impairment test.

These lower expectations were driven by lower-than-expected demand in the electric vehicle end market as well as reduced government funding to support charging infrastructures for electric vehicles, primarily in Europe.

The goodwill impairment charge for the Automotive sensors reporting unit was due to reductions in the estimated fair value for the Automotive sensors reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2023 annual goodwill impairment test.

These lower future expectations were driven by projected declines in end market demand and reduced revenue and profitability with existing customers.

Quantitative Assessment for Impairment

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If the carrying value of a reporting unit exceeds the estimated fair value, the difference between the estimated fair value and carrying value is recorded as the amount of the goodwill impairment charge.

The results of the 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.

Accordingly, there were no goodwill impairment charges recorded as part of the Company’s 2023 annual goodwill impairment test.

The results of the goodwill impairment test as of September 29, 2024 indicated that the estimated fair values for the Industrial controls and sensors and Automotive sensors reporting units were below their respective carrying values.

Accordingly, the Company recorded non-cash charges of $36.1 million and $8.6 million, respectively, to reflect the impairment of goodwill for the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment.

As a result of the impairment charge, the Industrial controls and sensors reporting unit had $115.2 million of goodwill

as of December 28, 2024.

There was no goodwill remaining within the Automotive sensors reporting unit as of December 28, 2024.

For the remainder of the Company's reporting units:

Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, and Industrial Circuit Protection, the results of the goodwill impairment test as of September 29, 2024 indicated that their estimated fair values exceeded their respective carrying values.

As part of its impairment test for these reporting units, the Company engaged a third-party appraisal firm to assist in the Company’s determination of the estimated fair values.

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Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.

Changes in assumptions concerning future

financial results or other underlying assumptions could have a significant impact on the fair value of the reporting units.

Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the fair value of the reporting units.

Future declines in the overall market value of the Company’s equity may also result in a conclusion that the fair value of one or more reporting units has declined below its carrying value.

One measure of the sensitivity of the amount of goodwill impairment charges to key assumptions is the amount by which each reporting unit “passed” (fair value exceeds the carrying value) the goodwill impairment test.

All seven of the reporting units passed the goodwill impairment test, with fair values that exceeded the carrying values between 23% and 369% of their respective estimated fair 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.

With the exception of the Industrial controls and sensors and the Automotive sensors reporting units, the other five reporting units passed the goodwill impairment test, with estimated fair values that exceeded the carrying values between 44% and 409%.

As of the most recent annual test conducted on September 29, 2024, the Company noted that the excess of fair value over the carrying value was 108%, 82%, 96%, 44%, and 409% for its reporting units:

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

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

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Of the other key assumptions that impact the estimated fair values, most reporting units have the greatest sensitivity to changes in the estimated discount rate.

The estimated discount rate was 12.6% for the Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, and Industrial Circuit Protection reporting units, and 16.8% for the Industrial Controls and Sensors reporting unit.

The estimated discount rate was 10.6% for the Electronics-Passive Products and Sensors, Electronics-Semiconductor, and Industrial Circuit Protection reporting units, 11.5% for the Passenger Car Products and Commercial Vehicle Products reporting units, 12.3% for the Automotive Sensors reporting unit, and 14.9% for the Industrial Controls and Sensors reporting unit.

A 1.0% increase in the estimated discount rates would have resulted in no reporting units failing the annual goodwill impairment test.

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Additionally, price deterioration or lower volume could have a significant impact on the fair values of the reporting units.

Long-Lived Assets

The Company evaluates the recoverability of other long-lived assets, including property, plant and equipment and certain identifiable intangible assets, whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.

Factors which could trigger an impairment review include significant underperformance relative to historical or projected operating results, significant changes in the manner of use of the assets or the strategy for the overall business, and a significant decrease in the market value of the assets or significant negative industry or economic trends.

When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the indicators, the assets are assessed for impairment based on the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition.

If the carrying value of an asset exceeds its estimated future

undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

For the fiscal year ended December 28, 2024, the Company recorded non-cash impairment charges of $47.8 million for the impairment of intangible assets, including $47.6 million related to the impairment of certain acquired customer relationships, developed technology, and tradename intangible assets in the Industrial controls and sensors reporting unit within the Industrial segment.

The impairment of the intangible assets resulted from lower expectations of future revenue and cash flows driven by lower-than-expected demand in the electrical vehicle end market as well as reduced government funding to support charging infrastructures for electric vehicles, primarily in Europe.

The remaining impairment charges included $0.2 million for patents and customer relationships related to the exit of a small business in China within the Industrial segment.

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

For the fiscal year ended December 30, 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 on certain machinery and equipment in the semiconductor business within the Electronics segment.

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

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In accordance with guidance issued by the Financial Accounting Standards Board ("FASB") staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred.

Thus, for the fiscal years ended December 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.

Thus, for the fiscal years ended December 28, 2024, December 30, 2023, and December 31, 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.

Further information regarding income taxes, including a detailed reconciliation of current year activity, is provided in Note 14, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report.

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

See Note 16, Segment Information, for net sales by segment and countries.

Fiscal Year Ended December 31, 2022

(in thousands) Electronics

Segment Transportation

Segment Industrial

Electronics – Semiconductor $ 802,281 $ — $ — $ 802,281

Electronics – Passive Products and Sensors 690,538 — — 690,538

Commercial Vehicle Products — 374,707 — 374,707

Passenger Car 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 country.

Revenue Recognition

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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.

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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 regularly analyzes its significant customer accounts and, when the Company becomes aware of a customer’s inability to meet its financial obligations, 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.

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Historically, inventory reserves have been adequate to reflect inventory at net realizable value.

Long-Lived Assets

Factors which could trigger an impairment review include significant underperformance relative to historical or projected operating results, significant changes in the manner of use of the assets or the strategy for the overall business, a significant decrease in the market value of the assets or significant negative industry or economic trends.

If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.

For the fiscal year ended December 31, 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.

Additionally, the Company recorded a non-cash impairment charge of $1.7 million for certain machinery and equipment within the Electronics segment due to a decision to cease further production of a product line during the fourth quarter of 2022.

Environmental Liabilities

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The expected returns on plan assets and discount rates are determined based on each plan’s investment approach, local interest rates and plan participant profiles.

The weighted-average discount rates for the Company’s defined benefit plans primarily in Europe and the Asia-Pacific regions at December 30, 2023 and December 31, 2022 were 5.6% and 5.8%, respectively.

