Vishay Precision Group, Inc. 10-K

Item 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. - 43 - Our management, including our CEO and CFO, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be prevented or detected. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the 2013 framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020. Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, has issued an attestation report on the effectiveness of our internal control over financial reporting, as stated in their report which is set forth on the next page. - 44 - Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Vishay Precision Group, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Vishay Precision Group, Inc. (the “Company”) as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated March 11, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Brightman Almagor Zohar & Co, A Firm in the Deloitte Global Network Tel Aviv, Israel March 11,2021 - 45 - Item 9B. OTHER INFORMATION None. PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Certain information required under this Item with respect to our Executive Officers is contained under the heading “Executive Officers” in Item 1 hereof. Other information required under this Item will be contained under the heading “Nominees for Election as Directors” in our definitive proxy statement for the Company’s 2021 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2020, our most recent fiscal year end, and is incorporated herein by reference. The Company has adopted codes of conduct that constitute “codes of ethics” as that term is defined in paragraph (b) of Item 406 of Regulation S-K and that apply to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, and to any persons performing similar functions. Such codes of conduct are posted on the Company’s internet website, the address of which is www.vpgsensors.com. Item 11. EXECUTIVE COMPENSATION Information required under this Item will be contained in our definitive proxy statement for the Company’s 2021 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2020, our most recent fiscal year end, and is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required under this Item will be contained in our definitive proxy statement for the Company’s 2021 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2020, our most recent fiscal year end, and is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information required under this Item will be contained in our definitive proxy statement for the Company’s 2021 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2020, our most recent fiscal year end, and is incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information required under this Item will be contained in our definitive proxy statement for the Company’s 2021 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2020, our most recent fiscal year end, and is incorporated herein by reference. - 46 - PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Documents Filed as part of Form 10-K i) Financial Statements The Consolidated Financial Statements for the year ended December 31, 2020 are filed herewith. See index to the Consolidated Financial Statements on page F-1 of this report. ii) Financial Statement Schedules All financial statement schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. iii) Exhibits Exhibit No. Description 2.1 Stock Purchase Agreement, dated November 1, 2019, by and among Vishay Precision Group, Inc., DSI Holdings DE Inc., the sellers identified therein, and HCI Equity Partners III, L.P., not individually but solely in its capacity as the representative of the Sellers (previously filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2019 and incorporated herein by reference). 3.1 Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective June 25, 2010 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2010 and incorporated herein by reference). 3.2 Amendment no. 1 to Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 6, 2011 and incorporated herein by reference). 3.3 Second Amended and Restated Bylaws of Vishay Precision Group, Inc., adopted as of June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 6, 2011 and incorporated herein by reference). 4.1 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 11, 2020 and incorporated herein by reference) . 10.1 Master Separation and Distribution Agreement, dated June 22, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Form 10 Registration Statement of Vishay Precision Group, Inc., filed with the Securities and Exchange Commission on June 22, 2010 and incorporated herein by reference). 10.2 Employee Matters Agreement, dated June 22, 2010, by and among Vishay Intertechnology, Inc. and Vishay Precision Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 23, 2010 and incorporated herein by reference). 10.3 Tax Matters Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.4 Trademark License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.5 Supply Agreement, dated July 6, 2010, between Vishay Advanced Technology, Ltd. and Vishay Dale Electronics, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.6* Patent License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Dale Electronics, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.7* Supply Agreement, dated July 6, 2010, between Vishay Dale Electronics, Inc. and Vishay Advanced Technology, Ltd. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.8* Lease Agreement, dated July 4, 2010, between Vishay Advanced Technology, Ltd. and V.I.E.C. Ltd. (previously filed as an exhibit to the Registrant's Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). - 47 - Exhibit No. Description 10.9* Supply Agreement, dated July 6, 2010, between Vishay Measurements Group, Inc. and Vishay S.A. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.10* Manufacturing Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil GmbH (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.11 Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil GmbH (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.12* Supply Agreement, dated July 6, 2010, between Vishay Precision Foil GmbH and Vishay S.A. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.13 Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Measurements Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.14 Lease Agreement, between Alpha Electronics Corp. and Vishay Japan Co., Ltd. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.15† Amended and Restated 2010 Vishay Stock Incentive Program, adopted as of June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 6, 2011 and incorporated herein by reference). 10.16 Lease Agreement between Vishay Advanced Technologies Ltd and Mega Or Holdings Ltd, dated February 17, 2019 (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2019 and incorporated herein by reference). 10.17† Form of Stock Option Award Agreement (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference). 10.18† Form of Restricted Stock Unit Award Agreement for Director Grants (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference) . 10.19† Form of Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference). 10.20† Employment Agreement, dated November 17, 2010, by and among Vishay Advanced Technology and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2010 and incorporated herein by reference). 10.21† Employment Agreement, dated November 17, 2010, by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2010 and incorporated herein by reference). 10.22† Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Advanced Technologies, Ltd. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2011 and incorporated herein by reference). 10.23† Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2011 and incorporated herein by reference). 10.24† Form of Performance Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit to the Registrant’s Current Report on Form 10-K filed with the SEC on March 12, 2013 and incorporated herein by reference). 10.25 Lease Agreement, between George Kelk Corporation and Anndale Properties Limited (and its successors), dated January 30, 1996 and as amended as of January 17, 2011 (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with SEC on May 8, 2013 and incorporated herein by reference). 10.26 Vishay Precision Group, Inc. 2010 Stock Incentive Program, as Amended and Restated Effective May 21, 2013 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on May 22, 2013 and incorporated herein by reference). 10.27† Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Advanced Technologies, Ltd. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2013 and incorporated herein by reference). - 48 - Exhibit No. Description 10.28† Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Precision Group, Inc. and William Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2013 and incorporated herein by reference). 10.29 Lease agreement, dated January 26, 2014, by and among between Vishay Advanced Technologies, Inc. and Tefen Enterprises Ltd. (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2014 and incorporated herein by reference). 10.30 Stock Purchase Agreement, dated December 14, 2015, by and among VPG Systems U.S., Inc., Stress-Tek, Inc., the shareholders of Stress-Tek, Inc., and Keith Reichow, as Representative (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 15, 2015 and incorporated herein by reference). 10.31 Third Amended and Restated Credit Agreement, dated March 20, 2020, by and among Vishay Precision Group, Inc., the lenders party thereto, Citizens Bank, National Association, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, National Association (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 23, 2020 and incorporated herein by reference). 10.32 Stock Purchase Agreement, dated March 30, 2016, by and among Vishay Precision Group, Inc., Pacific Instruments, Inc., the shareholders of Pacific Instruments, Inc., John Hueckel and Norman Hueckel as Owners, and John Hueckel, as Representative (previously filed as an exhibit to the Registrant's Current Report on Form 8-K filed with the SEC on April 5, 2016 and incorporated herein by reference). 10.33† Form of Indemnification Agreement with directors (previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 11, 2016 and incorporated herein by reference). 10.34† Employment Agreement, dated March 15, 2020, by and between Vishay Advanced Technologies, Ltd. and Amir Tal (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 5, 2020 and incorporated herein by reference). 10.35 Lease agreement, dated July 7, 2016, by and among between Vishay Advanced Technologies, Ltd. and Marshee Estates & Investments Ltd. (previously filed as an exhibit to the Registrant's Current Report on Form 10-K filed with the SEC on March 16, 2016 and incorporated herein by reference). 10.36† Amendment to Employment Agreement, dated May 8, 2017, by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2017 and incorporated herein by reference). 10.37† Amendment to Employment Agreement, dated August 7, 2017, by and among Vishay Advanced Technologies, Ltd. and Ziv Shoshani (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2017 and incorporated herein by reference). 10.38† Vishay Precision Group, Inc. 2017 Non-Employee Director Compensation Plan (previously filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 9, 2018 and incorporated herein by reference). 10.39† Amendment to Employment Agreement,dated March 10, 2019, by and among Vishay Advanced Technologies Ltd. and Ziv Shoshani (previously file d as Exhibit 10.45 to the Registrant ' s Annual Report on Form 10-K filed with the SEC on March 14, 2019 and inco rporated her e in by reference) . 10.40† Amendment to Employment Agreement, dated March 11, 2019, by and among Vishay Precision Group, Inc. and William Clancy (previously filed as Exhibit 10.46 to the Registrant ' s Annual Report on Form 10-K filed with the SEC on March 14, 2019 and incorporated herein by reference) . 16.1 Letter of Ernst & Young LLP, dated May 31, 2019 (previously filed as Exhibit 16.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 31, 2019 and incorporated herein by reference). 21.1 List of Subsidiaries. 23.1 Consent of Brightman Almagor Zohar & Co, a Firm in the Deloitte Global Network, relating to the Registrant’s financial statements. 23.2 Consent of Ernst & Young LLP relating to the Registrant’s financial statements. 