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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 26, 2020
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 | | 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 October 23, 2020, the registrant had outstanding 24,375,049 shares of Common Stock, net of Treasury Shares.
TABLE OF CONTENTS
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| Page |
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PART I | | |
Item 1. | | |
| Condensed Consolidated Balance Sheets as of September 26, 2020 (unaudited) and December 28, 2019 | |
| Condensed Consolidated Statements of Net Income for the three and nine months ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited) | |
| Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited) | |
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited) | |
| Condensed Consolidated Statements of Stockholders' Equity for the nine months ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited) | |
| | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
PART II | | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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LITTELFUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | |
| | (Unaudited) | | |
(in thousands) | | September 26, 2020 | | December 28, 2019 |
ASSETS | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 641,890 | | | $ | 531,139 | |
Short-term investments | | 52 | | | 44 | |
Trade receivables, less allowances of $42,737 and $42,043 at September 26, 2020 and December 28, 2019, respectively | | 231,930 | | | 202,309 | |
Inventories | | 243,832 | | | 237,507 | |
Prepaid income taxes and income taxes receivable | | 1,218 | | | 4,831 | |
Prepaid expenses and other current assets | | 30,012 | | | 28,564 | |
Total current assets | | 1,148,934 | | | 1,004,394 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
Net property, plant, and equipment | | 339,870 | | | 344,617 | |
Intangible assets, net of amortization | | 296,159 | | | 321,247 | |
Goodwill | | 799,791 | | | 820,589 | |
Investments | | 26,066 | | | 24,099 | |
Deferred income taxes | | 7,173 | | | 8,069 | |
Right of use lease assets, net | | 18,811 | | | 21,918 | |
Other assets | | 17,566 | | | 14,965 | |
Total assets | | $ | 2,654,370 | | | $ | 2,559,898 | |
LIABILITIES AND EQUITY | | | | |
Current liabilities: | | | | |
Accounts payable | | $ | 120,938 | | | $ | 117,320 | |
| | | | |
| | | | |
| | | | |
Accrued liabilities | | 98,437 | | | 84,120 | |
Accrued income taxes | | 15,231 | | | 14,122 | |
Current portion of long-term debt | | — | | | 10,000 | |
Total current liabilities | | 234,606 | | | 225,562 | |
Long-term debt, less current portion | | 725,507 | | | 669,158 | |
Deferred income taxes | | 46,584 | | | 49,763 | |
Accrued post-retirement benefits | | 40,279 | | | 38,198 | |
Non-current operating lease liabilities | | 14,193 | | | 17,166 | |
Other long-term liabilities | | 63,639 | | | 64,037 | |
Shareholders’ equity: | | | | |
Common stock, par value $0.01 per share: 34,000,000 shares authorized; shares issued, September 26, 2020–26,015,067; December 28, 2019–25,855,203 | | 258 | | | 256 | |
Treasury stock, at cost: 1,644,103 and 1,473,901 shares, respectively | | (242,323) | | | (216,447) | |
Additional paid-in capital | | 891,924 | | | 867,996 | |
Accumulated other comprehensive loss | | (107,238) | | | (106,823) | |
Retained earnings | | 986,810 | | | 950,901 | |
Littelfuse, Inc. shareholders’ equity | | 1,529,431 | | | 1,495,883 | |
Non-controlling interest | | 131 | | | 131 | |
Total equity | | 1,529,562 | | | 1,496,014 | |
Total liabilities and equity | | $ | 2,654,370 | | | $ | 2,559,898 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(in thousands, except per share data) | | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
Net sales | | $ | 391,566 | | | $ | 361,971 | | | $ | 1,044,999 | | | $ | 1,165,350 | |
Cost of sales | | 253,390 | | | 231,025 | | | 684,012 | | | 737,368 | |
Gross profit | | 138,176 | | | 130,946 | | | 360,987 | | | 427,982 | |
| | | | | | | | |
Selling, general, and administrative expenses | | 50,465 | | | 54,224 | | | 158,832 | | | 174,845 | |
Goodwill impairment charge | | — | | | — | | | 33,841 | | | — | |
Research and development expenses | | 13,049 | | | 19,728 | | | 41,044 | | | 62,595 | |
