LITTELFUSE INC / MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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Caution regarding forward-looking statements under the Private Securities Litigation Reform Act of 1995 (“PSLRA”).

Certain statements in this section and other parts of this Quarterly Report on
Form 10-Q may constitute "forward-looking statements" within the meaning of the
federal securities laws and are entitled to the safe-harbor provisions of the
PSLRA. These statements include statements regarding the Company's future
performance, as well as management's expectations, beliefs, intentions, plans,
estimates or projections relating to the future. Such statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy, although not all forward-looking statements contain
such terms. The Company cautions that forward-looking statements, which speak
only as of the date they are made, are subject to risks, uncertainties and other
factors, and actual results and outcomes may differ materially from those
indicated or implied by the forward-looking statements. These risks,
uncertainties and other factors include, but are not limited to, risks and
uncertainties relating to general economic conditions; the severity and duration
of the coronavirus disease 2019 ("COVID-19") pandemic and the measures taken in
response thereto and the effects of those items on the Company's business;
product demand and market acceptance; economic conditions; the impact of
competitive products and pricing; product quality problems or product recalls;
capacity and supply difficulties or constraints; coal mining exposures reserves;
cybersecurity matters; failure of an indemnification for environmental
liability; exchange rate fluctuations; commodity price fluctuations; the effect
of the Company's accounting policies; labor disputes; restructuring costs in
excess of expectations; pension plan asset returns less than assumed;
uncertainties related to political or regulatory changes; integration of
acquisitions may not be achieved in a timely manner, or at all; and other risks
that may be detailed in Item 1A. "Risk Factors" of the Company's Annual Report
on Form 10-K for the year ended January 1, 2022, and the Company's other filings
and submissions with the Securities and Exchange Commission. The Company does
not undertake any obligation to update or revise any forward-looking statements
to reflect future events or circumstances, new information or otherwise.

This report, including the Management's Discussion and Analysis of Financial
Condition and Results of Operations, should be read in conjunction with
information provided in the consolidated financial statements and the related
Notes thereto appearing in the Company's Annual Report on Form 10-K for the year
ended January 1, 2022.

Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is designed to provide information that is supplemental to,
and should be read together with, the consolidated financial statements and the
accompanying notes. Information in MD&A is intended to assist the reader in
obtaining an understanding of (i) the consolidated financial statements,
(ii) the changes in certain key items within those financial statements from
year-to-year, (iii) the primary factors that contributed to those changes, and
(iv) any changes in known trends or uncertainties that the Company is aware of
and that may have a material effect on future performance. In addition, MD&A
provides information about the Company's segments and how the results of those
segments impact the results of operations and financial condition as a whole.









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Executive Overview

Founded in 1927, Littelfuse is an industrial technology manufacturing company
empowering a sustainable, connected, and safer world. Across more than 15
countries, and with 17,000 global associates, we partner with customers to
design and deliver innovative, reliable solutions. Serving over 100,000 end
customers, our products are found in a variety of industrial, transportation and
electronics end markets - everywhere, every day.

The Company maintains a network of global laboratories and engineering centers
that develop new products and product enhancements, provide customer application
support and test products for safety, reliability, and regulatory compliance.
The Company conducts its business through three reportable segments:
Electronics, Transportation, and Industrial. Within these segments, the Company
designs, manufactures and sells components and modules empowering a sustainable,
connected, and safer world. Our products protect against electrostatic
discharge, power surges, short circuits, voltage spikes and other harmful
occurrences, safely and efficiently control power and improve productivity and
are used to identify and detect temperature, proximity, flow speed and fluid
level in various applications.

Summary

For the second quarter of 2022, the Company recognized net sales of $618.4
million, an increase of $94.9 million, or 18.1% as compared to $523.5 million in
the second quarter of 2021. The increase was primarily driven by higher volumes
in the Electronics and Industrial segments and $57.8 million or 11.0% of net
sales from the Carling acquisition within the Transportation segment, partially
offset by $16.4 million or 3.1% of unfavorable changes in foreign exchange
rates. The Company recognized net income of $87.0 million, or $3.48 per diluted
share, in the second quarter of 2022 compared to $82.1 million, or $3.30 per
diluted share in the second quarter of 2021. The increase in net income reflects
higher operating income of $37.9 million primarily due to an increase in
operating income of $31.7 million in the Electronics segment partially offset by
higher foreign exchange losses of $15.8 million and higher unrealized losses of
$9.1 million associated with the Company's equity investment.