A 50 basis point change in the discount rates at December 30, 2023 would have the following effect on the projected benefit obligation:

(in millions) 0.5%

Increase 0.5%

Projected benefit obligation $ (3.8) $ 4.1

The weighted-average discount rates for the Company’s defined benefit plans primarily in Europe and the Asia-Pacific regions at December 28, 2024 and December 30, 2023 were both 5.6%.

The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $23 million, representing approximately 33% of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand.

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

Equity-Based Compensation

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Treasury yield curve in effect at the time of grant.

The Company initiated a quarterly cash dividend in

2010 and expects to continue making cash dividend payments for the foreseeable future.

The Company initiated a quarterly cash dividend in 2010 and expects to continue making cash dividend payments for the foreseeable future.

The fair value of restricted share units 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.

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RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 2024 AS COMPARED TO THE YEAR ENDED DECEMBER 30, 2023

Fiscal year 2023 included $28.2 million of non-segment charges, of which $11.7 million related to legal and professional fees and other integration expenses related to completed and contemplated acquisitions and $16.5 million of restructuring, impairment and other charges, primarily associated with employee termination costs and a $3.9 million impairment charge for the land and building in the commercial vehicle business within the Transportation segment.

Fiscal year 2024 included $93.5 million of non-cash impairment charges, which included $47.8 million for the impairment of intangible assets primarily related to certain acquired customer relationships, developed technology, and tradename in the

Industrial controls and sensors reporting unit within the Industrial segment, and $36.1 million and $8.6 million of non-cash goodwill impairment charges associated with the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

The remaining impairment charges included $0.2 million for patents and customer relationships related to the exit of a small business in China within the Industrial 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.

The Company also recognized total restructuring charges of $14.9 million, primarily for employee termination costs related to the reorganization of certain manufacturing, selling and administrative functions in the semiconductor business within the Electronics segment and the reorganization of certain selling and administrative functions in the commercial vehicle business within the Transportation segment.

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

Fiscal year 2022 included $43.2 million of non-segment charges, of which $17.6 million related to legal and professional fees and other integration expenses primarily associated with the C&K and Carling acquisitions and other 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 intangible asset impairment charge within the Electronics segment in the fourth quarter of 2022.

Also included in "Other" Operating income was $5.1 million of legal and professional fees and other integration expenses related to completed and contemplated acquisitions, a gain of $1.0 million for the sale of two buildings within the Transportation segment, and a gain of $0.5 million recorded for the sale of a land use right within the Electronics segment.

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

Fiscal year 2023 also included approximately $12.3 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Sterling, and Chinese renminbi against the U.S.

dollar, while fiscal year 2022 included approximately $24.4 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Philippine peso, Sterling, and Chinese renminbi against the U.S.

Fiscal year 2024 also included approximately $9.2 million in foreign currency exchange gains primarily attributable to changes in the value of the Euro, Korean won, and Chinese renminbi against the U.S.

dollar, while fiscal year 2023 included approximately $12.3 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Sterling, and Chinese renminbi against the U.S.

(in thousands, except % change) 2024 2023 Change % Change

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Operating income 158,780 360,862 (202,082) (56.0) %

Other (income) expense, net (19,901) 7,207 (27,108) (376.1) %

Other income, net (22,570) (19,901) 2,669 13.4 %

Income before income taxes 151,863 328,598 (176,735) (53.8) %

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Net income 100,190 259,485 (159,295) (61.4) %

Net sales were $2,362.7 million, which decreased by $151.2 million, or 6.0% compared to 2022, including $0.7 million of favorable changes in foreign exchange rates for 2023 compared to 2022.

The sales decrease was primarily due to lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment that more than offset $105.1 million or 4.2% of incremental net sales from the C&K and Western Automation acquisitions and higher volume from the Industrial segment.

Net sales were $2,190.8 million, which decreased by $171.9 million, or 7.3% compared to 2023, including $7.9 million of unfavorable changes in foreign exchange rates for 2024 compared to 2023.

The net sales decrease was primarily due to lower volume of $163.7 million in the Electronics segment, primarily driven by reduced demand and inventory rebalancing in the semiconductor business.

Cost of Sales

Cost of sales was $1,403.2 million, or 64.1% of net sales, in 2024 compared to $1,462.4 million, or 61.9% of net sales, in 2023.

As a percent of net sales, cost of sales increased 2.0% driven by lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment, partially offset by volume leverage and favorable product mix from the Industrial segment compared to 2022, and $15.6 million or 0.6% of purchase accounting inventory charges recorded during 2022.

As a percent of net sales, cost of sales increased 2.2% driven by lower volume in the Electronics segment, partially offset by improved margin from all businesses within the Transportation segment driven by favorable price, product mix and cost reduction initiatives.

In addition, during the year ended December 28, 2024, the Company identified certain errors in its previously issued financial statements that have now been corrected through cumulative out-of-period adjustments in the financial statements as of and for the year ended December 28, 2024.

The error that was identified by management related to the valuation and existence of inventory that originated in prior periods at certain of our non-U.S.

manufacturing locations within the Transportation and Industrial segments.

As a result, the Company recorded an out-of-period adjustment of $13.5 million in the year ended December 28, 2024, of which $12.3 million was the cumulative out-of-period adjustment related to fiscal years prior to 2024.

The out-of-period adjustment negatively impacted cost of sales as percentage of net sales by 0.6%.

Gross profit was $787.5 million, or 35.9% of net sales, in 2024, compared to $900.2 million, or 38.1% of net sales, in 2023.

The $106.7 million decrease in gross profit was primarily due to lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment, partially offset by the acquisition of C&K within the Electronics segment, and volume leverage and favorable product mix from the Industrial segment and $15.6 million or 0.6% of purchase accounting inventory charges recorded during the first nine months of 2022.

The $112.7 million decrease in gross profit was primarily due to lower volume in the Electronics and Industrial segments, partially offset by improved margin from all businesses within the Transportation segment driven by favorable price, product mix and cost reduction initiatives.

As mentioned above, the out-of-period adjustments of $13.5 million negatively impacted gross margin by 0.6%.

Operating Expenses

Total operating expenses were $628.8 million, or 28.7% of net sales, for 2024 compared to $539.4 million, or 22.8% of net sales, for 2023.

