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What changed in LITTELFUSE INC /DE's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LITTELFUSE INC /DE's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+374 added−354 removedSource: 10-K (2024-02-16) vs 10-K (2022-02-17)

Top changes in LITTELFUSE INC /DE's 2023 10-K

374 paragraphs added · 354 removed · 234 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+48 added−33 removed8 unchanged
Biggest changeConsists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-one suppliers and parts and aftermarket distributors in passenger vehicle, heavy duty truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets.
Biggest changeThe segment covers a broad range of end markets, including industrial motor drives and power conversion, automotive electronics, electric vehicle and related charging infrastructure, aerospace, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics. • Transportation Segment: Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-one suppliers and parts and aftermarket distributors in passenger vehicle, heavy-duty truck and bus, off-road and recreational vehicles, material handling equipment, agricultural machinery, construction equipment and other commercial vehicle end markets.
Governance & Oversight The Chief Human Resources Officer ("CHRO") is responsible for developing and executing the Company’s human capital strategy. This includes establishing and implementing the Company's global policies and programs for leadership and employee development, compensation, benefits, workforce planning, human resources systems, and ensuring effective and efficient internal company operations.
Governance & Oversight The Chief Human Resources Officer ("CHRO") is responsible for developing and executing the Company’s human capital strategy. This includes establishing and implementing global policies and programs for leadership and employee development, compensation, benefits, workforce planning, human resources systems, and ensuring effective and efficient internal company operations.
The Company is targeting average annual organic sales growth of 5-7 percent and average annual sales growth from strategic acquisitions of 5-7 percent. The Company expects to achieve this through content and share gains, expanded presence in high-growth markets and geographies, and targeting high-growth and niche applications.
The Company is targeting average annual organic sales growth of 5-7 percent and average annual sales growth from strategic acquisitions of 5-7 percent. The Company expects to achieve this through content and share gains, expanded presence in high-growth markets and geographies, and targeting adjacent high-growth and niche applications.
In the Transportation segment, the Company’s competitors include Eaton Corporation, Pacific Engineering, MTA (Meccanotecnica Codognese), CTS Corporation, Amphenol Corporation, Sensata Technologies Holding NV, and TE Connectivity Ltd. In the Industrial segment, the Company’s major competitors include Eaton Corporation, GE Multilin, and Mersen.
In the Transportation segment, the Company’s competitors include Eaton Corporation, Pacific Engineering, MTA (Meccanotecnica Codognese), Amphenol Corporation, Sensata Technologies Holding NV, and TE Connectivity Ltd. In the Industrial segment, the Company’s major competitors include Eaton Corporation, GE Multilin, and Mersen.
Within these segments, the Company designs, manufactures and sells components, modules and subassemblies to empower the long-term structural themes of sustainability, connectivity and safety. Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable, connected, and safer world.
Within these segments, the Company designs, manufactures and sells electronic components, modules and subassemblies to empower the long-term secular growth themes of sustainability, connectivity and safety. Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable, connected, and safer world.
For segment and geographical information and consolidated net sales and operating income see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report. • Electronics Segment : Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate bipolar transistors (“IGBT”) technologies.
For segment and geographical information and consolidated net sales and operating income see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report. • Electronics Segment : Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories, positive temperature coefficient (“PTC”) resettable fuses, electromechanical switches and interconnect solutions, polymer electrostatic discharge (“ESD”) suppressors, varistors, reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon and silicon carbide metal-oxide-semiconductor field effect transistors (“MOSFETs”) and diodes; and insulated gate bipolar transistors (“IGBT”) technologies.
The Company’s commercial vehicle business includes a variety of products including power distribution modules and units, low and high current switches, circuit breakers, relays, battery management products, ignition key switches, and trailer connectors. These products are used in applications serving a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine.
The Company’s commercial vehicle business includes a variety of products including power distribution modules and units, low and high current switches, circuit breakers, relays, battery management products, ignition key switches, and trailer connectors. These products are used in applications largely serving commercial vehicle end markets including heavy-duty truck, construction, agriculture, material handling and marine.
Sensor products in the Electronics Segment are used in a wide variety of applications including appliances, building and home automation, industrial controls, and commercial vehicles.
Sensor products in the Segment are used in a wide variety of applications including appliances, building and home automation, industrial controls, and commercial vehicles.
The contents of the Company's Sustainability Report and website are not incorporated by reference in this Annual Report on Form 10-K. ENVIRONMENTAL REGULATION 10 Table of Contents The Company is subject to numerous foreign, federal, state, and local regulations relating to air and water quality, the disposal of hazardous waste materials, safety and health.
The contents of the Company's Sustainability Reports and website are not incorporated by reference in this Annual Report on Form 10-K. ENVIRONMENTAL REGULATION The Company is subject to numerous foreign, federal, state, and local regulations relating to air and water quality, the disposal of hazardous waste materials, safety and health.
The Company believes that it globally competes on the basis of innovative products, the breadth of its product line, the quality, design and performance of its products based on their reliability, consistency and safety, its technical capabilities and application expertise, and the responsiveness of its customer service.
The Company believes that it globally competes on the basis of innovative products, the breadth of its product line, the quality, design and performance of its products based on their reliability, consistency and safety, its technical capabilities, its global footprint and application expertise, and the responsiveness of its customer service.
The Company expects to continue to expand its presence within transportation end markets, leveraging its strong OEM, Tier One and distributor customer base and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments.
The Company expects to continue to expand its presence across its transportation end markets, leveraging its strong OEM, Tier One and distributor customer base and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments.
In addition, several of the Littelfuse manufacturing sites are also certified under IATF 16949 and ISO 14001. 5 Table of Contents Additional information regarding the Company’s sales by geographic area and long-lived assets in different geographic areas is in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
In addition, several of the Littelfuse manufacturing sites are also certified under IATF 16949 and ISO 14001. Additional information regarding the Company’s sales by geographic area and long-lived assets in different geographic areas is in Note 16, Segment Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
The accrual is reviewed annually and calculated based upon the estimated costs of remediating the shafts. Further information regarding the coal mine liability accrual is provided in Note 1, Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial Statements included in this Annual Report.
The accrual is reviewed annually and calculated based upon the estimated costs of remediating the shafts. Further information regarding the coal mine liability accrual is provided in Note 1, Summary of Significant Accounting Policies and Other Information, of the Notes to Consolidated Financial Statements included in this Annual Report. 12 Table of Contents
The Company maintains a staff of engineers, chemists, material scientists and technicians whose primary responsibility is to design and develop new products. Proposals for the development of new products are initiated primarily by sales, marketing, and product management personnel with input from customers.
The Company maintains a staff of engineers, chemists, material scientists and technicians whose primary responsibility is to design and develop new products. 7 Table of Contents Proposals for the development of new products are initiated primarily by sales, marketing, and product management personnel with input from customers.
Substantially all the orders currently in backlog are scheduled for delivery in 2022. 8 Table of Contents HUMAN CAPITAL MANAGEMENT A passion for engineering excellence and an innovative spirit have been a part of what it means to work at Littelfuse since its founding in 1927.
Substantially all the orders currently in backlog are scheduled for delivery in 2024. 9 Table of Contents HUMAN CAPITAL MANAGEMENT A passion for engineering excellence and an innovative spirit have been a part of what it means to work at Littelfuse since its founding in 1927.
PRODUCT DESIGN AND DEVELOPMENT The Company employs scientific, engineering, and other personnel to continually improve its existing product lines and to develop new products at its research, product design, and development (“R&D”) and engineering facilities with primary locations in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Taiwan (China), United Kingdom ("U.K."), and the U.S.
PRODUCT DESIGN AND DEVELOPMENT The Company employs scientific, engineering, and other personnel to continually improve its existing product lines and to develop new products at its research, product design, and development (“R&D”) and engineering facilities with primary locations in Canada, China, France, Germany, India, Ireland, Italy, Japan, Lithuania, Mexico, Philippines, Spain, Taiwan (China), United Kingdom ("U.K."), and the U.S.
For the fiscal year 2021, approximately 69% of the Company’s net sales were to customers outside the United States (“U.S.”), including approximately 30% to China. The Company manufactures many of its products on fully integrated manufacturing and assembly equipment. The Company maintains product quality through a Global Quality Management System with most manufacturing sites certified under ISO 9001:2000.
For the fiscal year 2023, approximately 65% of the Company’s net sales were to customers outside the United States (“U.S.”), including approximately 23% to China. The Company manufactures many of its products on fully integrated manufacturing and assembly equipment. The Company maintains product quality through a Global Quality Management System with most manufacturing sites certified under ISO 9001:2000.
Transportation Segment The Company is a primary supplier of fuses and circuit protection technologies to global automotive OEMs, through sales made to Tier One automotive suppliers, main-fuse box, and wire harness manufacturers that incorporate the fuses into their products, as well as automotive component parts manufacturers, and automotive parts distributors.
Transportation Segment The Company is a primary supplier of circuit protection technologies, as well as certain sensing technologies to global automotive OEMs, mainly through sales made to Tier One automotive suppliers, main-fuse box, and wire harness manufacturers that incorporate these technologies into their products, as well as automotive component parts manufacturers, and automotive parts distributors.
Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the prior 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this convention, the fiscal year 2021 contained 53 weeks while each of fiscal 2020 and fiscal 2019 contained 52 weeks.
Therefore, the financial results of certain fiscal years and the associated 14 week quarters will not be exactly comparable to the 52 week fiscal years and the associated quarters having only 13 weeks. As a result of using this convention, the fiscal year 2021 contained 53 weeks while each of fiscal 2022 and fiscal 2023 contained 52 weeks.
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. Segments The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial.
Serving over 100,000 end customers, our products are found in a variety of industrial, transportation and electronics end markets – everywhere, every day. 3 Table of Contents Segments The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial.
For example, solar and wind energy, and energy storage systems that enable lower carbon emissions, the ongoing proliferation of electric vehicles and charging stations, more efficient climate control units, increasing requirements for electrical safety, and the rising demand for factory and process automation.
For example, renewables, including solar and wind energy, and energy storage systems that enable lower carbon emissions, the ongoing proliferation of electric vehicles and charging stations, more efficient climate control units, increasing requirements for electrical safety, the rising demand for factory and process automation, and motor drives and power supplies.
Industrial Segment The Company markets and sells its Industrial segment products direct to OEMs, and through electrical distributors and electronics distribution channels to various end customers including electrical contractors, factories, municipalities, and utilities. CUSTOMERS The Company directly sells to over 6,900 customers and distributors worldwide.
Industrial Segment The Company markets and sells its Industrial segment products direct to OEMs, and through both electrical and electronics distribution channels to various end customers including electrical contractors, factories, municipalities, and utilities. CUSTOMERS The Company directly sells to over 4,000 customers and distributors worldwide.
The Company hires bright minds who want to make a big impact and are committed to improve the safety, reliability and performance of our customers’ products.
The Company hires bright minds who want to make a big impact and are committed to improve the safety, reliability and performance of our customers’ products that use electrical energy.
Sales to Arrow Electronics, Inc., which were reported in our Electronics, Transportation and Industrial segments, were 10.7%, 10.4% and 10.7% of consolidated net sales in 2021, 2020, and 2019, respectively. No other single customer accounted for more than 10% of net sales during any of the last three years.
Sales to Arrow Electronics, Inc., which were reported in our Electronics, Transportation and Industrial segments, were 11.2%, 11.5% and 10.7% of consolidated net sales in 2023, 2022, and 2021, respectively. No other single customer accounted for more than 10% of net sales during any of the last three years.
OVERVIEW Founded in 1927, Littelfuse is an industrial technology manufacturing company empowering a sustainable, connected, and safer world. Across more than 15 countries, and with approximately 17,000 global associates, the Company partners with customers to design and deliver innovative, reliable solutions.
OVERVIEW 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 17,000 global associates, we partner with customers to design and deliver innovative, reliable solutions.
The ever-increasing complexity of applications surrounding these themes continues to drive greater demand for the Company’s reliable products and a higher level of product content. As a result, the Company has evolved its presence across the industrial, transportation and electronics end markets it serves.
The ever-increasing complexity of applications surrounding these themes continues to drive greater demand for the Company’s innovative, reliable products and a higher level of product content within a broad range of applications. With its expanding, diversified, product portfolio, the Company has evolved its presence across the industrial, transportation and electronics end markets it serves.
ITEM 1. BUSINESS. GENERAL Littelfuse, Inc., was incorporated under the laws of the State of Delaware in 1991. References herein to the “Company,” “we,” “our” or “Littelfuse” refer to Littelfuse, Inc. and its subsidiaries. References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022.