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

Net cash provided by operating activities was $165.3 million for the six months
ended July 2, 2022 as compared to $126.3 million for the six months ended
June 26, 2021. The increase in net cash provided by operating activities was
primarily due to higher cash earnings, partially offset by increases in working
capital resulting from higher sales growth and higher annual incentive bonus
payments made in 2022 as compared to 2021.

On June 30, 2022, the Company amended its Credit Agreement, dated as of April 3,
2020 (the "Credit Agreement") to effect certain changes, including, among other
changes: (i) adding a $300 million unsecured term loan credit facility; (ii)
making certain financial and non-financial covenants less restrictive on the
Company and its subsidiaries; (iii) replacing LIBOR-based interest rate
benchmarks and modifying performance-based interest rate margins; and (iv)
extending the maturity date to June 30, 2027 (the "Maturity Date"). Pursuant to
the Credit Agreement, the Company may, from time to time, increase the size of
the revolving credit facility or enter into one or more tranches of term loans
in minimum increments of $25 million if there is no event of default and the
Company is in compliance with certain financial covenants.

On July 19, 2022, the Company acquired C&K Switches ("C&K") for $540 million in
cash. Founded in 1928, C&K is a leading designer and manufacturer of
high-performance electromechanical switches and interconnect solutions with a
strong global presence across a broad range of end markets, including
industrial, transportation, aerospace, and datacom. At the time the Company and
C&K entered into the definitive agreement, C&K had annualized sales of over
$200 million. The business will be reported as part of the Electronics-Passive
Products and Sensors business within the Company's Electronics segment. The
Company financed the transaction through a combination of cash on hand and debt.

On July 28, 2022the Company’s Board of Directors approved a 13% increase in the quarterly cash dividend from $0.53 at $0.60 per share, payable on
September 8, 2022 to shareholders registered in August 25, 2022.

Impact of COVID-19 on businesses

The effects from COVID-19 continue to drive higher ongoing costs including
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.

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During the second quarter of 2022, the outbreak of COVID-19 in China in late
March resulted in the temporary shut-down of certain of the Company's China
manufacturing facilities during April and May. The Company's other manufacturing
facilities were operational and were generally running at normal capacity
levels. The financial impact of these shut-downs was modest to the Company's
financial results during the second quarter of 2022.

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 further resurgence in COVID-19 cases and its
impact on the Company's employees, customers, suppliers and vendors. The Company
will continue to actively monitor the situation and may take further actions
altering its business operations that the Company determines are in the best
interests of its 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 the Company's business and operations, including the effects on its
customers, employees, and prospects, or on the Company's financial results for
the fiscal year 2022.

Risks related to market conditions

The Company continues to operate in a more volatile macro environment given
events related to the war in Ukraine. The company does not have any direct
operations in Ukraine or Russia. The war has had a modest impact on the Company,
including higher transportation costs due to the Company modifying its shipping
logistics as well as suspending sales into and purchases from Russia.
Additionally, the war has impacted certain OEM customers who have had lower
production levels due to shut-downs and ongoing material shortages.

Operating results

The following table summarizes the Company's unaudited condensed consolidated
results of operations for the periods presented. The second quarter of 2022
includes $4.8 million ($8.6 million year-to-date) of legal and professional fees
primarily related to the acquisition of C&K and other integration expenses
related to completed and contemplated acquisitions, and $0.6 million ($0.8
million year-to-date) of restructuring, impairment and other charges, primarily
related to employee termination costs, and $4.8 million year-to-date of purchase
accounting inventory step-up charges. See Note 7, Restructuring, Impairment, and
Other Charges, for further discussion..

