. Acquisitions

The

Company accounts for acquisitions using the acquisition method in accordance with ASC

805,

“Business Combinations,” in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition. These acquisitions were recorded by allocating the cost of the acquisition to the assets acquired, including other intangible assets, based on their estimate fair values at the acquisition date. The excess of the cost over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill. The goodwill associated with these acquisitions is primarily attributable to the synergies expected to arise as a result of these acquisitions. The operating results of the acquired business are included in the Company’s condensed consolidated financial statements from the date of the acquisition.

2017

Acquisitions

IXYS Corporation

August

28,

2017,

the Company announced that it had entered in a definitive agreement to acquire IXYS Corporation (“IXYS”), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power control semiconductors across the industrial, communications, consumer and medical markets. IXYS has a broad customer base, serving more than

3,500

customers through its direct salesforce and global distribution partners.

The Company will acquire all outstanding shares of common stock of IXYS in exchange for a combination of cash and shares of common stock of the Company. Each IXYS stockholder will be entitled to elect to receive, per IXYS share, either

$23.00

in cash or

0.1265

of a share of Littelfuse common stock, subject to proration. In total,

50%

of IXYS stock will be converted into the cash election option and the remaining will be converted into the stock election option. The

equity value of the transaction at the announcement was approximately

$750

million. The exchange ratio is fixed and will

not

be adjusted for changes in the market value of shares of Littelfuse or IXYS common stock. The market values of Littelfuse common stock and number of outstanding shares of IXYS common stock and equity-based awards will continue to fluctuate until the acquisition is completed. As a result, the final purchase price will differ from the initially announced purchase price, and that difference

may

be material.

The transaction is expected to close in the

first

calendar quarter of

2018

and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by IXYS stockholders.

The Company expects to finance the cash portion of the transaction consideration through a combination of existing cash and additional debt.

U.S. Sensor

July 7, 2017,

the Company acquired the assets of U.S. Sensor Corporation (“U.S. Sensor”) for

$24.4

million. The Company funded the acquisition with available cash

. The final purchase price is subject to adjustment for finalization of income tax gross up which is expected to be settled in the

fourth

quarter of

2017.

The acquired business

expands the Company’s existing sensor portfolio in several key electronics and industrial end markets. U.S. Sensor manufactures a variety of high quality negative temperature coefficient thermistors as well as thermistor probes and assemblies. Product lines also include thin film platinum resistance temperature detectors (“RTDs”) and RTD assemblies.

The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the U.S. Sensor acquisition:

(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash	$	24,439
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	4,755
Patented and unpatented technologies		1,090
Trademarks and tradenames		200
Non-compete agreement		50
Customer relationships		2,830
Goodwill		16,054
Current liabilities		(540	)
	$	24,439

All U.S. Sensor goodwill, other assets and liabilities were recorded in the Electronics segment and reflected in the United States geographic area. The goodwill resulting from this acquisition consists largely of the Company

’s expected future product sales and synergies from combining U.S. Sensor’s products and technology with the Company’s existing electronics product portfolio. Goodwill for the above acquisition is expected to be deductible for tax purposes.

As required by purchase accounting rules, the Company recorded a

$1.6

million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation.

The step-up was amortized as a non-cash charge to cost of goods sold during the

third

quarter of

2017,

as the acquired inventory was sold, and reflected as other non-segment costs.

Monolith

December 2015,

the

Company invested

$3.5

million in the preferred stock of Monolith Semiconductor Inc. (“Monolith”), a U.S. start-up company developing silicon carbide technology, which represented approximately

12%

of the common stock of Monolith on an as-converted basis. The Company accounted for its investment in Monolith under the cost method with any changes in value recorded in other comprehensive income. The value of the Monolith investment was

$3.5

million at

December 31, 2016.

February 28, 2017,

pursuant to a Securities Purchase Agreement between the

Company and the stockholders of Monolith and conditioned on Monolith achieving a product development milestone and other provisions, the Company acquired approximately

62%

of the outstanding common stock of Monolith for

$15

million. The Securities Purchase Agreement includes provisions whereby the Company will acquire the remaining outstanding stock of Monolith (“non-controlling interest”) at a time or times based on Monolith meeting certain technical and sales targets. Consideration for the additional investment(s) will range from

$1.0

million to

$10

million and will be paid

later than

June 30, 2019.