ITEM 1. BUSINESS. GENERAL Littelfuse, Inc., was incorporated under the laws of the State of Delaware in 1991. References herein to the “Company,” “we,” “our” or “Littelfuse” refer to Littelfuse, Inc. and its subsidiaries. References herein to “2023”, “fiscal 2023” or “fiscal year 2023” refer to the fiscal year ended December 30, 2023.
Commercial vehicle products include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving a number of end markets, including heavy-duty truck, construction, agriculture, material handling and marine. • Industrial Segment: Consists of industrial circuit protection (industrial fuse), industrial controls (protection relay, contactors, transformers) and temperature sensors for use in various applications such as renewable energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO, mining and industrial automation.
Commercial vehicle products include fuses, switches, circuit breakers, relays, and power distribution modules and units used in applications serving a number of end markets, including heavy-duty truck and bus, construction, agriculture, material handling and marine. • Industrial Segment: Consists of industrial circuit protection (industrial fuses), industrial controls (protection relays, contactors, transformers, residual current devices, ground fault circuit interrupters, residual current monitors, and arc fault detection devices) and temperature sensors for use in various applications such as renewable energy and energy storage systems, industrial safety, factory automation, electr ic vehicle infrastructure, HVAC systems, non-residential construction, MRO, and mining.
Recent Acquisitions • Carling Technologies: On November 30, 2021, the Company acquired Carling Technologies (“Carling”), a leader in switching, circuit protection and power distribution technologies with a strong global presence in commercial transportation, communications infrastructure and marine markets. At the time of acquisition, Carling had annualized sales of approximately $170 million.
The total purchase consideration was $9.2 million, net of cash. • Carling Technologies: On November 30, 2021, the Company acquired Carling Technologies (“Carling”), a leader in switching, circuit protection and power distribution 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 entire product development process usually ranges from a few months to a few years based on the complexity of development, with continuous efforts to reduce the development cycle. During fiscal years 2021, 2020, and 2019, the Company expended $65.9 million, $52.5 million, and $80.0 million, respectively, on R&D.
The entire product development process usually ranges from a few months to a few years based on the complexity of development, with continuous efforts to reduce the development cycle. During fiscal years 2023, 2022, and 2021, the Company expended $102.4 million, $95.6 million, and $65.9 million, respectively, on R&D.
The operations of Monolith are included in the Electronics segment. Sales and Operations The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial.
Sales and Operations The Company conducts its business through three reportable segments: Electronics, Transportation, and Industrial.
The Company expects to continue to expand its presence within industrial end markets, leveraging its strong customer base, and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments.
The Company expects to continue to expand its presence across its end markets, leveraging its growing customer base, and go-to-market strength, and by continuing to expand its product portfolio through organic and inorganic investments in high growth, niche applications.
Industrial Segment The Company designs and sells a broad range of power fuses and holders, protection relays and controls, temperature sensors and other circuit protection products, contactors and transformers, for use in various industrial applications such as renewable energy and energy storage systems, electric vehicle infrastructure, HVAC systems, industrial safety, non-residential construction, MRO, mining and industrial automation.
Industrial Segment The Company designs and sells a broad range of industrial fuses, industrial controls (protection relays, contactors, transformers, residual current devices, ground fault circuit interrupters, residual current monitors, and arc fault detection devices) and temperature sensors for use in various applications such as renewable energy and energy storage systems, industrial safety, factory automation, electr ic vehicle infrastructure, HVAC systems, non-residential construction, MRO, and mining.
The Company is well-positioned within the center of the global structural growth themes of sustainability, connectivity, and safety, which will continue to drive increased demand for the company’s products across the transportation, industrial and electronics end markets that it serves.
Strategy In February 2021, the Company announced its five-year strategic plan which builds upon its strengths from its previous strategy. The Company is well-positioned within the center of the global structural growth themes of sustainability, connectivity, and safety, which will continue to drive increased demand for the Company’s products across the transportation, industrial and electronics end markets that it serves.
These products are used to protect personnel and equipment from excessive currents, over voltages, and electrical shock hazards. 6 Table of Contents Products are sold direct to OEMs, and through electrical distributors and electronics distribution channels. The 2021 acquisition of Hartland expanded the Company’s contactors and transformers product portfolios.
These products are used to protect personnel and equipment from excessive currents, over voltages, and electrical shock hazards. Products are sold direct to OEMs, and through both electrical and electronics distribution channels. The 2021 acquisition of Hartland expanded the Company’s contactors and transformers product portfolios, which primarily services HVAC and e-Mobility off-board charging applications.
For critical materials, the Company looks to diversify its supplier base by prequalifying second sources. SALES AND MARKETING The Company goes to market through selling organizations consisting of worldwide direct sales personnel, distribution partners and manufacturers’ representatives.
This helps to minimize the transportation of materials, and ultimately reduces the Company’s environmental footprint by decreasing emissions, consistent with its sustainability strategy. For critical materials, the Company looks to diversify its supplier base by prequalifying second sources. SALES AND MARKETING The Company goes to market through selling organizations consisting of worldwide direct sales personnel, distribution partners and manufacturers’ representatives.
Net sales in the Company’s three geographic regions, based upon the shipped-to destination, are as follows: Fiscal Year (in millions) 2021 2020 2019 Asia-Pacific $ 955.7 $ 670.5 $ 656.8 Americas 694.3 457.8 508.4 Europe 429.9 317.4 338.7 Total $ 2,079.9 $ 1,445.7 $ 1,503.9 The Company’s products are sold worldwide through distributors, direct sales force and manufacturers’ representatives in certain regions.
Net sales in the Company’s three geographic regions, based upon the shipped-to destination, are as follows: Fiscal Year (in millions) 2023 2022 2021 Americas $ 901.5 $ 992.3 $ 694.3 Asia-Pacific 898.9 1,019.9 955.7 Europe 562.3 501.7 429.9 Total $ 2,362.7 $ 2,513.9 $ 2,079.9 The Company’s products are sold worldwide through distributors, direct sales force and manufacturers’ representatives in certain regions.
Products are sold directly to a mix of OEMs, Tier One suppliers, aftermarket channels, as well as through general distribution. The acquisition of Carling Technologies significantly expanded the Company's switching, circuit protection and power distribution product portfolios.
Products are sold directly to a mix of OEMs, Tier One suppliers, aftermarket channels, as well as through general distribution. The acquisition of Carling Technologies in 2021 significantly expanded the Company's presence in commercial vehicle end markets.
References herein to “2020”, “fiscal 2020” or “fiscal year 2020” refer to the fiscal year ended December 26, 2020. References herein to “2019”, “fiscal 2019” or “fiscal year 2019” refer to the fiscal year ended December 28, 2019. The Company operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31.
References herein to “2022”, “fiscal 2022” or “fiscal year 2022” refer to the fiscal year ended December 31, 2022. References herein to “2021”, “fiscal 2021” or “fiscal year 2021” refer to the fiscal year ended January 1, 2022. The Company operates on a 52-53 week fiscal year (4-4-5 basis) ending on the Saturday closest to December 31.
Globally, the Company conducts enterprise-wide talent review processes with the CEO, business unit and function leaders focusing on the Company's high-performing and high-potential talent, diverse talent, and the succession for the Company's most critical roles. Also, the Company's board of directors reviews and assesses management development plans for senior executives and the succession plans relating to those positions.
The Company conducts enterprise-wide, global talent review processes with the CEO, business unit and function leaders focusing on the Company's high-performing and high-potential talent, diverse talent, and succession plans for the Company's most critical roles, as well as the development of our key talent.
Net sales by segment for the periods indicated are as follows: Fiscal Year (in millions) 2021 2020 2019 Electronics $ 1,300.7 $ 937.7 $ 961.1 Transportation 528.1 395.8 428.5 Industrial 251.1 112.2 114.3 Total $ 2,079.9 $ 1,445.7 $ 1,503.9 The Company operates in three geographic regions: Asia-Pacific, the Americas, and Europe.
Net sales by segment for the periods indicated are as follows: 5 Table of Contents Fiscal Year (in millions) 2023 2022 2021 Electronics $ 1,350.4 $ 1,492.8 $ 1,300.7 Transportation 678.3 716.2 528.1 Industrial 334.0 304.9 251.1 Total $ 2,362.7 $ 2,513.9 $ 2,079.9 The Company operates in three geographic regions: the Americas, Asia-Pacific, and Europe.
The CHRO is responsible for developing and integrating the Company’s diversity, inclusion, and belonging strategy in its business operations. The Chief Executive Officer ("CEO") and CHRO regularly update the Company's board of directors on human capital matters. Leadership and Employee Development The Company is committed to identifying and developing our next generation of leaders.
The CHRO is responsible for developing and integrating the Company’s diversity, inclusion, and belonging strategy in its business operations. The Chief Executive Officer ("CEO") and CHRO regularly update the Company's Board of Directors on human capital matters. Our Values & Culture Littelfuse core values have been instrumental in driving success for our business.
Employee Data At January 1, 2022, the Company had approximately 17,000 full-time, part-time and temporary employees; of which 53% are female and 47% are male; and of which 52%, 37% and 11% are located in the Americas, Asia-Pacific region, and Europe, respectively.
Employee Data On December 30, 2023, the Company had approximately 17,000 full-time, part-time and temporary employees; of which 51% are female and 49% are male; and of which 49%, 39% and 12% are located in the Americas, Asia-Pacific region, and Europe, respectively.
In transportation end markets, including passenger and commercial vehicles, the ongoing electronification and electrification of applications is driving increased product demand. Across industrial end markets, product demand is driven by a more sustainable ecosystem.
Across electronics end markets, product demand is largely driven by electrification, energy and power efficiency, automation, connectivity, artificial intelligence, and safety. In transportation end markets, including passenger and commercial vehicles, the ongoing electronification and electrification of applications is driving increased product demand.
Products include a comprehensive portfolio of semiconductor components and modules including thyristors, MOSFETs, rectifiers and fast recovery diodes, IGBTs and wide band gap devices. The 2018 acquisition of IXYS expanded the Company's power semiconductor portfolio in medium and high-power industrial applications and technology expertise.
Products include a comprehensive portfolio of semiconductor components and modules including thyristors, MOSFETs, rectifiers and fast recovery diodes, IGBTs and wide band gap devices, and medium and high-power industrial applications. 6 Table of Contents The acquisition of C&K Switches in 2022 significantly expanded the Company's electromechanical switches and interconnect solutions portfolios, which primarily serves industrial, transportation and datacom applications.
PATENTS, TRADEMARKS, AND OTHER INTELLECTUAL PROPERTY The Company generally relies on patents, trademarks, licenses, and nondisclosure agreements to protect its intellectual property and proprietary products. In cases where it is deemed necessary by management, key employees are required to sign an agreement that they will maintain the confidentiality of the Company’s proprietary information and trade secrets.
In cases where it is deemed necessary by management, key employees are required to sign an agreement that they will maintain the confidentiality of the Company’s proprietary information and trade secrets. The Company owns a large portfolio of patents worldwide and new products are continually being developed to replace older products.
Most Electronics segment products are sold through our direct salesforce or through our channel distribution partners. The fulfillment of these products is primarily through our broad line distribution partners, including global distributors such as Arrow Electronics, Inc., Future Electronics and TTI, Inc., regional and high service distributors, including Digi-Key and Mouser, as well as directly to OEM's.
The fulfillment of these products is primarily through our broad line distribution partners, including global distributors such as Arrow Electronics, Inc., Future Electronics and TTI, Inc., regional and high service distributors, including Digi-Key and Mouser, as well as directly to OEM's. 8 Table of Contents Transportation Segment The Company primarily uses a direct sales force to service major automotive and commercial vehicle OEMs, system suppliers, and Tier One automotive and aftermarket customers globally.
While, in the aggregate, the Company’s patents are important in the operation of its businesses, the Company believes that the loss by expiration or otherwise of any one patent or group of patents would not materially affect its business. MANUFACTURING The Company’s manufacturing facilities are in China, Germany, Italy, Japan, Lithuania, Mexico, Philippines, Portugal, the U.K., and the U.S.
The Company regularly applies for patent protection on such new products. While, in the aggregate, the Company’s patents are important in the operation of its businesses, the Company believes that the loss by expiration or otherwise of any one patent or group of patents would not materially affect its business.
The Company also leverages its transportation customer relationships to sell products from the Electronics segment into transportation end markets, primarily to Tier One automotive customers. These revenues are reported in the Electronics segment.