The second quarter of 2021 includes $3.3 million ($6.8 million year-to-date) of
purchase accounting inventory step-up charges, $0.5 million ($1.3 million
year-to-date) of legal and professional fees and other integration expenses
related to Hartland and other contemplated acquisitions, and $0.8 million
($1.3 million year-to-date) of restructuring, impairment and other charges,
primarily related to employee termination costs. See Note 7, Restructuring,
Impairment, and Other Charges, for further discussion. In addition, there was a
loss of $1.0 million recorded during the second quarter of 2021 for a total
year-to-date gain of $0.9 million from the sale of a building within the
Electronics segment.



                                                       Second Quarter                                                               First Six Months
                                                                                          %                                                                              %
(in thousands)                  2022               2021             Change             Change                2022                2021              Change             Change
Net sales                   $ 618,436          $ 523,488          $ 94,948                18.1  %       $ 1,241,766          $ 987,282          $ 254,484                25.8  %
Cost of sales                 355,465            326,092            29,373                 9.0  %           720,199            629,420             90,779                14.4  %
Gross profit                  262,971            197,396            65,575                33.2  %           521,567            357,862            163,705                45.7  %
Operating expenses            128,807            101,139            27,668                27.4  %           236,813            185,124             51,689                27.9  %
Operating income              134,164             96,257            37,907                39.4  %           284,754            172,738            112,016                64.8  %
Income before income
taxes                         109,612             95,197            14,415                15.1  %           243,737            167,905             75,832                45.2  %
Income taxes                   22,596             13,102             9,494                72.5  %            39,203             28,097             11,106                39.5  %
Net income                  $  87,016          $  82,095          $  4,921                 6.0  %       $   204,534          $ 139,808          $  64,726                46.3  %



Net Sales

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Net sales increased $94.9 million, or 18.1%, including $57.8 million or 11.0%
from the Carling acquisition within the Transportation segment and $16.4 million
or 3.1% of unfavorable changes in foreign exchange rates for the second quarter
of 2022 compared to the second quarter of 2021. The remaining increase was
primarily driven by growth across the Company's Electronics and Industrial
segments, which had sales increases of $32.8 million and $13.4 million,
respectively. The increase within the Electronics segment was led by continued
broad-based demand across numerous end markets and price realization. The
increase in the Industrial segment was driven across all businesses within the
segment and price realization.

Net sales increased $254.5 million, or 25.8%, including $113.5 million or 11.5%
from the Carling acquisition and $25.0 million or 2.5% of unfavorable changes in
foreign exchange rates for the first six months of 2022 compared to the first
six months of 2021. The remaining increase was primarily driven by growth across
the Company's Electronics and Industrial segments, which had sales increases of
$112.1 million and $37.7 million, respectively. The increase within the
Electronics segment was led by continued broad-based demand across numerous end
markets. The increase in the Industrial segment was driven across all businesses
within the segment.

Cost of Sales

Cost of sales was $355.5 million, or 57.5% of net sales, in 2022, compared to
$326.1 million, or 62.3% of net sales, in 2021. The increase in cost of sales
was primarily due to greater volume across the Electronics and Industrial
segments driven by the factors discussed above along with the acquisition of
Carling. As a percent of net sales, cost of sales decreased 4.8% driven by
volume leverage, favorable product mix predominantly in the Electronics segment
in 2022 and lower purchase accounting inventory charges of $3.3 million or 0.6%,
partially offset by higher commodity costs.

Cost of sales was $720.2 million, or 58.0% of net sales for the first six months
of 2022, compared to $629.4 million, or 63.8% of net sales for the first six
months of 2021. The increase in cost of sales was primarily due to greater
volume across the Electronics and Industrial segments driven by the factors
discussed above along with the acquisition of Carling. As a percent of net
sales, cost of sales decreased 5.8% driven by volume leverage and lower purchase
accounting inventory charges of $2.0 million or 0.2% in 2022, partially offset
by higher commodity costs and higher transportation, duty and tariff charges of
0.3%.

Gross Profit

Gross profit was $263.0 million, or 42.5% of net sales, in the second quarter of
2022 compared to $197.4 million, or 37.7% of net sales, for the second quarter
of 2021. The $65.6 million increase in gross profit was primarily due to higher
volume and price in the Electronics and Industrial segments along with
acquisition of Carling. The increase in gross margin of 4.8% was primarily
driven by volume leverage, price realization and favorable product mix within
the Electronics segment and lower purchase accounting inventory charges,
partially offset by higher commodity costs.