31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer. 31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer. - 49 - Exhibit No. Description 101 Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2020, furnished in XBRL (eXtensible Business Reporting Language)). * Confidential treatment has been accorded to certain portions of this Exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. † Denotes a management contract or compensatory plan, contract or arrangement. Item 16. FORM 10-K SUMMARY None. - 50 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VISHAY PRECISION GROUP, INC. By: /s/ Ziv Shoshani Ziv Shoshani Date: March 11, 2021 President and Chief Executive Officer P OWER OF A TTORNEY Vishay Precision Group, Inc., a Delaware corporation, and each person whose signature appears below constitutes and appoints each of Ziv Shoshani and William M. Clancy, and either of them, such person’s true and lawful attorney-in-fact, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign on such person’s behalf, individually and in each capacity stated below, any and all amendments to this Annual Report on Form 10-K and other documents in connection therewith, and to file the same and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed by the following persons on behalf of the Registrant in the capacities and on the date indicated below. Signature Title Date /s/ Ziv Shoshani Chief Executive Officer and Director March 11, 2021 Ziv Shoshani (Principal Executive Officer) /s/ William M. Clancy Executive Vice President & Chief Financial Officer March 11, 2021 William M. Clancy (Principal Financial and Accounting Officer) /s/ Marc Zandman Director March 11, 2021 Marc Zandman /s/ Saul V. Reibstein Director March 11, 2021 Saul V. Reibstein /s/ Timothy V. Talbert Director March 11, 2021 Timothy V. Talbert /s/ Janet Clarke Director March 11, 2021 Janet Clarke /s/ Bruce Lerner Director March 11, 2021 Bruce Lerner /s/ Wesley Cummins Director March 11, 2021 Wesley Cummins - 51 - Vishay Precision Group, Inc. Index to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firms F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations F- 7 Consolidated Statements of Comprehensive Income F- 8 Consolidated Statements of Cash Flows F- 9 Consolidated Statements of Equity F- 10 Notes to Consolidated Financial Statements F- 11 F-1 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Vishay Precision Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Vishay Precision Group, Inc. (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates Goodwill and Indefinite-lived Intangible Assets – Instrumentation and DSI Reporting Units — Refer to Note 4 to the Financial Statements Critical Audit Matter Description The Company's quantitative goodwill and indefinite-lived intangible assets impairment test involves the comparison of the fair value of each reporting unit or asset to its carrying value. In estimating the fair value of the Instrumentation and DSI reporting units, the Company used the income approach to evaluate the estimated fair value of the reporting units. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of discount and long term growth rates. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. In estimating the fair value of the indefinite-lived trade names, the Company compares the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the applicable fair value is recognized as impairment. F-2 During 2020, the Company recognized an impairment loss of $2.4 million for the Instrumentation reporting unit’s goodwill and indefinite-lived trade name. After considering the impact of the impairment charges, the carrying amount of goodwill and indefinite-lived trade name as of December 31, 2020, is $1.1 million and $0.4 million, respectively. The carrying amount of goodwill and indefinite-lived trade name as of December 31, 2020, for the DSI reporting unit is $16.9 million and $3.3 million, respectively. The fair value of the DSI reporting unit and indefinite-lived trade name exceeds the carrying value by approximately 12% and 16%, respectively. We identified goodwill and indefinite-lived trade names for the Instrumentation and DSI reporting units as a critical audit matter because of the significant judgments made by management to estimate fair value and the sensitivity to changes in management estimates and assumptions. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues, profitability, working capital requirements and selection of the discount and long term growth rates. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to forecasts of future revenues, profitability, working capital requirements and selection of discount and long term growth rates used by management to estimate the fair value of the Instrumentation and DSI reporting units and indefinite-lived trade names included the following, among others: • We tested the effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value of the Instrumentation and DSI reporting units and indefinite-lived trade names, such as controls related to management’s forecasts of future revenues, profitability, working capital requirements and selection of discount and long term growth rates. • We evaluated management’s ability to accurately forecast operating performance by comparing actual results to management’s historical forecasts. • We evaluated the reasonableness of management’s forecasts of future revenues, profitability and working capital requirements by comparing the forecasts to: – Historical revenues, profitability and working capital requirements. – Internal communications to management and the Board of Directors. • With the assistance of our fair value specialists, we evaluated the valuation methodologies and the reasonableness of the discount and long term growth rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount and long term growth rates selected by management. /s/ Brightman Almagor Zohar & Co. A Firm in the Deloitte Global Network Tel Aviv, Israel March 11, 2021 We have served as the Company’s auditor since 2019. F-3 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Vishay Precision Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of operations, comprehensive income, equity and cash flows of Vishay Precision Group, Inc. (the Company) for the year ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2018, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Ernst & Young LLP We served as the Company’s auditor from 2009 to 2019. Philadelphia, Pennsylvania March 14, 2019 F-4 VISHAY PRECISION GROUP, INC. Consolidated Balance Sheets (In thousands, except share amounts) December 31, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $ 98,438 $ 86,910 Accounts receivable, net of allowances for credit losses of $ 879 and $ 555 , respectively 45,339 43,198 Inventories: Raw materials 21,894 21,701 Work in process 21,534 23,128 Finished goods 18,920 22,066 Inventories 62,348 66,895 Prepaid expenses and other current assets 15,761 15,558 Total current assets 221,886 212,561 Property and equipment, at cost: Land 4,282 4,243 Buildings and improvements 67,581 52,708 Machinery and equipment 115,717 111,492 Software 10,026 9,384 Construction in progress 6,341 2,485 Accumulated depreciation ( 128,931 ) ( 119,042 ) Property and equipment, net 75,016 61,270 Goodwill 31,105 35,018 Intangible assets, net 32,039 34,198 Operating lease right-of-use assets 21,788 8,691 Other assets 20,053 18,675 Total assets $ 401,887 $ 370,413 Continues on the following page F-5 VISHAY PRECISION GROUP, INC. Consolidated Balance Sheets (continued) (In thousands, except share amounts) December 31, 2020 December 31, 2019 Liabilities and equity Current liabilities: Trade accounts payable $ 10,487 $ 8,869 Payroll and related expenses 17,595 16,312 Other accrued expenses 13,843 16,126 Income taxes 1,593 261 Current portion of operating lease liabilities 4,011 2,827 Current portion of long-term debt 18 44,516 Total current liabilities 47,547 88,911 Long-term debt, less current portion 40,626 17 Deferred income taxes 3,403 3,478 Operating lease liabilities 19,504 5,811 Other liabilities 16,263 14,775 Accrued pension and other postretirement costs 16,687 15,669 Total liabilities 144,030 128,661 Commitments and contingencies Equity: Preferred stock, par value $ 1.00 per share: authorized - 1,000,000 shares; none issued — — Common stock, par value $ 0.10 per share: authorized - 25,000,000 shares; 12,552,439 shares outstanding as of December 31, 2020 and 12,500,006 shares outstanding as of December 31, 2019 1,317 1,312 Class B convertible common stock, par value $ 0.10 per share: authorized - 3,000,000 shares; 1,022,887 shares outstanding as of December 31, 2020 and December 31, 2019 103 103 Treasury stock, at cost - 619.667 shares held at December 31, 2020 and December 31, 2019 ( 8,765 ) ( 8,765 ) Capital in excess of par value 197,764 197,125 Retained earnings 100,075 89,288 Accumulated other comprehensive loss ( 32,671 ) ( 37,703 ) Total Vishay Precision Group, Inc. stockholders' equity 257,823 241,360 Noncontrolling interests 34 392 Total equity 257,857 241,752 Total liabilities and equity $ 401,887 $ 370,413 See accompanying notes. F-6 VISHAY PRECISION GROUP, INC. Consolidated Statements of Operations (In thousands, except per share amounts) Years ended December 31, 2020 2019 2018 Net revenues $ 269,812 $ 283,958 $ 299,794 Costs of products sold 165,541 172,341 178,527 Gross profit 104,271 111,617 121,267 Selling, general, and administrative expenses 78,256 79,622 80,935 Acquisition costs — 443 — Impairment of goodwill and indefinite-lived intangibles 2,440 — 2,820 Executive severance costs — 611 — Restructuring costs 918 2,293 289 Operating income 22,657 28,648 37,223 Other income (expense): Interest expense ( 1,366 ) ( 1,507 ) ( 1,738 ) Other ( 2,982 ) ( 701 ) ( 1,496 ) Other expenses - net ( 4,348 ) ( 2,208 ) ( 3,234 ) Income before taxes 18,309 26,440 33,989 Income tax expense 7,509 4,145 10,344 Net earnings 10,800 22,295 23,645 Less: net earnings (loss) attributable to noncontrolling interests 13 107 ( 1 ) Net earnings attributable to VPG stockholders $ 10,787 $ 22,188 $ 23,646 Basic earnings per share attributable to VPG stockholders $ 0.80 $ 1.64 $ 1.76 Diluted earnings per share attributable to VPG stockholders $ 0.79 $ 1.63 $ 1.75 Weighted average shares outstanding - basic 13,566 13,515 13,439 Weighted average shares outstanding - diluted 13,623 13,597 13,535 See accompanying notes. F-7 VISHAY PRECISION GROUP, INC. Consolidated Statements of Comprehensive Income (In thousands) Years ended December 31, 2020 2019 2018 Net earnings $ 10,800 $ 22,295 $ 23,645 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 5,169 558 ( 3,929 ) Pension and other postretirement actuarial items ( 137 ) ( 796 ) 1,914 Other comprehensive income (loss) 5,032 ( 238 ) ( 2,015 ) Comprehensive income 15,832 22,057 21,630 Less: comprehensive income (loss) attributable to noncontrolling interests 13 107 ( 1 ) Comprehensive income attributable to VPG stockholders $ 15,819 $ 21,950 $ 21,631 See accompanying notes. F-8 VISHAY PRECISION GROUP, INC. Consolidated Statements of Cash Flows (In thousands) Years ended December 31, 2020 2019 2018 Operating activities Net earnings $ 10,800 $ 22,295 $ 23,645 Adjustments to reconcile net earnings to net cash provided by operating activities: Impairment of goodwill and indefinite-lived intangibles 2,440 — 2,820 Depreciation and amortization 12,507 11,795 10,631 Loss from extinguishment of debt 30 — — (Gain) loss on disposal of property and equipment ( 130 ) 34 ( 120 ) Reclassification of foreign currency translation adjustment related to disposal of subsidiary — ( 827 ) — Share-based compensation expense 1,387 1,336 1,799 Inventory write-offs for obsolescence 2,525 2,588 1,876 Deferred income taxes 1,153 ( 2,556 ) 1,011 Other 1,735 358 819 Net changes in operating assets and liabilities, net of acquisition: Accounts receivable ( 753 ) 11,369 ( 7,757 ) Inventories 2,986 ( 619 ) ( 5,095 ) Prepaid expenses and other current assets 67 ( 5,087 ) 588 Trade accounts payable 59 ( 2,273 ) ( 819 ) Other current liabilities 507 ( 7,481 ) 5,981 Net cash provided by operating activities 35,313 30,932 35,379 Investing activities Capital expenditures ( 22,949 ) ( 11,196 ) ( 14,521 ) Proceeds from sale of property and equipment 983 615 132 Purchase of business 156 ( 40,481 ) — Net cash used in investing activities ( 21,810 ) ( 51,062 ) ( 14,389 ) Financing activities Principal payments on long-term debt ( 3,493 ) ( 4,618 ) ( 5,603 ) Debt issuance costs ( 402 ) — — Proceeds from revolving facility — 22,000 22,000 Payments on revolving facility — — ( 19,000 ) Purchase of non-controlling interest ( 253 ) — — Distributions to noncontrolling interests ( 70 ) ( 52 ) ( 109 ) Payments of employee taxes on certain share-based arrangements ( 813 ) ( 854 ) ( 801 ) Net cash (used in) provided by financing activities ( 5,031 ) 16,476 ( 3,513 ) Effect of exchange rate changes on cash and cash equivalents 3,056 405 ( 1,610 ) Increase (decrease) in cash and cash equivalents 11,528 ( 3,249 ) 15,867 Cash and cash equivalents at beginning of year 86,910 90,159 74,292 Cash and cash equivalents at end of year $ 98,438 $ 86,910 $ 90,159 Supplemental disclosure of investing transactions: Capital expenditures purchased $ ( 24,327 ) $ ( 10,529 ) $ ( 13,239 ) Capital expenditures accrued but not yet paid $ 2,561 $ 1,183 Supplemental disclosure of financing transactions: Conversion of exchangeable notes to common stock $ — $ — $ ( 2,794 ) See accompanying notes. F-9 VISHAY PRECISION GROUP, INC. Consolidated Statements of Equity (In thousands, except share amounts) Common Stock Class B Convertible Common Stock Treasury Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Total VPG Inc. Stockholders' Equity Noncontrolling Interests Total Equity Balance at January 1, 2018 $ 1,288 $ 103 $ ( 8,765 ) $ 192,904 $ 43,076 $ ( 35,450 ) $ 193,156 $ 148 $ 193,304 Net earnings — — — — 23,646 — 23,646 ( 1 ) 23,645 Other comprehensive loss — — — — — ( 2,015 ) ( 2,015 ) — ( 2,015 ) Share-based compensation expense — — — 1,799 — — 1,799 — 1,799 Restricted stock issuances ( 59,038 shares) 7 — — ( 819 ) — — ( 812 ) — ( 812 ) Common stock issuance from conversion of exchangeable notes ( 123,808 shares) 12 — — 2,782 — — 2,794 — 2,794 Cumulative effect adjustment for adoption of ASU 2016-16 — — — — ( 153 ) — ( 153 ) — ( 153 ) Distributions to noncontrolling interests — — — — — — — ( 109 ) ( 109 ) Balance at December 31, 2018 $ 1,307 $ 103 $ ( 8,765 ) $ 196,666 $ 66,569 $ ( 37,465 ) $ 218,415 $ 38 $ 218,453 Net earnings — — — — 22,188 — 22,188 107 22,295 Other comprehensive income — — — — — ( 238 ) ( 238 ) — ( 238 ) Share-based compensation expense — — — 1,336 — — 1,336 — 1,336 Restricted stock issuances ( 48.482 shares) 5 — — ( 877 ) — — ( 872 ) — ( 872 ) Cumulative effect adjustment for