The increase in operating expenses of $33.3 million was primarily due to higher selling, general, and administrative expenses of $9.8 million, higher amortization expense of $10.1 million and research and development expenses of $6.8 million mainly due to the C&K and Western Automation acquisitions.

Additionally, the Company incurred an increase in restructuring, impairment, and other charges of $6.5 million primarily related to the reorganization of certain manufacturing, selling and administrative functions within the Transportation and Industrial segments and a $3.9 million impairment charge related to the land and building of a property in the commercial vehicle business within the Transportation segment.

This increase in operating expenses was partially offset by lower variable incentive compensation expense.

The increase in operating expenses of $89.4 million was primarily due to an increase in restructuring, impairment, and other charges of $91.9 million, which included a non-cash impairment charge of $47.8 million for the impairment of intangible assets primarily related to certain acquired customer relationships, developed technology, and tradename in the Industrial controls and sensors reporting unit within the Industrial segment, and $36.1 million and $8.6 million of non-cash goodwill impairment charges associated with the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

Additionally, the Company incurred higher research and development expenses of $5.3 million.

These increases in operating expenses were partially offset by lower selling, general, and administrative expenses of $4.2 million as a result of lower legal and professional fees and other integration expenses related to completed and contemplated acquisitions and lower amortization expense of $3.7 million.

Operating Income

Operating income for 2024 was $158.8 million , a decrease of $202.1 million or 56.0% compared to $360.9 million for 2023.

The decrease in operating income was due to lower gross profit from the Electronics and Transportation segments and higher

operating expenses as noted above .

Operating margins decreased from 19.9% in 2022 to 15.3% in 2023 primarily driven by lower volume in the Electronics and Transportation segments and the higher operating expenses mentioned above.

The decrease in operating income was due to lower operating income of $130.7 million from the Electronics segment and higher operating expenses due to the non-cash charge of $92.6 million from the impairment of intangible assets and goodwill as noted above, partially offset by higher operating income of $24.9 million from the Transportation segment.

Operating margins decreased from 15.3% in 2023 to 7.2% in 2024 primarily driven by low er volume in the Electronics segment and the higher operating expenses mentioned ab ove.

The total non-cash charges of $92.6 million from the impairment of intangible assets and goodwill negatively impacted the 2024 operating margin by 4.2%.

Income Before Income Taxes

Income before income taxes for 2024 was $151.9 million, or 6.9% of net sales compared to $328.6 million, or 13.9% of net sales for 2023.

In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was primarily benefited by lower foreign exchange losses of $12.1 million and lower unrealized losses of $13.7 million related to one of the Company's equity investments for 2023 compared to 2022.

In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was primarily benefited by foreign exchange gains of $9.2 million in the fiscal year 2024 compared to foreign exchange losses of $12.3 million in the fiscal year 2023, and higher interest income of $9.0 million from short-term investments in cash equivalents, partially offset by higher coal mine charges of $1.8 million and non-operating pension expense.

Income tax expense for 2024 was $51.7 million, or an effective tax rate of 34.0%, compared to income tax expense of $69.1 million, or an effective tax rate of 21.0% for 2023.

The effective tax rate for 2024 is higher than the effective tax rate for 2023,

primarily due to less income earned in lower tax jurisdictions in 2023 , as well as one-time tax benefits in 2022 resulting from losses on investments in the stock of two of the Company's affiliates.

The effective tax rate for 2022 was lower than the applicable U.S.

statutory tax rate primarily due to income earned in lower tax jurisdictions as well as the impact of the one-time deductions previously noted.

primarily due to t he impact of goodwill impairments and non-US losses with no related tax benefit.

The effective tax rate for 2024 is higher than the statutory tax rate primarily due to the impact of goodwill impairments and non-US losses with no related tax benefit as previously noted.

Further information regarding these items is provided in Note 14, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report.

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Total $ 2,190.8 $ 2,362.7 $ (171.9) (7.3) %

Operating Income Fiscal Year

Segment Operating Income Fiscal Year

(in millions) 2024 2023 Change % Change

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Industrial 42.3 54.8 (12.5) (22.8) %

Total segment operating income 270.8 389.1 (118.3)

Other (a) (112.0) (28.2) (83.8)

Total $ 360.9 $ 500.8 $ (139.9) (30.9) %

(a) Included in “Other” Operating income for the 2023 was $28.2 million of non-segment charges, of which $11.7 million was for legal and professional fees and other integration expenses related to completed and contemplated acquisitions, $16.5 million of restructuring, impairment and other charges, primarily related to employee termination costs and a $3.9 million impairment charge related to the land and building in the commercial vehicle business within the Transportation segment.

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

Included in “Other” Operating income for 2022 was $43.2 million of non-segment charges, of which $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.

Total Operating income $ 158.8 $ 360.9 $ (202.1) (56.0) %

(a) Included in “Other” Operating income for the 2024 was $93.5 million of non-cash impairment charges, which included $47.8 million for the impairment of intangible assets primarily related to certain acquired customer relationships, developed technology, and tradename in the Industrial controls and sensors reporting unit within the Industrial segment, and $36.1 million and $8.6 million of non-cash goodwill impairment charges associated with the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

The remaining impairment charges included $0.2 million for patents and customer relationships related to the exit of a small business in China within the Industrial segment.

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

Included in “Other” Operating income for the 2023 was $28.2 million of non-segment charges, of which $11.7 million was for legal and professional fees and other integration expenses related to completed and contemplated acquisitions, $16.5 million of restructuring, impairment and other charges, primarily related to employee termination costs and a $3.9 million impairment charge related to the land and building in the commercial vehicle business within the Transportation segment.

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

Electronics Segment

Net sales for the Electronics segment decreased $142.4 million, or 9.5%, in 2023 compared to 2022 and included favorable changes in foreign exchange rates of $2.1 million or 0.1%.

The sales decrease was mainly due to lower volume from the Electronics products business driven by inventory rebalancing at certain distributors and reduced demand across certain electronics markets, including consumer facing and personal electronics, and telecom, which more than offset the incremental net sales of $91.9 million from the C&K acquisition.

Net sales for the Electronics segment decreased $163.7 million, or 12.1%, in 2024 compared to 2023 and included unfavorable changes in foreign exchange rates of $4.3 million or 0.3%.