Gross profit was $521.6 million, or 42.0% of net sales, in the first six months
of 2022 compared to $357.9 million, or 36.2% of net sales, for the first six
months of 2021. The $163.7 million increase in gross profit was primarily due to
higher volume in the Electronics and Industrial segments along with acquisition
of Carling. The increase in gross margin of 5.8% was primarily driven by volume
leverage, price realization and lower purchase accounting inventory charges of
$2.0 million or 0.3% in 2022, partially offset by higher commodity costs and
higher transportation, duty and tariff charges of 0.3%.

Functionnary costs

Total operating expenses were $128.8 million, or 20.8% of net sales, for the
second quarter of 2022 compared to $101.1 million, or 19.3% of net sales, for
the second quarter of 2021. The increase in operating expenses of $27.7 million
was primarily due to the higher selling, general, and administrative expenses of
$19.8 million largely due to the Carling acquisition and increased
acquisition-related expenses of $4.3 million and higher research and development
expenses of $7.1 million.

Total operating expenses were $236.8 million, or 19.1% of net sales, for the
first six months of 2022 compared to $185.1 million, or 18.8% of net sales, for
the first six months of 2021. The increase in operating expenses of $51.7
million was primarily due to the higher selling, general, and administrative
expenses of $37.0 million largely due to the Carling acquisition and increased
acquisition-related expenses of $7.3 million, higher research and development
expenses of $11.9 million, and higher amortization expense of $3.2 million due
to the Carling acquisition.

Operating Income

Operating income was $134.2 million, an increase of $37.9 million, or 39.4%, for
the second quarter of 2022 compared to $96.3 million for the second quarter of
2021. The increase in operating income was due to higher gross profit from all
segments, particularly in the Electronics segment, partially offset by higher
operating expenses as noted above. Operating margins
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TOC decreased from 18.4% in Q2 2021 to 21.7% in Q2 2022, due to the factors mentioned above.

Operating income was $284.8 million, an increase of $112.0 million, or 64.8%,
for the first six months of 2022 compared to $172.7 million for the first six
months of 2021. The increase in operating income was due to higher gross profit
from all segments, particularly in the Electronics segment, partially offset by
higher operating expenses as noted above. Operating margins increased from 17.5%
in the first six months of 2021 to 22.9% in the first six months of 2022 driven
by the factors mentioned above.

income before taxes

Income before income taxes was $109.6 million, or 17.7% of net sales, for the
second quarter of 2022 compared to $95.2 million, or 18.2% of net sales, for the
second quarter of 2021. In addition to the factors impacting comparative results
for operating income discussed above, income before income taxes was primarily
impacted by foreign exchange losses of $14.1 million in the second quarter of
2022 compared to foreign exchange gains of $1.7 million in the second quarter of
2021, and $7.8 million of unrealized losses in the second quarter of 2022
compared to unrealized gains of $1.3 million in the second quarter of 2021
related to the Company's equity investment.

Income before income taxes was $243.7 million, or 19.6% of net sales, for the
first six months of 2022 compared to $167.9 million, or 17.0% of net sales, for
the first six months of 2021. In addition to the factors impacting comparative
results for operating income discussed above, income before income taxes was
impacted by $12.5 million of unrealized losses during the six months ended July
2, 2022 compared to unrealized gains of $8.8 million during six months ended
June 26, 2021 related to the Company's equity investment, and higher foreign
exchange losses of $16.7 million during the six months ended July 2, 2022.

Income taxes

Income tax expense for the second quarter of 2022 was $22.6 million, or an
effective tax rate of 20.6%, compared to $13.1 million, or an effective tax rate
of 13.8%, for the second quarter of 2021. The effective tax rate for the second
quarter of 2022 is higher than the effective tax rate for the comparable 2021
period, primarily due to foreign exchange losses noted above with no related tax
benefit in the 2022 period, as compared to foreign exchange gains with limited
tax expense during the comparable 2021 period.

Income tax expense for the first six months of 2022 was $39.2 million, or an
effective tax rate of 16.1%, compared to income tax expense of $28.1 million, or
an effective tax rate of 16.7%, for the first six months of 2021. The effective
tax rate for the first six months of the 2022 period is lower than the
applicable U.S. statutory tax rate due to a one-time deduction that resulted
from the dissolution of one of the Company's affiliates, as well as the
forecasted impact of income earned in lower tax jurisdictions. The effective tax
rate for the comparable 2021 period is lower than the applicable U.S. statutory
tax rate primarily due to the forecasted impact of income earned in lower tax
jurisdictions.


Segment operating results

The Company reports its operations by the following segments: Electronics,
Transportation and Industrial. Segment information is described more fully in
Note 15, Segment Information, of the Notes to Condensed Consolidated Financial
Statements included in this Quarterly Report.

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

                                       Second Quarter                                          First Six Months
                                                                   %                                                          %
(in thousands)         2022           2021          Change       Change         2022            2021          Change        Change
Electronics         $ 358,176      $ 325,347      $ 32,829       10.1  %    $   723,997      $ 611,882      $ 112,115       18.3  %
Transportation        182,027        133,318        48,709       36.5  %        366,531        261,847        104,684       40.0  %
Industrial             78,233         64,823        13,410       20.7  %        151,238        113,553         37,685       33.2  %
Total               $ 618,436      $ 523,488      $ 94,948       18.1  %    $ 1,241,766      $ 987,282      $ 254,484       25.8  %


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Contents

Electronics Sector

Net sales increased $32.8 million, or 10.1%, in the second quarter of 2022
compared to the second quarter of 2021 and included unfavorable changes in
foreign exchange rates of $9.5 million. The sales increase was primarily due to
increased volume for the semiconductor and electronics products businesses of
$25.8 million and $7.0 million, respectively, primarily driven by continued
broad-based demand across numerous end markets and price realization.

Net sales increased $112.1 million, or 18.3%, in the first six months of 2022
compared to the first six months of 2021 and included unfavorable changes in
foreign exchange rates of $14.4 million. The sales increase was primarily due to
increased volume for the semiconductor and electronics products businesses of
$67.6 million and $44.5 million, respectively. The volume increases were driven
by continued broad-based demand across numerous end markets.

Transportation Segment

Net sales increased $48.7 million, or 36.5%, in the second quarter of 2022
compared to the second quarter of 2021 and included unfavorable changes in
foreign exchange rates of $6.3 million. The sales increase was primarily due to
the acquisition of Carling which contributed net sales of $57.8 million. Net
sales in the commercial vehicle business increased by $60.5 million, largely due
to the Carling acquisition noted previously and continued demand across a number
of commercial vehicle end markets. The passenger car products and automotive
sensors businesses had sales decreases of $8.3 million and $3.5 million,
respectively, driven by a decline in global car build compared to the same
quarter last year primarily due to supply chain constraints, including China
COVID shut-downs and OEM shut downs caused by market shortages of semiconductor
chips partially offset by greater content growth from vehicle mix and electric
vehicles.

Net sales increased $104.7 million, or 40.0%, in the first six months of 2022
compared to the first six months of 2021 and included favorable changes in
foreign exchange rates of $9.9 million. The sales increase was primarily due to
the acquisition of Carling which contributed net sales of $113.5 million. Net
sales in the commercial vehicle business increased by $122.0 million, largely
due to the Carling acquisition noted previously and continued demand across a
number of commercial vehicle end markets. The passenger car products and
automotive sensors businesses had sales decreases of $11.7 million and $5.6
million, respectively, driven by a decline in global car build compared to last
year largely due to supply chain constraints and OEM shut downs caused by market
shortages of semiconductor chips as well as a reduction of demand in Europe due
to Ukraine/Russia conflict partially offset by greater content growth from
vehicle mix and electric vehicles.

Industrial sector

Net sales increased by $13.4 million, or 20.7%, in the second quarter of 2022
compared to the second quarter of 2021, which included unfavorable changes in
foreign exchange rates of $0.6 million. The increase in net sales was primarily
due to higher volume and demand across product lines in renewables, and ongoing
improving demand in nonresidential construction, oil & gas, natural resources,
and industrial maintenance, repair, and operations end markets along with price
realization.