The additional investment resulted in the

Company gaining control of Monolith and was accounted for as a step-acquisition with the fair value of the original investment immediately before the acquisition estimated to be approximately

$3.5

million. As the fair value of the investment immediately prior to the transaction equaled the carrying value, there was

impact on the Company’s condensed consolidated statement of net income. As the Securities Purchase Agreement includes an obligation of the Company to mandatorily redeem the non-controlling interest for cash, the fair value of the non-controlling interest was recognized as a liability on the Company’s condensed consolidated balance sheet. Changes in the fair value of the non-controlling interest are recognized in the Company’s condensed consolidated statements of net income.

Commencing

March 1, 2017,

Monolith was reflected as a consolidated subsidiary within the

Company’s condensed consolidated financial statements. Had the acquisition occurred as of

January

2017,

the impact on the Company’s consolidated results of operations would

not

have been material.

The following table summarizes the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the Monolith acquisition:

(in thousands)	Purchase Price Allocation
Total purchase consideration:
Original investment	$	3,500
Cash, net of cash acquired		14,172
Fair value of commitment to purchase non-controlling interest		9,000
Total purchase consideration	$	26,672
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	891
Property, plant, and equipment		789
Patented and unpatented technologies		6,720
Non-compete agreement		140
Goodwill		20,641
Current liabilities		(639	)
Other non-current liabilities		(1,870	)
	$	26,672

All Monolith goodwill, other assets and liabilities were recorded in the Electronics segment and reflected in the United States geographic area. The goodwill resulting from this acquisition consists largely of the

Company’s expected future product sales and synergies from combining Monolith’s products and technology with the Company’s existing electronics product portfolio. Goodwill for the above acquisition is

not

expected to be deductible for tax purposes.

The purchase price allocations for U.S. Sensor and Monolith are preliminary because the evaluations necessary to assess the fair values of the net assets acquired are still in process. The primary areas that are

not

yet finalized relate to the completion of the independent valuations of

other intangible assets.

2016

Acquisitions

ON Portfolio

August 29, 2016,

the

Company acquired certain assets of select businesses (the “ON Portfolio”) of ON Semiconductor Corporation for

$104.0

million. The Company funded the acquisition with available cash and proceeds from its credit facility

. The acquired business, which is included in the Electronics segment,

consists of a product portfolio that includes transient voltage suppression (“TVS”) diodes, switching thyristors and insulated gate bipolar transistors (“IGBTs”) for automotive ignition applications. The acquisition expands the Company’s offerings in power semiconductor applications as well as increases its presence in the automotive electronics market. The ON Portfolio products have strong synergies with the Company’s existing circuit protection business and will strengthen its channel partnerships and customer engagement.

The following table summarizes the

final purchase price allocation of the fair value of assets acquired and liabilities assumed in the ON Portfolio acquisition:

(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash	$	104,000
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	4,816
Customer relationships		31,800
Patented and unpatented technologies		8,800
Non-compete agreement		2,500
Goodwill		56,084
	$	104,000

All the ON Portfolio business goodwill and other assets were recorded in the Electronics segment and are reflected in the Americas and Europe geographic areas. The customer relationships are being amortized over

13.5

years. The patented and unpatented technologies are being amortized over

8.5

years. The non-compete agreement is being amortized over

years. The goodwill resulting from this acquisition consists largely of the

Company’s expected future product sales and synergies from combining the ON Portfolio products with the Company’s existing

power semiconductor product portfolio.

$7.3

million of goodwill for the above acquisition is expected to be deductible for tax purposes.

As required by purchase accounting rules, the

Company recorded a

$0.7

million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. All of the step-up was amortized as a non-cash charge to cost of goods sold during

2016,

as the acquired inventory was sold, and reflected as other non-segment costs.

Menber

’s

April 4, 2016,

the

Company completed the acquisition of Menber’s S.p.A. (“Menber’s”) headquartered in Legnago, Italy for

$19.2

million, net of acquired cash and after settlement of a working capital adjustment. The Company funded the acquisition with cash on hand and borrowings under the Company’s revolving credit facility. The acquired business is part of the Company's commercial vehicle product business within the Automotive segment and specializes in the design, manufacturing, and selling of manual and electrical high current switches and trailer connectors for commercial vehicles. The acquisition expands the Company’s commercial vehicle products business globally.