In selected areas, the Company also uses distributors to service smaller customers and to provide supply chain fulfillment for certain customers. The Company also leverages its transportation customer relationships to sell products from the Electronics and Industrial segments into transportation end markets, primarily to Tier One and OEM automotive customers. Respective revenues are reported in the Electronics and Industrial segments.
With a long list of target applications within each primary end market, the Company believes its balanced approach is healthy for the long-term sustainability of its business, increases diversification and creates additional growth opportunities. Across electronics end 3 Table of Contents markets, product demand is largely driven by the amplified themes of electrification, energy efficiency, automation, and connectivity.
The Company's exposure with each of these end markets is relatively balanced. With a deep list of target applications within each primary end market, the Company believes its balanced approach positions its business for the long-term sustainability, increases diversification and creates additional growth opportunities.
The purchase price for Carling was $315 million subject to change for working capital adjustments and the operations of Carling are included in the Transportation segment. • 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.
The acquisition was funded with the Company's cash on hand. • 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, and eMobility.
Many of the Company's key end markets are linked to sustainable applications such as electric vehicles and charging infrastructure, renewable energy, and power management.
Accordingly, the Company is positioned within the global sustainability megatrend to enhance our product offering to help empower a sustainable, connected, and safer world. Many of the Company's key end markets are linked to sustainable applications such as electric vehicles and charging infrastructure, renewable energy, and power management.
The direct sales force closely works with global OEM, Tier One automotive, consulting engineers, and major end customers to design-in and sell all of the Company’s products. The distributors provide fulfillment for a majority of customers including those partnered with electronic manufacturing services ("EMS").
The direct sales force closely works with global OEM, Tier One automotive, consulting engineers, and major end customers to design-in and sell all of the Company’s products. The Company has sales offices and direct sales channels in number of countries around the world.
The components of the Company's compensation program vary by region and employee-type, and include items such as base salary, performance-based bonus plans, equity awards, paid time off, and tuition reimbursement. Global programs include a combination of statutory and additional supplemental benefits in the areas of health, welfare and retirement.
Compensation, Benefits and Employee Wellness The Company provides compensation and benefits programs designed to be competitive and equitable to attract, retain and motivate highly qualified associates. The components of the Company's compensation program vary by region and job-type, and include items such as base salary, performance-based bonus plans, equity awards, paid time off, and tuition reimbursement.
After sub-components are readied for assembly, final assembly is accomplished on fully automatic and semi-automatic assembly machines. Quality assurance and operations personnel, using techniques such as statistical process control, perform tests, checks and measurements during the production process to maintain the highest levels of product quality, including safety and reliability, and customer satisfaction.
Quality assurance and operations personnel, using techniques such as statistical process control, perform tests, checks and measurements during the production process to maintain the highest levels of product quality, including safety and reliability, and customer satisfaction. Additionally, the Company utilizes external wafer foundries and subcontracted test and assembly facilities for a portion of its semiconductor business.
The Company will continue to invest in its people, as well as customer-driven innovation, eMobility, and its digital infrastructure to improve customer experience, and its operating systems. It plans to capitalize on growth opportunities where technologies and applications are converging across its product segments, while continuing to acquire and integrate businesses that fit its strategic focus areas.
The Company continues to drive commercial excellence through investments in its people, 4 Table of Contents customer-driven innovation, strategic acquisitions and integration of these businesses, eMobility, and its digital infrastructure to improve the customer experience, and its operating systems. These investments enable the Company to capitalize on growth opportunities where technologies and applications are converging across its product segments.
The Company also sells its fuses in the replacement parts market, with its products being sold through merchandisers, discount stores, and service stations, as well as under private label by national firms.
The Company also sells some of its circuit protection products in the transportation aftermarket, with its products being sold through merchandisers, discount stores, and service stations, as well as under private label by national firms. Passenger vehicle products include both protection and sensing technologies used in internal combustion engine based, hybrid and electric vehicles.
Circuit protection technologies in the Electronics Segment are designed to protect against harmful occurrences like voltage spikes, short circuits, power surges and electrostatic discharge. Products include fuses and fuse accessories, PTC resettable fuses, ESD suppressors, varistors, gas discharge tubes, and semiconductor products such as discrete TVS diodes, TVS diode arrays, and protection thyristors.
Technologies within the Electronics segment provide protection, power control and sensing capabilities. Circuit protection technologies in the Electronics segment are designed to protect against harmful occurrences like voltage spikes, short circuits, power surges and electrostatic discharge.
BACKLOG The backlog of unfilled orders at January 1, 2022 was approximately $1,657.1 million, compared to $709.9 million at December 26, 2020 with the increase primarily driven by all segments and acquisition.
BACKLOG The backlog of unfilled orders at December 30, 2023 was approximately $1,046.9 million, compared to $1,646.1 million at December 31, 2022 with the decrease primarily driven by a reduction in the Electronics segment.
The Company has sales offices and direct sales channels in a number of countries around the world. Electronics Segment 7 Table of Contents Our Electronics segment products are used across a variety of applications. While certain of our products require less design support for our customers, many of our products are incorporated into applications with complex design technical support requirements.
Many of our products are incorporated into applications with complex design technical support requirements, while certain of our products require less design support for our customers. Most Electronics segment products are sold through our direct salesforce or through our channel distribution partners.
Additionally, the Company utilizes external wafer foundries and subcontracted test and assembly facilities for a portion of its semiconductor business. The principal raw materials for the Company’s products include copper and copper alloys, resin and heat-resistant plastics, zinc, melamine, glass, silver, gold, raw silicon, solder, rubber, and various gases.
The principal raw materials for the Company’s products include copper and copper alloys, resin and heat-resistant plastics, zinc, melamine, glass, silver, gold, raw silicon, solder, rubber, and various gases. The Company’s strategy is to prequalify suppliers for quality assurance and supply continuity, as much as possible, to localize supply sources close to its manufacturing sites.
The Company performs the majority of its own fabrication and maintains in-house capabilities for metal stamping, surface mount assembly, plating (silver, nickel, zinc, and oxides) and thermoplastic molding. In addition, the Company fabricates semiconductor wafers for certain applications and maintains in-house capability for epitaxy fabrication, die attach, and wafer probe testing.
MANUFACTURING The Company’s manufacturing facilities are in China, France, Germany, India, Ireland, Italy, Japan, Lithuania, Mexico, Philippines, the U.K., the U.S., and Vietnam. The Company performs the majority of its own fabrication and maintains in-house capabilities for metal stamping, surface mount assembly, plating (silver, nickel, zinc, and oxides) thermoplastic molding, and high-precision manufacturing, miniaturization and haptics.
BUSINESS ENVIRONMENT Electronics Segment The Company designs, manufactures and sells components and modules to empower the long-term mega sustainability themes. Over the last decade the Company has positioned itself within the center of these global structural growth themes by helping to enable its customers’ applications focused on a more sustainable, connected, and safer world.
BUSINESS ENVIRONMENT Electronics Segment The Company designs, manufactures and sells electronic components and modules empowering its customers’ applications focused on a more sustainable, connected, and safer world. The ever-increasing advancements of applications surrounding these themes continues to drive greater demand for the Company’s innovative, reliable products and a higher level of product content within a broad range of applications.
The Company also has regional development programs that assist the Company's current and future leaders to develop leadership skills and grow their careers in Littelfuse. Diversity and Inclusion As part of driving sustainable success, The Company values and celebrates diversity in every aspect of work with customers, stakeholders, suppliers and each other.
Diversity, Inclusion & Belonging As part of driving sustainable success, The Company values and celebrates diversity in every aspect of work with customers, suppliers, partners, and each other. The Company's commitment to diversity, inclusion and belonging creates a collaborative environment that draws out associates’ unique capabilities that contribute to innovation, deliver bold solutions and drive growth.
During fiscal 2021, 2020, and 2019, net sales to customers outside the U.S. accounted for approximately 69%, 73%, and 71%, respectively, of the Company’s total net sales. CYBERSECURITY The Company relies on its information technology systems and networks in connection with many of its business activities.
During fiscal 2023, 2022, and 2021, net sales to customers outside the U.S. accounted for approximately 65%, 64%, and 69%, respectively, of the Company’s total net sales. CYBERSECURITY The cybersecurity and data protection program at Littelfuse is based on foundational principles outlined in applicable industry and internationally accepted-cybersecurity frameworks.
Removed
The ever-increasing complexity of applications surrounding these themes continues to drive greater demand for the Company’s reliable products and a higher level of product content. As a result, the Company has evolved its presence across the industrial, transportation and electronics end markets it serves, which is relatively balanced.
Added
Across industrial end markets, product demand is driven by an ecosystem that continues to advance sustainability, safety and automation capabilities.
Removed
The segment covers a broad range of end markets, including industrial motor drives and power conversion, automotive electronics, electric vehicle and related infrastructure, power supplies, data centers and telecommunications, medical devices, alternative energy and energy storage, building and home automation, appliances, and mobile electronics. • Transportation Segment: Formerly known as Automotive segment .
Added
The Company's resilient growth strategy and business model has delivered sustained double-digit sales and earnings growth over the last five, ten and fifteen years. Recent Acquisitions • 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.
Removed
The term “Transportation” represents a more comprehensive description of the Company’s broad range of products, and the applications and end markets it serves.
Added
The acquisition of the Dortmund Fab is expected to close in early fiscal year 2025.
Removed
Strategy In February 2021, the Company announced its new five-year strategic plan which builds upon its strengths from its previous strategy.
Added
The total purchase price for the fab is approximately 93 million Euro, of which 37.2 million Euro down payment (approximately $40.5 million) 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.
Removed
At the time of acquisition, Hartland had annualized sales of approximately 4 Table of Contents $70 million.
Added
The transaction did not have a material impact on the Company’s fiscal year 2023 financial results and is not expected to have a material impact on the Company's 2024 financial results and will be reported in the semiconductor business within the Company’s Electronics segment.
Removed
The purchase price for Hartland was $111.0 million and the operations of Hartland are included in the Industrial segment. • IXYS Corporation: On January 17, 2018, the Company acquired IXYS corporation ("IXYS"), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors across the industrial, communications, consumer and medical markets.
Added
The Company paid 37.2 million Euro down payment (approximately $40.5 million) with cash on hand. • 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.
Removed
IXYS had a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The purchase price for IXYS was $856.5 million, which included consideration of cash, Littelfuse common stock, and the value of converted, or cash settled IXYS equity awards. The operations of IXYS are included in the Electronics segment. • U.S.
Added
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.
Removed
Sensor: On July 7, 2017, the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for $24.3 million. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistor probes and assemblies across a number of industrial end markets. The operations of U.S.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

29 edited+6 added−15 removed58 unchanged
Biggest changeThe tax holiday for one of the subsidiaries expires at the end of 2022, and for the other subsidiary the tax holiday will expire at the end of 2023. Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire. There can be no assurance that future extensions will be granted.
Biggest changeFuture year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire. There can be no assurance that future extensions will be granted. The tax rates applicable in the jurisdictions within which the Company operates vary widely.
The Company monitors and manages these exposures as an integral part of its overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on its results. Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be predicted.
The Company monitors and manages exposures in changes in commodity prices, foreign currency exchange rates, and interest rates as an integral part of its overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on its results. Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be predicted.
Based on the broad scope of its product lines, the Company believes that the loss or expiration of any single intellectual property right would not have a material adverse effect upon its consolidated results of operations, financial position and cash flows; however, multiple losses or expirations could have a material adverse effect upon the Company’s consolidated results of operations, financial position and cash flows. 2) Regulatory Risks: 12 Table of Contents Climate change, and the regulatory and legislative developments related to climate change, may have a material adverse impact on our business and results of operations.
Based on the broad scope of its product lines, the Company believes that the loss or expiration of any single intellectual property right would not have a material adverse effect upon its consolidated results of operations, financial position and cash flows; however, multiple losses or expirations could have a material adverse effect upon the Company’s consolidated results of operations, financial position and cash flows. 2) Regulatory Risks: Climate change, and the regulatory and legislative developments related to climate change, may have a material adverse impact on our business and results of operations.
Increased government or governmental bodies contemplating legislative and regulatory changes in response to the potential impact of climate change could impose significant costs on us and our suppliers and customers, including increased cost of materials and natural resources, sources and supply of energy, capital equipment, environmental monitoring and reporting, or other costs to comply with such regulations.
Increased government or governmental bodies contemplating legislative and regulatory changes in response to the potential impact of climate change could impose significant costs on us and our suppliers and customers, including increased cost of 14 Table of Contents materials and natural resources, sources and supply of energy, capital equipment, environmental monitoring and reporting, or other costs to comply with such regulations.