The net sales decrease was mainly due to lower volume from the semiconductor business of $152.0 million and to a lesser extent the electronics products business driven by inventory rebalancing at certain distributors and reduced demand across certain electronics markets, including consumer facing and personal electronics, as well as industrial markets.

Operating Income

Operating income was $169.9 million, representing a decrease of $130.7 million, or 43.5%, in 2024 compared to $300.6 million in 2023.

The decrease in operating income was primarily due to lower volume mainly driven from the Electronics products business, which more than offset the incremental volume from the C&K acquisition.

Operating margins decreased from 28.9% in 2022 to 22.3% in 2023 primarily due to the lower volume.

The decrease in operating income was primarily due to lower volume leverage and unfavorable product mix that were partially offset by cost control initiatives.

Operating margins decreased from 22.3% in 2023 to 14.3% in 2024 primarily due to the lower volume from the semiconductor business.

Transportation Segment

Net sales in the Transportation segment decreased $5.9 million, or 0.9%, in 2024 compared to 2023 and included unfavorable changes in foreign exchange rates of $2.4 million or 0.4%.

The commercial vehicle business net sales declined $50.9 million, largely driven by reduced demand largely due to inventory rebalancing at certain distributors and customers, and some demand reduction in commercial vehicle end markets.

The automotive sensors business had net sales declines of $3.4 million primarily due to lower demand in the United States and China.

These declines were partially offset by an increase of $16.5 million from

the passenger car products business driven by the ongoing electronification and electrification of vehicles and global passenger vehicle production growth.

The sales decrease was mainly driven by lower volume of $15.0 million and $3.2 million from the automotive sensors and the commercial vehicles businesses, respectively, due to the strategic exit of certain lower margin products and reduced demand largely due to inventory rebalancing at certain distributors and customers, partially offset by a sales increase of $12.3 million from the passenger car business driven by the ongoing electronification and electrification of vehicles and vehicle content growth.

Operating Income

Operating income was $33.7 million, representing a decrease of $29.8 million, or 47.0%, in 2023 compared to $63.5 million in 2022.

Operating margins declined from 8.9% to 5.0% primarily due to lower volume from the commercial vehicle business, partially offset by higher volume and price realization in the passenger car business.

Operating income was $58.6 million, representing an increase of $24.9 million, or 73.9%, in 2024 compared to $33.7 million in 2023.

The increase in operating income was primarily due to favorable price and cost reduction initiatives from the commercial vehicle business.

Operating margins increased from 5.0% to 8.7% primarily driven by favorable price and product mix and cost reduction initiatives from the commercial vehicle business.

In addition, as mentioned above, during the year ended December 28, 2024, the Company identified certain errors in its previously issued financial statements that have now been corrected through cumulative out-of-period adjustments in the financial statements as of and for the year ended December 28, 2024.

The out-of-period adjustment related to the Transportation segment was $11.1 million, which negatively impacted operating margin by 1.7%.

Industrial Segment

The Industrial segment net sales increased by $29.1 million, or 9.5%, in 2023 compared to 2022 and included unfavorable changes in foreign exchange rates of $0.7 million or 0.2%.

The increase in net sales was primarily due to higher volume across multiple end markets, and the acquisition of Western Automation.

The Industrial segment net sales decreased by $2.4 million, or 0.7%, in 2024 compared to 2023 and included unfavorable changes in foreign exchange rates of $1.2 million or 0.4%.

The sales decrease was due to lower volume across industrial control products driven by softer end market demand in the first half of 2024.

Operating Income

Operating income was $54.8 million, representing an increase of $5.9 million, or 12.1%, in 2023 compared to $48.9 million in 2022.

The increase in operating income was due to price realization and higher volume, partially offset by higher amortization expenses from the acquisition of Western Automation.

Operating income was $42.3 million, representing a decrease of $12.5 million, or 22.8%, in 2024 compared to $54.8 million in 2023.

The decrease in operating income was driven by lower volume due to reduced industrial end market demand across industrial control products and industrial circuit protection along with cost inflation.

Operating margins were 12.8% in 2024 compared to 16.4% in 2023.

The decrease in operating margin was due to cost inflation, partially offset by favorable price.

The out-of-period adjustment related to the Industrial segment was $4.1 million, which negatively impacted operating margin by 1.2%.

Geographic Net Sales Information

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Net sales in the Americas decreased $1.1 million, or 0.1%, in 2024 compared to 2023 and included unfavorable changes in foreign exchange rates of $0.7 million.

The decrease in net sales was primarily due to lower volume from the electronics products business within the Electronics segment and lower sales from the commercial vehicle business within the Transportation segment, partially offset by incremental sales from C&K acquisition within the Electronics segment and higher sales within the Industrial segment compared to 2022.

The decrease in net sales was primarily due to lower volume from the semiconductor business within the Electronics segment, partially offset by higher volume from the Industrial segment and the commercial vehicle and passenger car products businesses within the Transportation segment compared to 2023.

Asia-Pacific net sales decreased $74.2 million, or 8.3%, in 2024 compared to 2023 and included unfavorable changes in foreign exchange rates of $9.2 million.

The decrease in net sales was primarily due to lower net sales from electronics products business within the Electronics segment and lower net sales from the commercial vehicle business within the Transportation segment, partially offset by incremental sales from C&K acquisition within the Electronics segment and Western Automation acquisition within in the Industrial segment compared to 2022.

European net sales increased $60.6 million, or 12.1%, in 2023 compared to 2022 and included favorable changes in foreign exchange rates of $13.1 million.

The increase in net sales was primarily due to incremental sales from the acquisition of C&K, increased volume from the semiconductor business within the Electronics segment and the passenger car products business within the Transportation segment, and the incremental sales from the Western Automation acquisition included within the Industrial segment, partially offset by lower net sales from the electronics products business within the Electronics segment.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2022 AS COMPARED TO THE YEAR ENDED JANUARY 01, 2022

The decrease in net sales was primarily due to lower net sales from the semiconductor business within the Electronics segment and the industrial circuit protection business within the Industrial segment, partially offset by higher net sales from the passenger car products business within the Transportation segment compared to 2023.

Europe net sales decreased $96.6 million, or 17.2%, in 2024 compared to 2023 and included favorable changes in foreign exchange rates of $2.0 million.