adoption of ASC 842 — — — — 531 — 531 — 531 Conversion from Class B to common stock ( 2,271 shares) — — — — — — — — — Impact due to DSI acquisition — — — — — — — 299 299 Distributions to noncontrolling interests — — — — — — — ( 52 ) ( 52 ) Balance at December 31, 2019 $ 1,312 $ 103 $ ( 8,765 ) $ 197,125 $ 89,288 $ ( 37,703 ) $ 241,360 $ 392 $ 241,752 Net earnings — — — — 10,787 — 10,787 13 10,800 Other comprehensive income — — — — — 5,032 5,032 — 5,032 Share-based compensation expense — — — 1,387 — — 1,387 — 1,387 Restricted stock issuances ( 52,433 shares) 5 — — ( 796 ) — — ( 791 ) — ( 791 ) Purchase of noncontrolling interest — — — 48 — — 48 ( 301 ) ( 253 ) Distributions to noncontrolling interests — — — — — — — ( 70 ) ( 70 ) Balance at December 31, 2020 $ 1,317 $ 103 $ ( 8,765 ) $ 197,764 $ 100,075 $ ( 32,671 ) $ 257,823 $ 34 $ 257,857 See accompanying notes. F-10 Vishay Precision Group, Inc. Notes to Consolidated Financial Statements Note 1 – Background and Summary of Significant Accounting Policies Background Vishay Precision Group, Inc. (“VPG” or the “Company”) is an internationally recognized designer, manufacturer and marketer of sensors, and sensor-based measurement systems, as well as specialty resistors and strain gages based upon the Company's proprietary technology. The Company provides precision products and solutions, many of which are “designed-in” by its customers, specializing in the growing markets of stress, force, weight, pressure, and current measurements. Principles of Consolidation The consolidated financial statements include the accounts of the individual entities in which the Company maintained a controlling financial interest. For those subsidiaries in which the Company’s ownership is less than 100 percent, the outside stockholders’ interests are shown as noncontrolling interests in the accompanying consolidated balance sheets. All transactions, accounts, and profits between individual members comprising the Company have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates. Revenue Recognition The Company derives substantially all of its revenue from product sales. The Company recognizes the vast majority of its sales at a point-in-time. It utilizes the core principle of recognizing revenue when the Company satisfies performance obligations as evidenced by the transfer of control of its products to the customer. Such revenues are derived from purchase orders and/or contracts with customers. Each contract has the promise to transfer the control of the products, each of which is individually distinct and is considered the identified performance obligation. As part of the decision to enter into each contract, the Company evaluates the customer’s credit risk, but its contracts do not have any significant financing components, as payment is generally due net 30 to 60 days after delivery. In accordance with contract terms, revenue from the Company’s product sales is recognized at the time of product shipment from its facilities or delivery to the customer location, as determined by the agreed upon shipping terms. Under the terms of some of its contracts, the Company may be required to perform certain installation services. These installation services are performed at the time of product delivery or at some point thereafter. The installation services do not significantly modify the product provided, and although the Company may be required contractually to provide these services, the installation services could be performed by a third party or the customer. Thus, these installation services are a distinct performance obligation. In most of the applicable contracts, this installation service element is immaterial in the context of the agreement. When the installation services are accounted for as a separate performance obligation, the Company allocates the transaction price to this element based on its relative standalone selling price. Given the specialized nature of the Company's products, the Company generally does not allow product returns. Shipping and handling costs are recorded to Costs of product sold when control of the product has transferred to the customer. The Company offers standard product warranties. Warranty related costs continue to be recognized as expense when the products are sold. Sales, value add and other taxes collected concurrent with revenue-producing activities are excluded from revenue. See Note 2 for further details on Revenues. Research and Development Expenses Research and development costs are expensed as incurred. The amount charged to expense for research and development was $ 12.6 million, $ 12.1 million, and $ 11.8 million for the years ended December 31, 2020, 2019, and 2018, respectively. F-11 Note 1 – Background and Summary of Significant Accounting Policies (continued) Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income tax expense in the period that includes the enactment date. The Company records net deferred tax assets to the extent it believes such assets will "more likely than not" be realized. In making this determination, the Company considers all positive and negative evidence, including historic earnings, projected future income, and cost-effective tax-planning strategies. When the Company determines that its ability to realize deferred tax assets is not "more likely than not", the Company adjusts its deferred tax asset valuation allowance, which increases income tax expense. The Company records uncertain tax positions on the basis of a two-step process in which the Company first determines whether it is "more likely than not" that the tax positions will be sustained based on the technical merits of the position and then measures those tax positions that meet the more-likely-than-not recognition threshold. The Company recognizes the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets. On December 22, 2017, the SEC staff issued SAB 118 to address the application of U.S. GAAP in situations when a registrant does not have all the necessary information available to prepare and analyze the accounting treatment for the proper recognition of the tax impact of the 2017 Tax Act. In accordance with SAB 118 guidance, the Company had recorded the provisional tax impacts related to the deemed distribution of foreign earnings and the expense for the revaluation of deferred tax assets and liabilities in its consolidated financial statements for the year ended December 31, 2017. In accordance with SAB 118, the financial reporting impact of the 2017 Tax Act was completed in the fourth quarter of 2018 resulting in a net increase in tax expense of $ 0.8 million. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or less when purchased. Highly liquid investments with maturities greater than three months are classified as short-term investments. There were no investments classified as short-term investments at December 31, 2020 or 2019. Allowance for Credit Losses The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments. In determining the amount of the allowance for credit losses, the Company considers historical loss data, customer specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. The allowance for credit losses was $ 0.9 million and $ 0.6 million at December 31, 2020 and 2019, respectively. The credit loss was $ 0.3 million, $ 0.1 million, and $ 0.0 million for the years ended December 31, 2020, 2019, and 2018, respectively. Inventories Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market based on net realizable value. Inventories are adjusted for estimated excess and obsolescence and written down to net realizable value based upon estimates of future demand, technology developments, and market conditions. Property and Equipment Property and equipment is carried at cost and is depreciated principally by the straight-line method based upon the estimated useful lives of the assets. Machinery and equipment are being depreciated over useful lives of seven to fifteen years . Buildings and building improvements are being depreciated over useful lives of twenty to forty years or the lease term. Software is being depreciated over useful lives of three to five years . Construction in progress is not depreciated until the assets are placed in service. Depreciation expense was $ 10.1 million, $ 10.1 million, and $ 8.9 million for the years ended December 31, 2020, 2019, and 2018, respectively, which included software depreciation expense of $ 0.7 million, $ 0.6 million, and $ 0.5 million for the years ended December 31, 2020, 2019, and 2018, respectively. F-12 Note 1 – Background and Summary of Significant Accounting Policies (continued) Business Combinations The Company allocates the purchase price of an acquired company, including when applicable, the fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired businesses based on estimated fair values, with any residual of the purchase price recorded as goodwill. Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. Estimating fair values requires significant judgments, estimates and assumptions, including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, customer relationships, property, plant and equipment, as well as income taxes. These estimates are based on historical experience and information obtained from the management of the acquired companies, and are inherently uncertain. Goodwill and Other Intangible Assets Goodwill and indefinite-lived trademarks are tested for impairment at least annually, and whenever events or changes in circumstances occur indicating that it is "more likely than not" impairment may have been incurred. The Company has the option to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining if it is necessary to perform the quantitative goodwill impairment test. However, if the Company concludes otherwise, then it is required to perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing it against its carrying amount. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying amount of goodwill exceeds the reporting unit fair value. The indefinite-lived trade names are tested for impairment either by employing the qualitative approach outlined above, or by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the applicable fair value is recognized as impairment. Any impairment would be recognized in the reporting period in which it has been identified. The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth fiscal quarter each year. As more fully described in Note 4 to the consolidated financial statements, the 2020 annual impairment test resulted in an impairment charge in the fourth quarter of 2020. The 2019 annual impairment test resulted in no impairment. The 2018 annual impairment test resulted in an impairment charge in the fourth quarter of 2018. Definite-lived intangible assets, such as customer relationships, patents and acquired technology, non-competition agreements, and certain trade names are amortized on a straight-line method over their estimated useful lives. Patents and acquired technology are being amortized over useful lives of seven to twenty years . Customer relationships are being amortized over useful lives of five to fifteen years . Trade names are being amortized over useful lives of seven to ten years . Non-competition agreements are being amortized over periods of five to ten years . The Company continually evaluates the reasonableness of the useful lives of these assets. Additionally, the Company reviews the carrying values of these assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable based on undiscounted estimated cash flows expected to result from its use and eventual disposition. Impairment of Long-Lived Assets The carrying value of long-lived assets held-and-used, other than goodwill and indefinite-lived intangible assets, is evaluated when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived asset group is considered impaired when the total projected undiscounted cash flows from such asset group are separately identifiable and are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset group. Fair market value is determined primarily using present value techniques based on projected cash flows from the asset group. Losses on long-lived assets held-for-sale, other than goodwill and indefinite-lived intangible assets, are determined in a similar manner, except that fair market values are reduced for disposal costs. Foreign Currency Translation The Company has significant operations outside of the United States. The Company's operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash in local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. The Company’s operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. F-13 Note 1 – Background and Summary of Significant Accounting Policies (continued) For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated balance sheets have been translated at the rate of exchange as of the balance sheet date. Revenues and expenses are translated at the average exchange rate for the year. Translation adjustments do not impact the consolidated statements of operations and are reported as a separate component of accumulated other comprehensive loss within the statement of comprehensive income. Foreign currency transaction gains and losses are included in the results of operations. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the consolidated statements of operations. Share-Based Compensation Compensation costs related to share-based payments are recognized in the consolidated financial statements. The amount of compensation cost is measured based on the grant-date fair value of the equity instruments issued. For service-based awards, compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award. The Company recognizes forfeitures as they occur. For performance based awards, the Company recognizes compensation cost for awards that are expected to vest based on whether performance criteria are expected to be met. For options and restricted stock units subject to graded vesting, the Company recognizes expense over the service period for each separately vesting portion of the award as if the award was comprised of multiple awards. Leases The Company determines if an arrangement is or contains a lease at inception or modification of such agreement. The arrangement is or contains a lease if the contract conveys the right to control the use of the identified asset for a period in exchange for consideration. Lease right of use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected term at commencement date. As the implicit rate is not determinable in most of the Company's leases, the Company's incremental borrowing rate is used as the basis to determine the present value of future lease payments. The expected lease terms include options to extend or terminate. The period which is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised. Some of these leases contain variable payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date and are therefore not included in our future minimum lease payments. Variable payments are expensed in the periods incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. The Company uses the practical expedients to exclude from balance sheet reporting leases with initial terms of 12 months or less and to exclude non-lease components from lease right of use assets and corresponding liabilities. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13, and subsequent related amendments to ASU 2016-13, replace the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. The Company adopted this ASU, effective January 1, 2020, using the modified retrospective approach, and the effect on the Company's consolidated condensed financial statements and related disclosures was not material. In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurements (Topic 820)." This ASU modifies the disclosures on fair value measurements by removing the requirements to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The Company adopted this ASU effective January 1, 2020, and the effect on the Company's disclosures in its consolidated financial statements was not material. F-14 Note 1 – Background and Summary of Significant Accounting Policies (continued) In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This ASU amends Accounting Standards Codification ("ASC") 715 to add, remove and clarify disclosure requirements related to defined benefit and pension and other postretirement plans. The Company adopted this ASU effective January 1, 2020, and determined that the effect on the Company's disclosures in its consolidated financial statements was not material. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. ASU 2019-12, "Simplifying the Accounting for Income Taxes". This ASU amends Accounting Standards Codification ("ASC") 740 by removing certain exceptions to the general principles, clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020 and early adoption is permitted. The Company has not yet adopted this ASU. Note 2 – Revenues The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location (in thousands) : Year Ended December 31, 2020 Foil Technology Products Force Sensors Weighing and Control Systems Total United States $ 49,713 $ 27,699 $ 30,849 $ 108,261 United Kingdom 3,276 8,491 11,375 23,142 Other Europe 30,046 9,020 15,618 54,684 Israel 21,432 384 — 21,816 Asia 27,178 8,130 8,122 43,430 Canada — — 18,479 18,479 $ 131,645 $ 53,724 $ 84,443 $ 269,812 Year Ended December 31, 2019 Foil Technology Products Force Sensors Weighing and Control Systems Total United States $ 56,393 $ 33,695 $ 24,227 $ 114,315 United Kingdom 3,181 10,450 15,576 29,207 Other Europe 32,328 10,811 16,860 59,999 Israel 12,401 415 — 12,816 Asia 27,500 8,986 8,331 44,817 Canada — — 22,804 22,804 $ 131,803 $ 64,357 $ 87,798 $ 283,958 Year Ended December 31, 2018 Foil Technology Products Force Sensors Weighing and Control Systems Total United States $ 61,132 $ 39,955 $ 23,818 $ 124,905 United Kingdom 3,666 11,787 14,296 29,749 Other Europe 31,431 10,678 18,741 60,850 Israel 11,028 517 — 11,545 Asia 33,752 10,249 7,442 51,443 Canada — — 21,302 21,302 $ 141,009 $ 73,186 $ 85,599 $ 299,794 F-15 Note 2 – Revenues (continued) The following table disaggregates net revenue by market sector (in thousands) : Years Ended December 31, 2020 2019 2018 Test & Measurement $ 53,633 $ 64,982 $ 72,728 Avionics, Military & Space 32,607 23,653 29,221 Transportation 29,483 36,914 39,107 Other Markets 58,256 50,169 48,665 Industrial Weighing 43,441 54,678 59,214 General Industrial 15,351 20,466 24,696 Steel 37,041 33,096 26,163 $ 269,812 $ 283,958 $ 299,794 Contract Assets & Liabilities Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due is not significant. The outstanding contract assets and liability accounts were as follows (in thousands) : Contract Asset Contract Liability Unbilled Revenue Accrued Customer Advances December 31, 2019 $ 3,937 $ 4,561 December 31, 2020 $ 3,605 $ 2,873 Increase ( decrease) $ ( 332 ) $ ( 1,688 ) The amount of revenue recognized during the year ended December 31, 2020 that was included in the contract liability balance at December 31, 2019 was $ 4.2 million. Practical Expedients The Company does not disclose the value of unsatisfied performance obligations for contracts that have a duration of one year or less and for contracts that are substantially complete. The Company treats shipping and handling activities as fulfillment costs. F-16 Note 3 – Acquisition Activity Dynamic Systems Inc. On November 1, 2019, VPG completed the acquisition of New York-based Dynamic Systems Inc. ("DSI"), a provider of specialized dynamic thermal-mechanical test and simulation systems used to develop new metal alloys and optimize production processes, for a purchase price of $ 40.3 million, subject to customary adjustments. During the second quarter of 2020, the Company received $ 0.2 million from escrow as a purchase price adjustment, resulting in a reduction of goodwill. Additionally, it was determined that an earn out, which was part of the purchase price, was not achieved. DSI reports into the Company's Weighing and Control Systems segment. The following table summarizes the final fair values assigned to the assets and liabilities of DSI as of November 1, 2019 (in thousands): November 1, 2019 Adjustments Adjusted Working capital (a) $ 6,874 $ ( 134 ) $ 6,740 Property and equipment 1,727 1,727 Long-term deferred income tax liability ( 4,321 ) 1,678 ( 2,643 ) Non-Controlling interest ( 299 ) ( 299 ) Intangible assets: Patents and acquired technology 10,250 10,250 Customer relationships 4,344 4,344 Trade names 3,300 3,300 Total intangible assets 17,894 — 17,894 Fair value of acquired identifiable assets and liabilities 21,875 1,544 23,419 Purchase price 40,481 ( 156 ) 40,325 Goodwill $ 18,606 $ ( 1,700 ) $ 16,906 (a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll. The fair value of the contingent consideration is zero . The weighted average useful lives for the patents and acquired technology and customer relationships are 16 years, and 15 years, respectively. Most of the goodwill associated with DSI is deductible for income tax purposes. The Company recorded acquisition costs of associated with this transaction in its consolidated statements of operation as follows (in thousands) : Year ended December 31, 2019 Accounting and legal fees $ 214 Appraisal fees 13 Other 216 $ 443 F-17 Note 3 – Acquisition Activity ( continued) Following are the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the DSI acquisition had been consummated on January 1, 2019 (unaudited): Year ended December 31, 2019 Pro forma net revenues $ 298,085 Pro forma net earnings attributable to VPG stockholders $ 25,737 Pro forma basic earnings per share attributable to VPG stockholders $ 1.90 Pro forma diluted earnings per share attributable to VPG stockholders $ 1.89 Note 4 – Goodwill and Other Intangible Assets The Company has four reporting units to which goodwill is allocated: steel, on-board weighing, instrumentation, and DSI. For the steel and on-board weighing goodwill reporting units, the Company performed the qualitative assessment, which included assessment of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other entity specific events which could impact the reporting unit. Based on this review, it was determined that the fair value of each of those reporting units was in excess of its carrying value and therefore no quantitative impairment test was required. For the instrumentation and DSI goodwill reporting units, the Company performed the quantitative impairment test. In estimating the fair value of our instrumentation and DSI reporting units the Company used the income approach. It further uses the market approach to evaluate the estimated fair value of the reporting units that was obtained by using the income approach. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting units. The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth fiscal quarter each year. In 2020, the results of the quantitative impairment test for the DSI reporting unit indicated no impairment, with the fair value exceeding the carrying value by approximately 12 % for goodwill and 16 % for the indefinite-lived trade name. The results of the quantitative impairment test for the instrumentation reporting unit's goodwill and indefinite-lived trade name indicated an impairment, and in the fourth quarter of 2020, the Company recognized a non-cash impairment loss of $ 2.4 million. The impairment was driven mainly by changes in forecasted projections including a slower growth rate in revenues. After considering the impact of the impairment charges, the carrying amount of goodwill and indefinite-lived trade names as of December 31, 2020 was $ 1.1 million and $ 0.4 million, respectively. The Company's analysis in 2019 resulted in the fair value exceeding the carrying value for all reporting units. In 2019, the Company did not recognize an impairment for the instrumentation reporting unit, as the fair value exceeded its carrying value by approximately 12 %. During 2018, the Company recognized a non-cash impairment loss associated with the goodwill and indefinite lived intangible assets in the instrumentation reporting unit of $ 2.5 million. The impairment was primarily from lower margins on the forecasted projections due to product mix. The impairment test for the remaining reporting units resulted in the fair value exceeding the carrying value, passing the quantitative impairment test. The change in the carrying amount of goodwill by segment is as follows ( in thousands) : F-18 Note 4 – Goodwill and Other Intangible Assets (continued) Total Weighing and Control Systems Segment Foil Technology Products Segment KELK Acquisition DSI Acquisition Stress-Tek Acquisition Pacific Instruments Balance at January 1, 2019 $ 16,141 $ 6,288 $ 6,311 $ 3,542 Goodwill acquired 18,606 — 18,606 — — Foreign currency translation adjustment 271 271 — — — Balance at December 31, 2019 35,018 6,559 18,606 6,311 3,542 Adjustments to purchase price ( 1,700 ) — ( 1,700 ) — — Impairment charges ( 2,416 ) — — — ( 2,416 ) Foreign currency translation adjustment 203 167 36 — — Balance at December 31, 2020 $ 31,105 $ 6,726 $ 16,942 $ 6,311 $ 1,126 Intangible assets were as follows (in thousands) : December 31, 2020 2019 Intangible assets subject to amortization (Definite-lived): Patents and acquired technology $ 19,804 $ 19,504 Customer relationships 26,061 25,690 Trade names 1,747 1,690 Non-competition agreements 12,259 11,745 59,871 58,629 Accumulated amortization: Patents and acquired technology ( 5,895 ) ( 4,718 ) Customer relationships ( 13,363 ) ( 11,727 ) Trade names ( 1,747 ) ( 1,690 ) Non-competition agreements ( 12,250 ) ( 11,717 ) ( 33,255 ) ( 29,852 ) Net intangible assets subject to amortization $ 26,616 $ 28,777 Intangible assets not subject to amortization (Indefinite-lived): Trade names 5,423 5,421 $ 32,039 $ 34,198 Certain intangible assets are subject to foreign currency translation. Amortization expense was $ 2.4 million, $ 1.7 million, and $ 1.7 million, for the years ended December 31, 2020, 2019, and 2018, respectively. Estimated annual amortization expense for each of the next five years is as follows (in thousands) : 2021 $ 2,452 2022 2,451 2023 2,343 2024 2,308 2025 2,308 F-19 Note 5 – Restructuring Costs Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges. The Company recorded restructuring costs of $ 0.9 million, $ 2.3 million, and $ 0.3 million during the years ended December 31, 2020, 2019, and 2018, respectively. In 2020 and 2018, restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs. In 2019, restructuring costs included $ 1.2 million of employee termination costs, including severance and statutory retirement allowances incurred in connection with various cost reduction programs, and $ 1.1 million of other exit costs, including asset write downs and an impairment of a right of use asset associated with the closure and downsizing of facilities as part of the manufacturing transitions of the Company's force sensors products to facilities in India and China. The following table summarizes the activity to date related to these programs in the accrued restructuring liability, which is comprised of the activity associated primarily with the employee termination costs. The accrued restructuring liability balance as of December 31, 2020 and 2019, respectively, is included in other accrued expenses in the accompanying consolidated balance sheets (in thousands) : December 31, 2020 2019 Balance at beginning of year $ 604 $ 159 Restructuring charges 918 1,559 Adjustment for adoption of ASU 2016-02 — ( 69 ) Cash payments ( 1,458 ) ( 1,064 ) Foreign currency translation ( 1 ) 19 Balance at end of year $ 63 604 F-20 Note 6 – Income Taxes For financial reporting purposes, income before taxes includes the following components (in thousands) : Years ended December 31, 2020 2019 2018 Domestic $ ( 9,476 ) $ ( 7,405 ) $ ( 7,897 ) Foreign 27,785 33,845 41,886 $ 18,309 $ 26,440 $ 33,989 The expense (benefit) for income taxes is comprised of (in thousands) : Years ended December 31, 2020 2019 2018 Current: Federal $ 106 $ 453 $ 189 State and local ( 18 ) ( 130 ) 162 Foreign 6,268 6,378 8,982 6,356 6,701 9,333 Deferred: Federal 1,718 ( 2,638 ) 197 State and local ( 422 ) ( 123 ) ( 35 ) Foreign ( 143 ) 205 849 1,153 ( 2,556 ) 1,011 Total income tax expense $ 7,509 $ 4,145 $ 10,344 A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate to the actual income tax provision is as follows (in thousands) : Years ended December 31, 2020 2019 2018 Tax at statutory rate $ 3,845 $ 5,553 $ 7,138 State income taxes, net of U.S. federal tax benefit ( 176 ) ( 21 ) 89 Effect of foreign operations 729 ( 109 ) 611 Change in valuation allowance 2,448 ( 646 ) 498 Change in unrecognized tax benefits, net ( 32 ) 650 258 Impairment of goodwill 507 — 525 Specialty tax credits ( 249 ) ( 176 ) ( 295 ) Statutory rate changes ( 119 ) ( 249 ) 272 Effect of foreign exchange ( 346 ) ( 1,152 ) 321 Loss of benefit of U.S. net operating loss (a) 1,064 967 — Excess tax benefits related to share based compensation (a) ( 168 ) ( 357 ) — 2017 Tax Act: Effects of U.S. tax reform — — ( 135 ) Change in valuation allowance — — 945 Other 6 ( 315 ) 117 Total income tax expense $ 7,509 $ 4,145 $ 10,344 F-21 Note 6 – Income Taxes (continued) (a) Amounts for 2018 are included in Other and fell below the 5% threshold. On December 22, 2017, the SEC staff issued SAB 118 which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the 2017 Tax Act. Consistent with that guidance, the Company had provisionally determined the tax cost of the one-time transition tax under the 2017 Tax Act to be approximately $ 2.2 million. In accordance with SAB 118, the financial reporting impact of the 2017 Tax Act was completed in the fourth quarter of 2018 resulting in a net $ 0.8 million increase in tax expense caused by a decrease in the transition tax and an increase in the valuation allowance. The 2017 Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in the future years or provide for tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize tax expense related to GILTI in the year the tax is incurred. The Company recognized approximately $ 14.3 million and $ 12.9 million of GILTI income for the years ended December 31, 2020 and 2019, respectively. The U.S. tax on the GILTI income was fully offset by foreign tax credits associated with GILTI and U.S. operating losses exclusive of GILTI. Any excess foreign tax credits associated with GILTI are lost and cannot be carried forward to future years. The Company would have generated a net operating loss for U.S. federal income tax purposes but for the effects of the GILTI provision. Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands) : December 31, 2020 2019 Deferred tax assets: Pension and other postretirement costs $ 4,296 $ 3,770 Inventories 2,327 2,095 Net operating/capital loss and interest carryforwards 13,082 11,895 Tax credit carryforwards 1,994 1,431 Deferred compensation 2,930 2,865 Other accruals and reserves 3,420 3,362 Book over tax depreciation 93 — Total gross deferred tax assets 28,142 25,418 Less: valuation allowance ( 16,946 ) ( 14,867 ) 11,196 10,551 Deferred tax liabilities: Tax over book depreciation — ( 290 ) Investment in subsidiary ( 1,927 ) ( 1,845 ) Intangible assets, including tax deductible goodwill ( 5,657 ) ( 5,745 ) Total gross deferred tax liabilities ( 7,584 ) ( 7,880 ) Net deferred tax assets $ 3,612 $ 2,671 In 2015, the Company established a valuation allowance with respect to substantially all of its U.S. deferred tax assets due to uncertainty regarding the realization of these assets. Throughout 2019 and 2020, the Company reassessed its ability to realize its U.S. and other deferred tax assets by considering both positive and negative evidence regarding realization. The most significant negative evidence is continuing cumulative operating losses in the U.S. The impact of the acquisitions of Stress-Tek, Pacific Instruments and DSI was also considered in determining the realization of the U.S. deferred tax assets. Other aspects, such as operating results, additional interest expense and additional tax deductions related to the Stress-Tek acquisition, were also considered. The Company also considered positive evidence such as tax planning strategies and the projected benefits of our restructuring efforts. However, there was insufficient positive evidence to overcome the negative evidence. F-22 Note 6 – Income Taxes (continued) In November 2019, the Company acquired Dynamic Systems, Inc. ("DSI"), a U.S. company. DSI's opening balance sheet included $ 17 million of gross deferred tax liabilities, including $ 4.1 million of indefinite-lived liabilities. The acquisition contributed to a $ 2.5 million net reduction in valuation allowance and current tax benefit for the Company in 2019. In the fourth quarter of 2020, the Company completed the purchase accounting for the acquisition of DSI, which resulted in the recognition of additional deferred tax assets of $ 1.7 million and a corresponding increase in valuation allowance. Overall, the cumulative losses and the acquisition impacts still indicate that realization of our U.S. deferred tax assets remains uncertain such that the Company cannot conclude that it is "more likely than not" that the deferred tax assets will be recoverable. We will continue to monitor the realization of U.S. deferred tax assets and reduce the valuation allowance if, and when, sufficient positive evidence of realization exists. At December 31, 2020 and 2019, the valuation allowance on U.S. deferred tax assets was approximately $ 14.9 million and $ 11.8 million, respectively. The net change in valuation allowance was approximately $ 3.2 million. The valuation allowance related to state taxes was $ 0.7 million and $ 0.8 million expense for the years ended December 31, 2020 and 2019, respectively. The Company also has valuation allowances of $ 2.0 million and $ 3.1 million at December 31, 2020 and 2019, respectively, with respect to certain foreign net operating loss and capital loss carryforwards. Significant valuation allowances are as follows (in thousands) : December 31, Jurisdiction 2020 2019 U.S. federal $ 5,816 $ 3,395 U.S. state (net of U.S. federal tax benefit) 9,090 8,411 Israel - capital losses 1,390 2,457 The following table summarizes significant net operating losses and credit carryforwards as of December 31, 2020 (in thousands): December 31, Jurisdiction 2020 Expiring U.S. federal net operating losses $ 5,548 No expiration U.S. federal net operating loss 315 2036 U.S. federal interest expense carryover 5,191 No expiration U.S. foreign tax credit 1,734 2026 - 2040 U.S. state net operating losses 102,090 2024 - 2040 Israel capital losses 6,042 No expiration The U.S. federal net operating losses shown above are pre-acquisition losses of DSI. The utilization of these losses is limited to $ 765 thousand per year pursuant to Internal Revenue Code ("IRC") Section 382. In addition, utilization of U.S. federal net operating losses is taken into account before the GILTI deduction allowable by IRC Section 250. Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $ 178.2 million at December 31, 2020 compared to $ 159.0 million at December 31, 2019. As a result of the 2017 Tax Act, in 2017 the Company had provided for a deferred tax liability of approximately $ 1.8 million of withholding tax associated with a planned cash distribution of approximately $ 25.5 million. As of December 31, 2020, other than the planned cash distribution of $ 14.1 million, substantially all of the remaining undistributed earnings are considered to be indefinitely reinvested and accordingly no provision has been made with respect to these earnings for incremental foreign income taxes, state income taxes or foreign withholding taxes. If those earnings were distributed to the U.S., the Company could be subject to incremental foreign income taxes, state income taxes, and withholding taxes. Determination of the amount of unrecognized deferred tax liability is not practicable because of the uncertainty regarding the timing of any such distribution and the impact on existing valuation allowances. In addition to the $ 1.5 million, additional withholding taxes of approximately $ 18.0 million are estimated to be payable upon remittance of the remaining previously unremitted earnings as of December 31, 2020. F-23 Note 6 – Income Taxes (continued) Net income taxes paid were $ 4.3 million, $ 11.1 million, and $ 7.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties. The following table summarizes changes in the Company's gross liabilities, excluding interest and penalties, associated with unrecognized tax benefits (in thousands) : December 31, 2020 2019 2018 Balance at beginning of year $ 1,355 $ 912 $ 823 Addition based on tax positions related to current year 51 144 189 Addition based on tax positions related to prior years — 668 182 Reduction based on tax positions related to prior years ( 57 ) ( 32 ) ( 98 ) Currency translation adjustments 92 3 ( 28 ) Reduction for settled tax examinations ( 73 ) — — Reduction for payments made ( 22 ) ( 134 ) — Reduction for lapses of statute of limitations ( 102 ) ( 206 ) ( 156 ) Balance at end of year $ 1,244 $ 1,355 $ 912 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Related to the unrecognized tax benefits noted above, for the years ended December 31, 2020, December 31, 2019 and December 31, 2018, the Company accrued total penalties and interest of $ 0.0 million, $ 0.0 million and $ 0.1 million, respectively. As of December 31, 2020, December 31, 2019 and December 31, 2018, accrued penalties and interest were $ 0.1 million, $ 0.1 million and $ 0.1 million, respectively. Included in the balance of unrecognized tax benefits as of December 31, 2020, 2019, and 2018 is $ 1.2 million, $ 1.4 million, and $ 0.9 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. The Company believes that it is reasonably possible that an increase in unrecognized tax benefits related to foreign exposures of between $ 0.1 million and $ 0.2 million may be necessary in 2020. As of December 31, 2020, the Company anticipates that it is reasonably possible that it will reverse less than $ 0.1 million of its current unrecognized tax benefits within the next calendar year due to the expiration of the statute of limitations in certain jurisdictions. None of the unrecognized tax benefits the Company expects to reverse in 2021 due to statute lapses are covered by the Tax Matters Agreement. The Company and its subsidiaries file U.S. federal income tax returns, as well as income tax returns in various state, local, and foreign jurisdictions. The Company files federal, state, and local income tax returns on a combined, unitary, or stand-alone basis. The statute of limitations in those jurisdictions generally ranges from 3 to 4 years. Additionally, the Company's foreign subsidiaries file income tax returns in the countries in which they have operations and the statutes of limitations in those jurisdictions generally range from 3 to 10 years. During the fourth quarter of 2020, the Company concluded a tax examination in Israel for one of its subsidiaries covering 2015. The conclusion of the audit resulted in no significant change in tax and a release of $ 0.1 million of reserves for uncertain tax positions for that year, including accrued interest. During the second and third quarters of 2019, the Company concluded tax examinations in Taiwan and Belgium, respectively, for two of its subsidiaries, covering the years 2016 and 2017. The conclusion of the tax examinations resulted in no significant change in tax. During the fourth quarter of 2018, the Company concluded a tax examination in Germany for one of its subsidiaries, covering the years 2015 and 2016. The conclusion of the tax examination resulted in no significant change in tax. The Company is subject to ongoing income tax audits, administrative appeals and judicial proceedings in India spanning a number of years. F-24 Note 7 – Long-Term Debt Long-term debt consists of the following (in thousands) : December 31, 2020 2019 2020 Credit Agreement - Revolving Facility $ 41,000 $ — 2015 Credit Agreement - Revolving Facility — 34,000 2015 Credit Agreement - U.S. Closing Date Term Facility — 2,038 2015 Credit Agreement - U.S. Delayed Draw Term Facility — 4,982 2015 Credit Agreement - Canadian Term Facility — 3,476 Other debt 18 149 Deferred financing costs ( 374 ) ( 112 ) 40,644 44,533 Less: current portion 18 44,516 $ 40,626 $ 17 2020 Credit Agreement On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the “Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $ 75.0 million, with a sublimit of $ 10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used for working capital and general corporate purposes, and a portion of such proceeds was used to refinance the Company’s existing revolving credit facility in the amount of $ 34.0 million and the Company’s existing term loans as follows: (1) the “2015 U.S. Closing Date Term Facility” in an aggregate principal amount of $ 2.0 million; and (2) the "2015 U.S. Delayed Draw Term Facility" in an aggregate principal amount of $ 5.0 million. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $ 25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025. The 2020 Credit Agreement replaced the 2015 Credit Agreement. Interest payable on amounts borrowed under the 2020 Revolving Facility is based upon, at the Company’s option, (1) the greatest of: the Agent’s prime rate, the Federal Funds rate, or a LIBOR floor (the “Base Rate”), or (2) LIBOR or CDOR plus a specified margin. An interest margin of 0.25 % is added to Base Rate loans. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50 % to 2.75 % per annum is added to the applicable LIBOR or CDOR rate to determine the interest payable on the LIBOR or CDOR loans. The Company is required to pay a quarterly fee of 0.25 % per annum to 0.40 % per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit. The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at December 31, 2020. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable. Other Lines of Credit In addition to the 2020 Revolving Facility discussed above, certain subsidiaries of the Company had committed short-term lines of credit with a foreign bank aggregating approximately $ 3.0 million and $ 3.0 million at December 31, 2020 and 2019, respectively. The Company had outstanding letters of credit under these short-term lines of credit of $ 0.4 million and $ 0.9 million at December 31, 2020 and 2019, respectively. F-25 Note 7 – Long-Term Debt (continued) Other Debt Other debt consists of debt held by VPG’s Japanese subsidiary and is payable monthly over the next 1 year at a zero interest rate. Aggregate annual maturities of long-term debt are as follows (in thousands) : 2021 $ 18 2022 — 2023 — 2024 — 2025 41,000 Thereafter — Interest paid on third-party debt was $ 1.3 million, $ 1.4 million, and $ 1.6 million during the years ended December 31, 2020, 2019, and 2018, respectively. Note 8 – Stockholders’ Equity The Company’s Class B convertible common stock carries ten votes per share. The common stock carries one vote per share. Class B shares are transferable only to certain permitted transferees while the common stock is freely transferable. Class B shares are convertible on a one -for-one basis at any time into shares of common stock. Transfers of Class B shares other than to permitted transferees result in the automatic conversion of the Class B shares into common stock. The Board of Directors may only declare dividends or other distributions with respect to the common stock or the Class B convertible common stock if it grants such dividends or distributions in the same amount per share with respect to the other class of stock. As discussed in Note 7, the Company is restricted from paying cash dividends. Stock dividends or distributions, on any class of stock, are payable only in shares of stock of that class. Shares of either common stock or Class B convertible common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally. The Board of Directors is authorized, without further stockholder approval, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. The Board of Directors may fix or alter the designation, preferences, rights and any qualification, limitations, restrictions of the shares of any series, including the dividend rights, dividend rates, conversion rights, voting rights, redemption terms and prices, liquidation preferences and the number of shares constituting any series. No shares of the Company’s preferred stock are currently outstanding. F-26 Note 8 – Stockholders’ Equity (continued) Other Comprehensive Income (Loss) The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows (in thousands) : Beginning Balance Before-Tax Amount Tax Effect Net-of-Tax Amount Ending Balance December 31, 2018 Pension and other postretirement actuarial items $ ( 8,060 ) $ 1,392 $ ( 18 ) $ 1,374 $ ( 6,686 ) Reclassification adjustment for recognition of actuarial items 685 ( 145 ) 540 540 Foreign currency translation adjustment ( 27,390 ) ( 3,857 ) ( 72 ) ( 3,929 ) ( 31,319 ) $ ( 35,450 ) $ ( 1,780 ) $ ( 235 ) $ ( 2,015 ) $ ( 37,465 ) December 31, 2019 Pension and other postretirement actuarial items $ ( 6,146 ) $ ( 1,310 ) $ 194 $ ( 1,116 ) $ ( 7,262 ) Reclassification adjustment for recognition of actuarial items 359 ( 39 ) 320 320 Foreign currency translation adjustment ( 31,319 ) ( 290 ) 21 ( 269 ) ( 31,588 ) Reclassification adjustment for foreign currency translation $ 827 827 827 $ ( 37,465 ) $ ( 414 ) $ 176 $ ( 238 ) $ ( 37,703 ) December 31, 2020 Pension and other postretirement actuarial items $ ( 6,942 ) $ ( 920 ) $ 319 $ ( 601 ) $ ( 7,543 ) Reclassification adjustment for recognition of actuarial items 537 ( 73 ) 464 464 Foreign currency translation adjustment ( 30,761 ) 5,070 99 5,169 ( 25,592 ) $ ( 37,703 ) $ 4,687 $ 345 $ 5,032 $ ( 32,671 ) In 2019, Reclassification of foreign currency translation adjustment for gain on liquidation of a subsidiary is included in other income (expense) other (See Note 15). Reclassifications of pension and other postretirement actuarial items out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (See Note 9). Note 9 – Pensions and Other Postretirement Benefits Defined Benefit Plans Employees of the Company participate in various defined benefit pension and other postretirement benefit plans. U.S. Pension Plan The Vishay Precision Group Non-Qualified Retirement Plan, like all nonqualified plans, is considered to be unfunded. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund benefits under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified pension plan of $ 1.9 million at December 31, 2020 and $ 1.7 million at December 31, 2019, and the related liabilities of $ 2.7 million and $ 2.4 million at December 31, 2020 and 2019, respectively. The Vishay Precision Group Non-Qualified Retirement Plan is frozen. Accordingly, no new employees may participate in the plan, no further participant contributions are permitted, and no further benefits accrue. Benefits accumulated prior to the freezing of the U.S. pension plan will be paid to employees upon retirement, and the Company will likely need to make additional cash contributions to the rabbi trust to fund this accumulated benefit obligation. Non-U.S. Pension Plans The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local practices. Pension benefits earned are generally based on years of service and compensation during active employment. F-27 Note 9 – Pensions and Other Postretirement Benefits (continued) In 2018, the Company undertook several measures to de-risk the UK pension plan. The first measure was to freeze the plan, with no new participants permitted and no further benefits accrue. The second measure was to execute an enhanced transfer value exercise to transfer pension benefits outside of the plan. As a result, the Company incurred $ 0.7 million of expense related to these de-risking measures. The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to pension plans (in thousands) : December 31, 2020 December 31, 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Change in benefit obligation: Benefit obligation at beginning of year $ 2,414 $ 24,857 $ 2,160 $ 21,762 Service cost (adjusted for actual employee contributions) — 402 — 336 Interest cost 70 442 85 535 Actuarial (gains) losses 338 1,863 248 1,922 Benefits paid ( 75 ) ( 659 ) ( 79 ) ( 777 ) Curtailments and settlements — ( 95 ) — ( 25 ) Plan amendments and other — — — 573 Currency translation — 1,278 — 531 Benefit obligation at end of year $ 2,747 $ 28,088 $ 2,414 $ 24,857 Change in plan assets: Fair value of plan assets at beginning of year $ — $ 16,420 $ — $ 14,501 Actual return on plan assets — 734 — 1,338 Company contributions 75 919 79 953 Benefits paid ( 75 ) ( 659 ) ( 79 ) ( 777 ) Curtailments and settlements — — — ( 25 ) Currency translation — 743 — 430 Fair value of plan assets at end of year $ — $ 18,157 $ — $ 16,420 Funded status at end of year $ ( 2,747 ) $ ( 9,931 ) $ ( 2,414 ) $ ( 8,437 ) Actuarial losses incurred in 2020 related to our U.S. and non-U.S. plans are primarily the result of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019. Actuarial losses incurred in 2019 related to our U.S. and non-U.S. plans are primarily the result of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2019 compared to December 31, 2018. Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands) : December 31, 2020 December 31, 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Other accrued expenses $ ( 105 ) $ ( 240 ) $ ( 98 ) $ ( 325 ) Accrued pension and other postretirement costs $ ( 2,642 ) $ ( 9,691 ) $ ( 2,316 ) $ ( 8,112 ) Accumulated other comprehensive loss $ 823 $ 9,068 $ 594 $ 5,969 $ ( 1,924 ) $ ( 863 ) $ ( 1,820 ) $ ( 2,468 ) Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations and from the difference between expected returns and actual returns on plan assets. Actuarial items consist of the following (in thousands) : F-28 Note 9 – Pensions and Other Postretirement Benefits (continued) December 31, 2020 December 31, 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Unrecognized net actuarial loss $ 823 $ 9,008 $ 594 $ 5,906 Unrecognized prior service cost — 60 — 62 Unamortized transition obligation — — — 1 $ 823 $ 9,068 $ 594 $ 5,969 The following table sets forth additional information regarding the projected and accumulated benefit obligations for the pension plans (in thousands) : December 31, 2020 U.S. Plans Non-U.S. Plans Accumulated benefit obligation, all plans $ 2,747 $ 25,148 Plans for which the accumulated benefit obligation exceeds plan assets: Projected benefit obligation $ 2,747 $ 25,107 Accumulated benefit obligation $ 2,747 $ 24,099 Fair value of plan assets — $ 16,259 December 31, 2019 U.S. Plans Non-U.S. Plans Accumulated benefit obligation, all plans $ 2,414 $ 23,686 Plans for which the accumulated benefit obligation exceeds plan assets: Projected benefit obligation $ 2,414 $ 23,386 Accumulated benefit obligation $ 2,414 $ 22,743 Fair value of plan assets — $ 14,983 Unrecognized gains and losses are amortized into future net periodic pension cost using the 10% corridor method over the expected remaining service life of the employee group. The following table sets forth the components of net periodic cost of pension (in thousands) : Years ended December 31, 2020 2019 2018 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Annual service cost $ — $ 402 $ — $ 336 $ — $ 498 Less: employee contributions — — — — — 21 Net service cost — 402 — 336 — 477 Interest cost 70 442 85 535 76 610 Expected return on plan assets — ( 442 ) — ( 517 ) — ( 549 ) Amortization of actuarial losses 109 286 38 164 70 437 Amortization of transition obligation — 5 — 1 — 1 Curtailment and settlement losses — — — — — 708 Net periodic benefit cost $ 179 $ 693 $ 123 $ 519 $ 146 $ 1,684 See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended December 31, 2020, 2019, and 2018. F-29 Note 9 – Pensions and Other Postretirement Benefits (continued) The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years: 2020 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 2.11 % 1.29 % 2.97 % 1.86 % Rate of compensation increase N/A 2.77 % N/A 1.20 % Expected return on plan assets N/A 2.66 % N/A 3.56 % The following weighted-average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2020 and 2019: 2020 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 2.97 % 1.86 % 3.99 % 2.47 % Rate of compensation increase N/A 1.20 % N/A 3.08 % Expected return on plan assets N/A 3.56 % N/A 2.70 % The plans’ expected return on assets is based on management’s expectation of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions. The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities. The target allocation of plan assets approximates the actual allocation of plan assets at December 31, 2020 and 2019. Plan assets are comprised of: December 31, 2020 December 31, 2019 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Equity securities — 48 % — 48 % Fixed income securities — 39 % — 42 % Cash and cash equivalents — 13 % — 10 % Total — 100 % — 100 % The Company maintains defined benefit retirement plans in certain of its subsidiaries. The assets of the plans are measured at fair value. Equity securities held by the defined benefit retirement plans consist of equity securities that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the equity securities is considered a Level 2 measurement within the fair value hierarchy. Fixed income securities held by the defined benefit retirement plans consist of government bonds and corporate notes that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the fixed income securities is considered a Level 2 measurement within the fair value hierarchy. Cash held by the defined benefit retirement plans consists of deposits on account in various financial institutions. The carrying amount of the cash approximates its fair value. A summary of the Company’s pension plan assets for each fair value hierarchy level are as follows for the periods presented (see Note 16 for further description of the levels within the fair value hierarchy (in thousands)) : F-30 Note 9 – Pensions and Other Postretirement Benefits (continued) As of December 31, 2020 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Defined benefit pension plan assets Equity securities $ 8,779 $ — $ 8,779 $ — Fixed income securities 7,700 — 7,700 — Cash and cash equivalents 1,678 1,678 — — $ 18,157 $ 1,678 $ 16,479 $ — As of December 31, 2019 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Defined benefit pension plan assets Equity securities $ 7,796 $ — $ 7,796 $ — Fixed income securities 7,703 — 7,703 — Cash and cash equivalents 921 921 — — $ 16,420 $ 921 $ 15,499 $ — Estimated future benefit payments are as follows (in thousands) : US Pension Plans Non-US Plans 2021 $ 105 $ 1,068 2022 106 784 2023 135 1,334 2024 134 853 2025 135 1,358 2025 - 2028 757 4,993 The Company anticipates making contributions to its funded and unfunded pension of approximately $ 1.4 million during 2021. Other Postretirement Benefit Plans In the U.S., the Company maintains two unfunded non-pension other postretirement benefit plans (“OPEB”) which are funded as costs are incurred. These plans provide medical and death benefits to retirees. F-31 Note 9 – Pensions and Other Postretirement Benefits (continued) The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to other postretirement benefit plans (in thousands) : OPEB Plans December 31, 2020 2019 Change in benefit obligation: Benefit obligation at beginning of year $ 4,633 $ 4,645 Service cost (adjusted for actual employee contributions) 123 126 Interest cost 133 180 Contributions by participants 25 — Actuarial gains ( 1,498 ) ( 131 ) Benefits paid ( 249 ) ( 187 ) Plan amendments and other 410 — Benefit obligation at end of year $ 3,577 $ 4,633 Change in plan assets: Fair value of plan assets at beginning of year $ — $ — Company contributions 224 187 Contributions by participants 25 — Benefits paid ( 249 ) ( 187 ) Fair value of plan assets at end of year $ — $ — Funded status at end of year $ ( 3,577 ) $ ( 4,633 ) Actuarial gains incurred in 2020 related to our post-retirement plans are primarily the result of a prior year adjustment of $ 763 , changes in medical claims and age variance assumptions, net of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019. Actuarial gains incurred in 2019 related to our post-retirement plans are primarily the result of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2019 compared to December 31, 2018. Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands) : OPEB Plans December 31, 2020 2019 Other accrued expenses $ ( 266 ) $ ( 290 ) Accrued pension and other postretirement costs $ ( 3,311 ) $ ( 4,343 ) Accumulated other comprehensive loss $ 583 $ 1,808 $ ( 2,994 ) $ ( 2,825 ) Actuarial items consist of the following (in thousands) : OPEB Plans December 31, 2020 2019 Unrecognized net actuarial loss $ 583 $ 1,808 $ 583 $ 1,808 Unrecognized gains and losses are amortized into future net periodic benefit cost using the 10% corridor method over the expected remaining service life of the employee group. The following table sets forth the components of net periodic benefit costs (in thousands) : F-32 Note 9 – Pensions and Other Postretirement Benefits (continued) OPEB Plans Years ended December 31, 2020 2019 2018 OPEB Plans OPEB Plans OPEB Plans Net service cost 123 126 108 Interest cost 133 180 152 Amortization of actuarial losses 137 156 177 Net periodic benefit cost $ 393 $ 462 $ 437 See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended December 31, 2020, 2019, and 2018. The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years: OPEB Plans December 31, 2020 2019 Discount rate 1.99 % 2.97 % The following weighted-average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2020 and 2019: OPEB Plans December 31, 2020 2019 Discount rate 2.97 % 3.99 % Health care trend rate 5.40 % 5.27 % The health care trend ultimate rate is 4.04 % per the terms of the plan. The impact of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material. Estimated future benefit payments are as follows (in thousands) : OPEB Plans 2021 $ 266 2022 $ 240 2023 $ 197 2024 $ 221 2025 $ 210 2025 - 2028 $ 1,044 As the plans are unfunded, the Company's anticipated contributions for 2021 are equal to the estimated benefit payment. F-33 Note 9 – Pensions and Other Postretirement Benefits (continued) Other Retirement Obligations The Company participates in various other defined contribution plans based on local law or custom. The Company periodically makes contributions to these plans. At December 31, 2020 and 2019, the consolidated balance sheets include $ 1.0 million and $ 0.9 million, respectively, within accrued pension and other postretirement costs related to these plans. Most of the Company’s U.S. employees are eligible to participate in 401(k) savings plans which provide company matching under various formulas. The Company’s matching expense for the plans was $ 0.8 million, $ 0.7 million, and $ 0.7 million for the years ended December 31, 2020, 2019, and 2018, respectively. No material amounts are included in the consolidated balance sheets related to unfunded 401(k) contributions. Certain key employees participate in a nonqualified deferred compensation plan, which allows these employees to defer a portion of their compensation until retirement, or elect shorter deferral periods. The accompanying consolidated balance sheets include a liability within other noncurrent liabilities related to these deferrals. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund payments under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified deferred compensation plan of $ 3.7 million at December 31, 2020 and $ 3.5 million at December 31, 2019, and the related liabilities of $ 5.4 million and $ 4.9 million at December 31, 2020 and 2019, respectively. Note 10 – Share-Based Compensation The Amended and Restated Vishay Precision Group, Inc. Stock Incentive Plan (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At December 31, 2020, the Company had reserved 371,637 shares of common stock for future grant of equity awards (restricted stock, unrestricted stock, restricted stock units (“RSUs”), or stock options). If any outstanding awards are forfeited by the holder, the underlying shares would be available for future grants under the Plan. Restricted Stock Units Pursuant to the Plan, the Company issued RSUs to board members, executive officers, and certain employees of the Company during 2020. The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that the participant provides service in exchange for the award. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. On March 5, 2020, VPG’s three current executive officers were granted annual equity awards in the form of RSUs, of which 75 % are performance-based. The awards have an aggregate target grant-date fair value of $ 1.2 million were comprised of 44,269 RSUs. Twenty-five percent of these awards will vest on January 1, 2023 , subject to the executives' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2023, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and net earnings goals, each weighted equally. The awards issued in 2019 and 2018 have similar allocations and vesting criteria. On March 16, 2020, certain VPG employees were granted annual equity awards in the form of RSUs, of which 75 % are performance-based. The awards have an aggregate target grant-date fair value of $ 0.4 million and were comprised of 18,940 RSUs. Twenty-five percent of these awards will vest on January 1, 2023 subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2023, subject to the employee's continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings goals and cash flow goals. On May 21, 2020, the Board of Directors approved the issuance of an aggregate of 15,564 RSUs to the independent board members of the Board of Directors and to the non-executive Chairman of the Board of Directors. The awards have an aggregate grant-date fair value of $ 0.3 million and will vest on the earlier of the 2021 Annual Stockholders meeting or May 21, 2021, subject to the directors' continued service on the Board of Directors. Vesting of equity awards may be subject to acceleration under certain circumstances. F-34 Note 10 – Share-Based Compensation (continued) RSU activity is presented below (number of RSUs in thousands) : Years ended December 31, 2020 2019 2018 Number of RSUs Weighted Average Grant-date Fair Value Number of RSUs Weighted Average Grant-date Fair Value Number of RSUs Weighted Average Grant-date Fair Value Outstanding: Beginning of year 212 $ 25.97 265 $ 17.64 417 $ 14.57 Granted 79 24.16 73 35.27 74 28.20 Vested ( 81 ) 19.02 ( 75 ) 15.27 ( 86 ) 16.75 Forfeited ( 5 ) 15.75 ( 51 ) 11.49 ( 140 ) 14.70 End of year 205 $ 28.23 212 $ 25.97 265 $ 17.64 The fair value of the RSUs vested during 2020 is $ 2.3 million. Included in the 2020, 2019 and 2018 activity are RSU's forfeited as a result of performance objectives not being met. These awards are therefore available for future grants under the Plan. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands) : Vesting Date Expected to Vest Not Expected to Vest Total January 1, 2021 46 3 49 January 1, 2022 1 47 48 January 1, 2023 4 43 47 Share-Based Compensation Expense The following table summarizes pre-tax share-based compensation expense recognized (in thousands) : Years ended December 31, 2020 2019 2018 Restricted stock units $ 1,387 $ 1,336 $ 1,799 Share-based compensation expense is recognized ratably over the vesting period of the awards and for RSUs with performance criteria, is recognized for RSU's that are expected to vest and for which performance criteria are expected to be met. During the fourth quarter of 2020, a net adjustment reducing share-based compensation expense by $ 0.1 million was recorded, based on the evaluation of performance objectives associated with awards granted in 2018, 2019 and 2020. It was determined that certain objectives were not likely to be fully met, necessitating a reversal of certain compensation expense associated with those awards. This was partially offset by additional share based compensation expense being recorded for certain objectives being fully met, which had been reversed in the prior year. During 2019, it was determined that certain performance objectives associated with awards granted in 2017, 2018 and 2019 were not likely to be fully met, necessitating a reversal of certain compensation expense associated with those awards. As a net result, adjustments decreasing share based compensation expense totaling $ 0.8 million were recorded during the year based on anticipated performance levels. The deferred tax benefit on share-based compensation expense was $ 0.0 million , $ 0.1 million, and $ 0.0 million for the years ended December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, the Company had $ 0.8 million of unrecognized share-based compensation expense related to share-based awards that will be recognized over a weighted-average period of approximately 1.3 years. Note 11 – Commitments, Contingencies, and Concentrations Litigation The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. The Company is of the opinion that the disposition of these proceedings will not have a material adverse effect on its business or its financial condition, results of operations, and cash flows. F-35 Note 11 – Commitments, Contingencies, and Concentrations (continued) Executive Employment Agreements The Company has employment agreements with its executive officers which outline base salary, incentive compensation, and equity-based compensation. The employment agreements with the Company's executive officers also provide for incremental compensation in the event of termination without cause or resignation for good reason. Sources of Supplies Although most materials incorporated in the Company’s products are available from a number of sources, certain materials are available only from a relatively limited number of suppliers. Some of the most highly specialized materials for the Company’s sensors are sourced from a single vendor. The Company maintains a safety stock inventory of certain critical materials at its facilities. Certain metals used in the manufacture of the Company’s products are traded on active markets, and can be subject to significant price volatility. Market Concentrations No single customer comprises greater than 10% of net revenues. The vast majority of the Company’s products are used in the broad industrial market, with selected uses in military and aerospace, medical, agriculture, and construction. Within the broad industrial segment, the Company’s products serve wide applications in the waste management, bulk hauling, logging, scale manufacturing, engineering systems, pharmaceutical, oil, chemical, steel, paper, and food industries. Credit Risk Concentrations Financial instruments with potential credit risk consist principally of cash and cash equivalents, accounts receivable, and notes receivable. The Company maintains cash and cash equivalents with various major financial institutions. Concentrations of credit risk with respect to receivables are generally limited due to the Company’s large number of customers and their dispersion across many countries and industries. At December 31, 2020 and 2019, the Company had no significant concentrations of credit risk. Geographic Concentrations At December 31, 2020 and 2019, a significant percentage of the Company’s cash and cash equivalents are held outside the United States. See the following table for the percentage of cash and cash equivalents by region at December 31, 2020 and December 31, 2019: December 31, 2020 2019 Asia 18 % 23 % United States 10 % 7 % Israel 26 % 28 % Europe 16 % 14 % United Kingdom 18 % 17 % Canada 12 % 11 % Total 100 % 100 % F-36 Note 12 - Leases The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to twelve years . The Company has no finance leases. In 2019, one of the Company's indirect wholly-owned subsidiaries entered into a lease agreement as tenant related to a property in Israel. The facility was made available to the Company during the second quarter of 2020, at which time the Company established an operating right of use asset and operating lease liability, with a lease term of 12.5 years, of $ 14.4 million, in accordance with the terms of the lease agreement. Leases recorded on the balance sheet consist of the following (in thousands) : Leases December 31, 2020 December 31, 2019 Assets Operating lease right of use asset $ 21,788 $ 8,691 Liabilities Operating lease - current $ 4,011 $ 2,827 Operating lease - non-current $ 19,504 $ 5,811 Other information related to lease term and discount rate is as follows: December 31, 2020 Operating leases weighted average remaining lease term (in years) 9.1 years Operating leases weighted average discount rate 3.59 % The components of lease expense are as follows (in thousands) : Year Ended December 31, 2020 December 31, 2019 Operating lease cost $ 4,389 $ 3,376 Variable lease cost — 44 Short-term lease cost 124 87 Total lease cost $ 4,513 $ 3,507 Right of use assets obtained in exchange for new operating lease liability during 2020 were $ 16.3 million and in 2019 were $ 0.3 million. The Company paid $ 4.0 million for its operating leases for the year ended December 31, 2020 and $ 3.4 million for the year ended December 31, 2019, which are included in operating cash flows on the consolidated statements of cash flows. Undiscounted maturities of operating lease payments as of December 31, 2020 are summarized as follows (in thousands) : 2021 $ 4,435 2022 3,704 2023 3,177 2024 2,617 2025 2,172 Thereafter 11,132 Total future minimum lease payments $ 27,237 Less: amount representing interest ( 3,722 ) Present value of future minimum lease payments $ 23,515 Rent expense on operating leases prior to adoption of ASC 842 was $ 3.6 million for the year ended December 31, 2018. F-37 Note 13 – Segment and Geographic Data VPG reports in three product segments: the Foil Technology Products segment, the Force Sensors segment, and the Weighing and Control Systems segment. The Foil Technology Products reporting segment is comprised of the foil resistor and strain gage operating segments. The Force Sensors reporting segment is comprised of transducers, load cells, and modules. The Weighing and Control Systems reporting segment is comprised of complete systems which include load cells and instrumentation for weighing, force control and force measurement for a variety of uses such as process control and on-board weighing applications. VPG evaluates reporting segment performance based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring and severance costs, and other items is meaningful because it provides insight with respect to the intrinsic operating results of VPG. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 1). Reporting segment assets are the owned or allocated assets used by each segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. 38 Note 13 – Segment and Geographic Data (continued) The following table sets forth reporting segment information (in thousands) : Foil Technology Products Force Sensors Weighing and Control Systems Corporate/ Other Total 2020 Net third-party revenues $ 131,645 $ 53,724 $ 84,443 $ — $ 269,812 Intersegment revenues 3,183 — 446 ( 3,629 ) — Gross profit 52,025 13,582 38,664 — 104,271 Segment operating income (loss) 29,870 4,756 18,768 ( 30,737 ) 22,657 Impairment of goodwill and indefinite-lived intangibles 2,440 — — — 2,440 Restructuring costs 572 108 156 82 918 Depreciation and amortization expense 5,840 2,367 2,964 1,336 12,507 Capital expenditures 22,032 1,211 1,071 13 24,327 Total assets 157,120 63,461 157,840 23,466 401,887 2019 Net third-party revenues $ 131,803 $ 64,357 $ 87,798 $ — $ 283,958 Intersegment revenues 4,067 1,068 463 ( 5,598 ) — Gross profit 53,292 18,022 40,303 — 111,617 Segment operating income (loss) 29,873 8,643 21,058 ( 30,926 ) 28,648 Acquisition costs — — 443 — 443 Executive severance costs — — — 611 611 Restructuring costs 86 2,041 — 166 2,293 Depreciation and amortization expense 5,870 2,442 2,200 1,283 11,795 Capital expenditures 7,011 2,237 1,243 38 10,529 Total assets 116,920 75,885 158,597 19,011 370,413 2018 Net third-party revenues $ 141,009 $ 73,186 $ 85,599 $ — $ 299,794 Intersegment revenues 3,878 1,365 577 ( 5,820 ) — Gross profit 61,562 20,001 39,704 — 121,267 Segment operating income (loss) 38,404 10,514 20,508 ( 32,203 ) 37,223 Impairment of goodwill and indefinite-lived intangibles 2,820 — — — 2,820 Restructuring costs — 289 — — 289 Depreciation and amortization expense 5,173 2,323 2,121 1,014 10,631 Capital expenditures 9,239 2,483 1,370 147 13,239 Total assets 132,918 82,637 95,954 14,874 326,383 F-39 Note 13 – Segment and Geographic Data (continued) The “Corporate/Other” column for segment operating income (loss) includes unallocated selling, general, and administrative expenses and certain items which management excludes from segment results when evaluating segment performance, as follows (in thousands) : Years ended December 31, 2020 2019 2018 Unallocated selling, general, and administrative expenses $ ( 27,379 ) $ ( 27,579 ) $ ( 29,094 ) Acquisition costs — ( 443 ) — Impairment of goodwill and indefinite-lived intangibles ( 2,440 ) — ( 2,820 ) Executive severance costs — ( 611 ) — Restructuring costs ( 918 ) ( 2,293 ) ( 289 ) $ ( 30,737 ) $ ( 30,926 ) $ ( 32,203 ) The following geographic data includes property and equipment based on physical location (in thousands) : December 31, Property and Equipment - Net 2020 2019 United States $ 11,036 $ 12,009 United Kingdom 4,153 4,011 Other Europe 1,813 1,498 Israel 38,339 22,903 Asia 17,953 19,118 Canada and Other 1,722 1,731 $ 75,016 $ 61,270 F-40 Note 14 – Earnings Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding, adjusted to include the potentially dilutive effect of stock options and restricted stock units (see Note 10), and other potentially dilutive securities. The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share) : Years ended December 31, 2020 2019 2018 Numerator: Numerator for basic earnings per share: Net earnings attributable to VPG stockholders $ 10,787 $ 22,188 $ 23,646 Adjustment to the numerator for net earnings: Interest savings assuming conversion of dilutive exchangeable notes, net of tax — — 6 Numerator for diluted earnings per share: Net earnings attributable to VPG stockholders $ 10,787 $ 22,188 $ 23,652 Denominator: Denominator for basic earnings per share: Weighted average shares 13,566 13,515 13,439 Effect of dilutive securities: Exchangeable notes — — 22 Restricted stock units 57 82 74 Dilutive potential common shares 57 82 96 Denominator for diluted earnings per share: Adjusted weighted average shares 13,623 13,597 13,535 Basic earnings per share attributable to VPG stockholders $ 0.80 $ 1.64 $ 1.76 Diluted earnings per share attributable to VPG stockholders $ 0.79 $ 1.63 $ 1.75 Note 15 – Additional Financial Statement Information The caption “Other” on the consolidated statements of operations consists of the following (in thousands) : Years ended December 31, 2020 2019 2018 Foreign exchange loss $ ( 2,246 ) $ ( 1,638 ) $ ( 279 ) Interest income 246 622 506 Pension expense ( 738 ) ( 643 ) ( 1,682 ) Other ( 244 ) 958 ( 41 ) $ ( 2,982 ) $ ( 701 ) $ ( 1,496 ) F-41 Note 15 – Additional Financial Statement Information (continued) Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in foreign exchange gains / (losses) during the period, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel. The change in the dollar-shekel exchange rate, particularly in the fourth quarter of 2020, resulted in an unfavorable foreign exchange impact primarily related to the shekel-denominated lease liability for a new Foil Technology Products facility in Israel . Pension expense represents the net periodic benefit cost excluding the service cost. In 2018, the Company recognized a settlement loss of $ 0.7 million related to measures taken to de-risk the UK pension schemes as discussed in Note 9 to the consolidated financial statements. Included in Other for the year ended December 31, 2019, is a one-time $ 0.8 million gain on liquidation of one of the Company's subsidiaries. Other accrued expenses consist of the following (in thousands) : December 31, 2020 2019 Customer advance payments $ 2,873 $ 4,561 Accrued restructuring 63 604 Goods received, not yet invoiced 2,553 1,561 Accrued taxes, other than income taxes 1,223 1,167 Accrued commissions 2,144 2,149 Accrued professional fees 638 1,082 Other 4,349 5,002 $ 13,843 $ 16,126 Israeli Severance Pay The Israeli Severance Pay Law, 1963 ("Severance Pay Law"), specifies that employees of our Israeli subsidiary are entitled to severance payment, following the termination of their employment. Under the Severance Pay Law, the severance payment is calculated as one month salary for each year of employment, or a portion thereof. Part of the subsidiary's liability for severance pay is covered by the provisions of Section 14 of the Severance Pay Law ("Section 14"). Under Section 14, employees are entitled to monthly deposits, at a rate of 8.33 % of their monthly salary, contributed on their behalf to their insurance funds. Payments in accordance with Section 14 release the subsidiary from any future severance payments in respect of those employees. As a result, the Company does not recognize any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in the Company's balance sheet. For the subsidiary's employees in Israel who are not subject to Section 14, the Company calculated the liability for severance pay pursuant to the Severance Pay Law based on the most recent salary of these employees multiplied by the number of years of employment as of the balance sheet date. The Company recorded as expenses the increase in the severance liability, net of earnings (losses) from the related investment fund. The subsidiary's liability was partially funded by monthly payments deposited with insurers and the value of these deposits is recorded as an asset on the Company's balance sheet. Any unfunded amounts would be paid from operating funds and are covered by a provision established by the subsidiary. The accompanying consolidated balance sheets at December 31, 2020 and December 31, 2019 include a $ 8.3 million and $ 8.0 million liability, respectively, associated with Israeli severance requirements in other liabilities. Executive Severance During the second fiscal quarter of 2019, the Company recorded $ 0.6 million of severance costs associated with the resignation of an executive officer of the Company. The severance costs consisted of payments and other benefits as specified in the executive officer's separation agreement. F-42 Note 16 – Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosures, establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect the Company’s own assumptions. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands) : As of December 31, 2020 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Assets held in rabbi trusts $ 5,601 $ 61 $ 5,540 $ — As of December 31, 2019 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Assets held in rabbi trusts $ 5,169 $ 53 $ 5,116 $ — The Company maintains nonqualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and nonqualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at December 31, 2020 and December 31, 2019, and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the year. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy. The fair value of the long-term debt, excluding capitalized deferred financing costs at December 31, 2020 and December 31, 2019 approximates its carrying value, as the revolving debt and term loans are reset monthly based on current market rates, plus a base rate as specified in the 2020 Credit Agreement. The fair value measurement of long-term debt is considered a Level 2 measurement. The Company’s financial instruments include cash and cash equivalents, accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated balance sheets approximate their fair values. F-43 Note 17 – Related Party Transactions Until July 6, 2010, VPG was part of Vishay Intertechnology, and the assets and liabilities consisted of those that Vishay Intertechnology attributed to its precision measurement and foil resistor businesses. Following the spin-off on July 6, 2010, VPG is an independent, publicly-traded company, and Vishay Intertechnology does not retain any ownership interest in VPG, although a common group of stockholders control a significant portion of the voting power of each company and the companies have three common board members. Subsequent to the spin-off, VPG and Vishay Intertechnology continue to share certain manufacturing locations. VPG owns one location in Japan at which it leases space to Vishay Intertechnology. Vishay Intertechnology owns one location in the United States, at which it leases space to VPG. Lease receipts and payments related to the shared facilities are immaterial. Note 18 – Subsequent Events Executive RSU grant On March 4 2021, VPG’s three current executive officers were granted annual equity awards in the form of RSUs, of which 50 % are performance-based and 50 % are time-based. The awards have an aggregate target grant-date fair value of $ 1.7 million and were comprised of 52,486 RSUs. The time-based awards will vest on January 1, 2024, subject to the executives continued employment. The performance-based awards will also vest on January 1, 2024, subject to the executives continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and net earnings goals. F-44