The Company’s operating activities are subject to a number of risks generally associated with multi-national operations, including risks relating to the following: • general economic conditions; • currency fluctuations and exchange restrictions; • import and export duties and restrictions; • the imposition of tariffs and other import or export barriers; • compliance with regulations governing import and export activities; • current and changing regulatory requirements; • political and economic instability; • potentially adverse income tax consequences; • transportation delays and interruptions; • labor unrest; • natural disasters; • terrorist activities; • public health concerns, including the outbreak of the coronavirus or other pandemics; • difficulties in staffing and managing multi-national operations; and 13 Table of Contents • limitations on the Company’s ability to enforce legal rights and remedies.
The Company’s operating activities are subject to a number of risks generally associated with multi-national operations, including risks relating to the following: • general economic conditions; • currency fluctuations and exchange restrictions; • import and export duties and restrictions; • the imposition of tariffs and other import or export barriers; • compliance with regulations governing import and export activities; • current and changing regulatory requirements; • political and economic instability; • potentially adverse income tax consequences; • transportation delays and interruptions; • labor unrest; • natural disasters; • terrorist activities; • war and acts of war • public health concerns, including the outbreak of the coronavirus or other pandemics; • difficulties in staffing and managing multi-national operations; and • limitations on the Company’s ability to enforce legal rights and remedies.
The introduction of products embodying new technologies and the emergence of new industry standards could render its existing products obsolete and unmarketable before it can recover any or all of its research, development, and commercialization expenses on capital investments. Furthermore, the life cycles of its products may change and are difficult to estimate.
The introduction of products embodying new technologies and the emergence of new industry standards could render its existing products obsolete and 13 Table of Contents unmarketable before it can recover any or all of its research, development, and commercialization expenses on capital investments. Furthermore, the life cycles of its products may change and are difficult to estimate.
These actions could result in 14 Table of Contents impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. The Company may be unsuccessful in any of its current or future efforts to restructure or consolidate its business.
These actions could result in impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. The Company may be unsuccessful in any of its current or future efforts to restructure or consolidate its business.
The Company is exposed to, and may be adversely affected by, potential security breaches or other disruptions to its information technology systems and data security. The Company relies on its information technology systems and networks in connection with many of its business activities.
The Company is exposed to, and may be adversely affected by, potential security breaches or other disruptions to its information technology systems and data security. 18 Table of Contents The Company relies on its information technology systems and networks in connection with many of its business activities.
The bankruptcy or insolvency of a major customer could adversely affect the Company. The bankruptcy or insolvency of a major customer could result in lower sales revenue and cause a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows.
The bankruptcy or insolvency of a major customer could result in lower sales revenue and cause a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows.
Any of these factors may adversely affect the Company’s financial condition and results of operations. 11 Table of Contents Disruptions in the Company’s manufacturing, supply or distribution chain could result in an adverse impact on results of operations. The Company sources materials and sells product through various global network channels.
Any of these factors may adversely affect the Company’s financial condition and results of operations. Disruptions in the Company’s manufacturing, supply or distribution chain could result in an adverse impact on results of operations. The Company sources materials and sells product through various global network channels. A disruption could occur within the Company’s manufacturing, distribution or supply chain network.
In the past, the Company has taken actions to restructure and optimize its production and manufacturing capabilities and efficiencies through relocations, consolidations, plant closings or asset sales. In the future, the Company may take additional restructuring actions including the consolidating, closing or selling of additional facilities.
Reorganization activities may lead to additional costs and material adverse effects. In the past, the Company has taken actions to restructure and optimize its production and manufacturing capabilities and efficiencies through relocations, consolidations, plant closings or asset sales. In the future, the Company may take additional restructuring actions including the consolidating, closing or selling of additional facilities.
In addition, the Organization for Economic Cooperation and Development (“OECD”) is working with a group of more than 100 countries to significantly change the tax treatment of multinational businesses, subjecting them to tax in additional jurisdictions, modifying the methods by which they allocate profits among jurisdictions, and subjecting them to a minimum level of tax.
The Organization for Economic Cooperation and Development (“OECD”) has been working with a group of more than 100 countries to significantly change the tax treatment of multinational businesses, subjecting them to tax in additional jurisdictions, modifying the methods by which they allocate profits among jurisdictions, and subjecting them to a minimum level of tax of 15%, on a country-by-country-basis.
The tax rates applicable in the jurisdictions within which the Company operates vary widely. Therefore, the Company’s effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction. The Company’s tax returns are subject to examination by various U.S. and non-U.S. tax authorities, including the U.S. Internal Revenue Service.
Therefore, the Company’s effective tax rate may be adversely affected by changes in the mix of its earnings by jurisdiction. The Company’s tax returns are subject to examination by various U.S. and non-U.S. tax authorities, including the U.S. Internal Revenue Service.
The Company continues to hold material amounts of goodwill and other long-lived assets on its balance sheet. A decline in expected profitability, particularly if there is a decline in the global economy, could call into question the recoverability of the Company’s related goodwill and other long-lived tangible and intangible assets and require the write-down or write-off of these assets.
A decline in expected profitability, particularly if there is a decline in the global economy, could call into question the recoverability of the Company’s related goodwill and other long-lived tangible and intangible assets and require the write-down or write-off of these assets.
Plans to minimize or eliminate any loss of revenues during restructuring or consolidation may not be achieved. These activities may have a material adverse effect upon the Company’s business, financial condition and results of operations. The Company’s ability to manage currency or commodity price fluctuations or supply shortages is limited.
Plans to minimize or eliminate any loss of revenues during restructuring or consolidation may not be achieved. These activities may have a material adverse effect upon the Company’s business, financial condition and results of operations.
A disruption could occur within the Company’s manufacturing, distribution or supply chain network. This could include damage or destruction due to various causes including natural disasters or political instability which would cause one or more of these network channels to become non-operational.
This could include damage or destruction due to various causes including natural disasters or political instability which would cause one or more of these network channels to become non-operational.
Therefore, it is subject to changes in tax laws in each of these jurisdictions, including changes discussed in the paragraphs below. The outcome of these and other legislative developments, including changes to interpretations of recently enacted legislation, could have a material adverse effect on the Company’s future effective tax rate and cash flows.
The outcome of these and other legislative developments, including changes to interpretations of recently enacted legislation, could have a material adverse effect on the Company’s future effective tax rate and cash flows.
Changes in foreign exchange rates could have an adverse effect on the Company's results of operations, financial position and cash flows. The Company’s revenues may vary significantly from period to period.
The Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso. Changes in foreign exchange rates could have an adverse effect on the Company's results of operations, financial position and cash flows. The Company’s revenues may vary significantly from period to period.
The Company's customers, suppliers, employees and operations are located in numerous countries around the world, and contribute significantly to its revenues and earnings. Sales to customers outside the U.S. constituted approximately 69% of the Company's net sales in fiscal 2021. Many of the Company's key customers are located outside of U.S. and maintain global operations.
The Company's customers, suppliers, employees and operations are located in numerous countries around the world, and contribute significantly to its revenues and earnings. Sales to customers outside the U.S. constituted approximately 65% of the Company's net sales in fiscal 2023, including approximately 23% to China, which decreased from 25% in fiscal 2022.
The Company’s effective tax rate could materially increase as a consequence of various factors, including U.S. and/or international tax legislation, mix of the Company’s earnings by jurisdiction, and U.S. and non-U.S. jurisdictional tax audits. The Company is subject to taxes in the U.S. and numerous non-U.S. jurisdictions.
The risk of environmental remediation exists, and the Company is in the process of remediating the mines considered to be the most at risk. 3) Financial Risks: The Company’s effective tax rate could materially increase as a consequence of various factors, including U.S. and/or international tax legislation, mix of the Company’s earnings by jurisdiction, and U.S. and non-U.S. jurisdictional tax audits.
Changes in U.S. and other countries trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
Any future climate change regulations could also adversely impact our ability to compete with companies not subject to such regulations. Changes in U.S. and other countries trade policy, including the imposition of tariffs and the resulting consequences, may have a material adverse impact on our business and results of operations.
Although the Company's financial results are reported in U.S. dollars, the majority of the Company’s operations consist of manufacturing and sales activities in foreign countries. The Company’s most significant net long exposure is to the euro. The Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso.
A significant fluctuation between the U.S. dollar and other currencies could adversely impact the Company's revenue and earnings. Although the Company's financial results are reported in U.S. dollars, the majority of the Company’s operations consist of manufacturing and sales activities in foreign countries. The Company’s most significant net long exposure is to the euro.
However, there can be no assurance as to the outcome of these examinations. 15 Table of Contents A decline in expected profitability of the Company or individual reporting units of the Company could result in the impairment of assets, including goodwill and other long-lived assets.
A decline in expected profitability of the Company or individual reporting units of the Company could result in the impairment of assets, including goodwill and other long-lived assets. 17 Table of Contents The Company continues to hold material amounts of goodwill and other long-lived assets on its balance sheet.
Such an occurrence could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows. A significant fluctuation between the U.S. dollar and other currencies could adversely impact the Company's revenue and earnings.
Such an occurrence could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows. The bankruptcy or insolvency of a major customer could adversely affect the Company.
Any of these factors could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows. The COVID-19 pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.
Any of these factors could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows. 15 Table of Contents Environmental liabilities could adversely impact the Company’s financial position.
The volatility of the Company’s stock price could affect the value of an investment in the Company’s stock and future financial position. 16 Table of Contents The market price of the Company’s stock can fluctuate widely.
The volatility of the Company’s stock price could affect the value of an investment in the Company’s stock and future financial position. The market price of the Company’s stock can fluctuate widely. Between December 31, 2022 and December 30, 2023, the closing sale price of the Company’s common stock ranged between a low of $212.8 and a high of $309.9.
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes.
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes. However, there can be no assurance as to the outcome of these examinations. 16 Table of Contents The Company’s ability to manage currency or commodity price fluctuations or supply shortages is limited.
Such legislation could potentially deny tax deductions for certain expenses and/or subject to tax the income earned in certain low tax jurisdictions. The Company has two subsidiaries in China which benefit from lower income tax rates due to “tax holidays” which apply for three-year periods.
The Company’s income tax rate in certain non-U.S. jurisdictions is lower than 15%. Once these minimum tax rules are effective, they could have a significant adverse effect on the Company’s future effective tax rate and cash flows. The Company has two subsidiaries in China which benefit from lower income tax rates due to “tax holidays” which apply for three-year periods.
Potential regulations or standards could mandate more restrictive manufacturing requirements, such as stricter limits on greenhouse gas emissions and material used in production. Any future climate change regulations could also adversely impact our ability to compete with companies not subject to such regulations.
Potential regulations or standards could mandate more restrictive manufacturing requirements, such as stricter limits on greenhouse gas emissions and material used in production. Some jurisdictions have already passing such laws. For example, California enacted legislation in 2023 requiring disclosure of certain companies' greenhouse gas (GHG) emissions, climate-related financial risks, voluntary carbon offsets (VCOs), and certain climate-related emission claims.
Removed
The World Health Organization declared the COVID-19 outbreak a pandemic in 2020, and the virus continues to spread in areas where we operate and sell our products. The COVID-19 pandemic and similar situations/circumstances in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments.
Added
Economic conditions in China have been, and may continue to be, volatile and uncertain. In addition, the legal and regulatory system in China continues to evolve and is subject to change. There also continues to be significant uncertainty about the relationship between the U.S. and China, including with respect to geopolitics, trade policies, treaties, government regulations, and tariffs.
Removed
Several public health organizations have recommended, and some local governments have implemented, certain measures to slow and limit the transmission of the virus, including travel restrictions, shelter-in-place requirements and social distancing requirements.
Added
Further deterioration of economic conditions or outlook, such as lower economic growth, recession or fears of recession in China may adversely affect the demand for or profitability of our products and services. Many of the Company's key customers are located outside of U.S. and maintain global operations.
Removed
Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential increased vulnerability to cybersecurity incidents, including breaches of information systems security due to widespread remote working arrangements, potential border closures.
Added
The Company is subject to taxes in the U.S. and numerous non-U.S. jurisdictions. Therefore, it is subject to changes in tax laws in each of these jurisdictions, including changes discussed in the paragraphs below.
Removed
Our suppliers and customers, including OEMs and distribution partners, may also face similar disruptions to their operations, which could lead to a disruption in our supply chain as well as decreased demand for our products.
Added
As part of this effort, in December of 2021, the OECD published model rules to assist with implementation of the minimum tax regime. In December of 2022, the European Union reached an agreement pursuant to which all European Union countries agreed to enact laws based upon the OECD-led minimum tax proposals.
Removed
These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. These disruptions may continue to occur and may result in future impairment, restructuring and other charges.
Added
As of the end of 2023, many of the European Union countries have already enacted these rules effective for years beginning on or after December 31, 2023. Similar legislation was adopted, or is expected to be adopted, in other countries with widespread implementation of the global minimum tax anticipated by the end of 2025.
Removed
To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors disclosed in Part I, Item 1A. Risk Factors , including those relating to our products and services, financial performance, debt covenant compliance and debt obligations.
Added
The tax holiday for one of the subsidiaries expired at the end of 2022 but was later extended for an additional three years, retroactive to include all of 2023, as well as 2024 and 2025, and for the other subsidiary the tax holiday expired at the end of 2023.
Removed
The ultimate magnitude of COVID-19, including the extent of its impact on our financial and operational results, which could be material, will be determined by the length of time that the pandemic continues, its effect on the demand for our services, as well as the effect of governmental regulations imposed in response to the pandemic.
Removed
We cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, results of operations and/or cash flows. Environmental liabilities could adversely impact the Company’s financial position.
Removed
The risk of environmental remediation exists, and the Company is in the process of remediating the mines considered to be the most at risk. 3) Financial Risks: Reorganization activities may lead to additional costs and material adverse effects.
Removed
However, significant shortages that disrupt the supply of raw materials or result in price increases could affect prices the Company charges its customers, its product costs, and the competitive position of its products and services.
Removed
U.S. tax legislative proposals currently being considered in a bill referred to as “Build Back Better” could, among other things, increase the Company’s U.S. taxes on non-U.S. earnings, effective in 2023.
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As part of this effort, during 2021, the OECD reached a near-unanimous agreement among the working group jurisdictions to apply a minimum income tax rate of 15%, on a country-by-country basis.
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In December of 2021, the OECD published model rules to assist with implementation of the minimum tax regime, proposed to be effective in 2023, and the European Union published a directive that would incorporate the OECD-led minimum tax proposals into European Union law. The Company’s income tax rate in certain non-U.S. jurisdictions is lower than 15%.
Removed
Enactment of these minimum tax proposals, and the other proposals discussed above, could have a material adverse effect on the Company’s future effective tax rate and cash flows. Certain European jurisdictions, including Germany and the Netherlands, have enacted or will enact tax legislation based upon directives from the European Union.
Removed
Between December 26, 2020 and January 1, 2022, the closing sale price of the Company’s common stock ranged between a low of $234.59 and a high of $334.84.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeITEM 2. PROPERTIES. The Company’s engineering and research and development, manufacturing, sales, and distribution centers are located in approximately 7 7 owned o r leased facilities worldwid e with primary operations in China, Germany, Italy, Japan, Lithuania, Mexico, Netherlands, Philippines, South Korea, U.K, and the U.S. totaling approximately 3.9 million square feet.
Biggest changeITEM 2. PROPERTIES. The Company’s engineering and research and development, manufacturing, sales, warehouses, and distribution centers are located in approximately 76 owned or leased facilities worldwide with primary operations in China, France, Germany, India, Ireland, Italy, Japan, Lithuania, Mexico, Netherlands, Philippines, South Korea, Spain, U.K, the U.S., and Vietnam totaling approximately 5.0 million square feet.
The Company’s owned facilities include approximately 2.1 million square feet and the Company’s leased facilities include approximately 1.8 million square feet. The Company’s corporate headquarters is located in the U.S. in Chicago, Illino is. The Company believes its facilities are adequate to meet its requirements for the foreseeable future.
The Company’s owned facilities include approximately 2.6 million square feet and the Company’s leased facilities include approximately 2.4 million square feet. The Company’s corporate headquarters is located in the U.S. in Chicago, Illinois. The Company believes its facilities are adequate to meet its requirements for the foreseeable future.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+5 added−0 removed5 unchanged
Biggest changeSethna joined Littelfuse in 2015 as Senior Vice President of Finance until assuming her current position in 2016. Prior to joining Littelfuse, Ms. Sethna served from 2011 to 2015 as Vice President and Corporate Controller of Illinois Tool Works Inc., a diversified manufacturer of specialized industrial equipment, consumables, and related service businesses. Ms.
Biggest changeSethna served from 2011 to 2015 as Vice President and Corporate Controller of Illinois Tool Works Inc., a diversified manufacturer of specialized industrial equipment, consumables, and related service businesses. Ms. Sethna is a Certified Public Accountant in Illinois. Ryan K. Stafford, Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and Corporate Secretary. Mr.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. Information about our Executive Officers. The executive officers of the Company are as follows: Name Age Position David W. Heinzmann 58 President and Chief Executive Officer Meenal A. Sethna 52 Executive Vice President and Chief Financial Officer Ryan K.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. Information about our Executive Officers. The executive officers of the Company are as follows: Name Age Position David W. Heinzmann 60 President and Chief Executive Officer Meenal A. Sethna 54 Executive Vice President and Chief Financial Officer Ryan K.
Stafford 54 Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and Corporate Secretary Maggie Chu 53 Senior Vice President and Chief Human Resources Officer Matthew J.
Stafford 56 Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and Corporate Secretary Maggie Chu 55 Senior Vice President and Chief Human Resources Officer Matthew J.
Heinzmann began his career at Littelfuse in 1985 as a manufacturing engineer and has held positions of increasing responsibility since that time, including Vice President, Global Operations, from 2007 to 2014, and Chief Operating Officer from 2014 until assuming his current position in 2017. Meenal A. Sethna, Executive Vice President and Chief Financial Officer. Ms.
Heinzmann, President and Chief Executive Officer and a member of the Board of Directors. Mr. Heinzmann began his career at Littelfuse in 1985 as a manufacturing engineer and has held positions of increasing responsibility since that time, including Vice President, Global Operations, from 2007 to 2014, and Chief Operating Officer from 2014 until assuming his current position in 2017.
He then held various positions of increasing responsibility at Littelfuse including Sales Director EMEA; Global Director of Sales; Managing Director, Passenger Car Products from 2013 to 2014; and Vice President, Passenger Car Products, from 2015 until assuming his current position in 2018. Deepak Nayar, Senior Vice President and General Manager, Electronics Business. Mr.
He then held various positions of increasing responsibility at Littelfuse including Sales Director EMEA; Global Director of Sales; Managing Director, Passenger Car Products from 2013 to 2014; and Vice President, Passenger Car Products, from 2015 until assuming his current position in 2018. 21 Table of Contents Peter Kim, Senior Vice President and General Manager, Industrial Business. Mr.
Nayar joined Littelfuse in 2005 as Business Line Director of the Electronics Business Unit. He then held various positions of increasing responsibility at Littelfuse including Vice President, Global Sales, Electronics Business Unit, and from 2011 until assuming his current position in 2020, Senior Vice President, Electronics Business Unit. 18 Table of Contents PART II
He then held various positions of increasing responsibility at Littelfuse including Vice President, Global Sales, Electronics Business Unit; Senior Vice President, Electronics Business Unit from 2011 until 2019; and Senior Vice President and General Manager, Electronics and Industrial Business from 2019 until assuming his current position in 2022. 22 Table of Contents PART II
Sethna is a Certified Public Accountant in Illinois. Ryan K. Stafford, Executive Vice President, Mergers and Acquisitions, Chief Legal Officer and Corporate Secretary. Mr. Stafford joined Littelfuse as its first General Counsel and Chief Human Resources Officer in 2007, became Corporate Secretary in 2017, and assumed his current position in 2021. Prior to joining Littelfuse, Mr.
Stafford joined Littelfuse as its first General Counsel and Chief Human Resources Officer in 2007, became Corporate Secretary in 2017, and assumed his current position in 2021. Prior to joining Littelfuse, Mr.
Cole 50 Senior Vice President, eMobility and Corporate Strategy Alexander Conrad 56 Senior Vice President and General Manager, Passenger Vehicle Business Deepak Nayar 62 Senior Vice President and General Manager, Electronics Business David W. Heinzmann, President and Chief Executive Officer and a member of the Board of Directors. Mr.
Cole 52 Senior Vice President, eMobility and Corporate Strategy Alexander Conrad 57 Senior Vice President and General Manager, Passenger Vehicle Business Peter Kim 51 Senior Vice President and General Manager, Industrial Business Chad Marak 44 Senior Vice President and General Manager, Semiconductor Products Deepak Nayar 64 Senior Vice President and General Manager, Electronics Business David W.
Added
Meenal A. Sethna, Executive Vice President and Chief Financial Officer. Ms. Sethna joined Littelfuse in 2015 as Senior Vice President of Finance until assuming her current position in 2016. Prior to joining Littelfuse, Ms.
Added
Kim joined Littelfuse in 2003 as Manager, Global Procurement. He then held various positions of increasing responsibility at Littelfuse including Director, Global Procurement; Director, Electronics Product Management; Vice President, Asia Sales; Vice President, Global Sales from 2017 to 2019; and Vice President and General Manager, Industrial Business from 2019 until assuming his current position in 2022.
Added
Chad Marak, Senior Vice President and General Manager, Semiconductor Products. Mr. Marak joined Littelfuse in 2007 as Senior Design Engineer. Mr.
Added
Marak held various positions of increasing responsibility at Littelfuse including Technical Marketing Manager; Director of Technical Marketing; Director of Semiconductor Business Development; Vice President, Product Management from 2019 to 2020; and Vice President and General Manager, Semiconductor Products from 2020 until assuming his current position in 2022. Deepak Nayar, Senior Vice President and General Manager, Electronics Business. Mr.
Added
Nayar joined Littelfuse in 2005 as Business Line Director of the Electronics Business Unit.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−3 removed4 unchanged
Biggest changeThe stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance. 19 Table of Contents 12/2016 12/2017 12/2018 12/2019 12/2020 12/2021 Littelfuse, Inc. $ 100 $ 131 $ 115 $ 129 $ 174 $ 217 Russell 1000 100 122 116 152 184 233 Dow Jones US Electrical Components & Equipment 100 127 112 138 167 209 The Dow Jones Electrical Components and Equipment Industry Group Index includes the common stock of A.
Biggest changeThe stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance. 23 Table of Contents 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 Littelfuse, Inc. $ 100 $ 113 $ 152 $ 189 $ 133 $ 164 Russell 1000 100 131 159 201 163 206 Dow Jones US Electrical Components & Equipment 100 124 149 187 154 197 The Dow Jones Electrical Components and Equipment Industry Group Index includes the common stock of AMETEK, Inc.; Amphenol Corp.; Arrow Electronics, Inc.; Avnet, Inc.; Eaton Corp plc; Emerson Electric Co.; Hubbell Inc.; Jabil Circuit, Inc.; Littelfuse, Inc.; Methode Electronics, Inc.; Regal Rexnord Corp.; Sensata Technologies Holding plc.; and TE Connectivity Ltd.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of the Company’s common stock are traded under the symbol “LFUS” on the NASDAQ Global Select Market SM . Number of Holders As of February 11, 2022, there were 56 holders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of the Company’s common stock are traded under the symbol “LFUS” on the NASDAQ Global Select Market SM . Number of Holders As of February 9, 2024, there were 55 holders of record of the Company’s common stock.
However, the Company expects to continue paying cash dividends on a quarterly basis for the foreseeable future. Recent Sales of Unregistered Securities There were no sales of unregistered securities by us or affiliates during the fiscal year ended January 1, 2022.
However, the Company expects to continue paying cash dividends on a quarterly basis for the foreseeable future. Recent Sales of Unregistered Securities There were no sales of unregistered securities by us or affiliates during the fiscal year ended December 30, 2023.
For Littelfuse, Inc. and all indexes noted above, a $100 investment made on December 31, 2016 and reinvestment of all dividends is assumed.
For Littelfuse, Inc. and all indexes noted above, a $100 investment made on December 29, 2018 and reinvestment of all dividends is assumed.
On April 28, 2021, the Company announced that the Board of Directors authorized a new 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 to replace its previous 2020 program.
Purchases of Equity Securities 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.
The Company did not repurchase shares of its common stock during the fiscal year ended January 1, 2022. There are $300 million in the aggregate of shares available for purchase under the new program as of January 1, 2022.
The Company did not repurchase shares of its common stock during the fiscal year ended December 30, 2023. There are $300 million in the aggregate of shares available for purchase under the program as of December 30, 2023.
Returns for the Company’s fiscal years presented above are as of the last day of the respective fiscal year which was December 30, 2017, December 29, 2018, December 28, 2019, December 26, 2020, and January 1, 2022 for the fiscal years 2017, 2018, 2019, 2020 and 2021, respectively. 20 Table of Contents
Returns for the Company’s fiscal years presented above are as of the last day of the respective fiscal year which was December 28, 2019, December 26, 2020, January 1, 2022, December 31, 2022 and December 30, 2023 for the fiscal years 2019, 2020, 2021, 2022 and 2023, respectively. 24 Table of Contents ITEM 6. [RESERVED.]
Removed
Purchases of Equity Securities On April 26, 2019, the Company's Board of Directors authorized a program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2019 to April 30, 2020 ("2019 program").
Removed
On April 29, 2020, the Company announced that the Board of Directors authorized a new program to repurchase up to 1,000,000 shares of the Company's common stock for the period May 1, 2020 to April 30, 2021 (the "2020 program") to replace its previous expired 2019 program.
Removed
O. Smith Corp.; AAON, Inc.; American Superconductor Corp.; AMETEK, Inc.; Amphenol Corp.; Arrow Electronics, Inc.; Avnet, Inc.; AVX Corp.; Capstone Turbine Corp.; CTS Corp.; General Cable Corp.; Hubbell Inc. Class B; Jabil Circuit, Inc.; Littelfuse, Inc.; Methode Electronics, Inc.; Plexus Corp.; Powerwave Technologies, Inc.; Regal-Beloit Corp.; Vicor Corp.; and Vishay Intertechnology, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

114 edited+77 added−68 removed62 unchanged
Biggest changeThe increase in net sales was primarily due to higher volume across all businesses within the Electronics and Transportation segments compared to the 2020 that had production disruptions due to the impact of COVID-19. 32 Table of Contents RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 26, 2020 AS COMPARED TO THE YEAR ENDED DECEMBER 28, 2019 The fiscal year 2020 included approximately $44.0 million of non-segment charges, of which $2.3 million of charges are acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions.
Biggest changeThe 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. 31 Table of Contents RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2022 AS COMPARED TO THE YEAR ENDED JANUARY 01, 2022 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.
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.
When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity, distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.
The effects of modifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive (loss) income.
The effects of modifications are recognized immediately on the Consolidated Balance Sheets but are generally amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss.
Allowance for Doubtful Accounts The Company currently measures the expected credit losses based on our historical credit loss experience. The Company has not experienced significant recent or historical credit losses and is not forecasting any significant credit losses which would require adjustments to our methodology.
Allowance for Credit Losses The Company currently measures the expected credit losses based on our historical credit loss experience. The Company has not experienced significant recent or historical credit losses and is not forecasting any significant credit losses which would require adjustments to our methodology.
Recent Accounting Pronouncements Recently issued accounting standards and their estimated effect on the Company’s Consolidated Financial Statements are described in Note 1, Summary of Significant Accounting Policies and Other Information , of the Notes to Consolidated Financial Statements. 40 Table of Contents
Recent Accounting Pronouncements Recently issued accounting standards and their estimated effect on the Company’s Consolidated Financial Statements are described in Note 1, Summary of Significant Accounting Policies and Other Information , of the Notes to Consolidated Financial Statements. 41 Table of Contents
The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. For more information see Note 14, Income Taxes , of the Notes to Consolidated Financial Statements. 39 Table of Contents (e) Purchase obligations include purchase commitments and commitments for capital expenditures not recognized in the Company’s Consolidated Balance Sheets.
The Company has elected to pay the 2017 Littelfuse Toll Charge over the eight-year period prescribed by the Tax Act. For more information see Note 14, Income Taxes , of the Notes to Consolidated Financial Statements. (e) Purchase obligations include purchase commitments and commitments for capital expenditures not recognized in the Company’s Consolidated Balance Sheets.
Goodwill Impairment Assumptions 24 Table of Contents 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.
Goodwill Impairment Assumptions 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.
The fair value of stock-option awards is estimated at the grant date using the Black-Scholes option pricing model, 28 Table of Contents which includes assumptions for volatility, expected term, risk-free interest rate and dividend yield. Expected volatility is based on implied volatilities from traded options on Littelfuse stock, historical volatility of Littelfuse stock and other factors.
The fair value of stock-option awards is estimated at the grant date using the Black-Scholes option pricing model, which includes assumptions for volatility, expected term, risk-free interest rate and dividend yield. Expected volatility is based on implied volatilities from traded options on Littelfuse stock, historical volatility of Littelfuse stock and other factors.
Built upon that framework, the Company has positioned itself around the structural growth themes of sustainability, connectivity, and safety, which will 22 Table of Contents continue to drive increased demand for the Company’s innovative, reliable solutions across the transportation, industrial and electronics end markets that it serves.
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 also leverages strategic acquisitions to enhance and sustain its organic growth. The Company will continue to make targeted strategic acquisitions that align to its strategy and financial metrics to drive growth across its business, products, markets, and technologies while leveraging existing customers and targeting new customers.
The Company also leverages strategic acquisitions to enhance its organic growth. The Company will continue to make targeted strategic acquisitions that align to its strategy and financial metrics to drive growth across its businesses, products, markets, and technologies while leveraging existing customers and targeting new customers.
Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, non-U.S. or U.S. tax laws could result in changes to these judgments and the need to record additional tax liabilities.
Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions and tax laws could result in changes to these judgments and the need to record additional tax liabilities.
The Company also analyzes all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer, macroeconomic considerations and historical collection and loss experience. Historically, the allowance for doubtful accounts has been adequate to cover bad debts.
The Company also analyzes all other customers based on a variety of factors including the length of time the receivables are past due, the financial health of the customer, macroeconomic considerations and historical collection and loss experience. Historically, the allowance for credit losses has been adequate to cover bad debts.
In accordance with guidance issued by the FASB staff, the Company has adopted an accounting policy to treat any GILTI inclusions as a period cost if and when incurred.
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.
Strategic Objectives Priorities Double-digit sales growth ● Increased product content with existing and new customers, and expand market share 5-7% average annual growth from annual organic sales growth ● Expand portfolio into new and underpenetrated, high-growth geographies and end markets 5-7% average annual growth from strategic acquisitions ● Increase innovation capabilities and investments ● Leverage breadth of go-to-market strategies ● Targeted mergers and acquisitions to enhance and sustain organic growth EPS growth ● Focus on higher profitability growth opportunities Earnings per share growth greater than revenue growth ● Improve operating margins through operational and commercial excellence ● Disciplined approach to balancing costs with long-term strategic investments Capital allocation and returns ● Disciplined management of working capital Cash flow from operations less capital expenditures is targeted to approximate or exceed net income ● Deployment of capital consistent with capital allocation priorities Target 40% of free cash flow returned to shareholders ● Mergers and acquisitions that align with strategy and financial metrics Remainder focused on strategic acquisitions ● Grow dividend in line with earnings Return on invested capital percentage in the high-teens ● Opportunistic share repurchases The Company’s strategy is focused on accelerating organic growth by increasing its product content in applications and share gains, enhancing technology efforts to drive innovation, capitalizing on cross segment opportunities, and gaining traction in underpenetrated, high-growth geographies and end markets.
These measures include organic sales growth, operating margins, cash flow from operations, and returns on invested capital. 26 Table of Contents Strategic Objectives Priorities Double-digit sales growth ● Increase product content with existing and new customers, and expand market share 5-7% average annual organic sales growth ● Expand presence (i.e. with portfolio and infrastructure) into new and underpenetrated, high-growth geographies and end markets 5-7% average annual growth from strategic acquisitions ● Increase innovation capabilities and investments ● Leverage breadth of go-to-market strategies ● Target mergers and acquisitions that enhance and sustain organic growth EPS growth ● Focus on higher profitability growth opportunities Earnings per share growth greater than revenue growth ● Improve operating margins through operational and commercial excellence ● Disciplined approach to balancing costs with long-term strategic investments Capital allocation and returns ● Disciplined management of working capital Cash flow from operations less capital expenditures (free cash flow) is targeted to approximate or exceed net income ● Deployment of capital consistent with capital allocation priorities Target 40% of free cash flow returned to shareholders ● Mergers and acquisitions that align with strategy and financial metrics Remainder focused on strategic acquisitions ● Grow dividend in line with earnings Return on invested capital percentage in the high-teens ● Opportunistic share repurchases The Company’s strategy is focused on accelerating organic growth by increasing its product content in applications and share gains, enhancing technology efforts to drive innovation, expanding its digital presence, capitalizing on cross segment opportunities, and gaining traction in niche, high-growth end markets.
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 and marine. The Company is also a key enabler of electrification, or eMobility, across these transportation applications, and EV charging infrastructure.
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.
Euro denominated debt amounts are converted based on the Euro to U.S. Dollar spot rate at year end. For more information see Note 9, Debt, of the Notes to Consolidated Financial Statements. (b) Amounts represent estimated contractual interest payments on outstanding debt. Rates in effect as of January 1, 2022 are used for variable rate debt.
Euro denominated debt amounts are converted based on the Euro to U.S. Dollar spot rate at year end. For more information see Note 9, Debt, of the Notes to Consolidated Financial Statements. (b) Amounts represent estimated contractual interest payments on outstanding debt. Rates in effect as of December 30, 2023 are used for variable rate debt.
All seven of the reporting units passed the goodwill impairment test, with fair values that exceeded the carrying values between 95% and 380% of their respective estimated fair values.
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.
Deferred taxes are recognized for the future effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred taxes are recognized for the future effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
The results of the goodwill impairment test as of September 26, 2021 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 2021 annual goodwill impairment test.
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 Company is also required to pay commitment fees on unused portions of the credit agreement ranging from 0.125% to 0.20%, based on the Consolidated Leverage Ratio, as defined in the agreement. The credit agreement includes representations, covenants and events of default that are customary for financing transactions of this natu re.
The Company is also required to pay commitment fees on unused portions of the Credit Facility ranging from 0.10% to 0.175%, based on the Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit Agreement includes representations, covenants and events of default that are customary for financing transactions of this nature.
At January 1, 2022, the Company was in compliance with all covenants under the credit agreement. 36 Table of Contents Senior Notes On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in two series.
At December 30, 2023, the Company was in compliance with all covenants under the credit agreement. Senior Notes On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold €212 million aggregate principal amount of senior notes in two series.
Based on the analysis, the Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value.
Based on the analysis, the Company records adjustments to inventory for excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. Historically, inventory reserves have been adequate to reflect inventory at net realizable value.
Fiscal year 2021 also 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. dollar, while fiscal year 2020 included approximately $14.9 million in foreign currency exchange gains primarily attributable to changes in the value of the Euro, Philippine peso, and Chinese renminbi against the U.S. dollar.
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. dollar.
In addition to the above contractual obligations and commitments, the Company had the following obligations at January 1, 2022: The Company has Company-sponsored defined benefit pension plans covering employees at various non-U.S. subsidiaries including the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. At January 1, 2022, the Company had a net unfunded status of $38.2 million.
In addition to the above contractual obligations and commitments, the Company had the following obligations at December 30, 2023: The Company has Company-sponsored defined benefit pension plans covering employees at various non-U.S. subsidiaries including the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. At December 30, 2023, the Company had a net unfunded status of $35.8 million.
On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S. Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S.
Senior Notes, Series A due 2022”), and $100 million in aggregate principal amount of 3.74% Senior Notes, Series B, due February 15, 2027 (“U.S. Senior Notes, Series B due 2027”) (together, the “U.S. Senior Notes due 2022 and 2027”) were funded. Interest on the U.S.
With respect to the remaining $154.9 million, the Company has recognized deferred tax liabilities on approximately $68.6 million as of January 1, 2022 because the amounts are not considered to be permanently reinvested, and the Company may access additional amounts through loans and other means. Repatriation of some non-U.S. cash balances is restricted by local laws.
With respect to the remaining $162.6 million, the Company has recognized deferred tax liabilities on approximately $106.3 million as of December 30, 2023 because the amounts are not considered to be permanently reinvested, and the Company may access additional amounts through loans and other means. Repatriation of some non-U.S. cash balances is restricted by local laws.
Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030” and with the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”) were funded.
Senior Notes, Series A due 2025”) and $125 million in aggregate principal amount of 3.78% Senior Notes, Series B, due February 15, 2030 (“U.S. Senior Notes, Series B due 2030”) (together, the “U.S. Senior Notes due 2025 and 2030”) were funded. Interest on the U.S.
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. Total equity-based compensation expense for all equity compensation plans was $21.4 million, $19.1 million, and $19.9 million in 2021, 2020, and 2019, respectively.
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. Total equity-based compensation expense for all equity compensation plans was $25.7 million, $24.6 million, and $21.4 million in 2023, 2022, and 2021, respectively.
Thus, for the fiscal years ended January 1, 2022 , December 26, 2020, and 25 Table of Contents December 28, 2019 , 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 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.