The decrease in net sales was primarily due to lower net sales from the Electronics segment and lower net sales from the commercial vehicle and automotive sensors businesses within the Transportation segment compared to 2023.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 2023 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 2022

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

Fiscal year 2021 included $12.6 million of non-segment charges, of which $8.4 million relates to purchase accounting inventory step-up charges, $7.0 million of acquisition-related and integration charges related to the Carling and Hartland acquisitions and other contemplated acquisitions, and $2.2 million of restructuring, impairment and other charges, primarily related to employee termination costs.

Fiscal year 2022 included $43.2 million of non-segment charges, of which $17.6 million related to legal and professional fees and other integration expenses primarily associated with the C&K Switches and Carling acquisitions and other 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 intangible asset impairment charge within the Electronics segment in the fourth quarter of 2022.

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

Additionally, partially offsetting the above amounts was a gain of $5.0 million recorded for the sale of buildings within the Electronics segment.

Fiscal year 2022 also included approximately $24.4 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Philippine peso, Sterling, and Chinese renminbi against the U.S.

dollar, while fiscal year 2021 included approximately $17.2 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Chinese renminbi, Mexican peso, and Philippine peso against the U.S.

(in thousands, except % change) 2023 2022 Change % Change

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Operating income 360,862 500,826 (139,964) (27.9) %

Other expense, net 7,207 8,932 (1,725) (19.3) %

Other (income) expense, net (19,901) 7,207 (27,108) (376.1) %

Income before income taxes 328,598 443,044 (114,446) (25.8) %

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Net income 259,485 373,306 (113,821) (30.5) %

Net sales were $2,513.9 million, which increased $434.0 million, or 20.9% compared to 2021, including $202.8 million or 9.8% of incremental net sales within the Transportation segment from the Carling acquisition and $81.7 million or 3.9% of net sales within the Electronics segment from the C&K acquisition, partially offset by $65.3 million or 3.1% of unfavorable changes in foreign exchange rates for 2022 compared to 2021.

The remaining increase of $110.3 million in the Electronics segment was due to higher volume and price realization across numerous end markets while the Industrial segment increased $53.8 million as a result of higher volume and price realization.

Net sales were $2,362.7 million, which decreased by $151.2 million, or 6.0% compared to 2022, including $0.7 million of favorable changes in foreign exchange rates for 2023 compared to 2022.

The sales decrease was primarily due to lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment that more than offset $105.1 million or 4.2% of incremental net sales from the C&K Switches and Western Automation acquisitions and higher volume from the Industrial segment.

Cost of Sales

Cost of sales was $1,462.4 million, or 61.9% of net sales, in 2023, compared to $1,507.0 million, or 59.9% of net sales, in 2022.

The increase in cost of sales was primarily due to greater volume across the Electronics and Industrial segments driven by the factors discussed above along with the acquisitions of Carling and C&K.

As a percent of net sales, cost of sales decreased 3.0% driven by volume leverage, partially offset by higher purchase accounting inventory charges of $7.2 million or 0.2% compared to 2021.

Gross profit was $900.2 million, or 38.1% of net sales, in 2023, compared to $1,006.9 million, or 40.1% of net sales, in 2022.

The $235.0 million increase in gross profit was primarily due to higher volume and price realization in the Electronics and

Industrial segments along with the acquisitions of Carling and C&K.

The increase in gross margin of 3.0% was primarily driven by volume leverage and price realization, partially offset by higher purchase accounting inventory charges of $7.2 million or 0.2% compared to 2021.

The $106.7 million decrease in gross profit was primarily due to lower volume in the Electronics segment and the commercial vehicle business within the Transportation segment, partially offset by the acquisition of C&K Switches within the Electronics segment, and volume leverage and favorable product mix from the Industrial segment and $15.6 million or 0.6% of purchase accounting inventory charges recorded during the first nine months of 2022.

Operating Expenses

Total operating expenses were $539.4 million, or 22.8% of net sales, for 2023 compared to $506.1 million, or 20.1% of net sales, for 2022.

The increase in operating expenses of $119.8 million was primarily due to higher selling, general, and administrative expenses, which increased by $69.4 million, research and development expenses, which increased by $29.7 million and increased amortization expense of $13.0 million and acquisition-related expenses of $10.6 million largely due to the Carling and C&K acquisitions.

This increase in operating expenses was partially offset by lower variable incentive compensation expense.

Operating Income

Operating income for 2022 was $500.8 million , an increase of $115.2 million or 29.9% compared to $385.6 million for 2021.

The increase in operating income was primarily due to higher gross profit across from Electronics and Industrial segments, partially offset by higher operating expenses as discussed above.

Operating margins increased from 18.5% in 2021 to 19.9% in 2022 primarily driven by higher operating income in the Electronics segment of $122.0 million.

Operating income for 2023 was $360.9 million , a decrease of $140.0 million or 27.9% compared to $500.8 million for 2022.

The decrease in operating income was due to lower gross profit from the Electronics and Transportation segments and higher

operating expenses as noted above .

Operating margins decreased from 19.9% in 2022 to 15.3% in 2023 primarily driven by lower volume in the Electronics and Transportation segments and the higher operating expenses mentioned above.

Income Before Income Taxes

Income before income taxes for 2023 was $328.6 million, or 13.9% of net sales compared to $443.0 million, or 17.6% of net sales, for 2022.

In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was impacted by $14.0 million of unrealized losses during 2022 compared to unrealized gains of $8.8 million during 2021 related to the Company's equity investment, higher interest expense of $7.7 million due to an increase in borrowings outstanding, and higher foreign exchange losses of $7.2 million compared to 2021, partially offset by a $19.9 million non-cash pension settlement charge recognized in 2021.

Income tax expense for 2023 was $69.1 million, or an effective tax rate of 21.0%, compared to income tax expense of $69.7 million, or an effective tax rate of 15.7% for 2022.

The Company’s tax rates are lower than the applicable U.S.

statutory tax rate primarily due to income earned in lower tax jurisdictions, partially offset by the impact of taxes on unremitted earnings, the GILTI tax provisions, and non-U.S.

losses and expenses with no tax benefit.

The effective tax rate for 2022 is lower than the effective tax rate for 2021, primarily due to one-time tax benefits resulting from losses on investments in the stock of two of the Company's affiliates.

The effective tax rate for 2023 is higher than the effective tax rate for 2022,

primarily due to less income earned in lower tax jurisdictions in 2023 , as well as one-time tax benefits in 2022 resulting from losses on investments in the stock of two of the Company's affiliates.

The effective tax rate for 2022 was lower than the applicable U.S.

statutory tax rate primarily due to income earned in lower tax jurisdictions as well as the impact of the one-time deductions previously noted.

Further information regarding these items is provided in Note 14, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report.

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The following table is a summary of the Company’s net sales and operating income by segment:

Net Sales Fiscal Year

(in millions) 2023 2022 Change % Change

4 unchanged sentences

Total $ 2,362.7 $ 2,513.9 $ (151.2) (6.0) %

Operating Income Fiscal Year

Segment Operating Income Fiscal Year

(in millions) 2023 2022 Change % Change

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Industrial 54.8 48.9 5.9 12.1 %

Total segment operating income 389.1 544.0 (154.9)

Other (a) (28.2) (43.2) 15.0

Total $ 500.8 $ 385.6 $ 115.2 29.9 %

(a) 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.

Total Operating income $ 360.9 $ 500.8 $ (139.9) (30.9) %

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 $2.2 million of restructuring, impairment and other charges, primarily related to employee termination costs.

In addition, there was a gain of $5.0 million recorded for the sale of buildings within the Electronics segment.

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

Electronics Segment

Net sales for the Electronics segment increased $192.1 million, or 14.8%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $37.1 million or 2.9%.

The sales increase was $123.4 million for the semiconductor products business and $68.7 million in the electronics products business, primarily driven by increased volume and price realization.

The sales increase in electronics products business also included the incremental $81.7 million of sales from the acquisition of C&K.

These volume increases were driven by continued broad-based demand across numerous end markets.

Net sales for the Electronics segment decreased $142.4 million, or 9.5%, in 2023 compared to 2022 and included favorable changes in foreign exchange rates of $2.1 million or 0.1%.

Operating Income

Operating income was $431.6 million, representing an increase of $122.0 million, or 39.4%, in 2022 compared to $309.6 million in 2021.

The increase in operating income was primarily due to higher volume and price realization from the semiconductor and electronics products businesses and also the incremental operating income from the C&K acquisition.

Operating margins increased from 23.8% in 2021 to 28.9% in 2022.

Operating income was $300.6 million, representing a decrease of $131.0 million, or 30.4%, in 2023 compared to $431.6 million in 2022.

The decrease in operating income was primarily due to lower volume mainly driven from the Electronics products business, which more than offset the incremental volume from the C&K Switches acquisition.

Operating margins decreased from 28.9% in 2022 to 22.3% in 2023 primarily due to the lower volume.

Transportation Segment

Net sales in the Transportation segment increased $188.1 million, or 35.6%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $26.0 million or 4.9%.

The sales increase was primarily due to the incremental sales of $202.8 million from the Carling acquisition.

Net sales in the commercial vehicle business increased by $214.4 million, largely due to the Carling acquisition noted previously and continued demand across a number of commercial vehicle end markets.

The passenger car products and automotive sensors businesses had sales decreases of $16.6 million and $9.8 million, respectively.

The decreases were primarily driven by unfavorable changes in foreign exchange rates, certain automotive customers rebalancing their inventory levels of the Company's products, and supply chain constraints, partially offset by greater content growth from vehicle mix and electric vehicles.

Net sales in the Transportation segment decreased $37.9 million, or 5.3%, in 2023 compared to 2022 and included unfavorable changes in foreign exchange rates of $0.7 million or 0.1%.

The automotive sensors business had net sales declines of $3.4 million primarily due to lower demand in the United States and China.

These declines were partially offset by an increase of $16.5 million from the passenger car products business driven by the ongoing electronification and electrification of vehicles and global passenger vehicle production growth.

Operating Income

Operating income was $33.7 million, representing a decrease of $29.8 million, or 47.0%, in 2023 compared to $63.5 million in 2022.

The decreased in operating income was primarily due to lower volume in the passenger car products and automotive sensors businesses, partially offset by the incremental operating income from the Carling acquisition.

Operating margins declined from 12.5% to 8.9%.

Operating margins declined from 8.9% to 5.0% primarily due to lower volume from the commercial vehicle business, partially offset by higher volume and price realization in the passenger car business.

Industrial Segment

The Industrial segment net sales increased by $29.1 million, or 9.5%, in 2023 compared to 2022 and included unfavorable changes in foreign exchange rates of $0.7 million or 0.2%.

The increase in net sales was primarily due to higher volume and demand across a number of end markets, price realization, and incremental one month net sales of $9.1 million or 3.6% from the Hartland acquisition.

The increase in net sales was primarily due to higher volume across multiple end markets, and the acquisition of Western Automation.

Operating Income

Operating income was $54.8 million, representing an increase of $5.9 million, or 12.1%, in 2023 compared to $48.9 million in 2022.

The increase in operating income was due to higher volume and price realization.

The increase in operating income was due to price realization and higher volume, partially offset by higher amortization expenses from the acquisition of Western Automation.

Operating margins were 16.4% in 2023 compared to 16.0% in 2022.

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(in millions) 2023 2022 Change % Change

Asia-Pacific $ 1,019.9 $ 955.7 $ 64.2 6.7 %

Americas $ 901.5 $ 992.3 $ (90.8) (9.2) %

Asia-Pacific 898.9 1,019.9 (121.0) (11.9) %

Europe 562.3 501.7 60.6 12.1 %

Total $ 2,362.7 $ 2,513.9 $ (151.2) (6.0) %

Asia-Pacific net sales increased $64.2 million, or 6.7%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $18.4 million.

The increase in net sales was primarily due to incremental sales from the C&K acquisition and higher volume and price realization from the semiconductor products business within the Electronics segment and incremental sales from the Carling acquisition included in the commercial vehicle products business, partially offset by lower net sales from the electronics products and passenger car products businesses.

Net sales in the Americas increased $298.0 million, or 42.9%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $1.4 million.

The increase in net sales was primarily due to incremental sales from the Carling acquisition included in the commercial vehicle products business within the Transportation segment, higher volume and price realization from all businesses within the Electronics segment including incremental sales from the C&K acquisition and higher volume and price realization from the Industrial segment compared to 2021.

European net sales increased $71.8 million, or 16.7%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $45.5 million.

The increase in net sales was primarily due to increased volume across all businesses within the Electronics segment including incremental sales from C&K acquisition, and incremental sales from the Carling acquisition included in the commercial vehicle products business within the Transportation segment compared to 2021.

