10-Q 1 lfus-20220402.htm 10-Q lfus-20220402
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United States
Securities and Exchange Commission
Washington, D.C. 20549
 
FORM 10-Q 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 02, 2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___

Commission file number 0-20388
LITTELFUSE, INC. 
(Exact name of registrant as specified in its charter)
Delaware36-3795742
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
8755 West Higgins Road 
 Suite 500
ChicagoIllinois60631
(Address of principal executive offices)(ZIP Code)
 
Registrant’s telephone number, including area code: 773-628-1000
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class		Trading SymbolName of exchange on which registered
Common Stock, $0.01 par valueLFUSNASDAQGlobal Select Market
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company ☐ Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [ ] No [ ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No [X]

As of April 29, 2022, the registrant had outstanding 24,738,721 shares of Common Stock, net of Treasury Shares.

TABLE OF CONTENTS
 
 Page
  
PART I 
Item 1. 
 Condensed Consolidated Balance Sheets as of April 02, 2022 (unaudited) and January 01, 2022
 Condensed Consolidated Statements of Net Income for the three months ended April 02, 2022 (unaudited) and March 27, 2021 (unaudited)
 Condensed Consolidated Statements of Comprehensive Income for the three months ended April 02, 2022 (unaudited) and March 27, 2021 (unaudited)
 Condensed Consolidated Statements of Cash Flows for the three months ended April 02, 2022 (unaudited) and March 27, 2021 (unaudited)
Condensed Consolidated Statements of Stockholders' Equity for the three months ended April 02, 2022 (unaudited) and March 27, 2021 (unaudited)
 
Item 2.
Item 3.
Item 4.
PART II 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2


LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)April 2,
2022		January 1,
2022
ASSETS  
Current assets:  
Cash and cash equivalents$461,617 $478,473 
Short-term investments27 28 
Trade receivables, less allowances of $62,170 and $59,232 at April 2, 2022 and January 1, 2022, respectively
319,457 275,192 
Inventories470,552 445,671 
Prepaid income taxes and income taxes receivable1,570 2,035 
Prepaid expenses and other current assets64,987 68,812 
Total current assets1,318,210 1,270,211 
Net property, plant, and equipment442,022 437,889 
Intangible assets, net of amortization391,855 407,126 
Goodwill926,732 929,790 
Investments34,372 39,211 
Deferred income taxes17,119 13,127 
Right of use lease assets, net37,579 29,616 
Other long-term assets25,279 24,734 
Total assets$3,193,168 $3,151,704 
LIABILITIES AND EQUITY  
Current liabilities:  
Accounts payable$212,644 $222,039 
Accrued liabilities127,011 159,689 
Accrued income taxes25,689 27,905 
Current portion of long-term debt— 25,000 
Total current liabilities365,344 434,633 
Long-term debt, less current portion606,741 611,897 
Deferred income taxes80,686 81,289 
Accrued post-retirement benefits36,884 37,037 
Non-current operating lease liabilities29,511 22,305 
Other long-term liabilities73,350 71,023 
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, April 2, 2022–26,358,545; January 1, 2022–26,350,763
260 260 
Additional paid-in capital951,495 946,588 
Treasury stock, at cost: 1,664,727 and 1,664,711 shares, respectively
(248,124)(248,120)
Accumulated other comprehensive loss(75,666)(73,463)
Retained earnings1,372,556 1,268,124 
Littelfuse, Inc. shareholders’ equity2,000,521 1,893,389 
Non-controlling interest131 131 
Total equity2,000,652 1,893,520 
Total liabilities and equity$3,193,168 $3,151,704 
 
See accompanying Notes to Condensed Consolidated Financial Statements.
3

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
 Three Months Ended
(in thousands, except per share data)April 2,
2022		March 27,
2021
Net sales$623,330 $463,794 
Cost of sales364,734 303,328 
Gross profit258,596 160,466 
Selling, general, and administrative expenses75,508 58,288 
Research and development expenses19,556 14,739 
Amortization of intangibles12,724 10,521 
Restructuring, impairment, and other charges218 437 
Total operating expenses108,006 83,985 
Operating income150,590 76,481 
Interest expense4,302 4,673 
Foreign exchange loss7,736 6,837 
Other expense (income), net4,427 (7,737)
Income before income taxes134,125 72,708 
Income taxes16,607 14,995 
Net income$117,518 $57,713 
Earnings per share:  
Basic$4.76 $2.35 
Diluted$4.70 $2.32 
Weighted-average shares and equivalent shares outstanding:
Basic24,689 24,532 
Diluted24,981 24,892 
 
See accompanying Notes to Condensed Consolidated Financial Statements.

4
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 Three Months Ended
(in thousands)April 2,
2022		March 27,
2021
Net income$117,518 $57,713 
Other comprehensive income (loss):
Pension and postemployment adjustment, net of tax310 454 
Foreign currency translation adjustments(2,513)(5,325)
Comprehensive income$115,315 $52,842 
 
See accompanying Notes to Condensed Consolidated Financial Statements.

5
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months Ended
(in thousands)April 2, 2022March 27, 2021
OPERATING ACTIVITIES  
Net income$117,518 $57,713 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation15,574 13,677 
Amortization of intangibles12,724 10,521 
Deferred revenue(158)(157)
Non-cash inventory charges4,769 3,489 
Stock-based compensation3,886 3,395 
Loss (gain) on investments and other assets4,729 (7,675)
Deferred income taxes(2,112)378 
Other8,554 8,537 
Changes in operating assets and liabilities:
Trade receivables(45,945)(32,973)
Inventories(30,879)(6,152)
Accounts payable(6,611)17,070 
Accrued liabilities and income taxes(36,287)(15,427)
Prepaid expenses and other assets5,969 (2,230)
Net cash provided by operating activities51,731 50,166 
INVESTING ACTIVITIES  
Acquisitions of businesses, net of cash acquired— (109,852)
Purchases of property, plant, and equipment(29,809)(14,721)
Net proceeds from sale of property, plant and equipment, and other21 2,553 
Net cash used in investing activities(29,788)(122,020)
FINANCING ACTIVITIES  
Payments of revolving credit facility— (30,000)
Payments of senior notes payable(25,000)— 
Net proceeds related to stock-based award activities1,016 7,509 
Cash dividends paid(13,086)(11,782)
Net cash used in financing activities(37,070)(34,273)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(2,738)(4,101)
Decrease in cash, cash equivalents, and restricted cash(17,865)(110,228)
Cash, cash equivalents, and restricted cash at beginning of period482,836 687,525 
Cash, cash equivalents, and restricted cash at end of period$464,971 $577,297 
Supplementary Cash Flow Information
Reconciliation of cash and cash equivalents:
Cash and cash equivalents$461,617 $572,771 
Restricted cash included in prepaid expenses and other current assets$1,745 3,462 
Restricted cash included in other long-term assets$1,609 $1,064 
Cash paid interest during the period$6,018 $6,235 
Capital expenditures, not yet paid$9,553 $4,141 
 
See accompanying Notes to Condensed Consolidated Financial Statements.
6
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
 Littelfuse, Inc. Shareholders’ Equity  
(in thousands, except share and per share data)Common StockAddl. Paid in CapitalTreasury StockAccum. Other Comp. (Loss)Retained EarningsNon-controlling InterestTotal
Balance at January 1, 2022$260 $946,588 $(248,120)$(73,463)$1,268,124 $131 $1,893,520 
Net income— — — — 117,518 — 117,518 
Other comprehensive loss, net of tax— — — (2,203)— — (2,203)
Stock-based compensation— 3,886 — — — — 3,886 
Withheld shares on restricted share units for withholding taxes— — (4)— — — (4)
Stock options exercised— 1,021 — — — — 1,021 
Cash dividends paid ($0.53 per share)
— — — — (13,086)— (13,086)
Balance at April 2, 2022$260 $951,495 $(248,124)$(75,666)$1,372,556 $131 $2,000,652 

See accompanying Notes to Condensed Consolidated Financial Statements.
 Littelfuse, Inc. Shareholders’ Equity  
(in thousands, except share and per share data)Common StockAddl. Paid in CapitalTreasury StockAccum. Other Comp. (Loss)Retained EarningsNon-controlling InterestTotal
Balance at December 26, 2020$259 $907,858 $(242,366)$(91,157)$1,034,048 $131 $1,608,773 
Net income— — — — 57,713 — 57,713 
Other comprehensive loss, net of tax— — — (4,871)— — (4,871)
Stock-based compensation— 3,395 — — — — 3,395 
Stock options exercised— 7,509 — — — — 7,509 
Cash dividends paid ($0.48 per share)
— — — — (11,782)— (11,782)
Balance at March 27, 2021$259 $918,762 $(242,366)$(96,028)$1,079,979 $131 $1,660,737 

See accompanying Notes to Condensed Consolidated Financial Statements.
7
Notes to Condensed Consolidated Financial Statements 
 
1. Summary of Significant Accounting Policies and Other Information
 
Nature of Operations 
 
Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with 17,000 global associates, the Company partners with customers to design and deliver innovative, reliable solutions. Serving over 100,000 end customers, the Company’s products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day. 

Basis of Presentation 
 
The Company’s accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the consolidated balance sheets, statements of net income and comprehensive income, statements of cash flows, and statement of stockholders' equity prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. They have been prepared in accordance with accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2022 which should be read in conjunction with the disclosures therein. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for interim periods are not necessarily indicative of annual operating results.
 
Revenue Recognition
  
Revenue Disaggregation
 
The following tables disaggregate the Company’s revenue by primary business units for the three months ended April 2, 2022 and March 27, 2021:
 
 Three Months Ended April 2, 2022
(in thousands)Electronics
Segment		Transportation
Segment		Industrial
Segment		 
Total
Electronics – Passive Products and Sensors$169,943 $— $— $169,943 
Electronics – Semiconductor195,878 — — 195,878 
Passenger Car Products— 64,494 — 64,494 
Automotive Sensors— 26,137 — 26,137 
Commercial Vehicle Products— 93,873 — 93,873 
Industrial Products— — 73,005 73,005 
Total$365,821 $184,504 $73,005 $623,330 





8
 Three Months Ended March 27, 2021
(in thousands)Electronics
Segment		Transportation
Segment		Industrial
Segment
 
Total
Electronics – Passive Products and Sensors$132,437 $— $— $132,437 
Electronics – Semiconductor154,098 — — 154,098 
Passenger Car Products— 67,901 — 67,901 
Automotive Sensors— 28,284 — 28,284 
Commercial Vehicle Products— 32,344 — 32,344 
Industrial Products48,730 48,730 
Total$286,535 $128,529 $48,730 $463,794 

 
See Note 15, Segment Information for net sales by segment and countries.
 
Revenue Recognition
 
The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.
 
The Company elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
 
Revenue and Billing
 
The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue.
 
Ship and Debit Program
 
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.

Return to Stock 
 
9
The Company has a return to stock policy whereby certain customers, with prior authorization from Littelfuse management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance for these returns based on historic activity. Sales revenue and cost of sales are reduced to anticipate estimated returns.
 
Volume Rebates
 
The Company offers volume based sales incentives to certain customers to encourage greater product sales. If customers achieve their specific quarterly or annual sales targets, they are entitled to rebates. The Company estimates the projected amount of rebates that will be achieved by the customer and recognizes this estimated cost as a reduction to revenue as products are sold.
 
Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash at April 2, 2022 and January 1, 2022 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

(in thousands)April 2,
2022		January 1,
2022
Cash and cash equivalents$461,617 $478,473 
Restricted cash included in prepaid expenses and other current assets1,745 2,718 
Restricted cash included in other long-term assets1,609 $1,645 
Total cash, cash equivalents and restricted cash$464,971 $482,836 

Recently Adopted Accounting Standards

In November 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance". The standard, requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy: 1) Information about the nature of the transactions and the related accounting policy used to account for the transactions; 2) The line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; 3) Significant terms and conditions of the transactions, including commitments and contingencies. The guidance is effective for fiscal years beginning after December 15, 2021 with early adoption permitted. The adoption of ASU 2021-10 did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards

In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers". The standard requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The guidance is effective for fiscal years beginning after December 15, 2022 with early adoption permitted. The Company does not expect a material impact from the adoption of this guidance on the Company's Condensed Consolidated Financial Statements.


2. Acquisitions
 
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.

Carling Technologies

On November 30, 2021, the Company completed the previously announced acquisition of Carling Technologies, Inc. (“Carling”), pursuant to the Stock Purchase Agreement, dated as of October 19, 2021. Founded in 1920, Carling has a leading position in switching and circuit protection technologies with a strong global presence in commercial vehicle, marine and datacom/telecom infrastructure markets. At the time of acquisition, Carling had annualized sales of approximately $170 million. The business is headquartered in Plainville, Connecticut, with offices and facilities located around the world and is reported as
10
part of 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 acquisition was funded with cash on hand. The total purchase consideration of $313.6 million, net of cash, has been allocated, on a preliminary basis, to assets acquired and liabilities assumed, as of the completion of the acquisition, based on preliminary estimated fair values. The purchase consideration will be adjusted for an additional $0.5 million associated with the final working capital adjustment, which will be settled in the second quarter of 2022. The purchase price allocation is preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary areas that are not yet finalized relate to the completion of the valuations of certain property, plant and equipment and acquired income tax assets and liabilities. As a result, these allocations are subject to change during the purchase price allocation period as the valuations are finalized.

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

(in thousands)Purchase Price
Allocation
Total purchase consideration: 
Cash, net of cash acquired$313,583 
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables, net26,129 
Inventories56,657 
Other current assets3,454 
Property, plant, and equipment58,315 
Intangible assets125,890 
Goodwill97,553 
Other non-current assets4,007 
Current liabilities(22,288)
Other non-current liabilities(36,134)
 $313,583 

All Carling goodwill, other assets and liabilities were recorded in the Transportation segment and are reflected in the Americas, Europe and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Carling’s products and technology with the Company’s existing commercial vehicle products portfolio. Goodwill resulting from the Carling acquisition is not expected to be deductible for tax purposes.

During the three months ended April 2, 2022, the Company made adjustments to reduce the fair value of fixed assets of $6.0 million, inventories of $0.8 million, net accounts receivable of $0.6 million and increase in accrued liabilities of $0.5 million. As a result of these adjustments along with a corresponding reduction of deferred tax liabilities of $1.6 million, goodwill was increased by $5.2 million.

As required by purchase accounting rules, the Company recorded a $6.4 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was amortized as a non-cash charge to cost of sales during the fourth quarter of 2021 and first quarter of 2022, as the acquired inventory was sold, and reflected as other non-segment costs. The Company recognized a non-cash charge of $4.8 million to cost of sales during the three months ended April 2, 2022.


Hartland Controls

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

11
The total purchase consideration of $108.5 million, net of cash, cash equivalents, and restricted cash has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values. The purchase consideration is subject to change for the final working capital adjustments. As of April 2, 2022, the Company had restricted cash of $1.7 million in an escrow account for general indemnification purposes.

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

(in thousands)Purchase Price
Allocation
Total purchase consideration: 
Cash, net of cash acquired, and restricted cash $108,516 
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables, net12,915 
Inventories35,808 
Other current assets2,224 
Property, plant, and equipment6,296 
Intangible assets39,660 
Goodwill38,502 
Other non-current assets3,782 
Current liabilities(24,861)
Other non-current liabilities(5,810)
 $108,516 

All Hartland goodwill, other assets and liabilities were recorded in the Industrial segment and are primarily reflected in the Americas and Asia-Pacific geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Hartland’s products and technology with the Company’s existing industrial products portfolio. Goodwill resulting from the Hartland acquisition is not expected to be deductible for tax purposes.

The Company recorded a $6.8 million step-up of inventory to its fair value as of the acquisition date. The step-up was amortized as a non-cash charge to cost of sales during the first and second quarters of 2021, as the acquired inventory was sold, and is reflected as other non-segment costs. During the three months ended March 27, 2021, the Company recognized a charge of $3.5 million for the amortization of this fair value inventory step-up.
 
During the three months ended March 27, 2021, the Company incurred approximately $0.7 million of legal and professional fees related to this acquisition recognized as Selling, general, and administrative expenses. These costs were reflected as other non-segment costs.

Pro Forma Results
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company, Hartland and Carling as though the acquisitions had occurred as of December 29, 2019. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Hartland and Carling acquisitions occurred as of December 29, 2019 or of future consolidated operating results.
 
 For the Three Months Ended
(in thousands, except per share amounts)April 2, 2022March 27, 2021
Net sales$623,330 $517,399 
Income before income taxes138,894 78,595 
Net income121,238 62,573 
Net income per share — basic4.91 2.57 
Net income per share — diluted4.85 2.55 
12

Pro forma results presented above primarily reflect the following adjustments:
 
 For the Three Months Ended
(in thousands)April 2, 2022March 27, 2021
Amortization(a)
$— $(2,601)
Depreciation— (43)
Transaction costs(b)
— 707 
Amortization of inventory step-up(c)
4,769 3,490 
Income tax expense of above items(1,049)(309)
(a)The amortization adjustment for the three months ended March 27, 2021 primarily reflects incremental amortization resulting from the measurement of intangibles at their fair values.
(b)The transaction cost adjustments reflect the reversal of certain legal and professional fees from the three months ended March 27, 2021.
(c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during three months ended April 2, 2022 and the recognition of the amortization during 2020. The inventory step-up was amortized over four months as the inventory was sold.


3. Inventories
 
The components of inventories at April 2, 2022 and January 1, 2022 are as follows:
 
(in thousands)April 2, 2022January 1, 2022
Raw materials$197,628 $168,409 
Work in process122,324 117,506 
Finished goods187,477 195,656 
Inventory reserves(36,877)(35,900)
Total$470,552 $445,671 
 

4. Property, Plant, and Equipment
 
The components of net property, plant, and equipment at April 2, 2022 and January 1, 2022 are as follows:
 
(in thousands)April 2, 2022January 1, 2022
Land and land improvements$23,153 $23,470 
Building and building improvements177,453 151,297 
Machinery and equipment770,642 779,559 
Accumulated depreciation(529,226)(516,437)
Total$442,022 $437,889 

The Company recorded depreciation expense of $15.6 million and $13.7 million for the three months ended April 2, 2022 and March 27, 2021, respectively.


5. Goodwill and Other Intangible Assets
 
Changes in the carrying value of goodwill by segment for the three months ended April 2, 2022 are as follows:
 
13
(in thousands)ElectronicsTransportationIndustrialTotal
Net book value of goodwill as of January 1, 2022
Gross goodwill as of January 1, 2022$660,245 $228,555 $86,232 $975,032 
Accumulated impairment losses as of January 1, 2022— (36,177)(9,065)(45,242)
Total660,245 192,378 77,167 929,790 
Changes during 2022:
Additions(a)
— 5,187 — 5,187 
Currency translation(6,746)(1,610)111 (8,245)
Net book value of goodwill as of April 2, 2022
Gross goodwill as of April 2, 2022
653,499 231,733 86,517 971,749 
Accumulated impairment losses as of April 2, 2022
— (35,778)$(9,239)(45,017)
Total$653,499 $195,955 $77,278 $926,732 
(a) The additions resulted from the acquisition of Carling.