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 January 1, 2022 and December 26, 2020 were 3.1% and 1.2%, respectively.
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.
On January 27, 2022, the Board of Directors of the Company declared a quarterly cash dividend of $0.53 per share, payable on March 10, 2022 to stockholders of record as of February 24, 2022. Capital Resources The Company expends capital to support its operating and strategic plans.
On January 25, 2024, the Board of Directors of the Company declared a quarterly cash dividend of $0.65 per share, payable on March 7, 2024 to stockholders of record as of February 22, 2024. Capital Resources The Company expends capital to support its operating and strategic plans.
RESULTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 01, 2022 AS COMPARED TO THE YEAR ENDED DECEMBER 26, 2020 The fiscal year 2021 included approximately $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 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.
There are $300 million in the aggregate of shares available for purchase under the new program as of January 1, 2022. During the fiscal year 2021, the Company did not repurchase any shares of its common stock.
There are $300 million in the aggregate of shares available for purchase under the program as of December 30, 2023. During the fiscal years of 2023, 2022, and 2021, the Company did not repurchase any shares of its common stock.
The following describes the Company’s cash flows for the fiscal year ended January 1, 2022 and December 26, 2020: 37 Table of Contents Fiscal Year (in millions) 2021 2020 Net cash provided by operating activities $ 373.3 $ 258.0 Net cash used in investing activities (499.2) (51.4) Net cash used in financing activities (69.0) (67.8) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (9.9) 17.6 (Decrease) increase in cash, cash equivalents, and restricted cash (204.7) 156.4 Cash, cash equivalents, and restricted cash at beginning of period 687.5 531.1 Cash, cash equivalents, and restricted cash at end of period $ 482.8 $ 687.5 Cash Flow from Operating Activities Net cash provided by operating activities was $373.3 million for the fiscal year 2021, an increase of $115.3 million, compared to $258.0 million during the fiscal year 2020.
The following describes the Company’s cash flows for the twelve months ended December 31, 2022 and January 1, 2022: Fiscal Year (in millions) 2022 2021 Net cash provided by operating activities $ 419.7 $ 373.3 Net cash used in investing activities (636.4) (499.2) Net cash provided by (used in) financing activities 310.2 (69.0) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (11.4) (9.8) Increase (decrease) in cash, cash equivalents, and restricted cash 82.1 (204.7) Cash, cash equivalents, and restricted cash at beginning of period 482.8 687.5 Cash, cash equivalents, and restricted cash at end of period $ 564.9 $ 482.8 Cash Flow from Operating Activities Net cash provided by operating activities was $419.7 million for the fiscal year 2022, an increase of $46.4 million, compared to $373.3 million during the fiscal year 2021.
The Company also received proceeds of $15.4 million from the sale of buildings within the Electronics segment during the fiscal year 2021 as compared to proceeds of $4.8 million as a result of the sale of a property within the Industrial segment during the fiscal year 2020.
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.
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.
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. There were no impairment charges recorded during the fiscal years of 2023, 2022 and 2021.
OUTLOOK Vision and Strategy The Company closely collaborates with strategic customers to design and manufacture innovative and reliable solutions to help empower a sustainable, connected, and safer world in virtually every market that uses electrical energy.
The Company does not have any direct operations in Ukraine or Russia. 25 Table of Contents OUTLOOK Vision and Strategy The Company closely collaborates with strategic customers to design and manufacture innovative and reliable solutions to help empower a sustainable, connected, and safer world in virtually every market that uses electrical energy.
Historically, inventory reserves have been adequate to reflect inventory at net realizable value. 27 Table of Contents 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.
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.
Cost of Sales Cost of sales was $1,308.0 million, or 62.9% of net sales, in 2021, compared to $944.5 million, or 65.3% of net sales, in 2020. The increase in cost of sales was primarily due to greater volume across all segments driven by the factors discussed above along with the Hartland and Carling acquisitions.
Cost of Sales Cost of sales was $1,507.0 million, or 59.9% of net sales, in 2022, compared to $1,308.0 million, or 62.9% of net sales, in 2021. 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 the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.
The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.
Further information regarding these items is provided in Note 14, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report. Segment Information The Company reports its operations by the following segments: Electronics, Transportation and Industrial.
Segment Information The Company reports its operations by the following segments: Electronics, Transportation and Industrial. Segment information is described more fully in Note 16, Segment Information , of the Notes to Consolidated Financial Statements included in this Annual Report.
The Company expects to make approximately $2.6 million of contributions to the plans in 2022. For additional information, see Note 11, Benefit Plans , of the Notes to Consolidated Financial Statements. Dividends Cash dividends paid totaled $49.7 million, $46.8 million and $44.7 million for 2021, 2020 and 2019, respectively.
The Company expects to make approximately $2.2 million of contributions to the plans and pay $2.1 million of benefits directly in 2024. For additional information, see Note 11, Benefit Plans , of the Notes to Consolidated Financial Statements. Dividends Cash dividends paid totaled $62.2 million, $55.9 million and $49.7 million for 2023, 2022 and 2021, respectively.
The amended Credit Agreement also allows the Company to increase the size of the revolving credit facility or enter into o ne or more tranches of term loans if there is no event of default and the Company is in compliance with certain financial covenants.
Pursuant to the Credit Agreement, the Company may, from time to time, increase the size of the revolving credit facility or enter into one or more tranches of term loans in minimum increments of $25 million if there is no event of default and the Company is in compliance with certain financial covenants.
Interest on the Euro Senior Notes 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.
On December 8, 2016, the Company entered into a Note Purchase Agreement, pursuant to which the Company issued and sold $125 million aggregate principal amount of senior notes in two series. On February 15, 2017, $25 million in aggregate principal amount of 3.03% Senior Notes, Series A, due February 15, 2022 (“U.S.
The purchase price for Carling was $315 million subject to change for working capital adjustments and the operations of Carling are included in the Transportation segment. The net cash payment of $313.6 million was funded by the Company’s cash on hand. Cash Flow Overview Operating cash inflows are largely attributable to sales of the Company’s products.
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 Operating cash inflows are largely attributable to sales of the Company’s products.
Fiscal year 2020 also included approximately $14.9 million in foreign currency exchange gains primarily attributable to changes in the value of the Euro, Philippine peso, and Chinese renminbi against the U.S. dollar, while fiscal year 2019 included approximately $5.2 million in foreign currency exchange losses primarily attributable to changes in the value of the Euro, Chinese renminbi, and Japanese yen against the U.S. dollar.
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. dollar.
Outstanding borrowings under the amended credit agreement bear interest, at the Company’s option, at either LIBOR, fixed for interest periods of one, two, three or six-month periods, plus 1.25% to 2.00%, or at the bank’s Base Rate, as defined, plus 0.25% to 1.00%, based upon the Company’s Consolidated Leverage Ratio, as defined.
Loans made under the available credit facility pursuant to the Credit Agreement ("the Credit Facility") bear interest at the Company’s option, at either Secured Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three or six-month periods, plus 1.00% to 1.75%, plus a SOFR adjustment of 0.10% or at the bank’s Base Rate, as defined in the Credit Agreement, plus 0.00% to 0.75%, based upon the Company’s Consolidated Leverage Ratio, as defined in the Credit Agreement.
Interest on the U.S. Senior Notes due 2025 and 2030 is payable semiannually on February 15 and August 15, commencing August 15, 2018. The Company was in compliance with its debt covenants as of January 1, 2022.
Senior Notes due 2025 and 2030, the Euro Senior Notes and the U.S. Senior Notes due 2022 and 2027, the “Senior Notes”). Interest on the U.S. Senior Notes due 2032 is payable semiannually on June 30 and December 30, commencing on December 30, 2022. Debt Covenants The Company was in compliance with its debt covenants as of December 30, 2023.
BUSINESS For a description of the Company’s business, segments and product offerings, see Item 1, Business . 2021 EXECUTIVE OVERVIEW Net sales increased by $634.2 million or 43.9% including $27.4 million or 1.9% of favorable changes in foreign exchange rates in 2021 compared to 2020.
BUSINESS For a description of the Company’s business, segments and product offerings, see Item 1, Business . 2023 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 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. Cash Flow from Investing Activities Net cash used in investing activities was $499.2 million for the fiscal year 2021, compared to $51.4 million during the fiscal year 2020.
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.
On April 28, 2021, the Company announced that the Board of Directors authorized a new 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 to replace its previous 2020 program.
Many of the associated projects have long lead-times and require commitments in advance of actual spending. 40 Table of Contents 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.
The following table is a summary of the Company’s net sales by geography: 31 Table of Contents Fiscal Year (in millions) 2021 2020 Change % Change Asia-Pacific $ 955.7 $ 670.5 $ 285.2 42.5 % Americas 694.3 457.8 236.5 51.7 % Europe 429.9 317.4 112.5 35.4 % Total $ 2,079.9 $ 1,445.7 $ 634.2 43.9 % Asia-Pacific Asia-Pacific net sales increased $285.2 million, or 42.5%, in 2021 compared to 2020 and included favorable changes in foreign exchange rates of $12.5 million.
The following table is a summary of the Company’s net sales by geography: Fiscal Year (in millions) 2022 2021 Change % Change Asia-Pacific $ 1,019.9 $ 955.7 $ 64.2 6.7 % Americas 992.3 694.3 298.0 42.9 % Europe 501.7 429.9 71.8 16.7 % Total $ 2,513.9 $ 2,079.9 $ 434.0 20.9 % Asia-Pacific 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 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. 26 Table of Contents 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.
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.
A 1.0% increase in the estimated discount rates would have resulted in no reporting units failing the annual goodwill impairment test. The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates.
The Company believes that its estimates of future cash flows and discount rates are reasonable, but future changes in the underlying assumptions could differ due to the inherent uncertainty in making such estimates. Additionally, price deterioration or lower volume could have a significant impact on the fair values of the reporting units.
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. Within electronics end markets, the Company’s products are found in data center, cloud storage and telecom infrastructure applications, building technologies and automation, appliances, mobile electronics, medical devices, and gaming and entertainment applications.
Within electronics end markets, the Company’s products are found in data center, cloud storage and telecom infrastructure applications, building technologies and automation, appliances, medical devices, gaming and entertainment applications and mobile electronics. The Company leverages its strategic distribution partnerships and deep OEM relationships, coupled with its comprehensive product offerings, to drive product content growth across a broad range of applications.
The Company made payments of $30.0 million on the amended revolving credit facility during the fiscal year ended January 1, 2022. The balance under the facility was $100.0 million as of January 1, 2022.
During the fiscal year 2021, the Company made payments of $30 million on the amended revolving credit facility.
Europe European net sales increased $112.5 million, or 35.4%, in 2021 compared to 2020 and included favorable changes in foreign exchange rates of $14.2 million.
Europe 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.
Cash Flow from Investing Activities Net cash used in investing activities was $51.4 million for the fiscal year 2020, compared to $56.4 million during the fiscal year 2019. Capital expenditures were $56.2 million, representing a decrease of $5.7 million compared to the fiscal year 2019.
Cash Flow from Investing Activities Net cash used in investing activities was $636.4 million for the fiscal year 2022, compared to $499.2 million during the fiscal year 2021. Capital expenditures were $104.3 million, representing an increase of $13.8 million compared to the fiscal year 2021.
Such expenditures include strategic acquisitions, investments to maintain capital assets, develop new products or improve existing products, and to enhance capacity or productivity. Many of the associated projects have long lead-times and require commitments in advance of actual spending.
Such expenditures include strategic acquisitions, investments to maintain capital assets, develop new products or improve existing products, and to enhance capacity or productivity.
Management believes that profitable growth through a combination of organic growth and strategic acquisitions is critical to the Company’s competitiveness, while enhancing value the Company delivers to all of its stakeholders. In addition, the Company continues to implement initiatives across all platforms to enhance productivity while managing its cost structure to align with business conditions.
Management believes profitable growth through a combination of organic growth and strategic acquisitions is critical to the Company’s competitiveness, while enhancing the value it delivers to all of its stakeholders.
Income Taxes Income tax expense for 2020 was $31.3 million, or an effective tax rate of 19.4% compared to income tax expense of $26.8 million, or an effective tax rate of 16.2% for 2019.
Income Taxes Income tax expense for 2022 was $69.7 million, or an effective tax rate of 15.7%, compared to income tax expense of $57.2 million, or an effective tax rate of 16.8% for 2021.
In addition to the factors impacting comparative results for operating income discussed above, income before income taxes was impacted by foreign exchange losses of $17.2 million during the fiscal year ended January 1, 2022 compared to foreign exchange gains of $14.9 million during the fiscal year ended December 26, 2020, and a $19.9 million non-cash pension settlement charge, partially of fset by a $4.0 million increase in unrealized investment gains associated with our equity investment, and lower interest expense of $2.6 million due to lower outstanding borrowings under the credit facility along with a lower effective interest rate and a reduction in coal mining charges of $1.6 million compared to 2020. 30 Table of Contents Income Taxes Income tax expense for 2021 was $57.2 million, or an effective tax rate of 16.8%, compared to income tax expense of $31.3 million, or an effective tax rate of 19.4% for 2020.
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.
Transportation Segment Net sales in the Transportation segment increased $132.3 million, or 33.4%, in 2021 compared to 2020 and included favorable changes in foreign exchange rates of $12.0 million or 3.0%.
Americas 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.
On November 30, 2021, the Company acquired Carling, a leader in switching, circuit protection and power distribution technologies with a strong global presence in commercial transportation, communications infrastructure and marine markets. At the time of acquisition, Carling had annualized sales of approximately $170 million.
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.
Critical Estimates and Significant Accounting Policies 23 Table of Contents The preparation of financial statements in conformity with 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.
These priorities include investments to drive increased organic growth, targeted acquisitions that align to the Company’s strategic and financial metrics, and enhance and sustain its organic growth, and returning capital to shareholders through dividends and opportunistic share repurchases. 27 Table of Contents 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 Company leverages its strategic distribution partnerships and deep OEM relationships, coupled with its comprehensive product offerings, to drive product content growth across a broad range of applications. The Company expects the ever-increasing complexity of application architectures, driven by ongoing electronification and electrification across these end markets, to drive increasing product content opportunities.
The Company expects the ever-increasing advancements of application architectures, driven by ongoing electronification and electrification across these end markets, to drive increasing product content opportunities.
Industrial Segment The Industrial segment net sales increased by $138.9 million, or 123.8%, in 2021 compared to 2020 and included favorable changes in foreign exchange rates of $0.9 million or 0.8%.
Operating margins declined from 12.5% to 8.9%. 34 Table of Contents Industrial Segment Net Sales The Industrial segment net sales increased by $53.8 million, or 21.4%, in 2022 compared to 2021 and included unfavorable changes in foreign exchange rates of $2.2 million or 0.9%.
Of the $326.1 million, at least $171.2 million can be repatriated with minimal tax consequences, although in certain cases a non-U.S. withholding tax would be payable but subsequently refunded.
As of December 30, 2023, $376.9 million of the Company's $555.5 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.
Revolving Credit Facility On April 3, 2020, the Company amended its existing credit agreement to effect certain changes, including, among others: (i) eliminating the $200.0 million unsecured term loan credit facility, the remaining outstanding balance ($140.0 million) of which was repaid in full on April 3, 2020 through the revolving credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company; (iii) modifying performance-based interest rate margins and undrawn fees; and (iv) extending the maturity date to April 3, 2025.
Revolving Credit Facility On June 30, 2022, the Company amended and restated its Credit Agreement, dated as of April 3, 2020 (as so amended and restated, the “Credit Agreement”) to effect certain changes, including, among other changes: (i) adding a $300 million unsecured term loan credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins; and (iv) extending the maturity date to June 30, 2027 (the “Maturity Date”).
Operating Income Operating income for 2021 was $385.6 million, an increase of $223.3 million or 137.5% compared to $162.4 million for 2020. The increase in operating income was primarily due to higher gross margin across all segments, led by the Electronics segment partially offset by higher operating expenses noted above.
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.
The following describes the Company’s cash flows for the twelve months ended December 26, 2020 and December 28, 2019: Fiscal Year (in millions) 2020 2019 Net cash provided by operating activities $ 258.0 $ 245.3 Net cash used in investing activities (51.4) (56.4) Net cash used in financing activities (67.8) (146.3) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 17.6 (1.2) Increase in cash, cash equivalents, and restricted cash 156.4 41.4 Cash, cash equivalents, and restricted cash at beginning of period 531.1 489.7 Cash, cash equivalents, and restricted cash at end of period $ 687.5 $ 531.1 Cash Flow from Operating Activities 38 Table of Contents Net cash provided by operating activities was $258.0 million for the fiscal year 2020, compared to $245.3 million during the fiscal year 2019.
The following describes the Company’s cash flows for the fiscal year ended December 30, 2023 and December 31, 2022: Fiscal Year (in millions) 2023 2022 Net cash provided by operating activities $ 457.4 $ 419.7 Net cash used in investing activities (284.3) (636.4) 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) (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 Cash, cash equivalents, and restricted cash at end of period $ 557.1 $ 564.9 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.
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.
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 increase in gross margin of 2.4% was primarily driven by volume leverage and favorable product mix within the Electronics segment, partially offset by higher transportation , duty and tariff charges as a percent of net sales of 2.2%, the purchase accounting inventory charges of $8.4 million or 0.4%, and higher material costs.
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 of the most recent annual test conducted on September 26, 2021, the Company noted that the excess of fair value over the carrying value was 380%, 104%, 255%, 217%, 95%, 144%, and 231% f or its reporting units: Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger Car Products, Commercial Vehicle Products, Automotive Sensors, Relays, and Power Fuse, respectively.
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.
Operating Expenses Total operating expenses were $338.8 million, or 23.4% of net sales, for 2020 compared to $353.5 million, or 23.5% of net sales, for 2019.
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 Company also received proceeds of $4.8 million and $6.2 million, respectively, in the fiscal year 2020 and the fiscal year 2019 primarily as a result of the sale of properties within the Industrial segment. Cash Flow from Financing Activities Net cash used in financing activities was $67.8 million for 2020 compared to $146.3 million for the fiscal year 2019.
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. 38 Table of Contents 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.
The increase in net cash provided by operating activities was primarily due to lower annual incentive payments and favorable changes in net working capital partially offset by lower earnings largely due to the impact of COVID-19.
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 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 safety, industrial motor drives and power conversion, 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, EV charging infrastructure, and heavy and general industrial type applications.
The impact of the items discussed above resulted in an increase in the effective tax rate in 2020, as compared to the effective tax rate in 2019. Further information regarding these items is provided in Note 14, Income Taxes , of the Notes to Consolidated Financial Statements included in this Annual Report.
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.
Income Before Income Taxes Income before income taxes for 2020 was $161.3 million, or 11.2% of net sales compared to $165.9 million, or 11.0% of net sales, for 2019.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+4 added−1 removed3 unchanged
Biggest changeThe Company is not party to any currency exchange or interest rate protection agreements as of January 1, 2022. Foreign Exchange Rate Risk The majority of the company’s operations consist of manufacturing and sales activities in foreign countries. The Company has operations in China, Germany, Mexico, Philippines, U.K., Japan, Lithuania, Netherlands, Portugal, Singapore, South Korea, Spain, and the U.S.
Biggest changeForeign Exchange Rate Risk The majority of the Company’s operations consist of manufacturing and sales activities in foreign countries. The Company has operations in China, France, Germany, India, Ireland, Mexico, Philippines, U.K., Japan, Lithuania, Netherlands, Portugal, Singapore, South Korea, Spain, U.S., and Vietnam. During 2023, sales to customers outside the U.S. were approximately 65% of total net sales.
A prospective increase of 100 basis points in the interest rate applicable to the Company’s outstanding borrowings under its credit facility would result in an increase of approximately $1.0 million in annual interest expense. This exposure would be partially if not fully offset by higher interest income from the Company's investments.
A prospective increase of 100 basis points in the interest rate applicable to the Company’s outstanding borrowings under its credit facility would result in an increase of approximatel y $1.9 million in annual interest expense. This exposure would be partially if not fully offset by higher interest income from the Company's investments.
While the Company is exposed to significant changes in certain metal prices and expects higher material costs, the Company actively monitors these exposures and may take various actions, including price increases and productivity improvements to mitigate any negative impacts of these exposures.
While the Company is exposed to significant changes in certain metal prices and expects higher material costs, the Company actively monitors these exposures, has taken and may take various actions in the future, including price increases and productivity improvements to mitigate any negative impacts of these exposures. 42 Table of Contents
During 2021, sales to customers outside the U.S. were approximately 69% of total net sales. During 2020, sales to customers outside the U.S. were approximately 73% of total net sales. Substantially all sales in Europe are denominated in euros and substantially all sales in the Asia-Pacific region are denominated in U.S. dollars, Chinese renminbi, Japanese yen, or Korean won.
During 2022, sales to customers outside the U.S. were approximately 64% of total net sales. Substantially all sales in Europe are denominated in euros and substantially all sales in the Asia-Pacific region are denominated in U.S. dollars, Chinese renminbi, Japanese yen, or Korean won.
Dollar denominated inter-company loans with a Euro functional currency subsidiary. The reduction in earnings from a hypothetical instantaneous 10% adverse change in quoted foreign currency spot rates applied to foreign currency sensitive liability instruments would be $39 million at January 1, 2022.
Dollar denominated inter-company loans with a Mexican Peso functional currency subsidiary. The reduction in earnings from a hypothetical instantaneous 10% adverse change in quoted foreign currency spot rates applied to foreign currency sensitive liability instruments would be $0.6 million at December 30, 2023.
Changes in foreign exchange rates could affect the company’s sales, costs, balance sheet values and earnings. At January 1, 2022, the net value of the Company’s assets with exposure to foreign currency risk was approximately $148 million, with the largest exposure being a Japanese yen denominated inter-company loan with a Euro functional currency subsidiary.
Changes in foreign exchange rates could affect the Company’s sales, costs, balance sheet values and earnings. At December 30, 2023, the net value of the Company’s assets with exposure to foreign currency risk was approximate ly $38 million, with the largest exposure being a Japanese Yen denominated inter-company loan with a U.S. Dollars functional currency subsidiary.
The reduction in earnings from a hypothetical instantaneous 10% adverse change in quot ed foreign currency spot rates applied to foreign currency sensitive asset instruments would be $15 million at January 1, 2022. At January 1, 2022, the net value of the Company’s liabilities with exposure to foreign currency risk was $389 million, with the largest exposure being U.S.
The re duction in earnings from a hypothetical instantaneous 10% adverse change in quot ed foreign currency spot rates applied to foreign currency sensitive asset instruments would be $3.8 million at December 30, 2023. At December 30, 2023, the net value of the Company’s liabilities with exposure to foreign currency risk was $6.5 million, with the largest exposure being U.S.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company is exposed to market risk from changes in interest rates, foreign exchange rates and commodity prices. Interest Rates Risk The Company made payments of $30.0 million on the amended revolving credit facility during the fiscal year 2021.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company is exposed to market risk from changes in interest rates, foreign exchange rates and commodity prices.
The balance under the facility was $100.0 million as of January 1, 2022. With variable interest rates, the Company is subject to future interest rate fluctuations in relation to these borrowings which could potentially have a negative impact on cash flows of the Company.
After consideration of the hedge above, the remaining borrowings o f $188.8 million , which represents approximately 20% of the Company's total debt, is subject to future interest rate fluctuations which could potentially have a negative impact on the Company's cash flows.
Removed
Due to the continued impact from COVID-19, transportation costs increased significantly in 2021 and may further increase in 2022. The Company has taken and, in the future, may take further various actions, including price increases and changing freight modes or other alternative solutions to mitigate the impact of rising transportation costs. 41 Table of Contents
Added
Interest Rate Risk On June 30, 2022, the Company amended and restated its Credit Agreement, dated as of April 3, 2020 to effect certain changes, including, among other changes: (i) adding a $300 million unsecured term loan credit facility; (ii) making certain financial and non-financial covenants less restrictive on the Company and its subsidiaries; (iii) replacing LIBOR-based interest rate benchmarks and modifying performance-based interest rate margins; and (iv) extending the maturity date to June 30, 2027 (the “Maturity Date”).
Added
Pursuant to the Credit Agreement, the Company may, from time to time, increase the size of the revolving credit facility or enter into one or more tranches of term loans in minimum increments of $25 million if there is no event of default and the Company is in compliance with certain financial covenants.
Added
The revolving loan and term loan balance under the Credit Facility was $100.0 million and $288.8 million, respectively, as of December 30, 2023. On May 12, 2022, the Company entered into an interest rate swap agreement to manage interest rate risk exposure, effectively converting the interest rate on the Company's SOFR based floating-rate loans to a fixed-rate.
Added
The interest rate swap, with a notional value of $200 million, was designated as a cash flow hedge against the variability of cash flows associated with the Company's SOFR based loans scheduled to mature on June 30, 2027. The cash flow hedge reduces the Company exposure to future interest rate fluctuation.

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