Net sales in the Americas decreased $90.8 million, or 9.2%, in 2023 compared to 2022 and included unfavorable changes in foreign exchange rates of $0.1 million.

The decrease in net sales was primarily due to lower volume from the electronics products business within the Electronics segment and lower sales from the commercial vehicle business within the Transportation segment, partially offset by incremental sales from C&K Switches acquisition within the Electronics segment and higher sales within the Industrial segment compared to 2022.

Asia-Pacific net sales decreased $121.0 million, or 11.9%, in 2023 compared to 2022 and included unfavorable changes in foreign exchange rates of $12.3 million.

The decrease in net sales was primarily due to lower net sales from electronics products business within the Electronics segment and lower net sales from the commercial vehicle business within the Transportation segment, partially offset by incremental sales from C&K Switches acquisition within the Electronics segment and Western Automation acquisition within in the Industrial segment compared to 2022.

Europe net sales increased $60.6 million, or 12.1%, in 2023 compared to 2022 and included favorable changes in foreign exchange rates of $13.1 million.

The increase in net sales was primarily due to incremental sales from the acquisition of C&K Switches, increased volume from the semiconductor business within the Electronics segment and the passenger car products business within the Transportation segment, and the incremental sales from the Western Automation acquisition included within the Industrial segment, partially offset by lower net sales from the electronics products business within the Electronics segment.

Liquidity and Capital Resources

Cash and cash equivalents were $555.5 million as of December 30, 2023, a decrease of $7.1 million as compared to December 31, 2022.

Cash and cash equivalents were $724.9 million as of December 28, 2024, an increase of $169.4 million as compared to December 30, 2023.

As of December 28, 2024, $422.8 million of the Company's $724.9 million cash and cash equivalents was held by non-U.S.

subsidiaries.

Of the $376.9 million, at least $214.3 million can be repatriated with minimal tax consequences, although in certain cases a non-U.S.

withholding tax would be payable but subsequently refunded.

Of the $422.8 million, at least $228.7 million can be repatriated with minimal tax consequences, although in certain cases a non-U.S.withholding tax would be payable but subsequently refunded.

With respect to the remaining $194.1 million, the Company has recognized deferred tax liabilities on approximately $49.7 million as of December 28, 2024 because the amounts are not considered to be permanently reinvested, and the Company may access additional amounts through loans and other means.

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Management expects that the Company’s (i) current level of cash, cash equivalents, and marketable securities, (ii) current and forecasted cash flows from operations, (iii) availability under existing funding arrangements, and (iv) access to capital in the capital markets will provide sufficient funds to support the Company’s operations, capital expenditures, investments, and debt obligations on both a short-term and long-term basis.

Revolving Credit Facility

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:

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As of December 28, 2024, the effective interest rate on unhedged portion of the outstanding borrowings under the credit facility was 5.71%, and 4.13% on the hedged portion.

As of December 30, 2023, the Company had $0.2 outstanding 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.

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

As of December 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.

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.

On December 8, 2023, the Company paid off €117 million of Euro Senior Notes, Series A due 2023.

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

Interest on the Euro Senior Notes, Series B due 2028 is payable semiannually on June 8 and December 8, commencing June 8, 2017.

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.

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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 million of U.S.

Senior Notes, Series A due 2022.

Interest on the U.S.

Senior Notes, Series B due 2027 is payable semiannually on February 15 and August 15, commencing August 15, 2017.

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.

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

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.

As of December 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.

Debt Covenants

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As of December 28, 2024, the Company met all the conditions required to borrow under the Credit Agreement and management expects the Company to continue to meet the applicable borrowing conditions.

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.

Dortmund Fab:

On December 31, 2024, the Company completed the acquisition of a 200mm wafer fab located in Dortmund, Germany (“Dortmund Fab”) from Elmos Semiconductor SE.

The total purchase price for the Dortmund Fab is approximately 94 million Euro, of which 37.2 million Euro down payment (approximately $40.5 million) was recorded in Prepaid expenses and other current assets in the Consolidated Balance Sheets.

The down payment was paid in the third quarter of 2023 after regulatory approvals, and 56.7 million Euro was paid at closing.

The transaction did not have any impact on the Company's 2024 financial results and reported in the Electronics-Semiconductor business within the Company’s Electronics segment.

The acquisition was funded with the Company’s cash on hand.

On February 3, 2023, the Company completed the acquisition of Western Automation for approximately $162 million in cash.

At the time the Company and Western Automation entered into the definitive agreement, Western Automation

had annualized sales of approximately $25 million.

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 electric vehicle 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.

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The net cash payment of $523.0 million was funded through a combination of cash on hand and debt.

On November 30, 2021, the Company acquired 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 operations of Carling are included in the commercial vehicle business within the Company's Transportation segment.

The purchase price for Carling Technologies was approximately $315.5 million subject to a working capital adjustment.

The net cash payment of $314.1 million was funded by the Company’s cash on hand.

On January 28, 2021, the Company acquired Hartland, a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning ("HVAC") and other industrial and systems applications, and eMobility.

At the time of acquisition, Hartland had annualized sales of approximately $70 million.

The purchase price for Hartland was $111.0 million and the operations of Hartland are included in the Industrial segment.

The net cash payment of $108.5 million was funded by the Company’s cash on hand.

Cash Flow Overview

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Net cash used in investing activities (65.8) (284.3)

Net cash (used in) provided by financing activities (185.7) 310.2

Net cash used in financing activities (112.4) (185.7)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash (20.1) 4.8

(Decrease) increase in cash, cash equivalents, and restricted cash (7.8) 82.1

Increase (decrease) in cash, cash equivalents, and restricted cash 169.3 (7.8)

Cash, cash equivalents, and restricted cash at beginning of period 557.1 564.9

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Cash Flow from Operating Activities

Net cash provided by operating activities was $457.4 million for the fiscal year 2023, an increase of $37.7 million, compared to $419.7 million during the fiscal year 2022.

The increase in net cash provided by operating activities was primarily due to reductions in working capital partially offset by lower cash earnings.

Net cash provided by operating activities was $367.6 million for the fiscal year 2024, a decrease of $89.8 million, compared to $457.4 million during the fiscal year 2023.

The decrease in net cash provided by operating activities was primarily due to lower cash earnings.

Cash Flow from Investing Activities

Net cash used in investing activities was $65.8 million for the fiscal year 2024, compared to $284.3 million during the fiscal year 2023.