The components of other intangible assets as of April 2, 2022 and January 1, 2022 are as follows:

As of April 2, 2022
(in thousands)Gross
Carrying
Value
 
Accumulated Amortization
 
Net Book
Value
Land use rights$19,562 $2,019 $17,543 
Patents, licenses and software163,214 103,649 59,565 
Distribution network43,239 40,991 2,248 
Customer relationships, trademarks, and tradenames483,872 171,373 312,499 
Total$709,887 $318,032 $391,855 
 
 As of January 1, 2022
(in thousands)Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Book
Value
Land use rights$19,542 $1,906 $17,636 
Patents, licenses and software164,556 101,307 63,249 
Distribution network43,361 40,591 2,770 
Customer relationships, trademarks, and tradenames487,710 164,239 323,471 
Total$715,169 $308,043 $407,126 

During the three months ended April 2, 2022 and March 27, 2021, the Company recorded amortization expense of $12.7 million and $10.5 million, respectively.

Estimated annual amortization expense related to intangible assets with definite lives as of April 2, 2022 is as follows:
 
(in thousands)
Amount
2022$49,911 
202345,302 
202441,899 
202541,426 
202632,955 
2027 and thereafter193,086 
Total$404,579 
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6. Accrued Liabilities
 
The components of accrued liabilities as of April 2, 2022 and January 1, 2022 are as follows:
 
(in thousands)April 2, 2022January 1, 2022
Employee-related liabilities$55,410 $92,018 
Operating lease liability9,748 9,018 
Other non-income taxes6,252 4,280 
Professional services5,840 4,299 
Restructuring liability2,882 2,944 
Interest2,594 4,402 
Deferred revenue1,216 1,105 
Other43,069 41,623 
Total$127,011 $159,689 

Employee-related liabilities consist primarily of payroll, sales commissions, bonus, employee benefit accruals and workers’ compensation. Bonus accruals include amounts earned pursuant to the Company’s primary employee incentive compensation plans. Other accrued liabilities include miscellaneous operating accruals and other client-related liabilities.

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7. Restructuring, Impairment, and Other Charges

The Company recorded restructuring, impairment and other charges for the three months ended April 2, 2022 and March 27, 2021 as follows:
Three months ended April 2, 2022
(in thousands)ElectronicsTransportationIndustrialTotal
Employee terminations$205 $— $— $205 
Other restructuring charges— 13 — 13 
Total restructuring charges205 13 — 218 
   Total$205 $13 $— $218 

 Three months ended March 27, 2021
(in thousands)ElectronicsTransportationIndustrialTotal
Employee terminations$257 $— $163 $420 
Other restructuring charges— 17 — 17 
Total restructuring charges257 17 163 437 
   Total$257 $17 $163 $437 


2022
For the three months ended April 2, 2022, the Company recorded total restructuring charges of $0.2 million, primarily for employee termination costs. These charges are primarily related to the reorganization of certain manufacturing, selling and administrative functions within the Electronics segment.

2021
For the three months ended March 27, 2021, the Company recorded total restructuring charges of $0.4 million, primarily for employee termination costs. These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions within the Electronics and Industrial segments.

The restructuring liability as of both April 2, 2022 and January 1, 2022 is $2.9 million. The restructuring liability is included within accrued liabilities in the Condensed Consolidated Balance Sheets. The Company anticipates the remaining payments associated with employee terminations will primarily be completed in fiscal year 2022.
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8. Debt
 
The carrying amounts of debt at April 2, 2022 and January 1, 2022 are as follows:
 
(in thousands)April 2,
2022		January 1,
2022
Revolving Credit Facility$100,000 $100,000