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Table of Contents

United States
Securities and Exchange Commission
Washington, D.C. 20549
 
FORM 10-Q 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___

Commission file number 0-20388
LITTELFUSE, INC. 
(Exact name of registrant as specified in its charter)
Delaware
 
36-3795742
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
8755 West Higgins Road
 
 
 Suite 500
 
 
Chicago
Illinois
60631
(Address of principal executive offices)
 
(ZIP Code)
 
Registrant’s telephone number, including area code: 773-628-1000
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
Name of Each Exchange
On Which Registered
 
Common Stock, $0.01 par value
NASDAQ
Global Select MarketSM
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes [ ] No [ ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No [X]

As of July 26, 2019, the registrant had outstanding 24,587,591 shares of Common Stock, net of Treasury Shares.


Table of Contents

TABLE OF CONTENTS
 
 
Page
 
 
PART I
 
Item 1.
 
 
Condensed Consolidated Balance Sheets as of June 29, 2019 (unaudited) and December 29, 2018
 
Condensed Consolidated Statements of Net Income for the three and six months ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)
 
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)
 
Condensed Consolidated Statements of Cash Flows for the six months ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)
 
Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)
 
Item 2.
Item 3.
Item 4.
PART II 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


2

Table of Contents



LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
(Unaudited)
 
 
(in thousands)
 
June 29,
2019
 
December 29,
2018
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
474,781

 
$
489,733

Short-term investments
 
34

 
34

Trade receivables, less allowances of $34,468 and $36,038 at June 29, 2019 and December 29, 2018, respectively
 
245,723

 
232,892

Inventories
 
254,305

 
258,228

Prepaid income taxes and income taxes receivable
 
1,374

 
2,339

Prepaid expenses and other current assets
 
63,332

 
49,291

Total current assets
 
1,039,549


1,032,517

Net property, plant, and equipment
 
338,500


339,894

Intangible assets, net of amortization
 
341,174

 
361,474

Goodwill
 
826,408

 
826,715

Investments
 
25,456

 
25,405

Deferred income taxes
 
9,200

 
7,330

Right of use lease assets, net
 
23,280

 

Other assets
 
18,018

 
20,971

Total assets
 
$
2,621,585


$
2,614,306

LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
123,058

 
$
126,323

Accrued liabilities
 
111,696

 
138,405

Accrued income taxes
 
21,657

 
20,547

Current portion of long-term debt
 
10,000

 
10,000

Total current liabilities
 
266,411


295,275

Long-term debt, less current portion
 
676,940

 
684,730

Deferred income taxes
 
53,039

 
51,853

Accrued post-retirement benefits
 
30,666

 
31,874

Non-current operating lease liabilities
 
18,643

 

Other long-term liabilities
 
65,944

 
72,232

Shareholders’ equity:
 
 
 
 
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, June 29, 2019–25,786,662; December 29, 2018–25,641,959
 
255

 
254

Treasury stock, at cost: 1,157,213 and 868,045 shares, respectively
 
(166,068
)
 
(116,454
)
Additional paid-in capital
 
855,192

 
835,828

Accumulated other comprehensive loss
 
(95,582
)
 
(97,924
)
Retained earnings
 
916,014

 
856,507

Littelfuse, Inc. shareholders’ equity
 
1,509,811


1,478,211

Non-controlling interest
 
131

 
131

Total equity
 
1,509,942


1,478,342

Total liabilities and equity
 
$
2,621,585


$
2,614,306

 See accompanying Notes to Condensed Consolidated Financial Statements.

3

Table of Contents


LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)

 
 
Three Months Ended
 
Six Months Ended
(in thousands, except per share data)
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net sales
 
$
397,879

 
$
459,183

 
$
803,379

 
$
876,996

Cost of sales
 
256,071

 
290,196

 
506,343

 
558,386

Gross profit
 
141,808


168,987


297,036


318,610

 
 
 
 
 
 
 
 
 
Selling, general, and administrative expenses
 
57,666

 
73,244

 
120,621

 
150,758

Research and development expenses
 
21,458

 
22,748

 
42,867

 
45,288

Amortization of intangibles
 
10,050

 
13,373

 
20,241

 
25,371

Total operating expenses
 
89,174


109,365


183,729


221,417

Operating income
 
52,634


59,622


113,307


97,193

 
 
 
 
 
 
 
 
 
Interest expense
 
5,589

 
5,782

 
11,275

 
11,205

Foreign exchange (gain) loss
 
(3,575
)
 
3,200

 
668

 
(7,354
)
Other (income) expense, net
 
(2,947
)
 
(1,678
)
 
1,358

 
(3,621
)
Income before income taxes
 
53,567

 
52,318

 
100,006

 
96,963

Income taxes
 
9,775

 
9,992

 
19,225

 
18,609

Net income
 
$
43,792


$
42,326


$
80,781


$
78,354

 
 
 
 
 
 
 
 
 
Income per share:
 
 
 
 
 
 
 
 
Basic
 
$
1.77

 
$
1.69

 
$
3.27

 
$
3.18

Diluted
 
$
1.75

 
$
1.67

 
$
3.23

 
$
3.12

 
 
 
 
 
 
 
 
 
Weighted-average shares and equivalent shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
24,740

 
25,004

 
24,729

 
24,671

Diluted
 
24,983

 
25,401

 
24,998

 
25,086

 
See accompanying Notes to Condensed Consolidated Financial Statements.


4

Table of Contents

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
 
Three Months Ended
 
Six Months Ended
(in thousands)
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net income
 
$
43,792

 
$
42,326

 
$
80,781

 
$
78,354

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Pension and postemployment adjustment, net of tax
 
161

 
766

 
112

 
763

Foreign currency translation adjustments
 
(5,892
)
 
(16,708
)
 
2,230

 
(16,984
)
Comprehensive income
 
$
38,061


$
26,384


$
83,123


$
62,133

 
See accompanying Notes to Condensed Consolidated Financial Statements.


5

Table of Contents

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six Months Ended
(in thousands)
 
June 29, 2019
 
June 30, 2018
OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
80,781

 
$
78,354

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
25,727

 
24,431

Amortization of intangibles
 
20,241

 
25,371

Deferred revenue
 

 
1,921

Non-cash inventory charges
 

 
36,927

Impairment charges
 

 
1,125

Stock-based compensation
 
12,250

 
15,883

Loss (gain) on investments and other assets
 
2,458

 
(3,311
)
Deferred income taxes
 
(632
)
 
2,434

Other
 
2,009

 
778

Changes in operating assets and liabilities:
 
 
 
 
Trade receivables
 
(13,242
)
 
(33,481
)
Inventories
 
6,230

 
(1,502
)
Accounts payable
 
(17,927
)
 
13,684

Accrued liabilities and income taxes
 
(36,713
)
 
(16,383
)
Prepaid expenses and other assets
 
(1,090
)
 
(5,316
)
Net cash provided by operating activities
 
80,092


140,915

 
 
 
 
 
INVESTING ACTIVITIES
 
 
 
 
Acquisitions of businesses, net of cash acquired
 
(775
)
 
(310,487
)
Purchases of property, plant, and equipment
 
(25,249
)
 
(40,315
)
Net proceeds from sale of property, plant and equipment, and other
 
6,212

 
68

Net cash used in investing activities
 
(19,812
)

(350,734
)
 
 
 
 
 
FINANCING ACTIVITIES
 
 
 
 
Proceeds of revolving credit facility
 

 
60,000

Proceeds of term loan
 

 
75,000

Net proceeds from senior notes payable
 

 
175,000

Payments of term loan
 
(7,500
)
 
(40,025
)
Payments of revolving credit facility
 

 
(60,000
)
Net proceeds related to stock-based award activities
 
3,011

 
5,568

Purchases of common stock
 
(49,861
)
 

Debt issuance costs
 

 
(878
)
Cash dividends paid
 
(21,274
)
 
(18,458
)
Net cash (used in) provided by financing activities
 
(75,624
)
 
196,207

Effect of exchange rate changes on cash and cash equivalents
 
392

 
(7,917
)
Decrease in cash and cash equivalents
 
(14,952
)
 
(21,529
)
Cash and cash equivalents at beginning of period
 
489,733

 
429,676

Cash and cash equivalents at end of period
 
$
474,781


$
408,147

 
See accompanying Notes to Condensed Consolidated Financial Statements.