Net cash paid for acquisitions was $198.8 million for the Dortmund Fab and Western Automation acquisitions during the fiscal year 2023 versus $532.7 million primarily for the C&K and Embed acquisitions during the fiscal year 2022.

Net cash paid for acquisitions was $198.8 million for the Western Automation and Dortmund Fab acquisitions during the fiscal year 2023.

Capital expenditures were $75.9 million, representing a decrease of $10.3 million compared to the fiscal year 2023.

The Company also received proceeds of $0.8 million primarily from the sale of a property within the Electronics segment during the fiscal year 2023 as compared to proceeds of $0.7 million from the sale of a property within the Transportation segment during the fiscal year 2022.

The Company also received proceeds of $10.8 million mainly from the sale of a land use right within the Electronics segment and two buildings from the Transportation segment during the fiscal year 2024 as compared to proceeds of $0.8 million from the sale of a property within the Electronics segment during the fiscal year 2023.

Cash Flow from Financing Activities

Net cash used in financing activities was $185.7 million for the fiscal year 2023 compared to $310.2 million net cash provided by financing activities for the fiscal year 2022.

On July 18, 2022, the Company issued and funded $100 million in aggregate principal amount of 4.33% U.S.

Senior Notes, due 2032.

On June 30, 2022, the Company amended and restated its Credit Agreement and borrowed $300.0 million through a term loan.

Net cash used in financing activities was $112.4 million for the fiscal year 2024 compared to $185.7 million during the fiscal year 2023.

During the fiscal year 2024, the Company paid $7.5 million on the term loan.

During the fiscal year 2023, the Company paid $121.3 million (€117 million) of Euro Senior Notes, Series A due 2023 and $7.5 million on the term loan.

During the fiscal year 2022, the Company paid $25.0 million of U.S.

Senior Notes, Series A due on February 15, 2022 and $3.8 million on the term loan.

Additionally, the Company paid dividends of $62.2 million and $55.9 million for the fiscal year 2023 and 2022, respectively, representing an increase of $6.3 million from the fiscal year 2022.

The following describes the Company’s cash flows for the twelve months ended December 31, 2022 and January 1, 2022:

The Company paid dividends of $67.1 million and $62.2 million for the fiscal year 2024 and 2023, respectively, representing an increase of $4.9 million from the fiscal year 2023.

Additionally, the Company repurchased 179,311 shares of its common stock totaling $40.9 million during the fiscal year 2024.

The following describes the Company’s cash flows for the fiscal year ended December 30, 2023 and December 31, 2022:

(in millions) 2023 2022

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Net cash used in investing activities (284.3) (636.4)

Net cash provided by (used in) financing activities 310.2 (69.0)

Net cash (used in) provided by financing activities (185.7) 310.2

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 4.8 (11.4)

Increase (decrease) in cash, cash equivalents, and restricted cash 82.1 (204.7)

(Decrease) increase in cash, cash equivalents, and restricted cash (7.8) 82.1

Cash, cash equivalents, and restricted cash at beginning of period 564.9 482.8

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Net cash provided by operating activities was $457.4 million for the fiscal year 2023, an increase of $37.7 million, compared to $419.7 million during the fiscal year 2022.

The increase in net cash provided by operating activities was primarily due to higher cash earnings partially offset by increases in working capital resulting from higher sales growth and larger annual incentive bonus payments made in 2022 as compared to 2021.

The increase in net cash provided by operating activities was primarily due to reductions in working capital partially offset by lower cash earnings.

Cash Flow from Investing Activities

Net cash used in investing activities was $284.3 million for the fiscal year 2023, compared to $636.4 million during the fiscal year 2022.

Capital expenditures were $104.3 million, representing an increase of $13.8 million compared to the fiscal year 2021.

Net cash paid for acquisitions was $532.7 million during the fiscal year 2022 primarily for the C&K and Embed acquisitions versus net cash paid of $422.1 million for the Carling and Hartland acquisitions during the fiscal year 2021.

The Company also received proceeds of $0.7 million primarily from the sale of a property within the Transportation segment during the fiscal year 2022 as compared to proceeds of $15.4 million from the sale of buildings within the Electronics segment during the fiscal year 2021.

Net cash paid for acquisitions was $198.8 million for the Dortmund Fab and Western Automation acquisitions during the fiscal year 2023 versus $532.7 million primarily for the C&K Switches and Embed acquisitions during the fiscal year 2022.

Capital expenditures were $86.2 million, representing a decrease of $18.2 million compared to the fiscal year 2022.

Cash Flow from Financing Activities

Net cash provided by financing activities was $310.2 million for the fiscal year 2022 compared to $69.0 million used in financing activities for the fiscal year 2021.

Net cash used in financing activities was $185.7 million for the fiscal year 2023 compared to $310.2 million net cash provided by financing activities for the fiscal year 2022.

On July 18, 2022, the Company issued and funded $100 million in aggregate principal amount of 4.33% U.S.

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On June 30, 2022, the Company amended and restated its Credit Agreement and borrowed $300.0 million through a term loan.

During the fiscal year 2023, the Company paid $121.3 million (€117 million) of Euro Senior Notes, Series A due 2023 and $7.5 million on the term loan.

During the fiscal year 2022, the Company paid $25.0 million of U.S.

Senior Notes, Series A due on February 15, 2022 and $3.8 million on the term loan.

During the fiscal year 2021, the Company made payments of $30 million on the amended revolving credit facility.

Additionally, dividends paid by the Company increased $6.2 million from $49.7 million for the fiscal year 2021 to $55.9 million for the fiscal year 2022.

Additionally, the Company paid dividends of $62.2 million and $55.9 million for the fiscal year 2023 and 2022, respectively, representing an increase of $6.3 million from the fiscal year 2022.

C ontractual Obligations and Commitments

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The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act.

The anticipated 2025 annual installment payment of $8.2 million, which represents the eighth and final required installment, is included in Accrued income taxes , on the Consolidated Balance Sheet as of December 28, 2024.

For more information see Note 14, Income Taxes , of the Notes to Consolidated Financial Statements.

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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.

The Company's Board of Directors authorized the repurchase of 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 ("2021 program").

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 fiscal year of 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.

There is $298.0 million of an authorized amount not yet purchased under the 2024 program as of December 28, 2024.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis