Acquisitions

12 Months Ended

Dec. 26, 2020

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. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.

IXYS Corporation

On January 17, 2018, the Company acquired IXYS Corporation (“IXYS”), a global pioneer in the power semiconductor and integrated circuit markets with a focus on medium to high voltage power semiconductors across the industrial, communications, consumer and medical markets. IXYS had a broad customer base, serving more than 3,500 customers through its direct sales force and global distribution partners. The acquisition of IXYS accelerated the Company’s growth across the power control market driven by IXYS’s extensive power semiconductor portfolio and technology expertise. With IXYS, the Company was able to diversify and expand its presence within industrial electronics markets, leveraging the strong IXYS industrial OEM customer base. The Company leveraged its power semiconductor portfolio in automotive markets to expand its global content per vehicle.

Upon completion of the acquisition, at IXYS stockholders’ election and subject to proration, each share of IXYS common stock, par value $0.01 per share, owned immediately prior to the effective time were canceled and extinguished and automatically converted into the right to receive: (i) $23.00 in cash (subject to applicable withholding tax), without interest (referred to as the cash consideration), or (ii) 0.1265 of a share of common stock, par value $0.01 per share, of Littelfuse (referred to as the stock consideration). IXYS stockholders received cash in lieu of any fractional shares of Littelfuse common stock that the IXYS stockholders would otherwise have been entitled to receive. Additionally, each outstanding option to purchase shares of IXYS common stock granted under an IXYS equity plan were assumed by Littelfuse and converted into an option to acquire (i) a number of shares of Littelfuse common stock equal to the number of shares of IXYS common stock subject to such option immediately prior to the effective time multiplied by 0.1265, rounded down to the nearest whole share, with (ii) an exercise price per share of Littelfuse common stock equal to the exercise price of such IXYS stock option immediately prior to the effective time divided by 0.1265, rounded up to the nearest whole cent.

Based on the $207.5 per share opening price of Littelfuse common stock on January 17, 2018, the consideration IXYS stockholders received in exchange of their IXYS common stock in the acquisition had a value of $814.8 million comprised of $380.6 million of cash and $434.2 million of Littelfuse stock. In addition to the consideration transferred related to IXYS common stock, the value of consideration transferred, and included in the purchase price, related to IXYS stock options that were converted to Littelfuse stock options, or cash settled, had a value of $41.7 million. As a result, total consideration was valued at $856.5 million.

The total purchase price of $856.5 million has been allocated to assets acquired and liabilities assumed, as of the completion of the acquisition, based on estimated fair values. The following table summarizes the purchase price allocation of the fair value of assets acquired and liabilities assumed in the IXYS acquisition:


(in thousands)			Purchase Price Allocation
Total purchase consideration:
Cash, net of cash acquired			302,865
Cash settled stock options			3,622
Littelfuse stock			434,192
Converted stock options			38,109
Total purchase consideration			778,788
Allocation of consideration to assets acquired and liabilities assumed:
Current assets, net			155,930
Property, plant, and equipment			77,442
Intangible assets			212,720
Goodwill			382,360
Other non-current assets			28,706
Other non-current liabilities			(78,370)
			778,788

Approximately $49.1 million of net receivables was included in IXYS’s current assets, All IXYS goodwill, other assets and liabilities were recorded in the Electronics segment and primarily reflected in the Americas and European geographic areas. The goodwill resulting from this acquisition consists largely of the Company’s expected future product sales and synergies from combining IXYS’s products and technology with the Company’s existing electronics product portfolio. Goodwill resulting from the IXYS acquisition is not expected to be deductible for tax purposes. The Company recorded $7.0 million for the Toll Charge associated with IXYS as part of the IXYS acquisition purchase price allocation (this reflects a reduction of $1.0 million recorded in the fourth quarter of 2018 and $2.0 million recorded in the third quarter of 2018 as a consequence of revisions to the Company’s original estimates). As a result of the Company completing its fair value analysis, in the fourth quarter of 2018, the company recorded a reduction of $2.6 million in certain investments held by IXYS.

Included in the Company’s Consolidated Statements of Net Income for the fiscal year ended December 29, 2018 are net sales of approximately $378.2 million, and loss before income taxes of $22.2 million, since the January 17, 2018 acquisition of IXYS. The Company recognized approximately $11.9 million of stock compensation expense related to IXYS stock options converted to Littelfuse stock options during the fiscal year ended December 29, 2018, of which $4.5 million was recognized immediately as it related to prior service periods.

As required by purchase accounting rules, the Company recorded a $36.9 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. The step-up was fully amortized as a non-cash charge to cost of goods sold during the first and second quarters of 2018, as the acquired inventory was sold, and reflected as other non-segment costs.

During the fiscal year ended December 29, 2018, the Company incurred approximately $11.0 million of legal and professional fees related to this acquisition which were primarily recognized as selling, general, and administrative expenses. These costs were reflected as other non-segment costs.

Pro Forma Results

The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company and IXYS as though the acquisition had occurred as of January 1, 2017. The pro forma amounts presented are not necessarily indicative of either the actual consolidated results had the IXYS acquisition occurred as of January 1, 2017 or of future consolidated operating results.


	For the Fiscal Year Ended
(in thousands, except per share amounts)	December 29, 2018
Net sales	$	1,735,181
Income before income taxes	272,724
Net income	215,228
Net income per share — basic	8.61
Net income per share — diluted	8.53

Pro forma results presented above primarily reflect the following adjustments:


	For the Fiscal Year Ended
(in thousands)	December 29, 2018
Amortization(a)	$	12,009

Transaction costs(b)	9,976
Amortization of inventory step-up(c)	36,927
Stock compensation(d)	5,845

Income tax impact of above items	(15,446)

(a)The amortization adjustment for the twelve months ended December 29, 2018 primarily reflects the reduction of amortization expense in the period related to the Order backlog intangible asset. The Order backlog has a useful life of twelve months and is fully amortized in the fiscal 2017 for pro forma results.

(b)The transaction cost adjustments reflect the reversal of certain bank and attorney fees from the twelve months ended December 29, 2018.

(c)The amortization of inventory step-up adjustment reflects the reversal of the amount recognized during the twelve months ended December 29, 2018. The inventory step-up was amortized over five months as the inventory was sold.

(d)The stock compensation adjustment reflects the reversal of the portion of stock compensation for IXYS stock options that were converted to Littelfuse stock options and expensed immediately during the twelve months ended December 29, 2018.

For the fiscal year ended December 26, 2020 and December 28, 2019, the Company recorded $0.8 million and $2.7 million of acquisition-related expenses associated with contemplated acquisitions within Selling, general and administrative expenses in the Consolidated Statements of Net Income.