6

Table of Contents

LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
 
Littelfuse, Inc. Shareholders’ Equity
 
 
 
 
(in thousands, except share and per share data)
Common Stock
 
Addl. Paid in Capital
 
Treasury Stock
 
Accum. Other Comp. Inc. (Loss)
 
Retained Earnings
 
Non-controlling Interest
 
Total
Balance at December 29, 2018
$
254

 
$
835,828

 
$
(116,454
)
 
$
(97,924
)
 
$
856,507

 
$
131

 
$
1,478,342

Net income

 

 

 

 
36,989

 

 
36,989

Other comprehensive income, net of tax

 

 

 
8,073

 

 

 
8,073

Stock-based compensation

 
3,966

 

 

 

 

 
3,966

Withheld shares on restricted share units for withholding taxes

 

 
(94
)
 

 

 

 
(94
)
Stock options exercised

 
2,292

 

 

 

 

 
2,292

Repurchases of common stock

 

 
(13,555
)
 

 

 

 
(13,555
)
Cash dividends paid ($0.43 per share)

 

 

 

 
(10,625
)
 

 
(10,625
)
Balance at March 30, 2019
$
254

 
$
842,086

 
$
(130,103
)
 
$
(89,851
)
 
$
882,871

 
$
131

 
$
1,505,388

Net income

 

 

 

 
43,792

 

 
43,792

Other comprehensive income, net of tax

 

 

 
(5,731
)
 

 

 
(5,731
)
Stock-based compensation

 
8,284

 

 

 

 

 
8,284

Withheld shares on restricted share units for withholding taxes

 

 
(4,010
)
 

 

 

 
(4,010
)
Stock options exercised
1

 
4,822

 

 

 

 

 
4,823

Repurchases of common stock

 

 
(31,955
)
 

 

 

 
(31,955
)
Cash dividends paid ($0.43 per share)

 

 

 

 
(10,649
)
 

 
(10,649
)
Balance at June 29, 2019
$
255

 
$
855,192

 
$
(166,068
)
 
$
(95,582
)
 
$
916,014

 
$
131

 
$
1,509,942


 
Littelfuse, Inc. Shareholders’ Equity
 
 
 
 
(in thousands, except share and per share data)
Common Stock
 
Addl. Paid in Capital
 
Treasury Stock
 
Accum. Other Comp. Inc. (Loss)
 
Retained Earnings
 
Non-controlling Interest
 
Total
Balance at December 30, 2017
$
229

 
$
310,012

 
$
(41,294
)
 
$
(63,668
)
 
$
722,140

 
$
137

 
$
927,556

Net income

 

 

 

 
36,029

 

 
36,029

Cumulative effect adjustment

 

 

 
(9,795
)
 
9,795

 

 

Other comprehensive income, net of tax

 

 

 
(279
)
 

 

 
(279
)
Stock-based compensation

 
8,714

 

 

 

 

 
8,714

Withheld shares on restricted share units for withholding taxes

 

 
(2,758
)
 

 

 

 
(2,758
)
Stock options exercised

 
9,609

 

 

 

 

 
9,609

Issuance of common stock
22

 
472,279

 

 

 

 

 
472,301

Cash dividends paid ($0.37 per share)

 

 

 

 
(9,198
)
 

 
(9,198
)
Balance at March 31, 2018
$
251

 
$
800,614

 
$
(44,052
)
 
$
(73,742
)
 
$
758,766

 
$
137

 
$
1,441,974

Net income

 

 

 

 
42,326

 

 
42,326

Other comprehensive income, net of tax

 

 

 
(15,942
)
 

 

 
(15,942
)
Stock-based compensation

 
7,169

 

 

 

 

 
7,169

Non-controlling interest

 

 

 

 

 
(7
)
 
(7
)
Withheld shares on restricted share units for withholding taxes

 

 
(4,284
)
 

 

 

 
(4,284
)
Stock options exercised
2

 
8,043

 

 

 

 

 
8,045

Cash dividends paid ($0.37 per share)

 

 

 

 
(9,261
)
 

 
(9,261
)
Balance at June 30, 2018
$
253

 
$
815,826

 
$
(48,336
)
 
$
(89,684
)
 
$
791,831

 
$
130

 
$
1,470,020


See accompanying Notes to Condensed Consolidated Financial Statements.

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Notes to Condensed Consolidated Financial Statements 
 
1. Summary of Significant Accounting Policies and Other Information
 
Nature of Operations 
 
Littelfuse, Inc. and subsidiaries (the “Company”) is a global manufacturer of leading technologies in circuit protection, power control and sensing. The Company's products are found in automotive and commercial vehicles, industrial applications, data and telecommunications, medical devices, consumer electronics and appliances. With its broad product portfolio of fuses, semiconductors, polymers, ceramics, relays and sensors, and extensive global infrastructure, the Company’s worldwide associates partner with its customers to design, manufacture and deliver innovative, high-quality solutions for a safer, greener and increasingly connected world.
 
Basis of Presentation 
 
The Company’s accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the consolidated balance sheets, statements of net income and comprehensive income, statements of cash flows, and statement of stockholders' equity prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. They have been prepared in accordance with accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018 which should be read in conjunction with the disclosures therein. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for interim periods are not necessarily indicative of annual operating results.
 
Revenue Recognition
 
On December 31, 2017, the Company adopted new guidance on revenue from contracts with customers using the modified retrospective method. The adoption did not have a significant impact on the Company’s consolidated financial statements.
 
Revenue Disaggregation
 
The following tables disaggregate the Company’s revenue by primary business units for the three and six months ended June 29, 2019 and June 30, 2018 :
 
 
 
Three Months Ended June 29, 2019
 
Six Months Ended June 29, 2019
(in thousands)
 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Passive Products and Sensors
 
$
108,481

 
$

 
$

 
$
108,481

 
$
216,858

 
$

 
$

 
$
216,858

Electronics – Semiconductor
 
151,072

 

 

 
151,072

 
308,089

 

 

 
308,089

Passenger Car Products
 

 
53,916

 

 
53,916

 

 
110,459

 

 
110,459

Automotive Sensors
 

 
24,682

 

 
24,682

 

 
50,739

 

 
50,739

Commercial Vehicle Products
 

 
30,052

 

 
30,052

 

 
60,935

 

 
60,935

Industrial Products
 

 

 
29,676

 
29,676

 

 

 
56,299

 
56,299

Total
 
$
259,553


$
108,650


$
29,676


$
397,879

 
$
524,947

 
$
222,133

 
$
56,299

 
$
803,379








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Table of Contents

 
 
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
(in thousands)
 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
 
Electronics
Segment
 
Automotive
Segment
 
Industrial
Segment
 
 
Total
Electronics – Passive Products and Sensors
 
$
128,321

 
$

 
$

 
$
128,321

 
$
242,816

 
$

 
$

 
$
242,816

Electronics – Semiconductor
 
171,036

 

 

 
171,036

 
320,952

 

 

 
320,952

Passenger Car Products
 

 
63,581

 

 
63,581

 

 
127,160

 

 
127,160

Automotive Sensors
 

 
30,729

 

 
30,729

 

 
62,052

 

 
62,052

Commercial Vehicle Products
 

 
32,862

 

 
32,862

 

 
64,090

 

 
64,090

Industrial Products
 

 

 
32,654

 
32,654

 

 

 
59,926

 
59,926

Total
 
$
299,357

 
$
127,172

 
$
32,654

 
$
459,183

 
$
563,768

 
$
253,302


$
59,926


$
876,996


 
See Note 16, Segment Information for net sales by segment and countries.
 
Revenue Recognition
 
The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.
 
The Company elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
 
Revenue and Billing
 
The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue. This is similar to the Company’s prior practice and therefore the effect of the new guidance is immaterial.
 
Ship and Debit Program
 
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity and actual authorizations for the debit and recognizes these debits as a reduction of revenue.



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Table of Contents




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

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, "Leases" (Topic 842), ("ASC 842"). This ASU requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. The accounting by lessors will remain largely unchanged. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Adoption requires using a modified retrospective transition with either 1) periods prior to the adoption date being recast or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast.

The Company adopted the standard on December 30, 2018 using alternative modified retrospective transition method provided in ASU No. 2018-11, "Leases (Topic 842): Target Improvements." Under this method, the Company recorded a cumulative-effect adjustment as of December 30, 2018 and did not record any retrospective adjustments to comparative periods to reflect the adoption of ASC 842. The new standard provides a number of optional practical expedients in transition. The Company has elected the ‘package of practical expedients’ which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The Company has not elected the use-of-hindsight. Adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets ("ROU") net of deferred rent of $26.1 million and lease liabilities of $29.4 million, as of December 30, 2018 for operating leases on its Condensed Consolidated Balance Sheets, with no impact to its Condensed Consolidated Statements of Net Income and no impact on Condensed Consolidated Statements of Cash Flow. See Note 6, Lease Commitments, for further discussion.

In February 2018, the FASB issued ASU No. 2018-02 “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which permits the reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as a result of the Tax Act. The standard also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income. The standard allows the option of applying either a retrospective adoption, meaning the standard is applied to all periods in which the effect of the Tax Act is recognized, or applying the amendments in the period of adoption, meaning an adjustment is made to shareholder’s equity as of the beginning of the reporting period. The Company adopted the new standard on December 30, 2018. The adoption of this guidance did not have a material effect on our Condensed Consolidated Financial Statements.

 
2. Acquisitions
 
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, “Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.
 