Amortization of intangibles | | 10,104 | | | 9,827 | | | 29,912 | | | 30,068 | |
Total operating expenses | | 73,618 | | | 83,779 | | | 263,629 | | | 267,508 | |
Operating income | | 64,558 | | | 47,167 | | | 97,358 | | | 160,474 | |
| | | | | | | | |
Interest expense | | 4,988 | | | 5,559 | | | 16,261 | | | 16,834 | |
Foreign exchange (gain) loss | | (6,174) | | | 4,968 | | | (9,600) | | | 5,636 | |
Other income, net | | (1,682) | | | (4,764) | | | (1,643) | | | (3,406) | |
Income before income taxes | | 67,426 | | | 41,404 | | | 92,340 | | | 141,410 | |
Income taxes | | 12,070 | | | 5,757 | | | 21,331 | | | 24,982 | |
Net income | | $ | 55,356 | | | $ | 35,647 | | | $ | 71,009 | | | $ | 116,428 | |
| | | | | | | | |
Income per share: | | | | | | | | |
Basic | | $ | 2.27 | | | $ | 1.46 | | | $ | 2.92 | | | $ | 4.72 | |
Diluted | | $ | 2.25 | | | $ | 1.44 | | | $ | 2.89 | | | $ | 4.68 | |
| | | | | | | | |
Weighted-average shares and equivalent shares outstanding: | | | | | | | | |
Basic | | 24,357 | | | 24,482 | | | 24,354 | | | 24,646 | |
Diluted | | 24,573 | | | 24,684 | | | 24,535 | | | 24,894 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
(in thousands) | | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
Net income | | $ | 55,356 | | | $ | 35,647 | | | $ | 71,009 | | | $ | 116,428 | |
Other comprehensive income (loss): | | | | | | | | |
Pension and postemployment adjustment, net of tax | | 563 | | | 137 | | | (9,715) | | | 249 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Foreign currency translation adjustments | | 16,418 | | | (17,163) | | | 9,300 | | | (14,933) | |
Comprehensive income | | $ | 72,337 | | | $ | 18,621 | | | $ | 70,594 | | | $ | 101,744 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
LITTELFUSE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | | | | | | | | |
| | Nine Months Ended |
(in thousands) | | September 26, 2020 | | September 28, 2019 |
OPERATING ACTIVITIES | | | | |
Net income | | $ | 71,009 | | | $ | 116,428 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Depreciation | | 41,953 | | | 38,988 | |
Amortization of intangibles | | 29,912 | | | 30,068 | |
| | | | |
Deferred revenue | | (438) | | | (228) | |
| | | | |
Impairment charges | | 36,078 | | | 322 | |
| | | | |
Stock-based compensation | | 14,544 | | | 15,738 | |
(Gain) loss on investments and other assets | | (1,200) | | | 559 | |
Deferred income taxes | | 1,567 | | | (203) | |
Other | | (8,549) | | | 8,267 | |
Changes in operating assets and liabilities: | | | | |
Trade receivables | | (29,362) | | | 2,781 | |
Inventories | | (1,611) | | | 18,102 | |
Accounts payable | | 6,661 | | | (29,453) | |
| | | | |
| | | | |
| | | | |
Accrued liabilities and income taxes | | (2,095) | | | (44,241) | |
Prepaid expenses and other assets | | 5,787 | | | 3,735 | |
Net cash provided by operating activities | | 164,256 | | | 160,863 | |
| | | | |
INVESTING ACTIVITIES | | | | |
Acquisitions of businesses, net of cash acquired | | — | | | (775) | |
| | | | |
| | | | |
Purchases of property, plant, and equipment | | (41,536) | | | (38,397) | |
Net proceeds from sale of property, plant and equipment | | 148 | | | 6,212 | |
Net cash used in investing activities | | (41,388) | | | (32,960) | |
| | | | |
FINANCING ACTIVITIES | | | | |
Proceeds of revolving credit facility | | 240,000 | | | — | |
Payments of revolving credit facility | | (60,000) | | | — | |
| | | | |
| | | | |
Payments of term loan | | (145,000) | | | (7,500) | |
Net proceeds related to stock-based award activities | | 6,437 | | | 4,412 | |
Purchases of common stock | | (22,927) | | | (99,387) | |
Debt issuance costs | | (1,786) | | | — | |
Cash dividends paid | | (35,100) | | | (32,990) | |
Net cash used in financing activities | | (18,376) | | | (135,465) | |
Effect of exchange rate changes on cash and cash equivalents | | 6,259 | | | (6,114) | |
Increase (decrease) in cash and cash equivalents | | 110,751 | | | (13,676) | |
Cash and cash equivalents at beginning of period | | 531,139 | | | 489,733 | |
Cash and cash equivalents at end of period | | $ | 641,890 | | | $ | 476,057 | |
Supplementary Cash Flow Information | | | | |
Cash paid during the period for interest | | $ | 17,228 | | | $ | 17,872 | |
| | | | |
Capital expenditures, not yet paid | | $ | 6,267 | | | $ | 8,978 | |
| | | | |
| | | | |
See accompanying Notes to Condensed Consolidated Financial Statements.
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 | |
Net income | — | | | — | | | — | | | — | | | 55,356 | | | — | | | 55,356 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Other comprehensive income, net of tax | — | | | — | | | — | | | 16,981 | | | — | | | — | | | 16,981 | |
Stock-based compensation | — | | | 3,692 | | | — | | | — | | | — | | | — | | | 3,692 | |
| | | | | | | | | | | | | |
Withheld shares on restricted share units for withholding taxes | — | | | — | | | (131) | | | — | | | — | | | — | | | (131) | |
Stock options exercised | 1 | | | 2,926 | | | — | | | — | | | — | | | — | | | 2,927 | |
| | | | | | | | | | | | | |
Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,697) | | | — | | | (11,697) | |
Balance at September 26, 2020 | $ | 258 | | | $ | 891,924 | | | $ | (242,323) | | | $ | (107,238) | | | $ | 986,810 | | | $ | 131 | | | $ | 1,529,562 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | |
Net income | — | | | — | | | — | | | — | | | 35,647 | | | — | | | 35,647 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Other comprehensive loss, net of tax | — | | | — | | | — | | | (17,026) | | | — | | | — | | | (17,026) | |
Stock-based compensation | — | | | 3,488 | | | — | | | — | | | — | | | — | | | 3,488 | |
| | | | | | | | | | | | | |
Withheld shares on restricted share units for withholding taxes | — | | | — | | | (790) | | | — | | | — | | | — | | | (790) | |
Stock options exercised | 1 | | | 2,191 | | | — | | | — | | | — | | | — | | | 2,192 | |
Repurchases of common stock | — | | | — | | | (49,526) | | | — | | | — | | | — | | | (49,526) | |
| | | | | | | | | | | | | |
Cash dividends paid ($0.48 per share) | — | | | — | | | — | | | — | | | (11,715) | | | — | | | (11,715) | |
Balance at September 28, 2019 | $ | 256 | | | $ | 860,871 | | | $ | (216,384) | | | $ | (112,608) | | | $ | 939,946 | | | $ | 131 | | | $ | 1,472,212 | |
See accompanying Notes to Condensed Consolidated Financial Statements.
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 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 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 nine months ended September 26, 2020 and September 28, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 26, 2020 | | Nine Months Ended September 26, 2020 |
(in thousands) | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total |
Electronics – Passive Products and Sensors | | $ | 108,253 | | | $ | — | | | $ | — | | | $ | 108,253 | | | $ | 285,697 | | | $ | — | | | $ | — | | | $ | 285,697 | |
Electronics – Semiconductor | | 147,096 | | | — | | | — | | | 147,096 | | | 407,112 | | | — | | | — | | | 407,112 | |
Passenger Car Products | | — | | | 52,691 | | | — | | | 52,691 | | | — | | | 135,645 | | | — | | | 135,645 | |
Automotive Sensors | | — | | | 26,093 | | | — | | | 26,093 | | | — | | | 64,166 | | | — | | | 64,166 | |
Commercial Vehicle Products | | — | | | 25,940 | | | — | | | 25,940 | | | — | | | 71,682 | | | — | | | 71,682 | |
Industrial Products | | — | | | — | | | 31,493 | | | 31,493 | | | — | | | — | | | 80,697 | | | 80,697 | |
Total | | $ | 255,349 | | | $ | 104,724 | | | $ | 31,493 | | | $ | 391,566 | | | $ | 692,809 | | | $ | 271,493 | | | $ | 80,697 | | | $ | 1,044,999 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 28, 2019 | | Nine Months Ended September 28, 2019 |
(in thousands) | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total | | Electronics Segment | | Automotive Segment | | Industrial Segment | | Total |
Electronics – Passive Products and Sensors | | $ | 94,766 | | | $ | — | | | $ | — | | | $ | 94,766 | | | $ | 311,624 | | | $ | — | | | $ | — | | | $ | 311,624 | |
Electronics – Semiconductor | | 132,486 | | | — | | | — | | | 132,486 | | | 440,575 | | | — | | | — | | | 440,575 | |
Passenger Car Products | | — | | | 53,889 | | | — | | | 53,889 | | | — | | | 164,348 | | | — | | | 164,348 | |
Automotive Sensors | | — | | | 23,877 | | | — | | | 23,877 | | | — | | | 74,616 | | | — | | | 74,616 | |
Commercial Vehicle Products | | — | | | 26,915 | | | — | | | 26,915 | | | — | | | 87,850 | | | — | | | 87,850 | |
Industrial Products | | — | | | — | | | 30,038 | | | 30,038 | | | — | | | — | | | 86,337 | | | 86,337 | |
Total | | $ | 227,252 | | | $ | 104,681 | | | $ | 30,038 | | | $ | 361,971 | | | $ | 752,199 | | | $ | 326,814 | | | $ | 86,337 | | | $ | 1,165,350 | |
See Note 14, Segment Information for net sales by segment and countries.
Revenue Recognition
The Company recognizes revenue on product sales in the period in which the Company satisfies its performance obligation and control of the product is transferred to the customer. The Company’s sales arrangements with customers are predominately short term in nature and generally provide for transfer of control at the time of shipment as this is the point at which title and risk of loss of the product transfers to the customer. At the end of each period, for those shipments where title to the products and the risk of loss and rewards of ownership do not transfer until the product has been received by the customer, the Company adjusts revenues and cost of sales for the delay between the time that the products are shipped and when they are received by the customer. The amount of revenue recorded reflects the consideration to which the Company expects to be entitled in exchange for goods and may include adjustments for customer allowance, rebates and price adjustments. The Company’s distribution channels are primarily through direct sales and independent third-party distributors.
The Company elected the practical expedient under Accounting Standards Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.
Revenue and Billing
The Company generally accepts orders from customers through receipt of purchase orders or electronic data interchange based on written sales agreements and purchasing contracts. Contract pricing and selling agreement terms are based on market factors, costs, and competition. Pricing is often negotiated as an adjustment (premium or discount) from the Company’s published price lists. The customer is invoiced when the Company’s products are shipped to them in accordance with the terms of the sales agreement. As the Company’s standard payment terms are less than one year, the Company elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company also elected the practical expedient provided in ASC 606-10-25-18B to treat all product shipping and handling activities as fulfillment activities, and therefore recognize the gross revenue associated with the contract, inclusive of any shipping and handling revenue.
Ship and Debit Program
Some of the terms of the Company’s sales agreements and normal business conditions provide customers (distributors) the ability to receive price adjustments on products previously shipped and invoiced. This practice is common in the industry and is referred to as a “ship and debit” program. This program allows the distributor to debit the Company for the difference between the distributors’ contracted price and a lower price for specific transactions. Under certain circumstances (usually in a competitive situation or large volume opportunity), a distributor will request authorization for pricing allowances to reduce its price. When the Company approves such a reduction, the distributor is authorized to “debit” its account for the difference between the contracted price and the lower approved price. The Company establishes reserves for this program based on historic activity, electronic distributor inventory levels and actual authorizations for the debit and recognizes these debits as a reduction of revenue.
Return to Stock
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 June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments." The standard modifies the measurement approach for credit losses on financial instruments, including trade receivables, from an incurred loss method to a current expected credit loss method ("CECL"). The standard requires the measurement of expected credit losses to be based on relevant information, including historical experiences, current conditions and a forecast that is supportable. The Company adopted the new standard on December 29, 2019. The adoption of the standard did not have a material effect on our Condensed Consolidated Financial Statements.
In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement." ASU 2018-13 modifies the disclosure requirements in Topic 820: "Fair Value Measurement," based on the FASB Concepts Statement, "Conceptual Framework for Financial Reporting - Chapter 8: Notes to Financial Statements," including consideration of costs and benefits. The new standard removes certain disclosures, modifies other disclosures and adds additional disclosures related to fair value measurement. The Company adopted the new standard on December 29, 2019. The adoption of ASU 2018-13 did not have a material impact on our Condensed Consolidated Financial Statements.
In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic: 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)." ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted the new standard on December 29, 2019. The adoption of ASU 2018-15 did not have a material impact on our Condensed Consolidated Financial Statements.