LITTELFUSE INC /MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS. (Form 10-K)

The following discussion of the Company's financial condition and results of
operations should be read together with the Consolidated Financial Statements
and notes to those statements included in Item 8 of Part II of this Annual
Report on Form 10-K.

BUSINESS

For a description of the Company’s businesses, 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. The
increase was due to volume growth across all segments and businesses while 2020
had temporary closures of manufacturing facilities resulting from government
directives due to the impact of COVID-19. The increase was due to higher sales
of $363.0 million, $138.9 million, and $132.3 million in the Electronics,
Industrial, and Transportation segments, respectively, driven by higher volumes
across all businesses within these segments. The volume increase within the
Electronics segment was led by broad-based demand across electronics,
transportation and industrial end markets. The increase with the Industrial
segment was primarily due to $100.5 million of net sales resulting from the
Hartland acquisition and volume growth across all businesses within the
Industrial segment. The increase within the Transportation segment was due to
volume growth driven by higher demand in the global auto and commercial vehicle
markets, greater content growth across passenger vehicles due to vehicle mix,
including growth in electric vehicles and some customers maintaining additional
inventory of our products, and $15.3 million of net sales resulting from the
Carling acquisition. The Company recognized net income of $283.8 million, or
$11.38 per diluted share, in 2021 compared to net income of $130.0 million, or
$5.29 per diluted share in 2020. The increase in net income reflects higher
operating income of $223.3 million driven by a $156.9 million increase in
operating income in the Electronics segment, the 2020 goodwill impairment charge
of $33.8 million, a $24.3 million increase in operating income in the
Transportation segment partially offset by higher foreign exchange losses of
$32.0 million and a $19.9 million non-cash pension settlement charge associated
with the completion of the buy-out of one of our U.K. pension plans.

Supply chain constraints, including transportation capacity shortages have and
are expected to continue to impact the Company, our suppliers and our customers.
This has resulted in higher transportation and input costs incurred by the
Company.

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Net cash provided by operating activities was $373.3 million for the fiscal year
ended January 1, 2022 representing an increase of $115.3 million as compared to
the fiscal year ended December 26, 2020. 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.

On January 28, 2021, the Company acquired Hartland Controls, a manufacturer and
leading supplier of electrical components used primarily in HVAC and other
industrial and control systems applications. At the time of acquisition,
Hartland had annualized sales of approximately $70 million. The purchase price
for Hartland was $111.0 million and the operations of Hartland are included in
the Industrial segment.

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. The purchase price for Carling was approximately
$315 million and the operations of Carling are included in the Transportation
segment.

Impact of COVID-19 on businesses

The effects from COVID-19 continue to drive increased costs, though less than
net costs incurred in 2020. Ongoing costs include spending on personal
protective equipment ("PPE"), additional personnel and employee transportation
costs, and manufacturing inefficiencies. as well as an increase in material
costs and transportation costs due to global supply chain and logistics
constraints around the world.

In 2021, all of our manufacturing facilities were operational and operating generally at normal capacity levels.

The Company anticipates that the disruptions caused by COVID-19 may continue to
impact its business activity for the foreseeable future. It is currently
difficult to estimate the magnitude of the COVID-19 disruption, if future
disruptions will occur due to a resurgence in COVID-19 cases and its impact on
our employees, customers, suppliers and vendors. The Company will continue to
actively monitor the situation and may take further actions altering our
business operations that we determine are in the best interests of our
employees, customers, partners, suppliers, and other stakeholders, or as
required by federal, state, or local authorities. It is not clear what the
potential effects any such alterations or modifications may have on our business
and operations, including the effects on our customers, employees, and
prospects, or on our financial results for the fiscal year 2022.

OUTLOOK

Vision and strategy

The company works closely with strategic customers to design and manufacture innovative and reliable solutions to help create a sustainable, connected and safer world in virtually every market using electric power.

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. 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. 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. 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. Built upon that
framework, the Company has positioned itself around the structural growth themes
of sustainability, connectivity, and safety, which will
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continue to drive demand for the Company’s innovative and reliable solutions in the transportation, industrial and electronics end markets it serves.

The Company's five-year strategic plan, built around these structural growth
themes, is focused on delivering top tier shareholder returns by driving
double-digit sales growth, best-in-class profitability, earnings per share
growth, strong cash flow generation, and deploying capital to drive value
creation. The Company pursues the following major strategic objectives, which
are summarized below, along with more specific areas of focus. The Company uses
the financial measures below to gauge progress toward achieving these strategic
objectives. These measures include organic sales growth, operating margins, cash
flow from operations, and returns on invested capital.

       Strategic Objectives                                          Priorities
                                           ?        Increased product content with existing and new
Double-digit sales growth                           customers, and expand market share
5-7% average annual growth from            ?        Expand portfolio into new and underpenetrated,
annual organic sales growth                         high-growth geographies and end markets
5-7% average annual growth from            ?        Increase innovation capabilities and investments
strategic acquisitions
                                           ?        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          ?        Improve operating margins through operational and
than revenue growth                                 commercial excellence
                                           ?        Disciplined approach to 

balancing costs with the long term

                                                    strategic investments

Capital allocation and returns             ?        Disciplined management of working capital
Cash flow from operations less             ?        Deployment of capital consistent with capital
capital expenditures is targeted to                 allocation priorities
approximate or exceed net income
Target 40% of free cash flow               ?        Mergers and acquisitions that align with strategy and
returned to shareholders                            financial metrics
Remainder focused on strategic             ?        Grow dividend in line with earnings
acquisitions
Return on invested capital                 ?        Opportunistic share repurchases
percentage in the high-teens



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.
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.