Net sales increased by $37.7 million, or 33.2%, in the first six months of 2022
compared to the first six months of 2021, which included favorable changes in
foreign exchange rates of $0.7 million. The increase in net sales was primarily
due to higher volume and demand across product lines in industrial safety, HVAC,
renewables, nonresidential construction, oil & gas, natural resources, and
industrial maintenance, repair, and operations end markets and incremental one
month net sales of $9.1 million or 14.0% from the Hartland acquisition.

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Geographic Net Sales Information

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:

                                                          Second Quarter                                                               First Six Months
                                                                                             %                                                                              %
(in thousands)                     2022               2021             Change             Change                2022                2021              Change             Change
Asia-Pacific                   $ 252,809          $ 239,477          $ 13,332                 5.6  %       $   513,027          $ 451,662          $  61,365                13.6  %
Americas                         247,591            180,335            67,256                37.3  %           484,821            333,241            151,580                45.5  %
Europe                           118,036            103,676            14,360                13.9  %           243,918            202,379             41,539                20.5  %
Total                          $ 618,436          $ 523,488          $ 94,948                18.1  %       $ 1,241,766          $ 987,282          $ 254,484                25.8  %



Asia-Pacific

Net sales increased $13.3 million, or 5.6%, in the second quarter of 2022
compared to the second quarter of 2021 and included unfavorable changes in
foreign exchange rates of $4.5 million. The increase in net sales was primarily
due to higher volume from the semiconductor business within the Electronics
segment and incremental sales from the Carling acquisition included in the
commercial vehicle products business within the Transportation segment compared
to the second quarter of 2021.

Net sales increased $61.4 million, or 13.6%, in the first six months of 2022
compared to the first six months of 2021 and included unfavorable changes in
foreign exchange rates of $5.5 million. The increase in net sales was primarily
due to higher volume across all businesses within the Electronics segment and
incremental sales from the Carling acquisition included in the commercial
vehicle products business within the Transportation segment compared to the
first six months of 2021.

Americas

Net sales increased $67.3 million, or 37.3%, in the second quarter of 2022
compared to the second quarter of 2021 and included unfavorable changes in
foreign exchange rates of $0.3 million. The increase in net sales was primarily
due to incremental sales from the Carling acquisition included in the commercial
vehicle products business within the Transportation segment and higher volume
from all businesses within the Electronics and Industrial segments compared to
the second quarter of 2021.

Net sales increased $151.6 million, or 45.5%, in the first six months of 2022
compared to the first six months of 2021 and included unfavorable changes in
foreign exchange rates of $0.5 million. The increase in net sales was primarily
due to incremental sales from the Carling acquisition included in the commercial
vehicle products business within the Transportation segment and higher volume
from all businesses within the Electronics and Industrial segments compared to
the first six months of 2021.

Europe

Net sales increased $14.4 million, or 13.9%, in the second quarter of 2022
compared to the second quarter of 2021 and included unfavorable changes in
foreign exchange rates of $11.6 million. The increase in net sales was primarily
due to increased volume across all businesses within the Electronics segment and
incremental sales from the Carling acquisition included in the commercial
vehicle products business within the Transportation segment compared to the
second quarter of 2021.

Net sales increased $41.5 million, or 20.5%, in the first six months of 2022
compared to the first six months of 2021 and included favorable changes in
foreign exchange rates of $19.0 million. The increase in net sales was primarily
due to increased volume across all businesses within the Electronics segment and
incremental sales from the Carling acquisition included in the commercial
vehicle products business within the Transportation segment compared to the
first six months of 2021.

Cash and capital resources

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.
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Contents

Cash and cash equivalents were $809.1 million as of July 2, 2022, an increase of
$330.6 million as compared to January 1, 2022. As of July 2, 2022,
$532.2 million of the Company's $809.1 million cash and cash equivalents was
held by U.S. subsidiaries.

Revolving credit facility and term loan

On June 30, 2022, the Company amended and restated its Credit Agreement, dated
as of April 3, 2020 (the "Credit Agreement") to effect certain changes,
including, among other changes: (i) adding a $300 million unsecured term loan
credit facility; (ii) making certain financial and non-financial covenants less
restrictive on the Company and its subsidiaries; (iii) replacing LIBOR-based
interest rate benchmarks and modifying performance-based interest rate margins;
and (iv) extending the maturity date to June 30, 2027 (the "Maturity Date").
Pursuant to the Credit Agreement, the Company may, from time to time, increase
the size of the revolving credit facility or enter into one or more tranches of
term loans in minimum increments of $25 million if there is no event of default
and the Company is in compliance with certain financial covenants.