The following table summarizes the

final purchase price allocation of the fair value of assets acquired and liabilities assumed in the Menber’s acquisition:

(in thousands)	Purchase Price Allocation
Total purchase consideration:
Cash, net of acquired cash	$	19,162
Preliminary allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	12,919
Property, plant, and equipment		1,693
Customer relationships		3,050
Patented and unpatented technologies		224
Trademarks and tradenames		1,849
Goodwill		8,091
Current liabilities		(7,220	)
Other non-current liabilities		(1,444	)
	$	19,162

All Menber

’s goodwill and other assets and liabilities were recorded in the Automotive segment and reflected in the Europe geographic area. The customer relationships are being amortized over

years. The patented and unpatented technologies are being amortized over

years. The trademarks and tradenames are being amortized over

years. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining Menber’s products with the Company’s existing automotive product portfolio. Goodwill for the above acquisition is

not

expected to be deductible for tax purposes.

As required by purchase accounting rules, the

Company recorded a

$0.2

million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was amortized as a non-cash charge to cost of goods sold during

2016,

as the acquired inventory was sold, with the charge reflected as other non-segment costs.

PolySwitch

March 25, 2016,

the

Company acquired

100%

of the circuit protection business (“PolySwitch”) of TE Connectivity Ltd. for

$348.3

million, net of acquired cash and after settlement of certain post-closing adjustments. In the

second

quarter of

2017,

the Company paid the final consideration of

$3.8

million. The Company funded the acquisition with available cash on hand and borrowings under the Company’s revolving credit facility. The PolySwitch business, which is split between the Automotive and Electronics segments,

has a leading position in polymer based resettable circuit protection devices, with a strong global presence in the automotive, battery, industrial, communications and mobile computing markets. PolySwitch has manufacturing facilities in Shanghai and Kunshan, China and Tsukuba, Japan. The acquisition allows the Company to strengthen its global circuit protection product portfolio, as well as strengthen its presence in the automotive electronics and battery end markets. The acquisition also significantly increases the Company’s presence in Japan.

The following table summarizes the

final purchase price allocation of the fair value of assets acquired and liabilities assumed in the PolySwitch acquisition:

(in thousands)	Purchase Price Allocation
Total purchase consideration:
Original consideration	$	350,000
Post closing consideration adjustment received		(1,708	)
Acquired cash		(3,810	)
Acquired cash returned to seller		3,810
Total purchase consideration	$	348,292
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net	$	60,228
Property, plant, and equipment		51,613
Land lease		4,290
Patented and unpatented technologies		56,425
Customer relationships		39,720
Goodwill		165,088
Other long-term assets		11,228
Current liabilities		(35,280	)
Other non-current liabilities		(5,020	)
	$	348,292

All PolySwitch goodwill and other assets and liabilities were recorded in the Electronics and Automotive segments and reflected in all geographic areas. The customer relationships are being amortized over

years. The patented and unpatented technologies are being amortized over

years. The goodwill resulting from this acquisition consists largely of the

Company’s expected future product sales and synergies from combining PolySwitch products with the Company’s existing automotive and electronics product portfolio.

$103.8

million and

$61.3

million of the goodwill for the above acquisition has been assigned to the Electronics and Automotive segments, respectively, with

$64.9

million expected to be deductible for tax purposes.

As required by purchase accounting rules, the

Company recorded a

$6.9

million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was amortized as a non-cash charge to cost of goods sold during the

second

quarter of

2016,

as the acquired inventory was sold, and reflected as other non-segment costs.

Pro Forma Results

The following table summarizes, on a pro forma basis, the combined results of operations of the

Company and the acquired PolySwitch and the ON Portfolio businesses for the

three

months and

nine

months ended

October 1, 2016

as though the acquisitions had occurred as of

January 3, 2016.

The Company has

not

included pro forma results of operations for Menber’s, Monolith, or U.S. Sensors as these results were

not

material to the Company. The pro forma amounts presented are

not

necessarily indicative of either the actual consolidated results had the PolySwitch or ON Portfolio acquisitions occurred as of

January 3, 2016

or of future consolidated operating results.

(in thousands)	Three Months Ended October 1 , 2016		Nine Months Ended October 1 , 2016
Net sales	$	290,377	$	846,127
Income before income taxes		32,760		110,982
Net income		33,119		96,819
Net income — basic		1.47		4.30
Net income — diluted		1.46		4.27

Pro forma results presented above primarily reflect: (i) incremental depreciation relating to fair value adjustments to property, plant, and equipment; (ii) amortization adjustments relating to fair value estimates of intangible assets; (iii) incremental interest expense on assumed indebtedness; and (iv) additional cost of goods sold relating to the capitalization of gross profit as part of purchase accounting recognized for purposes of the pro forma as if it was recognized during the

Company’s

first

quarter of

2016.

Pro forma adjustments described above have been tax affected using the Company's effective rate during the respective periods.