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. Areas of focus include integration of operations and streamlining
administrative and support activities to drive improved operating margins.

The Company seeks to deploy its capital in accordance with capital allocation priorities. These priorities include investments to drive organic growth, targeted acquisitions that align with the Company’s strategic and financial parameters, and enhance and sustain its organic growth, and the return of capital to shareholders through dividends and opportunistic share buybacks.

Critical Estimates and Significant Accounting Policies

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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. The Company's most critical accounting
policies are those that are most important to the portrayal of its financial
condition and results of operations, and which require the Company to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. The Company has identified
the following as its most critical accounting policies and judgments. Although
management believes that its estimates and assumptions are reasonable, they are
based upon information available when they are made, and therefore, actual
results may differ from these estimates under different assumptions or
conditions. The Company has reviewed these critical accounting policies and
related disclosures with the Audit Committee of its Board of Directors.
Significant accounting policies are more fully described in the Notes to
Consolidated Financial Statements included elsewhere in this Annual Report.

Critical accounting estimates

Good will

The Company's methodology for allocating the purchase price of acquisitions is
based on established valuation techniques that reflect the consideration of a
number of factors, including valuations performed by third-party appraisers when
appropriate. Goodwill is measured as the excess of the cost of an acquired
entity over the fair value assigned to identifiable assets acquired and
liabilities assumed. Based on its current organization structure, the Company
has seven reporting units for which cash flows are determinable and to which
goodwill has been allocated.

The Company annually tests goodwill for impairment on the first day of its
fiscal fourth quarter, or more frequently if an event occurs or circumstances
change that would more likely than not reduce the fair value of a reporting unit
below its carrying value. The Company also performs an interim review for
indicators of impairment each quarter to assess whether an interim impairment
review is required for any reporting unit. As part of its interim reviews,
management analyzes potential changes in the value of individual reporting units
based on each reporting unit's operating results for the period compared to
expected results as of the prior year's annual impairment test. 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.

During the second quarter of 2020, the Company recorded a non-cash charge of
$33.8 million to recognize the impairment of goodwill in the automotive sensors
reporting unit within the Transportation segment. As of January 1, 2022, the
automotive sensors reporting unit had $9.2 million of remaining goodwill.

Quantitative assessment of impairment

For the seven reporting units with goodwill, the Company compares the estimated
fair value of each reporting unit to its carrying value. If the carrying value
of a reporting unit exceeds the estimated fair value, the difference between the
estimated fair value and carrying value is recorded as the amount of the
goodwill impairment charge. 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.

As part of its impairment test for these reporting units, the Company engaged a
third-party appraisal firm to assist in the Company's determination of the
estimated fair values. This determination included estimating the fair value of
each reporting unit using both the income and market approaches. The income
approach requires management to estimate a number of factors for each reporting
unit, including projected operating results, economic projections, anticipated
future cash flows, discount rates and the allocation of shared or corporate
items. The market approach estimates fair values using comparable marketplace
fair value data from within a comparable industry grouping. The Company weighted
both the income and market approach equally to estimate the concluded fair value
of each reporting unit. The determination of fair value requires the Company to
make significant estimates and assumptions, which primarily include, but are not
limited to: the selection of appropriate peer group companies; control premiums
appropriate for acquisitions in which the Company competes; the discount rate;
terminal growth rates; and forecasts of revenue, operating income, depreciation
and amortization and capital expenditures.

Goodwill impairment assumptions

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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. Future declines in
the overall market value of the Company's equity may also result in a conclusion
that the fair value of one or more reporting units has declined below its
carrying value.

One measure of the sensitivity of the amount of goodwill impairment charges to
key assumptions is the amount by which each reporting unit "passed" (fair value
exceeds the carrying value) the goodwill impairment test. 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. 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% for its reporting units:
Electronics-Passive Products and Sensors, Electronics-Semiconductor, Passenger
Car Products, Commercial Vehicle Products, Automotive Sensors, Relays, and Power
Fuse, respectively. Relatively small changes in the Company's key assumptions
would not have resulted in any reporting units failing the goodwill impairment
test.

Generally, changes in estimates of expected future cash flows would have a
similar effect on the estimated fair value of the reporting unit. That is, a
1.0% decrease in estimated annual future cash flows would decrease the estimated
fair value of the reporting unit by approximately 1.0%. The estimated long-term
net sales growth rate can have a significant impact on the estimated future cash
flows, and therefore, the fair value of each reporting unit. A 1.0% decrease in
the long-term net sales growth rate would have resulted in no reporting units
failing the goodwill impairment test. Of the other key assumptions that impact
the estimated fair values, most reporting units have the greatest sensitivity to
changes in the estimated discount rate. The estimated discount rate was 8.9% for
the Electronics-Passive Products and Sensors and the Passenger Car Products
reporting units, 9.9% for the Electronics-Semiconductor, Commercial Vehicle
Products and the Automotive Sensors reporting units, 10.9% for the Power Fuse
reporting unit and 11.9% for the Relays reporting unit. 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. Additionally, price deterioration or lower volume could have a
significant impact on the fair values of the reporting units.

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 Company recognizes
deferred taxes for temporary differences, operating loss carryforwards and tax
credit and other tax attribute carryforwards (excluding carryforwards where
usage has been determined to be remote). Deferred tax assets are reduced by a
valuation allowance if it is more likely than not that some portion, or all, of
the deferred tax assets will not be realized. U.S. state and non-U.S. income
taxes are provided on the portion of non-U.S. income that is expected to be
remitted to the U.S. and be taxable (and non-U.S. income taxes are provided on
the portion of non-U.S. income that is expected to be remitted to an upper-tier
non-U.S. entity). Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Deferred income taxes are not provided on the excess of the investment value for
financial reporting over the tax basis of investments in those non-U.S.
subsidiaries for which such excess is considered to be permanently reinvested in
those operations. Management regularly evaluates whether non-U.S. earnings are
expected to be permanently reinvested. This evaluation requires judgment about
the future operating and liquidity needs of the Company and its non-U.S.
subsidiaries. Changes in economic and business conditions, non-U.S. or U.S. tax
laws, or the Company's financial situation could result in changes to these
judgments and the need to record additional tax liabilities.

The Company recognizes the tax benefit from an uncertain tax position only if it
is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. The
tax benefits recognized in the financial statements from such a position are
measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement.

The 2017 Tax Cuts and Jobs Act (the "Tax Act"), among other things, imposed a
one-time tax (the "Toll Charge") on accumulated earnings of certain non-U.S.
subsidiaries and included base broadening provisions commonly referred to as the
global intangible low-taxed income provisions ("GILTI").

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. Thus, for the fiscal years ended January 1, 2022, December 26, 2020,
and
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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.

Further information regarding income taxes, including a detailed reconciliation
of current year activity, is provided in Note 14, Income Taxes, of the Notes to
Consolidated Financial Statements included in this Annual Report.

Critical Accounting Policies

Revenue Recognition

Revenue Disaggregation

The following table breaks down the Company’s revenues by major business units for the years ended January 1, 2022 and December 26, 2020:

Year ended January 1, 2022

                                                    Electronics           Transportation          Industrial
(in thousands)                                        Segment                Segment                Segment              Total
Electronics - Semiconductor                        $   678,861          $   

-$- $678,861
Electronics – Passive Products and Sensors

             621,883                        -                   -              621,883
Passenger Car Products                                       -                  266,020                   -              266,020
Commercial Vehicle Products                                  -                  160,300                   -              160,300
Automotive Sensors                                           -                  101,738                   -              101,738
Industrial Products                                          -                        -             251,126              251,126
Total                                              $ 1,300,744          $       528,058          $  251,126          $ 2,079,928



                                                                         

Year ended December 26, 2020

                                                     Electronics           Transportation           Industrial
(in thousands)                                         Segment                Segment                Segment               Total
Electronics - Semiconductor                        $    522,352          $             -          $         -          $   522,352
Electronics - Passive Products and Sensors              415,410                        -                    -              415,410
Passenger Car Products                                        -                  200,455                    -              200,455
Commercial Vehicle Products                                   -                  101,324                    -              101,324
Automotive Sensors                                            -                   93,985                    -               93,985
Industrial Products                                           -            
           -              112,169              112,169
Total                                              $    937,762          $       395,764          $   112,169          $ 1,445,695


See Note 16, Segment information, for net sales by segment and by country.

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 sales channels
are primarily through direct sales and independent third-party distributors.

The Company has elected the practical expedient under Accounting Standards
Codification ("ASC") 340-40-25-4 to expense commissions when incurred as the
amortization period of the commission asset the Company would have otherwise
recognized is less than one year.
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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 has 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 the Company's management, can return previously purchased
goods for full or partial credit. The Company establishes an estimated allowance
for these returns based on historic activity. Sales revenue and cost of sales
are reduced to anticipate estimated returns.

Volume Discounts

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.

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. If current conditions
and supportable forecasts indicate that our historical loss experience is not
reasonable and no longer supportable, the Company may adjust its historical
credit loss experience and to reflect these conditions and forecasts. The
Company regularly analyzes its significant customer accounts and, when the
Company becomes aware of a customer's inability to meet its financial
obligations, the Company records a specific reserve for bad debt to reduce the
related receivable to the amount the Company reasonably believes is collectible.
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. If circumstances related to specific customers change, the
estimates of the recoverability of receivables could be further adjusted.

Inventory

The Company performs regular detailed assessments of inventory, which include a
review of, among other factors, demand requirements, product life cycle and
development plans, component cost trends, product pricing, shelf life, and
quality issues. 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.

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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. Factors which could trigger an
impairment review include significant underperformance relative to historical or
projected operating results, significant changes in the manner of use of the
assets or the strategy for the overall business, a significant decrease in the
market value of the assets or significant negative industry or economic trends.
When the Company determines that the carrying value of long-lived assets may not
be recoverable based upon the existence of one or more of the indicators, the
assets are assessed for impairment based on the estimated future undiscounted
cash flows expected to result from the use of the asset and its eventual
disposition. If the carrying value of an asset exceeds its estimated future
undiscounted cash flows, an impairment loss is recorded for the excess of the
asset's carrying value over its fair value. For the fiscal year ended December
26, 2020, the Company recognized a $2.2 million impairment charge related to the
land and building associated with the Company's announced consolidation of a
manufacturing facility within the Industrial segment. For the year-ended
December 28, 2019, the Company recognized non-cash impairment charges of $0.3
million for certain machinery and equipment related to the closure of a European
manufacturing facility in the automotive sensors business within the
Transportation segment.

Environmental liabilities

Environmental liabilities are accrued based on estimates of the probability of
potential future environmental exposure. Costs related to on-going maintenance
of environmental sites are expensed as incurred. If actual or estimated probable
future losses exceed the Company's recorded liability for such claims, it would
record additional charges as other expense during the period in which the actual
loss or change in estimate occurred. The Company evaluates its reserve for coal
mine remediation annually utilizing a third-party expert.

Pension plans

The Company records annual income and expense amounts relating to its pension
and postretirement benefits plans based on calculations which include various
actuarial assumptions including discount rates, expected long-term rates of
return and compensation increases. The Company reviews its actuarial assumptions
on an annual basis as of the fiscal year-end balance sheet date (or more
frequently if a significant event requiring remeasurement occurs) and modifies
the assumption based on current rates and trends when it is appropriate to do
so. 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 Company believes that the assumptions utilized in recording
its obligations under its plans are reasonable based on its experience, market
conditions and input from its actuaries and investment advisors. The Company
maintains several pension plans in international locations. 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.

A variation of 50 basis points in the discount rates at January 1, 2022 would have the following effect on the projected benefit obligation:

                                    0.5%           0.5%
(in millions)                     Increase       Decrease

Projected benefit obligation $(5.9) $6.4



On April 7, 2020, the Company entered into a definitive agreement to purchase a
group annuity contract, under which an insurance company will be required to
directly pay and administer pension payments to certain of the Company's U.K.
pension plan participants, or their designated beneficiaries. The Company
completed the buy-out of this U.K. pension plan during the fourth quarter of
2021 and as a result recorded a non-cash pension settlement charge of
$19.9 million (£14.9 million), inclusive of the accelerated recognition of prior
service cost of $0.5 million (£0.4 million). The purchase of this group annuity
contract reduced the Company's outstanding pension benefit obligation by
$47.1 million, representing 35% of the total obligation of the Company's
qualified pension plans.

Share-based compensation

Equity-based compensation expense is recorded for stock-option awards and
restricted share units based upon the fair values of the awards. The fair value
of stock-option awards is estimated at the grant date using the Black-Scholes
option pricing model,
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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. Historical data is used to estimate employee
termination experience and the expected term of the options. The risk-free
interest rate is based on the U.S. Treasury yield curve in effect at the time of
grant. The Company initiated a quarterly cash dividend in 2010 and expects to
continue making cash dividend payments for the foreseeable future. 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. Further information regarding this expense is provided in Note 12,
Stock-Based Compensation, of the Notes to Consolidated Financial Statements
included in this Annual Report.

Off-balance sheet arrangements

The Company does not have off-balance sheet arrangements as defined under SEC
rules. The Company does not participate in transactions that generate
relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities.

In the financial review that follows, the Company discusses its consolidated
results of operations, financial position, cash flows and certain other
information. This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and related notes.

RESULTS OF OPERATIONS FOR THE YEAR ENDED 01 JANUARY 2022 BY COMPARISON WITH 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. See Note 8, Restructuring, Impairment and Other
Charges, for further discussion. Additionally, partially offsetting the above
amounts was a gain of $5.0 million recorded for the sale of buildings within the
Electronics segment.

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. In addition, there were $41.7 million of restructuring, impairment
and other charges, primarily related to the goodwill impairment charge of
$33.8 million recorded in the second quarter associated with the automotive
sensors reporting unit within the Transportation segment, employee termination
costs of $5.5 million, $2.2 million of impairment charges recorded in the first
quarter associated with the announced consolidation of a manufacturing facility
within the Industrial segment and other restructuring charges of $0.2 million.

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
(in thousands, except % change)       2021             2020           Change        % Change
Net sales                         $ 2,079,928      $ 1,445,695      $ 634,233         43.9  %
Cost of sales                       1,308,002          944,523        363,479         38.5  %
Gross profit                          771,926          501,172        270,754         54.0  %
Operating expenses                    386,284          338,800         47,484         14.0  %
Operating income                      385,642          162,372        223,270        137.5  %
Other expense (income), net             8,932           (5,083)        14,015       (275.7) %
Income before income taxes            341,025          161,253        179,772        111.5  %
Income taxes                           57,219           31,267         25,952         83.0  %
Net income                            283,806          129,986        153,820        118.3  %


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Net Sales

Net sales increased $634.2 million or 43.9% including $27.4 million or 1.9% of
favorable changes in foreign exchange rates for 2021 compared to 2020. The
increase was due to volume growth across all segments and businesses while 2020
had temporary closures of manufacturing facilities resulting from government
directives due to the impact of COVID-19. The increase was due to higher sales
of $363.0 million, $138.9 million, and $132.3 million in the Electronics,
Industrial, and Transportation segments, respectively, primarily driven by
higher volumes across all businesses within these segments. The volume increase
within the Electronics segment was led by broad-based demand across electronics,
transportation and industrial end markets. The increase within the Industrial
segment was primarily due to $100.5 million of net sales resulting from the
Hartland acquisition and volume growth across all businesses within the
Industrial segment. The increase within the Transportation segment was due to
volume growth driven by higher demand in the global auto and commercial vehicle
markets, greater content growth across passenger vehicles due to vehicle mix,
including growth in electric vehicles and some customers maintaining additional
inventory of our products, and $15.3 million of net sales resulting from the
Carling acquisition.

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. As a percent
of net sales, cost of sales decreased 2.4% driven by volume leverage, partially
offset by higher transportation, duty and tariff charges of 2.2%, the purchase
accounting inventory charges of $8.4 million or 0.4% resulting from the Hartland
and Carling acquisitions, and higher material costs.

Gross profit

Gross profit was $771.9 million, or 37.1% of net sales, in 2021, compared to
$501.2 million, or 34.7% of net sales, in 2020. The $270.8 million increase in
gross profit was primarily due to higher volume across all segments while 2020
had additional costs associated with government-directed plant shutdowns and
supply chain constraints. 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.

Functionnary costs

Total operating expenses were $386.3 million, or 18.6% of net sales, for 2021
compared to $338.8 million, or 23.4% of net sales, for 2020. The increase in
operating expenses of $47.5 million is primarily due to higher selling, general,
and administrative expenses of $71.0 million largely due to higher accrued
incentive compensation, the Hartland and Carling acquisitions and higher
acquisition-related and integration charges of $4.7 million, and higher research
and development expenses of $13.4 million, partially offset by the 2020 goodwill
impairment charge of $33.8 million, or 2.3% of net sales, in the automotive
sensors reporting unit within the Transportation segment and impairment charges
of $2.2 million related to the Company's 2020 first quarter announcement to
consolidate a manufacturing facility within the Industrial segment.

Operating result

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
margins increased from 11.2% in 2020 to 18.5% in 2021 primarily driven by the
factors mentioned above. The 2020 goodwill impairment charge of $33.8 million
negatively impacted the 2020 operating margin by 2.3%.

income before taxes

Income before income taxes for 2021 was $341.0 million, or 16.4% of net sales
compared to $161.3 million, or 11.2% of net sales, for 2020. 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 offset 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.

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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. The Company's tax rates are lower than the applicable U.S.
statutory tax rate primarily due to income earned in lower tax jurisdictions,
partially offset by the impact of taxes on unremitted earnings, the GILTI tax
provisions, and non-U.S. losses and expenses with no tax benefit. The effective
tax rate for 2021 is lower than the effective tax rate for 2020, primarily due
to an increase in the income earned in lower tax jurisdictions in 2021 as
compared to 2020, as well as the impact of the goodwill impairment charge of
$33.8 million recorded in 2020, the substantial majority of which did not result
in a tax benefit. 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 is described more fully in
Note 16, Segment Information, of the Notes to Consolidated Financial Statements
included in this Annual Report.

The following table is a summary of the Company’s net sales by segment:

                        Fiscal Year
(in millions)       2021           2020         Change       % Change
Electronics      $ 1,300.7      $   937.7      $ 363.0         38.7  %
Transportation       528.1          395.8        132.3         33.4  %
Industrial           251.1          112.2        138.9        123.8  %
Total            $ 2,079.9      $ 1,445.7      $ 634.2         43.9  %



Electronics Segment

Net sales for the Electronics segment increased $363.0 million, or 38.7%, in
2021 compared to 2020 and included favorable changes in foreign exchange rates
of $14.5 million or 1.5%. The sales increase was primarily due to increased
volume for the electronics and semiconductor products businesses of $206.5
million and $156.5 million, respectively. The volume increases were driven by
broad-based demand across electronics, transportation and industrial end markets
while 2020 were negatively impacted by production disruptions and temporary
plant shutdowns due to the impact of COVID-19.

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%. The sales increase was due to higher volume in
passenger car products, commercial vehicle products, and the automotive sensors
businesses of $65.6 million, $59.0 million, and $7.8 million, respectively,
including the incremental net sales of $15.3 million from the Carling
acquisition within the commercial vehicle products business. These increases
were due to volume growth driven by higher demand in the global auto and
commercial vehicle markets, greater content growth across passenger vehicles due
to vehicle mix, including growth in electric vehicles and some customers
maintaining additional inventory of our products as compared to 2020, which had
production disruptions and temporary plant shutdowns due to the impact of
COVID-19.

Industrial sector

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%. The increase in net sales was primarily due to the
incremental net sales of $100.5 million or 90% from the Hartland acquisition,
growth across all product lines, and the transfer of the temperature sensor
product line totaling $4.7 million which was previously reported in the
Electronics segment and moved to Industrial segment in the third quarter of
2020. Additionally, 2020 was negatively impacted by production disruptions and
temporary plant shutdowns due to the impact of COVID-19.

Geographic information on net sales

Net sales by geography represent net sales to customer or distributor locations. The following table is a summary of the Company’s net sales by geographic area:

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                       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 increase in net sales was primarily due to higher volume across all segments
and businesses compared to 2020 that had production disruptions due to the
impact of COVID-19.

Americas

Net sales in the Americas increased $236.5 million, or 51.7%, in 2021 compared
to 2020 and included favorable changes in foreign exchange rates of $0.7
million. The increase in net sales was primarily due to incremental sales from
the Hartland and Carling acquisitions, higher volume across all segments and
businesses compared to 2020 that had production disruptions due to the impact of
COVID-19.

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. The
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.




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RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 26, 2020 BY COMPARISON WITH 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. In addition, there were $41.7 million of restructuring, impairment
and other charges, primarily related to the goodwill impairment charge of
$33.8 million recorded in the second quarter associated with the automotive
sensors reporting unit within the Transportation segment, employee termination
costs of $5.5 million, $2.2 million of impairment charges recorded in the first
quarter associated with the announced consolidation of a manufacturing facility
within the Industrial segment and other restructuring charges of $0.2 million.
See Note 8, Restructuring, Impairment and Other Charges, for further discussion.

Fiscal 2019 included approximately $21.9 million non-segment expenses, of which $8.9 million expenses are acquisition-related expenses and integration expenses primarily related to the acquisition of IXYS and other contemplated acquisitions, and $13.0 million restructuring charges primarily related to severance costs.

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
(in thousands, except % change)       2020             2019           Change        % Change
Net sales                         $ 1,445,695      $ 1,503,873      $ (58,178)        (3.9) %
Cost of sales                         944,523          957,578        (13,055)        (1.4) %
Gross profit                          501,172          546,295        (45,123)        (8.3) %
Operating expenses                    338,800          353,504        (14,704)        (4.2) %
Operating income                      162,372          192,791        (30,419)       (15.8) %
Other income, net                      (5,083)            (583)        (4,500)       771.9  %
Income before income taxes            161,253          165,884         (4,631)        (2.8) %
Income taxes                           31,267           26,802          4,465         16.7  %
Net income                            129,986          139,082         (9,096)        (6.5) %



Net Sales

Net sales of $1,445.7 million decreased $58.2 million, or 3.9%, for 2020
compared to the prior year primarily due to lower volume in the Transportation
and Electronics segments which had net sales decreases of $32.7 million and
$23.4 million, respectively, partially offset by $7.7 million or 0.5% of
favorable changes in foreign exchange rates. These decreases were primarily
driven by the production disruption due to temporary closures of manufacturing
facilities resulting from government directives due to the impact of COVID-19
and a decline in global auto production driven by the temporary closures of
customer manufacturing facilities during the first half of 2020. These sales
declines were partially offset by increases in customer demand for consumer
devices for work from home needs and strength in various end market demand
across all businesses in the second half of the year. All businesses within the
Transportation segment experienced lower sales in 2020 due to the production
disruptions in the first half of 2020 mentioned above, which was partially
offset in the second half of the year, driven by stronger end market demand.

Cost of sales

Cost of sales was $944.5 million, or 65.3% of net sales, in 2020, compared to
$957.6 million, or 63.7% of net sales, in 2019. The decrease in cost of sales
was primarily due to lower volume in the Electronics and Transportation segments
driven by the factors discussed above. As a percent of net sales, cost of sales
increased 1.6% driven by higher freight costs of $5.6 million, additional costs
associated with government-directed plant shutdowns and supply chain
constraints, supplies and other costs due to the impact of COVID-19, and
unfavorable product mix.

Gross profit

Gross profit was $501.2 million, or 34.7% of net sales, in 2020, compared to
$546.3 million, or 36.3% of net sales, in 2019. The decrease of $45.1 million in
gross profit reflected lower volume across all segments driven by the disruption
across all segments
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due to temporary closures of manufacturing facilities in the first half of the
year resulting from government directives due to the impact of COVID-19. The
decrease in gross margin of 1.6% was primarily from the lower volume mentioned
previously, unfavorable price and product mix primarily in the Industrial
segment. Additionally, higher freight cost of $5.6 million, costs associated
with government-directed plant shutdowns and supply chain constraints, supplies
and other costs due to the impact of COVID-19 negatively impacted gross margins.

Functionnary costs

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. The decrease in
operating expenses of $14.7 million is primarily due to lower research and
development expenses of $27.5 million, or 1.7% of net sales, a reduction in
discretionary expenses including travel and marketing expenses and a $6.6
million reduction in acquisition-related and integration charges, partially
offset by the second quarter goodwill impairment charge of $33.8 million, or
2.3% of net sales, in the automotive sensors reporting unit within the
Transportation segment and impairment charges of $2.2 million related to the
Company's first quarter announcement to consolidate a manufacturing facility
within the Industrial segment.

Operating result

Operating income for 2020 was $162.4 million, a decrease of $30.4 million or
15.8% compared to $192.8 million for 2019. The decrease in operating income is
primarily due to lower gross margin across all segments and the $33.8 million
goodwill impairment charge noted above partially offset by a reduction in
operating expenses described above. Operating margins decreased from 12.8% in
2019 to 11.2% in 2020 primarily driven by the factors mentioned above. The
second quarter goodwill impairment charge of $33.8 million negatively impacted
the 2020 operating margin by 2.3% which was partially offset by the lower
operating expenses and cost reductions noted above.

income before 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. In addition to the
factors impacting comparative results for operating income discussed above,
income before income taxes benefited from foreign exchange gains of $14.9
million during the fiscal year ended December 26, 2020 compared to foreign
exchange losses of $5.2 million during the fiscal year ended December 28, 2019.
Additionally, the increase in other income of $4.5 million was primarily due to
the 2019 fiscal year impairment charges of $7.3 million for certain other
investments and a $2.6 million loss on the disposal of a business within the
Electronics segment and $1.7 million increase in unrealized investment gains
associated with our equity investments, partially offset by lower interest
income of $2.0 million and a $1.2 million increase in coal mining reserves in
2020 versus 2019.

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. The Company's tax rates are lower than the applicable U.S.
statutory tax rate primarily due to income earned in lower tax jurisdictions,
partially offset by the impact of taxes on unremitted earnings, the GILTI tax
provisions, and non-U.S. losses and expenses with no tax benefit. Changes in the
amount of these items from year to year impact the effective tax rates. In
addition, the 2020 income tax expense included the impact of the goodwill
impairment charge of $33.8 million that was recorded in the second quarter of
2020, the substantial majority of which related to non-U.S. entities and did not
result in a tax benefit, and the 2019 income tax expense included a benefit of
$3.3 million from the recognition of previously unrecognized tax benefits (and
the reversal of the related accrued interest) due to a lapse in the statute of
limitations. 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.

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 following table is a summary of the Company’s net sales by segment:

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                        Fiscal Year
(in millions)       2020           2019         Change       % Change
Electronics      $   937.7      $   961.1      $ (23.4)        (2.4) %
Transportation       395.8          428.5        (32.7)        (7.6) %
Industrial           112.2          114.3         (2.1)        (1.8) %
Total            $ 1,445.7      $ 1,503.9      $ (58.2)        (3.9) %



Electronics Segment

Net sales for the Electronics segment decreased $23.4 million, or 2.4%, in 2020
compared to 2019 primarily due to declines in net sales for the semiconductor
and electronics products businesses of $17.5 million and $5.9 million,
respectively, driven by the production disruption due to temporary closures of
manufacturing facilities resulting from government directives due to the impact
of COVID-19 during the first half of the year. These declines were partially
offset by increases in customer demand for consumer devices for work from home
needs and strength in various end markets during the second half of the year
along with favorable changes in foreign exchange rates of $3.6 million.

Transportation Segment

Net sales in the Transportation segment decreased $32.7 million, or 7.6%, in
2020 compared to 2019 due to decreased volume in passenger car products,
commercial vehicle products, and automotive sensors businesses of $18.1 million,
$10.6 million, and $4.0 million, respectively, driven by the production
disruption due to temporary closures of manufacturing facilities resulting from
government directives due to the impact of COVID-19 and a decline in global auto
production driven by the temporary closures of customer manufacturing facilities
during the first half of 2020. These sales declines were partially offset by
increases in end market demand across all businesses in the second half of 2020
and favorable changes in foreign exchange rates of $4.1 million.

Industrial sector

The Industrial segment net sales decreased slightly by $2.1 million, or 1.9%, in
2020 compared to 2019 primarily due to decreased volume across all businesses
driven by the production disruption due to temporary closures of manufacturing
facilities resulting from government directives due to the impact of COVID-19 in
the first half of 2020, partially offset by the transfer of the temperature
sensor product line in the third quarter of 2020 previously reported in the
Electronics segment.

Geographic information on net sales

Net sales by geography represent net sales to customer or distributor locations. The following table is a summary of the Company’s net sales by geographic area:

                       Fiscal Year
(in millions)      2020           2019         Change       % Change
Asia-Pacific    $   670.5      $   656.8      $  13.7          2.1  %
Americas            457.8          508.4        (50.6)       (10.0) %
Europe              317.4          338.7        (21.3)        (6.3) %
Total           $ 1,445.7      $ 1,503.9      $ (58.2)        (3.9) %



Asia-Pacific

Asia-Pacific net sales increased $13.7 million, or 2.1%, in 2020 compared to
2019. The increase in net sales was primarily due to higher volume in the
semiconductor business within the Electronics segment and favorable changes in
foreign exchange rates of $2.2 million, partially offset by lower volume in the
passenger car products business within the Transportation segment due to the
production disruption associated with temporary closures of manufacturing
facilities resulting from government directives due to the impact of COVID-19 in
the first half of 2020.

Americas

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Net sales in the Americas decreased $50.6 million, or 10.0%, in 2020 compared to
2019 primarily due to lower volume across all segments driven by the production
disruption due to temporary closures of manufacturing facilities resulting from
government directives due to the impact of COVID-19, the temporary closures of
customer manufacturing facilities during the first half of 2020 and unfavorable
changes in foreign exchange rates of $0.3 million. These sales declines were
partially offset by increases in end market demand across all businesses in the
second half of the year.

Europe

European net sales decreased $21.3 million, or 6.3%, in 2020 compared to 2019.
The decrease in net sales was primarily due to lower volume in the semiconductor
business within the Electronics segment, lower volume in passenger car products
and commercial vehicle products businesses within the Transportation segment
driven by the production disruption due to temporary closures of manufacturing
facilities resulting from government directives due to the impact of COVID-19
and the temporary closures of customer manufacturing facilities during the first
half of 2020, partially offset by increased volume in the second half of 2020
due to higher end market demand in Electronics and Transportation businesses and
favorable changes in foreign exchange rates of $5.8 million.

Cash and capital resources

Cash and cash equivalents were $478.5 million from January 1, 2022a decrease of $209.1 million compared to December 26, 2020.

As of January 1, 2022, $326.1 million of the Company's $478.5 million cash and
cash equivalents was held by non-U.S. subsidiaries. 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. 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. 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.

The Company has historically supported its liquidity needs through cash flows
from operations. Management expects that the Company's (i) current level of
cash, cash equivalents, and marketable securities, (ii) current and forecasted
cash flows from operations, (iii) availability under existing funding
arrangements, and (iv) access to capital in the capital markets will provide
sufficient funds to support the Company's operations, capital expenditures,
investments, and debt obligations on both a short-term and long-term basis.

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. The amended Credit Agreement also allows the Company to increase
the size of the revolving credit facility or enter into one or more tranches of
term loans if there is no event of default and the Company is in compliance with
certain financial covenants. 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.

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. 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 nature. The effective interest rate on
outstanding borrowings under the credit facility was 1.35% at January 1, 2022.

As of January 1, 2022, the Company had no outstanding in letters of credit and
had available $600.0 million of borrowing capacity under the revolving credit
facility. At January 1, 2022, the Company was in compliance with all covenants
under the credit agreement.
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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. The funding date for the Euro denominated
senior notes occurred on December 8, 2016 for €117 million in aggregate amount
of 1.14% Senior Notes, Series A, due December 8, 2023 ("Euro Senior Notes,
Series A due 2023"), and €95 million in aggregate amount of 1.83% Senior Notes,
Series B due December 8, 2028 ("Euro Senior Notes, Series B due 2028")
(together, the "Euro Senior Notes"). 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 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 due 2022 and
2027") were funded. Interest on the U.S. Senior Notes due 2022 and 2027 is
payable semiannually on February 15 and August 15, commencing August 15, 2017.

On November 15, 2017, the Company entered into a Note Purchase Agreement
pursuant to which the Company issued and sold $175 million in aggregate
principal amount of senior notes in two series. On January 16, 2018, $50 million
aggregate principal amount of 3.48% Senior Notes, Series A, due February 15,
2025 ("U.S. 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. 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. As
of January 1, 2022, the Company met all the conditions required to borrow under
the Credit Agreement and management expects the Company to continue to meet the
applicable borrowing conditions.

Acquisitions

On January 28, 2021, the Company acquired Hartland, a manufacturer and leading
supplier of electrical components used primarily in HVAC and other industrial
and control systems applications. At the time of acquisition, Hartland had
annualized sales of approximately $70 million. The total 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.

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. 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

Cash flow from operations is largely attributable to sales of the Company’s products. Operating cash outflows are largely attributable to recurring expenses for raw materials, labor, rent, interest, taxes and other operating activities.

The following text describes the Company’s cash flows for the year ended
January 1, 2022 and December 26, 2020:

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                                                                                 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 changes in exchange rates 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, 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 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. Capital
expenditures were $90.6 million, representing a decrease of $34.4 million
compared to the fiscal year 2020. Net cash paid for the Hartland and Carling
acquisitions was $422.1 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.

Cash flow from financing activities

Net cash used in financing activities was $69.0 million for the fiscal year 2021
compared to $67.8 million for the fiscal year 2020. The Company made payments of
$30.0 million on the amended revolving credit facility during the fiscal year
2021. On March 25, 2020, the Company borrowed $100.0 million from its revolving
credit facility to preserve financial flexibility and enhance liquidity, given
the increasing levels of uncertainty related to COVID-19. On April 3, 2020, the
Company amended the Credit Agreement to eliminate the $200.0 million unsecured
term loan credit facility, with the remaining outstanding balance of $140.0
million repaid in full on April 3, 2020 through a new borrowing of $140.0
million under the amended revolving credit facility. The Company also made
principal payments of $5.0 million on the term loan during fiscal year 2020
before amended the Credit Agreement. During the fiscal year 2020, the Company
made payments of $110.0 million on the amended revolving credit facility.

During the fiscal year 2020, the Company repurchased 175,110 shares of its
common stock totaling $22.9 million. Additionally, dividends paid increased $2.9
million from $46.8 million for the fiscal year 2020 to $49.7 million for the
fiscal year 2021.
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 changes in exchange rates 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, 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

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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 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.

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. 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 made principal payments of
$5.0 million and $10.0 million on the term loan during fiscal year 2020 and
2019, respectively. During fiscal year 2020, the company borrowed $100.0 million
from its revolving credit facility to preserve financial flexibility and enhance
liquidity, given the increasing levels of uncertainty related to COVID-19. On
April 3, 2020, the Company amended the Credit Agreement to eliminate the $200.0
million unsecured term loan credit facility, with the remaining outstanding
balance of $140.0 million repaid in full on April 3, 2020 through a new
borrowing of $140.0 million under the recently amended revolving credit
facility. The Company made payments of $110.0 million on the amended revolving
credit facility during the fiscal year 2020. The balance under the facility was
$130.0 million as of December 26, 2020.

For the fiscal year 2020 and 2019, the Company repurchased 175,110 and 579,916
shares of its common stock totaling $22.9 million and $95.0 million,
respectively, but made payments of $99.4 million related to settled share
repurchases during the fiscal year 2019. Additionally, dividends paid increased
$2.2 million from $44.7 million for the fiscal year 2019 to $46.8 million for
the fiscal year 2020.

Contractual obligations and commitments

The following table summarizes the contractual obligations and outstanding commitments as of January 1, 2022:

                                                      Payments Due By Period
                                                                                            Greater
                                              Less than       1 to 3         3 to 5          than
(in thousands)                   Total         1 Year          Years          Years         5 Years
Long-term debt(a)             $ 639,984      $  25,000      $ 132,444      $ 150,000      $ 332,540
Interest payments(b)             80,435         14,488         26,710         20,202         19,035
Operating lease payments(c)      34,307         10,080         15,163          4,457          4,607
Income tax obligation(d)         20,754          3,000          9,515          8,239              -
Purchase obligations(e)          13,544         10,091          1,263          1,166          1,024
Total                         $ 789,024      $  62,659      $ 185,095      $ 184,064      $ 357,206



(a)Excludes offsetting issuance costs of $3.1 million. 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 at January 1, 2022 are used for variable rate debt. For more information, see Note 9, Debt, in the Notes to the Consolidated Financial Statements.

(c) For more information, see note 7, Lease commitments, in the notes to the consolidated financial statements.

(d)The Income tax obligation represents the remaining amounts payable regarding
the 2017 Littelfuse Toll Charge. 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.

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(e) Purchase obligations include purchase commitments and capital expenditure commitments not recognized on the Company’s consolidated balance sheets.

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. 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. 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. 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.

Share buyback program

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 (the "2019 program"). 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. 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. 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. During the fiscal year 2020 and 2019, the Company repurchased
175,110, and 579,916 shares of its common stock totaling $22.9 million and $95.0
million, respectively.

Off-balance sheet arrangements

As of January 1, 2022, the Company did not have any off-balance sheet
arrangements, as defined under SEC rules. Specifically, the Company was not
liable for guarantees of indebtedness owed by third parties, the Company was not
directly liable for the debt of any unconsolidated entity and the Company did
not have any retained or contingent interest in assets. The Company does not
participate in transactions that generate relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities.

Recent accounting pronouncements

Recently issued accounting standards and their estimated impact on the Company’s consolidated financial statements are described in Note 1, Summary of Significant Accounting Policies and Other Disclosures, in the Notes to the Consolidated Financial Statements.

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