Segment Information

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. Manufacturing, 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.

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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 and power semiconductor products such as discrete transient voltage suppressor (“TVS”) diodes, TVS diode arrays, protection and switching thyristors, silicon carbide, 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 infrastructure, data and telecommunications, medical devices, LED lighting, consumer electronics and appliances.

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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 industries. 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, emissions, speed and suspension.


•	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 - solar and wind, electric vehicle infrastructure, construction, HVAC systems, elevator and other industrial equipment.

The Company has provided this segment information for all comparable prior periods. Segment information is summarized as follows:



(in thousands)	2018			2017			2016
Net sales
Electronics	$	1,124,296		$	661,928		$	535,191
Automotive	479,791			453,227			415,200
Industrial	114,381			106,379			105,768
Total net sales	$	1,718,468		$	1,221,534		$	1,056,159

Depreciation and amortization
Electronics	$	61,779		$	35,215		$	29,141
Automotive	23,333			22,459			18,107
Industrial	5,661			5,337			5,889
Other	12,420			—			—
Total depreciation and amortization	$	103,193		$	63,011		$	53,137

Operating income (loss)
Electronics	$	241,426		$	155,880		$	117,088
Automotive	54,982			62,571			59,905
Industrial	17,335			10,334			3,615
Other^(a)	(88,694		)	(10,274		)	(49,964		)
Total operating income	225,049			218,511			130,644
Interest expense	22,569			13,380			8,628
Foreign exchange (gain) loss	(863		)	2,376			472
Other income, net	(1,599		)	(1,282		)	(1,730		)
Income before income taxes	$	204,942		$	204,037		$	123,274

(a) Included in “Other” Operating income (loss) for 2018 is $88.7 million of charges primarily related to the IXYS acquisition, which include $36.9 million of purchase accounting inventory step-up charges, $18.7 million in acquisition-related and integration costs primarily related to legal, accounting and other expenses, $12.4 million in backlog amortization costs, $8.3 million of employee termination costs, impairment and other restructuring charges, and $4.5 million in stock compensation expense recognized immediately upon close for converted IXYS options related to prior service periods and $2.1 million change in control expense related to IXYS. In addition, there were $5.8 million of employee termination costs, impairment and other restructuring charges and acquisition-related expenses for other contemplated acquisitions which included $1.1 million of charges associated with the exit of the Custom business in the second quarter.

Included in “Other” Operating income (loss) for 2017 are costs related to acquisition and integration costs associated with the Company’s completed and pending acquisitions in 2017 ($8.0 million in Cost of sales ("COS") and Selling, general, and administrative expenses (“SG&A”), and charges related to restructuring and production transfers in the Company’s Asia operations ($2.2 million in SG&A).

Included in “Other” Operating income (loss) for 2016 are costs related to the impairment of the Custom Products reporting unit ($14.8 million), acquisition and integration costs associated with the Company’s 2016 acquisitions ($29.2 million in COS and SG&A), transfer of the Company’s reed switch manufacturing operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines ($1.6 million in COS), impairment and severance costs related to the closure of the Company’s manufacturing facility in Denmark ($1.9 million in SG&A), and restructuring costs ($2.5 million in SG&A and Research and development expenses).

The Company’s net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended 2018, 2017, and 2016 are as follows:



(in thousands)	2018		2017		2016
Net sales
United States	$	511,544	$	383,025	$	356,674
China	468,174		321,111		263,701
Other countries^(a)	738,750		517,398		435,784
Total net sales	$	1,718,468	$	1,221,534	$	1,056,159

Long-lived assets
United States	$	58,691	$	23,490	$	23,731
China	95,806		86,866		65,345
Mexico	70,495		62,510		52,262
Germany	36,548		1,082		1,313
Philippines	32,459		31,129		33,345
Other countries	45,895		45,500		41,179
Total long-lived assets	$	339,894	$	250,577	$	217,175

Additions to long-lived assets
United States	$	5,567	$	3,518	$	4,694
China	29,286		32,775		13,181
Mexico	18,723		19,395		15,667
Germany	5,208		93		965
Philippines	7,605		2,979		5,096
Other countries	8,364		7,165		6,625
Total additions to long-lived assets	$	74,753	$	65,925	$	46,228


(a)	Each country included in other countries are less than 10% of net sales.

For the year ended December 29, 2018, approximately 70% of the Company’s net sales were to customers outside the United States (exports and foreign operations), including approximately 27% to China. For the year ended December 30, 2017, approximately 69% of the Company's net sales were to customers outside the United States (exports and foreign operations), including approximately 26% to China. For the year ended December 31, 2016, approximately 66% of the Company's net sales were to customers outside the United States (exports and foreign operations), including approximately 25% to China. Sales to Arrow Electronics, Inc., which were included in the Electronics, Automotive, and Industrial segments, were 10.7% and 10.6% of consolidated net sales in 2018 and 2017, respectively, but less than 10% for 2016. No other single customer accounted for more than 10% of net sales during the last three years.