Loans made under the available credit facility pursuant to the Credit Agreement
("the Credit Facility") bear interest at the Company's option, at either Secured
Overnight Financing Rate ("SOFR"), fixed for interest periods of one, two, three
or six-month periods, plus 1.00% to 1.75%, plus a SOFR adjustment of 0.10% or at
the bank's Base Rate, as defined in the Credit Agreement,, plus -% to 0.75%,
based upon the Company's Consolidated Leverage Ratio, as defined in the Credit
Agreement. The Company is also required to pay commitment fees on unused
portions of the Credit Facility ranging from 0.10% to 0.175%, based on the
Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit
Agreement includes representations, covenants and events of default that are
customary for financing transactions of this nature.

Revolving loans may be borrowed, repaid and reborrowed until the Maturity Date,
at which time all amounts borrowed must be repaid. The Company borrowed
$300.0 million under a term loan on June 30, 2022. The principal balance of the
term loans must be repaid in quarterly installments on the last day of each
calendar quarter in the amount of $1.9 million commencing September 30, 2022,
through June 30, 2024, and in the amount of $3.8 million commencing September
30, 2024, through March 31, 2027, with the remaining outstanding principal
balance payable in full on the Maturity Date. Accrued interest on the loans is
payable in arrears on each interest payment date applicable thereto and at such
other times as may be specified in the Credit Agreement. Subject to certain
conditions, (i) the Company may terminate or reduce the Aggregate Revolving
Commitments, as defined in the Credit Agreement, in whole or in part, and (ii)
the Company may prepay the revolving loans or the term loans at any time,
without premium or penalty. The revolving loan and term loan balance under the
Credit Facility was $100.0 million and $300.0 million, respectively, as of July
2, 2022.

On May 12, 2022, the Company entered into an interest rate swap agreement to
manage interest rate risk exposure, effectively converting the interest rate on
the Company's SOFR based floating-rate loans to a fixed-rate. The interest rate
swap, with a notional value of $200 million, was designated as a cash flow hedge
against the variability of cash flows associated with the Company's SOFR based
loans scheduled to mature on June 30, 2027.

From July 2, 2022the effective interest rate on outstanding revolving and term loans was 2.875%.

From July 2, 2022the Company had no outstanding letters of credit and had $600.0 million borrowing capacity under the revolving credit facility. To July 2, 2022the Company complied with all covenants of the credit agreement.

Senior Notes

On December 8, 2016, the Company entered into a Note Purchase Agreement,
pursuant to which the Company issued and sold €212 million aggregate principal
amount of senior notes in two series. 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.
During the six months ended July 2, 2022, the Company paid $25.0 million of U.S.
Senior Notes, Series A due on February 15, 2022.
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Contents

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") were funded. Interest on the U.S. Senior Notes due 2025 and 2030 is
payable semiannually on February 15 and August 15, commencing on August 15,
2018.

On May 18, 2022, the above note purchase agreements were amended to, among other
things, update certain terms, including financial covenants to be consistent
with the terms of the 2022 Purchase Agreement, as defined below.
On May 18, 2022, the Company entered into a Note Purchase Agreement ("2022
Purchase Agreement") pursuant to which the Company issued and funded on July 18,
2022 $100 million in aggregate principal amount of 4.33% Senior Notes, due June
30, 2032 ("U.S. Senior Notes, due 2032") (together with the U.S. Senior Notes
due 2025 and 2030, the Euro Senior Notes and the U.S. Senior Notes due 2022 and
2027, the "Senior Notes"). Interest on the U.S. Senior Notes due 2032 is payable
semiannually on June 30 and December 30, commencing on December 30, 2032.

Debt Covenants
The Company was in compliance with all covenants under the Credit Agreement and
Senior Notes as of July 2, 2022 and currently expects to remain in compliance
based on management's estimates of operating and financial results for 2022. As
of July 2, 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 July 19, 2022, the Company acquired C&K Switches ("C&K") for $540 million in
cash. Founded in 1928, C&K is a leading designer and manufacturer of
high-performance electromechanical switches and interconnect solutions with a
strong global presence across a broad range of end markets, including
industrial, transportation, aerospace, and datacom. At the time the Company and
C&K entered into the definitive agreement, C&K had annualized sales of over
$200 million. The business will be reported as part of the Electronics-Passive
Products and Sensors business within the Company's Electronics segment. The
Company financed the transaction through a combination of cash on hand and debt.

Dividends

During the second quarter of 2022 the Company paid quarterly dividends of $26.2
million to the shareholders. On July 28, 2022, the Board of Directors of the
Company approved a 13% increase in the quarterly cash dividend from $0.53 to
$0.60 per share, payable on September 8, 2022 to stockholders of record as of
August 25, 2022.

Cash Flow Overview


                                                                                 First Six Months
(in thousands)                                                               2022                2021
Net cash provided by operating activities                                $  165,322          $  126,346
Net cash used in investing activities                                       (65,367)           (139,940)
Net cash used in financing activities                                       245,017             (49,183)

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

                                                             (15,511)             (2,894)

Increase (decrease) in cash, cash equivalents and restricted cash 329,461

             (65,671)

Cash, cash equivalents and restricted cash, beginning of period 482,836

             687,525
Cash, cash equivalents, and restricted cash at end of period             $  

812 297 $621,854

Cash flow from operating activities

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.

Net cash provided by operating activities was $165.3 million for the six months
ended July 2, 2022 as compared to $126.3 million for the six months ended
June 26, 2021. The increase in net cash provided by operating activities was
primarily due to
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higher cash earnings, partially offset by increases in working capital resulting
from higher sales growth and higher annual incentive bonus payments made in 2022
as compared to 2021.

Cash flow from investing activities

Net cash used in investing activities was $65.4 million for the six months ended
July 2, 2022 compared to $139.9 million during the six months ended June 26,
2021. Net cash paid for acquisitions was $9.8 million and $109.9 million for the
six months ended July 2, 2022 and June 26, 2021, respectively. Capital
expenditures were $56.2 million, representing an increase of $23.5 million
compared to 2021. During six months ended July 2, 2022 and June 26, 2021, the
Company received proceeds of $0.5 million from the sale of a property within the
Transportation segment and $2.6 million from the sale of a property within the
Electronics segment, respectively.

Cash flow from financing activities

Net cash used in financing activities was $245.0 million for the six months
ended July 2, 2022 compared to $49.2 million for the six months ended June 26,
2021. On June 30, 2022, the Company amended its Credit Agreement and borrowed of
$300.0 million through a term loan. During the six months ended July 2, 2022,
the Company paid $25.0 million of U.S. Senior Notes, Series A due on February
15, 2022. During the six months ended June 26, 2021, the Company made payments
of $30.0 million on the amended revolving credit facility. Additionally, the
Company paid dividends $26.2 million and $23.6 million in the six months ended
July 2, 2022 and June 26, 2021, respectively.


Share buyback program

On April 28, 2021, the Company announced that the Board of Directors authorized
a new three year program to repurchase up to $300.0 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.

The Company has not repurchased any shares of its common stock for the three and six months ended July 2, 2022and June 26, 2021.

Off-balance sheet arrangements

As of July 2, 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.

Significant Accounting Policies and Estimates

The Company's Condensed Consolidated Financial Statements are prepared in
accordance with U.S. GAAP. In connection with the preparation of the Condensed
Consolidated Financial Statements, the Company uses estimates and makes
judgments and assumptions about future events that affect the reported amounts
of assets, liabilities, revenue, expenses, and the related disclosures. The
assumptions, estimates, and judgments are based on historical experience,
current trends, and other factors the Company believes are relevant at the time
it prepares the Condensed Consolidated Financial Statements.

The significant accounting policies and critical accounting estimates are
consistent with those discussed in Note 1, Summary of Significant Accounting
Policies and Other Information, to the consolidated financial statements and the
MD&A section of the Company's Annual Report on Form 10-K for the year ended
January 1, 2022. During the six months ended July 2, 2022, there were no
significant changes in the application of critical accounting policies.

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