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 control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The acquisition of IXYS is expected to accelerate the Company’s growth

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across the power control market driven by IXYS’s extensive power semiconductor portfolio and technology expertise. With IXYS, the Company will be able to diversify and expand its presence within industrial electronics markets, leveraging the strong IXYS industrial OEM customer base. The Company also expects to increase long-term penetration of its power semiconductor portfolio in automotive markets, expanding its global content per vehicle.

Upon completion of the acquisition, at IXYS stockholders’ election and subject to proration, each share of IXYS common stock, par value $0.01 per share, owned immediately prior to the effective time was canceled and extinguished and automatically converted into the right to receive: (i) $23.00 in cash (subject to applicable withholding tax), without interest (referred to as the cash consideration), or (ii) 0.1265 of a share of common stock, par value $0.01 per share, of Littelfuse (referred to as the stock consideration). IXYS stockholders received cash in lieu of any fractional shares of Littelfuse common stock that the IXYS stockholders would otherwise have been entitled to receive. Additionally, each outstanding option to purchase shares of IXYS common stock granted under an IXYS equity plan were assumed by Littelfuse and converted into an option to acquire (i) a number of shares of Littelfuse common stock equal to the number of shares of IXYS common stock subject to such option immediately prior to the effective time multiplied by 0.1265, rounded down to the nearest whole share, with (ii) an exercise price per share of Littelfuse common stock equal to the exercise price of such IXYS stock option immediately prior to the effective time divided by 0.1265, rounded up to the nearest whole cent.
 
Based on the $207.5 per share opening price of Littelfuse common stock on January 17, 2018, the consideration IXYS stockholders received in exchange of their IXYS common stock in the acquisition had a value of $814.8 million comprised of $380.6 million of cash and $434.2 million of Littelfuse stock. In addition to the consideration transferred related to IXYS common stock, the value of consideration transferred, and included in the purchase price, related to IXYS stock options that were converted to Littelfuse stock options, or cash settled, had a value of $41.7 million. As a result, total consideration was valued at $856.5 million.
 
The total purchase price of $856.5 million has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the IXYS acquisition:
 
(in thousands)
Purchase Price
Allocation
Total purchase consideration:
 
Cash, net of cash acquired
$
302,865

Cash settled stock options
3,622

Littelfuse stock
434,192

Converted stock options
38,109

Total purchase consideration
$
778,788

Allocation of consideration to assets acquired and liabilities assumed:
 
Current assets, net
$
155,930

Property, plant, and equipment
77,442

Intangible assets
212,720

Goodwill
382,360

Other non-current assets
28,706

Other non-current liabilities
(78,370
)
 
$
778,788


 

Approximately $49.1 million of net receivables was included in IXYS’s current assets. All IXYS goodwill, other assets and liabilities were recorded in the Electronics segment and primarily reflected in the Americas and European geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining IXYS’s products and technology with the Company’s existing electronics product portfolio. Goodwill resulting from the IXYS acquisition is not expected to be deductible for tax purposes.

Included in the Company’s Condensed Consolidated Statements of Net Income for the three and six months ended June 30, 2018 are net sales of approximately $100.2 million and $186.5 million, respectively, and a loss before income taxes of $13.9 million and $31.7 million, respectively, since the January 17, 2018 acquisition of IXYS. During the three and six months ended June 30,

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2018, the Company recognized a charge of $19.0 million and $36.9 million, respectively, for the amortization of the fair value inventory step-up. The step-up was a non-cash charge to cost of goods and reflected as other non-segment costs. The Company recognized approximately $1.6 million and $7.5 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the three and six months ended June 30, 2018, of which $4.5 million was recognized immediately as it related to prior services periods.
 
During the three and six months ended June 30, 2018, the Company incurred approximately $0.8 million and $11.0 million, respectively, of legal and professional fees related to this acquisition which were primarily recognized as selling, general, and administrative expenses. These costs were reflected as other non-segment costs.

Pro Forma Results
 
The following table summarizes, on a pro forma basis, the combined results of operations of the Company and IXYS as though the acquisition had occurred as of January 1, 2017. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the IXYS acquisition occurred as of January 1, 2017 or of future consolidated operating results.
 
 
 
Three Months Ended
 
Six Months Ended
(in thousands, except per share amounts)
 
June 30, 2018
 
June 30, 2018
Net sales
 
$
459,183

 
$
893,709

Income before income taxes
 
74,857

 
134,227

Net income
 
59,283

 
106,247

Net income per share — basic
 
2.37

 
4.26

Net income per share — diluted
 
2.33

 
4.22

 

Pro forma results presented above primarily reflect the following adjustments: