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lfus-20200627

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 27, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 0-20388

LITTELFUSE, INC.

(Exact name of registrant as specified in its charter)


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

Registrant’s telephone number, including area code: 773-628-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.01 par value

LFUS

NASDAQ

Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically 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 24, 2020, the registrant had outstanding 24,341,584 shares of Common Stock, net of Treasury Shares.

Table of Contents

TABLE OF CONTENTS


			Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 27, 2020 (unaudited) and December 28, 2019	3
	Condensed Consolidated Statements of Net (Loss) Income for the three and six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 27, 2020 (unaudited) and June 29, 2019 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures			40

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(in thousands)	June 27, 2020		December 28, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	651,867	$	531,139
Short-term investments	44		44
Trade receivables, less allowances of $39,970 and $42,043 at June 27, 2020 and December 28, 2019, respectively	185,806		202,309
Inventories	248,020		237,507
Prepaid income taxes and income taxes receivable	1,529		4,831
Prepaid expenses and other current assets	31,899		28,564
Total current assets	1,119,165		1,004,394





Net property, plant, and equipment	334,677		344,617
Intangible assets, net of amortization	301,661		321,247
Goodwill	787,601		820,589
Investments	23,678		24,099
Deferred income taxes	7,555		8,069
Right of use lease assets, net	19,621		21,918
Other assets	17,100		14,965
Total assets	$	2,611,058	$	2,559,898
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	113,767	$	117,320



Accrued liabilities	85,356		84,120
Accrued income taxes	10,034		14,122
Current portion of long-term debt	—		10,000
Total current liabilities	209,157		225,562
Long-term debt, less current portion	776,205		669,158
Deferred income taxes	46,562		49,763
Accrued post-retirement benefits	39,653		38,198
Non-current operating lease liabilities	15,155		17,166
Other long-term liabilities	61,892		64,037
Shareholders’ equity:
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, June 27, 2020–25,983,147; December 28, 2019–25,855,203	257		256
Treasury stock, at cost: 1,643,369 and 1,473,901 shares, respectively	(242,192)		(216,447)
Additional paid-in capital	885,306		867,996
Accumulated other comprehensive loss	(124,219)		(106,823)
Retained earnings	943,151		950,901
Littelfuse, Inc. shareholders’ equity	1,462,303		1,495,883
Non-controlling interest	131		131
Total equity	1,462,434		1,496,014
Total liabilities and equity	$	2,611,058	$	2,559,898

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME

(Unaudited)


	Three Months Ended						Six Months Ended
(in thousands, except per share data)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net sales	$	307,337	$	397,879	$	653,433	$	803,379
Cost of sales	208,238		256,071		430,622		506,343
Gross profit	99,099		141,808		222,811		297,036

Selling, general, and administrative expenses	53,981		57,666		108,367		120,621
Goodwill impairment charge	33,841		—		33,841		—
Research and development expenses	13,400		21,458		27,995		42,867
Amortization of intangibles	9,827		10,050		19,808		20,241
Total operating expenses	111,049		89,174		190,011		183,729
Operating (loss) income	(11,950)		52,634		32,800		113,307

Interest expense	5,855		5,589		11,273		11,275
Foreign exchange (gain) loss	(6,010)		(3,575)		(3,426)		668
Other (income) expense, net	(1,210)		(2,947)		39		1,358
(Loss) income before income taxes	(10,585)		53,567		24,914		100,006
Income taxes	(1,594)		9,775		9,261		19,225
Net (loss) income	$	(8,991)	$	43,792	$	15,653	$	80,781

(Loss) income per share:
Basic	$	(0.37)	$	1.77	$	0.64	$	3.27
Diluted	$	(0.37)	$	1.75	$	0.64	$	3.23

Weighted-average shares and equivalent shares outstanding:
Basic	24,312		24,740		24,353		24,729
Diluted	24,312		24,983		24,520		24,998

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)


	Three Months Ended						Six Months Ended
(in thousands)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Net (loss) income	$	(8,991)	$	43,792	$	15,653	$	80,781
Other comprehensive (loss) income:
Pension and postemployment adjustment, net of tax	(10,839)		161		(10,278)		112



Foreign currency translation adjustments	8,422		(5,892)		(7,118)		2,230
Comprehensive (loss) income	$	(11,408)	$	38,061	$	(1,743)	$	83,123

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
(in thousands)	June 27, 2020		June 29, 2019
OPERATING ACTIVITIES
Net income	$	15,653	$	80,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	27,728		25,727
Amortization of intangibles	19,808		20,241

Deferred revenue	(289)		—

Impairment charges	36,078		—

Stock-based compensation	10,852		12,250
Loss on investments and other assets	542		2,458
Deferred income taxes	2,512		(632)
Other	(1,222)		2,009
Changes in operating assets and liabilities:
Trade receivables	13,914		(13,242)
Inventories	(10,761)		6,230
Accounts payable	3,439		(17,927)



Accrued liabilities and income taxes	(19,144)		(36,713)
Prepaid expenses and other assets	2,176		(1,090)
Net cash provided by operating activities	101,286		80,092

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	—		(775)


Purchases of property, plant, and equipment	(29,479)		(25,249)
Net proceeds from sale of property, plant and equipment	89		6,212
Net cash used in investing activities	(29,390)		(19,812)

FINANCING ACTIVITIES
Proceeds of revolving credit facility	240,000		—


Payments of term loan	(145,000)		(7,500)

Net proceeds related to stock-based award activities	3,642		3,011
Purchases of common stock	(22,927)		(49,861)
Debt issuance costs	(1,786)		—
Cash dividends paid	(23,403)		(21,274)
Net cash provided by (used in) financing activities	50,526		(75,624)
Effect of exchange rate changes on cash and cash equivalents	(1,694)		392
Increase (decrease) in cash and cash equivalents	120,728		(14,952)
Cash and cash equivalents at beginning of period	531,139		489,733
Cash and cash equivalents at end of period	$	651,867	$	474,781
Supplementary Cash Flow Information
Cash paid during the period for interest	$	10,799	$	11,478

Capital expenditures, not yet paid	$	4,665	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

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LITTELFUSE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. (Loss) Income		Retained Earnings		Non-controlling Interest		Total
Balance at December 28, 2019	$	256	$	867,996	$	(216,447)	$	(106,823)	$	950,901	$	131	$	1,496,014
Net income	—		—		—		—		24,644		—		24,644


Other comprehensive loss, net of tax	—		—		—		(14,979)		—		—		(14,979)
Stock-based compensation	—		2,965		—		—		—		—		2,965

Withheld shares on restricted share units for withholding taxes	—		—		(443)		—		—		—		(443)
Stock options exercised	—		3,399		—		—		—		—		3,399
Repurchases of common stock	—		—		(22,927)		—		—		—		(22,927)
Cash dividends paid ($0.48 per share)	—		—		—		—		(11,725)		—		(11,725)
Balance at March 28, 2020	$	256	$	874,360	$	(239,817)	$	(121,802)	$	963,820	$	131	$	1,476,948
Net loss	—		—		—		—		(8,991)		—		(8,991)



Other comprehensive loss, net of tax	—		—		—		(2,417)		—		—		(2,417)
Stock-based compensation	—		7,887		—		—		—		—		7,887


Withheld shares on restricted share units for withholding taxes	—		—		(2,375)		—		—		—		(2,375)
Stock options exercised	1		3,059		—		—		—		—		3,060

Cash dividends paid ($0.48 per share)	—		—		—		—		(11,678)		—		(11,678)
Balance at June 27, 2020	$	257	$	885,306	$	(242,192)	$	(124,219)	$	943,151	$	131	$	1,462,434

See accompanying Notes to Condensed Consolidated Financial Statements.

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	Littelfuse, Inc. Shareholders’ Equity
(in thousands, except share and per share data)	Common Stock		Addl. Paid in Capital		Treasury Stock		Accum. Other Comp. (Loss) Income		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 loss, 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 loss, 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

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. Serving over 100,000 end customers, 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 (loss) income and comprehensive (loss) 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 28, 2019 which should be read in conjunction with the disclosures therein. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for interim periods are not necessarily indicative of annual operating results.

Revenue Recognition

Revenue Disaggregation

The following tables disaggregate the Company’s revenue by primary business units for the three and six months ended June 27, 2020 and June 29, 2019:


	Three Months Ended June 27, 2020														Six Months Ended June 27, 2020
(in thousands)	Electronics Segment		Automotive Segment		Industrial Segment		Total		Electronics Segment		Automotive Segment		Industrial Segment		Total
Electronics – Passive Products and Sensors	$	92,846	$	—	$	—	$	92,846	$	177,444	$	—	$	—	$	177,444
Electronics – Semiconductor	130,425		—		—		130,425		260,016		—		—		260,016
Passenger Car Products	—		30,309		—		30,309		—		82,954		—		82,954
Automotive Sensors	—