LITTELFUSE INC /DE [LFUS] Filings

10-Q 1 lfus-20240629.htm 10-Q lfus-20240629

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 June 29, 2024


☐			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)


Delaware		36-3795742
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
8755 West Higgins Road
Suite 500
Chicago	Illinois	60631
(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 Symbol

Name of exchange on which registered

Common Stock, $0.01 par value

LFUS

NASDAQ

Global 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 July 26, 2024, the registrant had outstanding 24,788,290 shares of Common Stock, net of Treasury Shares.

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TABLE OF CONTENTS


		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 29, 2024 (unaudited) and December 30, 2023	3
	Condensed Consolidated Statements of Net Income for the three and six months ended June 29, 2024 (unaudited) and July 01, 2023 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 29, 2024 (unaudited) and July 01, 2023 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2024 (unaudited) and July 01, 2023 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 29, 2024 (unaudited) and July 01, 2023 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

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ITEM 1. FINANCIAL STATEMENTS

LITTELFUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(in thousands, except share and per share data)	June 29, 2024		December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents (Note 1)	$	561,742	$	555,513
Short-term investments	971		235
Trade receivables, less allowances of $73,744 and $84,696 at June 29, 2024 and December 30, 2023, respectively	317,963		287,018
Inventories (Note 3)	451,186		474,607
Prepaid income taxes and income taxes receivable	6,413		8,701
Prepaid expenses and other current assets	125,703		82,526
Total current assets	1,463,978		1,408,600











Net property, plant, and equipment (Note 4)	472,537		493,153
Intangible assets, net of amortization (Note 5)	566,030		606,136
Goodwill (Note 5)	1,287,762		1,309,998
Investments	22,904		24,821
Deferred income taxes	10,950		10,486
Right of use lease assets	59,563		62,370
Other long-term assets	41,254		79,711
Total assets	$	3,924,978	$	3,995,275
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	176,095	$	173,535



Accrued liabilities (Note 6)	135,180		149,214
Accrued income taxes	39,235		38,725
Current portion of long-term debt (Note 8)	67,679		14,020
Total current liabilities	418,189		375,494
Long-term debt, less current portion (Note 8)	795,825		857,915
Deferred income taxes	96,214		110,820
Accrued post-retirement benefits	31,810		34,422
Non-current lease liabilities	49,581		49,472
Other long-term liabilities	67,872		86,671
Total liabilities	$	1,459,491	$	1,514,794
Commitments and contingencies (Note 15)
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, June 29, 2024–26,713,727; December 30, 2023–26,624,071	262		262
Additional paid-in capital	1,032,974		1,012,325
Treasury stock, at cost: 1,936,187 and 1,711,290 shares, respectively	(305,136)		(259,263)
Accumulated other comprehensive loss	(107,175)		(55,817)
Retained earnings	1,844,204		1,782,662
Littelfuse, Inc. shareholders’ equity	2,465,129		2,480,169
Non-controlling interest	358		312
Total equity	2,465,487		2,480,481
Total liabilities and equity	$	3,924,978	$	3,995,275

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
(in thousands, except per share data)	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	558,489	$	611,997	$	1,093,874	$	1,221,779
Cost of sales	351,485		377,165		699,062		741,990
Gross profit	207,004		234,832		394,812		479,789

Selling, general, and administrative expenses	93,371		94,543		179,498		182,853

Research and development expenses	27,146		24,496		54,813		51,786
Amortization of intangibles	15,729		16,885		31,554		33,751
Restructuring, impairment, and other charges	5,252		6,855		8,489		8,705
Total operating expenses	141,498		142,779		274,354		277,095
Operating income	65,506		92,053		120,458		202,694

Interest expense	9,975		10,056		19,586		19,702
Foreign exchange gain	(315)		(1,404)		(5,357)		(3,079)
Other income, net	(5,298)		(2,050)		(10,619)		(8,283)
Income before income taxes	61,144		85,451		116,848		194,354
Income taxes	15,678		15,380		22,930		35,538
Net income	$	45,466	$	70,071	$	93,918	$	158,816

Earnings per share:
Basic	$	1.83	$	2.82	$	3.78	$	6.40
Diluted	$	1.82	$	2.79	$	3.75	$	6.33

Weighted-average shares and equivalent shares outstanding:
Basic	24,822		24,839		24,867		24,810
Diluted	25,030		25,095		25,075		25,078

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net income	$	45,466	$	70,071	$	93,918	$	158,816
Other comprehensive income (loss):
Defined benefit pension plan and other adjustments, net of tax	326		(159)		670		(153)


Cash flow hedge, net of tax	(18)		3,113		1,908		595
Foreign currency translation adjustments	(21,375)		(17,865)		(53,936)		(2,070)
Comprehensive income	$	24,399	$	55,160	$	42,560	$	157,188

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended
(in thousands)	June 29, 2024		July 1, 2023
OPERATING ACTIVITIES
Net income	$	93,918	$	158,816
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	33,719		35,623
Amortization of intangibles	31,554		33,751

Deferred revenue	(1,272)		824

Impairment charges	933		3,924

Stock-based compensation	16,888		16,275
Loss (gain) on investments and other assets	1,148		(680)

Deferred income taxes	(12,427)		(3,431)
Other	2,618		(2,939)
Changes in operating assets and liabilities:
Trade receivables	(36,474)		(30,562)
Inventories	16,241		26,638
Accounts payable	6,819		(33,796)



Accrued liabilities and income taxes	(28,829)		(57,790)
Prepaid expenses and other assets	1,738		4,980
Net cash provided by operating activities	126,574		151,633
INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	—		(158,260)

Purchases of property, plant, and equipment	(34,674)		(41,501)
Net proceeds from sale of property, plant and equipment, and other	7,997		741
Net cash used in investing activities	(26,677)		(199,020)
FINANCING ACTIVITIES




Repayments of other debts	(1,351)		(1,347)
Payments of term loan	(3,750)		(3,750)

Net (payments) proceeds related to stock-based award activities	(997)		2,201
Repurchases of common stock	(40,862)		—

Cash dividends paid	(32,330)		(29,790)
Net cash used in financing activities	(79,290)		(32,686)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(14,434)		(1,772)
Increase (decrease) in cash, cash equivalents, and restricted cash	6,173		(81,845)
Cash, cash equivalents, and restricted cash at beginning of period	557,123		564,939
Cash, cash equivalents, and restricted cash at end of period	$	563,296	$	483,094
Supplementary Cash Flow Information
Reconciliation of cash and cash equivalents:
Cash and cash equivalents	$	561,742	$	480,743
Restricted cash included in prepaid expenses and other current assets	$	—	$	771
Restricted cash included in other long-term assets	$	1,554	$	1,580
Cash paid during the period for interest	$	19,621	$	21,310

Capital expenditures, not yet paid	$	8,386	$	10,183

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. Loss		Retained Earnings		Non-controlling Interest		Total
Balance at December 30, 2023	$	262	$	1,012,325	$	(259,263)	$	(55,817)	$	1,782,662	$	312	$	2,480,481
Net income	—		—		—		—		48,452		—		48,452



Other comprehensive loss, net of tax	—		—		—		(30,291)		—		—		(30,291)
Stock-based compensation	—		3,617		—		—		—		—		3,617
Non-controlling interest	—		—		—		—		2		(2)		—
Withheld shares on restricted share units for withholding taxes	—		—		(4)		—		—		—		(4)
Stock options exercised	—		1,369		—		—		—		—		1,369
Repurchases of common stock	—		—		(16,131)		—		—		—		(16,131)
Cash dividends paid ($0.65 per share)	—		—		—		—		(16,200)		—		(16,200)
Balance at March 30, 2024	$	262	$	1,017,311	$	(275,398)	$	(86,108)	$	1,814,916	$	310	$	2,471,293
Net income	—		—		—		—		45,466		—		45,466



Other comprehensive loss, net of tax	—		—		—		(21,067)		—		—		(21,067)
Stock-based compensation	—		13,271		—		—		—		—		13,271
Non-controlling interest	—		—		—		—		(48)		48		—
Withheld shares on restricted share units for withholding taxes	—		—		(4,754)		—		—		—		(4,754)
Stock options exercised	—		2,392		—		—		—		—		2,392
Repurchase of common stock, with excise tax					(24,984)								(24,984)


Cash dividends paid ($0.65 per share)	—		—		—		—		(16,130)		—		(16,130)
Balance at June 29, 2024	$	262	$	1,032,974	$	(305,136)	$	(107,175)	$	1,844,204	$	358	$	2,465,487

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	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. Income (Loss)		Retained Earnings		Non-controlling Interest		Total
Balance at December 31, 2022	$	261	$	974,097	$	(252,866)	$	(95,764)	$	1,585,466	$	184	$	2,211,378
Net income	—		—		—		—		88,745		—		88,745



Other comprehensive income, net of tax	—		—		—		13,283		—		—		13,283
Stock-based compensation	—		3,730		—		—		—		—		3,730
Non-controlling interest	—		—		—		—		(66)		66		—
Withheld shares on restricted share units for withholding taxes	—		—		(18)		—		—		—		(18)
Stock options exercised	—		5,238		—		—		—		—		5,238

Cash dividends paid ($0.60 per share)	—		—		—		—		(14,880)		—		(14,880)
Balance at April 1, 2023	$	261	$	983,065	$	(252,884)	$	(82,481)	$	1,659,265	$	250	$	2,307,476
Net income	—		—		—		—		70,071		—		70,071



Other comprehensive loss, net of tax	—		—		—		(14,911)		—		—		(14,911)
Stock-based compensation	—		12,545		—		—		—		—		12,545
Non-controlling interest	—		—		—		—		(45)		45		—
Withheld shares on restricted share units for withholding taxes	—		—		(5,999)		—		—		—		(5,999)
Stock options exercised	—		2,979		—		—		—		—		2,979


Cash dividends paid ($0.60 per share)	—		—		—		—		(14,910)		—		(14,910)
Balance at July 1, 2023	$	261	$	998,589	$	(258,883)	$	(97,392)	$	1,714,381	$	295	$	2,357,251

See accompanying Notes to Condensed Consolidated Financial Statements.

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Notes to Condensed Consolidated Financial Statements

1. Summary of Significant Accounting Policies and Other Information

Nature of Operations

Founded in 1927, Littelfuse is a diversified, industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 20 countries, and with approximately 16,000 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 statements 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 December 30, 2023, 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 and six months ended June 29, 2024 and July 1, 2023:


	Three Months Ended June 29, 2024								Six Months Ended June 29, 2024
(in thousands)	Electronics Segment		Transportation Segment		Industrial Segment		Total		Electronics Segment		Transportation Segment		Industrial Segment		Total
Electronics – Semiconductor	$	159,564	$	—	$	—	$	159,564	$	317,435	$	—	$	—	$	317,435
Electronics – Passive Products and Sensors	146,075		—		—		146,075		279,309		—		—		279,309
Commercial Vehicle Products	—		80,759		—		80,759		—		160,273		—		160,273
Passenger Car Products	—		69,036		—		69,036		—		139,298		—		139,298
Automotive Sensors	—		19,169		—		19,169		—		39,760		—		39,760
Industrial Products	—		—		83,886		83,886		—		—		157,799		157,799
Total	$	305,639	$	168,964	$	83,886	$	558,489	$	596,744	$	339,331	$	157,799	$	1,093,874

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	Three Months Ended July 1, 2023								Six Months Ended July 1, 2023
(in thousands)	Electronics Segment		Transportation Segment		Industrial Segment		Total		Electronics Segment		Transportation Segment		Industrial Segment		Total
Electronics – Semiconductor	$	197,295	$	—	$	—	$	197,295	$	407,290	$	—	$	—	$	407,290
Electronics – Passive Products and Sensors	152,852		—		—		152,852		301,450		—		—		301,450
Commercial Vehicle Products	—		83,329		—		83,329		—		167,475		—		167,475
Passenger Car Products	—		65,883		—		65,883		—		127,580		—		127,580
Automotive Sensors	—		22,836		—		22,836		—		43,634		—		43,634
Industrial Products	—		—		89,802		89,802						174,350		174,350
Total	$	350,147	$	172,048	$	89,802	$	611,997	$	708,740	$	338,689	$	174,350	$	1,221,779

See Note 14, 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 allowances, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.

The Company has elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

Revenue and Billing

The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company 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 historical activity, distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.

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Return to Stock

The Company has a return to stock policy whereby certain customers, with prior authorization from the Company's management, can return previously purchased goods for full or partial credit. The Company establishes an estimated allowance for these returns based on historical 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 June 29, 2024 and December 30, 2023 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.


(in thousands)	June 29, 2024		December 30, 2023
Cash and cash equivalents	$	561,742	$	555,513

Restricted cash included in other long-term assets	1,554		1,610
Total cash, cash equivalents, and restricted cash	$	563,296	$	557,123

Recently Adopted Accounting Standards

In March 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") ASU No. 2023-01, "Leases (Topic 842): Common Control Arrangements." The standard requires that leasehold improvements associated with common control leases be: 1) Amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. However, if the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period may not exceed the amortization period of the common control group. 2) Accounted for as a transfer between entities under common control through an adjustment to equity (or net assets for not-for-profit entities) if, and when, the lessee no longer controls the use of the underlying asset. Additionally, those leasehold improvements are subject to the impairment guidance in Topic 360, Property, Plant, and Equipment. This standard is effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years. The adoption of ASU 2023-01 did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards

In March 2024, the Securities and Exchange Commission ("SEC") issued a final rule that requires registrants to provide climate disclosures in annual reports and registration statements. The climate-related final rule requires disclosures in the footnotes to the financial statements, including: 1) specified financial statement effects of severe weather events and other natural conditions, 2) certain carbon offsets and renewable energy credits or certificates if used as a material component of a registrant's plans to achieve its disclosed climate-related targets or goals, 3) material impacts on financial estimates and assumptions in the financial statements if they would materially impacted by risks and uncertainties associated with severe weather events and other natural conditions, previously disclosed climate-related targets, and transition plans. The financial statement disclosure requirements are effective beginning with annual reports for the fiscal year beginning in calendar year 2025, for the Company as a large accelerated filer. These disclosures will be subject to existing audit requirement for financial statements. On April 4, 2024, the SEC chose to stay its climate disclosure rules pending judicial review. The adoption of this rule will increase the Company's disclosures in its Consolidated Financial Statements. The Company is currently evaluating and is in the process of performing its initial assessment of the potential impact on its Condensed Consolidated Financial Statements.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in this update provide more transparency about income tax information through improvements to the income tax disclosure primarily related to the income tax rate reconciliation and income taxes paid information. These requirements include: (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2)

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income taxes paid disaggregated by jurisdiction. The other amendments in this update improve the effectiveness and comparability of disclosures by (3) adding disclosures of pretax income (or loss) and income tax expense (or benefit), and (4) removing disclosures that are no longer considered cost beneficial or relevant. The guidance is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The adoption of this guidance will modify the Company's disclosures in its Condensed Consolidated Financial Statements.

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The amendments in this update require additional detailed and enhanced information about reportable segments' expense, including significant segment expenses and other segment items that bridge segment revenue, significant expenses to segment profit or loss. The ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) on an annual basis as well as an explanation of how the CODM uses the reported measures and other disclosures. The amendments in this update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this guidance will modify the Company's disclosures in its Condensed Consolidated Financial Statements.

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements." The amendments in this update represent changes to clarify or improve the disclosure or presentation requirements of a variety of Topics in the ASC. The Company may be affected by one or more of those amendments. The amendments in this ASU should be applied prospectively and will not be effective until June 30, 2027. The Company is currently evaluating the potential effects of these amendments on its 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 Condensed Consolidated Financial Statements from the date of the acquisition.

Dortmund Fab

On June 28, 2023, the Company entered into a definitive purchase agreement to acquire a 200mm wafer fab located in Dortmund, Germany (“Dortmund Fab”) from Elmos Semiconductor SE. The acquisition of the Dortmund Fab is expected to close in early fiscal year 2025. The total purchase price for the Dortmund Fab is approximately 93 million Euro, of which a 37.2 million Euro down payment (approximately $40.5 million) recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The down payment was paid in the third quarter of 2023 after regulatory approvals, and approximately 56 million Euro will be paid at closing. The transaction is not expected to have a material impact on the Company’s fiscal year 2024 financial results and will be reported in the Electronics-Semiconductor business within the Company’s Electronics segment.

Western Automation

On February 3, 2023, the Company completed the acquisition of Western Automation Research and Development Limited (“Western Automation”) for approximately $162 million in cash. Headquartered in Galway, Ireland, Western Automation is a designer and manufacturer of electrical shock protection devices used across a broad range of high-growth end markets, including e-Mobility off-board charging infrastructure, industrial safety and renewables. At the time the Company and Western Automation entered into the definitive agreement, Western Automation had annualized sales of approximately $25 million. The business is reported within the Company’s Industrial segment.

The acquisition was funded with cash on hand. The total purchase consideration of $158.3 million, net of cash acquired, has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values.

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

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(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash, net of cash acquired	$	158,260
Allocation of consideration to assets acquired and liabilities assumed:
Trade receivables	3,359
Inventories	3,678
Other current assets	718
Property, plant, and equipment	1,328
Intangible assets	68,000
Goodwill	93,937
Other long-term assets	573
Current liabilities	(4,335)

Other long-term liabilities	(8,998)
	$	158,260

All Western Automation assets and liabilities were recorded in the Industrial segment and are primarily reflected in the Europe geographic area. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Western Automation’s products and technology with the Company’s existing Industrial products portfolio. Goodwill resulting from the Western Automation acquisition is not expected to be deductible for tax purposes.

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

Pro Forma Results

The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company and Western Automation as though the acquisition had occurred as of January 2, 2022. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the Western Automation acquisition occurred as of January 2, 2022, or of future consolidated operating results.


	For the Three Months Ended		For the Six Months Ended
(in thousands, except per share amounts)	July 1, 2023		July 1, 2023
Net sales	$	611,997	$	1,223,665
Income before income taxes	85,481		196,094
Net income	70,098		160,339
Net income per share — basic	2.82		6.46
Net income per share — diluted	2.79		6.39

Pro forma results presented above primarily reflect the following adjustments:


	For the Three Months Ended		For the Six Months Ended
(in thousands)	July 1, 2023		July 1, 2023
Amortization (a)	$	—	$	(479)
Transaction costs (b)	30		1,427
Income tax expense of above items	(3)		(118)

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

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

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3. Inventories

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


(in thousands)	June 29, 2024		December 30, 2023
Raw materials	$	199,815	$	201,984
Work in process	141,887		137,688
Finished goods	170,166		195,886
Inventory reserves	(60,682)		(60,951)
Total	$	451,186	$	474,607

4. Property, Plant, and Equipment

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


(in thousands)	June 29, 2024		December 30, 2023
Land and land improvements	$	17,948	$	22,212
Building and building improvements	191,584		202,764
Machinery and equipment	867,976		859,060

Accumulated depreciation	(604,971)		(590,883)
Total	$	472,537	$	493,153

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

5. Goodwill and Other Intangible Assets

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


(in thousands)	Electronics		Transportation		Industrial		Total
Net goodwill as of December 30, 2023
Gross goodwill as of December 30, 2023	$	936,505	$	237,115	$	179,117	$	1,352,737
Accumulated impairment losses as of December 30, 2023	—		(34,004)		(8,735)		(42,739)
Total	936,505		203,111		170,382		1,309,998
Changes during 2024:


Foreign currency translation adjustments	(17,205)		(3,142)		(1,889)		(22,236)
Net goodwill as of June 29, 2024
Gross goodwill as of June 29, 2024	919,300		233,364		176,914		1,329,578
Accumulated impairment losses as of June 29, 2024	—		(33,395)		(8,421)		(41,816)
Total	$	919,300	$	199,969	$	168,493	$	1,287,762

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

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	As of June 29, 2024
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	17,146	$	2,971	$	14,175
Patents, licenses, and software	270,630		171,946		98,684
Distribution network	41,860		41,860		—
Customer relationships, trademarks, and tradenames	678,721		225,550		453,171

Total	$	1,008,357	$	442,327	$	566,030


	December 30, 2023
(in thousands)	Gross Carrying Value		Accumulated Amortization		Net Book Value
Land use rights	$	17,621	$	2,786	$	14,835
Patents, licenses, and software	275,337		163,799		111,538
Distribution network	43,210		43,210		—
Customer relationships, trademarks, and tradenames	689,244		209,481		479,763
Total	$	1,025,412	$	419,276	$	606,136

During the three months ended June 29, 2024 and July 1, 2023, the Company recorded amortization expense of $15.7 million and $16.9 million, respectively. During the six months ended June 29, 2024 and July 1, 2023, the Company recorded amortization expense of $31.6 million and $33.8 million, respectively.

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


(in thousands)	Amount
Remainder of 2024	$	31,341
2025	62,476
2026	51,666
2027	49,629
2028	48,770
2029 and thereafter	322,148
Total	$	566,030

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6. Accrued Liabilities

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


(in thousands)	June 29, 2024		December 30, 2023
Employee-related liabilities	$	60,753	$	72,635
Current lease liability	10,623		12,110
Other non-income taxes	6,851		7,855
Interest	6,356		6,387
Professional services	5,703		5,282
Restructuring liability	5,490		2,141
Other customer reserves	5,373		5,998
Deferred revenue	1,875		2,198
Current benefit liability	1,482		1,482
Other	30,674		33,126
Total	$	135,180	$	149,214

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 customer-related liabilities.

7. Restructuring, Impairment, and Other Charges

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


	Three Months Ended June 29, 2024								Six Months Ended June 29, 2024
(in thousands)	Electronics		Transportation		Industrial		Total		Electronics		Transportation		Industrial		Total
Employee terminations	$	4,501	$	437	$	5	$	4,943	$	5,105	$	1,591	$	416	$	7,112
Other restructuring charges	87		209		13		309		139		287		18		444
Total restructuring charges	4,588		646		18		5,252		5,244		1,878		434		7,556
Impairment	—		—		—		—		—		933		—		933

Total	$	4,588	$	646	$	18	$	5,252	$	5,244	$	2,811	$	434	$	8,489


	Three Months Ended July 1, 2023								Six Months Ended July 1, 2023
(in thousands)	Electronics		Transportation		Industrial		Total		Electronics		Transportation		Industrial		Total
Employee terminations	$	987	$	351	$	277	$	1,615	$	1,659	$	933	$	594	$	3,186
Other restructuring charges	250		412		654		1,316		257		684		654		1,595
Total restructuring charges	1,237		763		931		2,931		1,916		1,617		1,248		4,781
Impairment	—		3,870		54		3,924		—		3,870		54		3,924

Total	$	1,237	$	4,633	$	985	$	6,855	$	1,916	$	5,487	$	1,302	$	8,705

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2024

For the three and six months ended June 29, 2024, the Company recorded total restructuring charges of $5.3 million and $7.6 million, respectively, primarily for employee termination costs. These charges primarily related to the reorganization of certain manufacturing, selling and administrative functions within the semiconductor business in the Electronics segment and the reorganization of certain selling and administrative functions within the commercial vehicle business in the Transportation segment. In addition, during the first quarter of 2024, the Company recognized a $0.9 million impairment charge related to certain machinery and equipment in the commercial vehicle business within the Transportation segment.

2023

For the three and six months ended July 1, 2023, the Company recorded total restructuring charges of $2.9 million and $4.8 million, respectively, primarily for employee termination costs. These charges primarily related to the reorganization of certain selling and administrative functions within the Electronics segment due to the C&K Switches acquisition and the reorganization of certain manufacturing, selling and administrative functions within the commercial vehicle business in the Transportation segment. In addition, during the second quarter of 2023, the Company recognized a $3.9 million impairment charge related to the land and building of a property in the commercial vehicle business within the Transportation segment that the Company made the decision to donate.

The restructuring reserves as of both June 29, 2024 and December 30, 2023 is $5.5 million and $2.1 million, respectively. The restructuring liability is included within Accrued liabilities in the Condensed Consolidated Balance Sheets. The Company anticipates the remaining payments associated with employee terminations will primarily be completed in the first quarter fiscal year 2025.

8. Debt

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


(in thousands)	June 29, 2024		December 30, 2023
Revolving credit facility	$	100,000	$	100,000
Term loan	285,000		288,750

Euro Senior Notes, Series B due 2028	101,631		105,246

U.S. Senior Notes, Series B due 2027	100,000		100,000
U.S. Senior Notes, Series A due 2025