Segment Information

3 Months Ended

Mar. 28, 2020

The Company and its subsidiaries design, manufacture and sell components and modules for circuit protection, power control and sensing throughout the world. The Company reports its operations by the following segments: Electronics, Automotive, and Industrial. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is the Company’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes, but does not evaluate the operating segments using discrete balance sheet information.

Sales, marketing, and research and development expenses are charged directly into each operating segment. Purchasing, logistics, customer service, finance, information technology, and human resources are shared functions that are allocated back to the three operating segments. The Company does not report inter-segment revenue because the operating segments do not record it. Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments' current results, are not allocated but identified as “Other”. Additionally, the Company does not allocate interest and other income, interest expense, or taxes to operating segments. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the Company as a whole.


•	Electronics Segment: Consists of one of the broadest product offerings in the industry, including fuses and fuse accessories,

positive temperature coefficient (“PTC”) resettable fuses, polymer electrostatic discharge (“ESD”) suppressors, varistors,

reed switch based magnetic sensing, gas discharge tubes; semiconductor products such as discrete transient voltage

suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, metal-oxide-semiconductor field effect

transistors (“MOSFETs”) and silicon carbide diodes; and insulated gate bipolar transistors (“IGBT”) technologies.

The segment covers a broad range of end markets, including industrial and automotive electronics, electric vehicle and related infrastructure, data and telecommunications, medical devices, alternative energy, consumer electronics and white goods.

•

Automotive Segment: Consists of a wide range of circuit protection, power control and sensing technologies for global original equipment manufacturers (“OEMs”), Tier-I suppliers and parts distributors in passenger car, heavy duty truck, off-road vehicles, material handling, agricultural, construction and other commercial vehicle end markets. Passenger car fuse products include fuses and fuse accessories for internal combustion engine vehicles and hybrid and electric vehicles including blade fuses, battery cable protectors, resettable fuses, high-current fuses, and high-voltage fuses. Commercial vehicle products include fuses, switches, relays, and power distribution modules for the commercial vehicle industry. Automotive sensor products include a wide range of automotive and commercial vehicle products designed to monitor the passenger compartment occupants, safety and environment as well as the vehicle’s powertrain.


•	Industrial Segment: Consists of power fuses, protection relays and controls and other circuit protection products for use in various industrial applications such as oil, gas, mining, alternative energy, electric vehicle infrastructure, non-residential construction, HVAC systems, elevators and other industrial equipment.

Segment information is summarized as follows:



	Three Months Ended
(in thousands)	March 28, 2020			March 30, 2019
Net sales
Electronics	$	214,189		$	265,394
Automotive	104,770			113,483
Industrial	27,137			26,623
Total net sales	$	346,096		$	405,500

Depreciation and amortization
Electronics	$	15,531		$	15,342
Automotive	7,187			6,877
Industrial	1,084			1,060
Total depreciation and amortization	$	23,802		$	23,279

Operating income (loss)
Electronics	$	32,272		$	49,037
Automotive	14,116			13,200
Industrial	3,534			3,505
Other(a)	(5,172		)	(5,069		)
Total operating income	44,750			60,673
Interest expense	5,418			5,686
Foreign exchange loss	2,584			4,243
Other expense, net	1,249			4,305
Income before income taxes	$	35,499		$	46,439

(a) Included in “Other” Operating income (loss) for the 2020 first quarter is $1.2 million of acquisition-related and integration charges related to the IXYS acquisition and other contemplated acquisitions. In addition, there were $4.0 million of restructuring, impairment and other charges, primarily related to impairment charges of $2.2 million associated with the announced consolidation of a manufacturing facility within the Industrial segment and $1.7 million of employee termination costs and other restructuring charges. See Note 7, Restructuring, Impairment and Other Charges, for further discussion.

Included in "Other" Operating income (loss) for the first quarter of 2019 is $2.4 million of acquisition integration charges primarily related to the IXYS acquisition. In addition, there were $2.7 million of restructuring charges primarily related to employee termination costs.

The Company’s net sales by country were as follows:



	Three Months Ended
(in thousands)	March 28, 2020		March 30, 2019
Net sales
United States	$	102,910	$	119,528
China	86,015		106,866
Other countries(a)	157,171		179,106
Total net sales	$	346,096	$	405,500

The Company’s long-lived assets by country were as follows:



(in thousands)	March 28, 2020		December 28, 2019
Long-lived assets
United States	$	54,870	$	58,081
China	83,830		88,306
Mexico	69,664		73,096
Germany	35,483		36,025
Philippines	55,347		51,738
Other countries(a)	35,635		37,371
Total long-lived assets	$	334,829	$	344,617

The Company’s additions to long-lived assets by country were as follows:



	Three Months Ended
(in thousands)	March 28, 2020		March 30, 2019
Additions to long-lived assets
United States	$	580	$	905
China	1,657		1,225
Mexico	2,592		5,484
Germany	753		598
Philippines	3,218		5,229
Other countries(a)	2,508		635
Total additions to long-lived assets	$	11,308	$	14,076

(a)

Each country included in other countries is less than 10% of net sales.