What changed in this filing

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Item 1. Financial Statements

2021-05-11 compared with 2020-11-03 · 78 added, 315 removed, 392 unchanged (50% of the section changed)

3 unchanged sentences

(In thousands)

September 26, 2020 December 31, 2019

April 3, 2021 December 31, 2020

Current assets:

24 unchanged sentences

(In thousands)

September 26, 2020 December 31, 2019

April 3, 2021 December 31, 2020

Liabilities and equity

30 unchanged sentences

Fiscal quarter ended

September 26, 2020 September 28, 2019

Net revenues $ 67,525 $ 67,421

Costs of products sold 40,176 41,631

Gross profit 27,349 25,790

Selling, general, and administrative expenses 19,144 19,057

Executive severance costs — —

Restructuring costs 84 547

Operating income 8,121 6,186

Other income (expense):

Interest expense ( 309 ) ( 324 )

Other ( 39 ) 547

Other income (expense) ( 348 ) 223

Income before taxes 7,773 6,409

Income tax expense 2,109 1,879

Net earnings 5,664 4,530

net earnings attributable to noncontrolling interests 66 21

Net earnings attributable to VPG stockholders $ 5,598 $ 4,509

Basic earnings per share attributable to VPG stockholders $ 0.41 $ 0.33

Diluted earnings per share attributable to VPG stockholders $ 0.41 $ 0.33

Weighted average shares outstanding - basic 13,575 13,523

Weighted average shares outstanding - diluted 13,637 13,607

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)

Nine fiscal months ended

September 26, 2020 September 28, 2019

April 3, 2021 March 28, 2020

Net revenues $ 70,589 $ 67,696

2 unchanged sentences

Selling, general, and administrative expenses 22,183 20,291

Executive severance costs — 611

Restructuring costs — 130

18 unchanged sentences

Fiscal quarter ended

September 26, 2020 September 28, 2019

Net earnings $ 5,664 $ 4,530

Other comprehensive income (loss):

Foreign currency translation adjustment 2,479 ( 2,559 )

Pension and other postretirement actuarial items, net of tax ( 137 ) ( 21 )

Other comprehensive (loss) income 2,342 ( 2,580 )

Comprehensive income 8,006 1,950

comprehensive income attributable to noncontrolling interests 66 21

Comprehensive income attributable to VPG stockholders $ 7,940 $ 1,929

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)

Nine fiscal months ended

September 26, 2020 September 28, 2019

April 3, 2021 March 28, 2020

Net earnings $ 4,943 $ 3,292

2 unchanged sentences

Pension and other postretirement actuarial items, net of tax 209 ( 159 )

Other comprehensive (loss) income ( 39 ) ( 1,444 )

Comprehensive income 10,664 16,992

Other comprehensive loss ( 1,591 ) ( 5,500 )

Comprehensive income (loss) 3,352 ( 2,208 )

comprehensive income attributable to noncontrolling interests ( 18 ) ( 20 )

Comprehensive income attributable to VPG stockholders $ 10,630 $ 16,873

Comprehensive income (loss) attributable to VPG stockholders $ 3,370 $ ( 2,188 )

See accompanying notes.

2 unchanged sentences

(Unaudited - In thousands)

Nine fiscal months ended

September 26, 2020 September 28, 2019

Three fiscal months ended

April 3, 2021 March 28, 2020

Operating activities

4 unchanged sentences

Gain on sale of property and equipment ( 1 ) ( 3 )

Reclassification of foreign currency translation adjustment related to disposal of subsidiary — ( 827 )

Share-based compensation expense 366 379

12 unchanged sentences

Proceeds from sale of property and equipment 3 15

Adjustment to purchase price of a business 156 —

Net cash used in investing activities ( 5,743 ) ( 3,329 )

2 unchanged sentences

Debt issuance costs — ( 402 )

Purchase of noncontrolling interest ( 253 ) —

Contributions from (distributions to) noncontrolling interests 35 ( 45 )

Distributions to noncontrolling interests ( 111 ) ( 25 )

Payments of employee taxes on certain share-based arrangements ( 846 ) ( 813 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 1,189 ) ( 2,521 )

Increase in cash and cash equivalents 2,885 11,140

Decrease in cash and cash equivalents ( 2,284 ) ( 4,179 )

Cash and cash equivalents at beginning of period 98,438 86,910

3 unchanged sentences

Capital expenditures accrued but not yet paid $ 965 $ 1,016

Supplemental disclosure of financing transactions:

Non-cash extinguishment of long-term debt facility (see Note 7) $ ( 7,020 ) $ —

Non-cash refinancing of revolving facility (see Note 7) $ 7,020 $ —

See accompanying notes.

2 unchanged sentences

(Unaudited - In thousands, except share amounts)

Fiscal quarter ended

September 26, 2020

Stock Class B

Common Stock Treasury Stock Capital in

Par Value Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total VPG Inc.

Stockholders'

Equity Noncontrolling

Interests Total

Balance at June 27, 2020

$ 1,317 $ 103 $ ( 8,765 ) $ 197,134 $ 94,359 $ ( 40,084 ) $ 244,064 $ 176 $ 244,240

Net earnings — — — — 5,598 — 5,598 66 5,664

Other comprehensive income — — — — — 2,342 2,342 — 2,342

Share-based compensation expense

— — — 380 — — 380 — 380

Distributions to noncontrolling interests — — — — — — — ( 82 ) ( 82 )

Balance at September 26, 2020

$ 1,317 $ 103 $ ( 8,765 ) $ 197,514 $ 99,957 $ ( 37,742 ) $ 252,384 $ 160 $ 252,544

Fiscal quarter ended

September 28, 2019

Stock Class B

Common Stock Treasury Stock Capital in

Par Value Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total VPG Inc.

Stockholders'

Equity Noncontrolling

Interests Total

Balance at June 29, 2019

$ 1,312 $ 103 $ ( 8,765 ) $ 196,875 $ 80,908 $ ( 36,329 ) $ 234,104 $ 138 $ 234,242

— — — 4,509 4,509 21 4,530

Other comprehensive loss — — — — — ( 2,580 ) ( 2,580 ) — ( 2,580 )

Share-based compensation expense

— — — 506 — — 506 — 506

Distributions to noncontrolling interests — — — — — — — ( 47 ) ( 47 )

Balance at September 28, 2019

$ 1,312 $ 103 $ ( 8,765 ) $ 197,381 $ 85,417 $ ( 38,909 ) $ 236,539 $ 112 $ 236,651

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)

Nine Fiscal Months Ended September 26, 2020

Three Fiscal Months Ended April 3, 2021

Stock Class B

15 unchanged sentences

3 — — ( 848 ) — — ( 845 ) — ( 845 )

Purchase of noncontrolling interest — — — 48 — — 48 ( 301 ) ( 253 )

Contributions from noncontrolling interests

— — — — — — — 35 35

Balance at September 26, 2020 $ 1,317 $ 103 $ ( 8,765 ) $ 197,514 $ 99,957 $ ( 37,742 ) $ 252,384 $ 160 $ 252,544

Nine Fiscal Months Ended September 28, 2019

Distributions to noncontrolling interests — — — — — — — ( 111 ) ( 111 )

Balance at April 3, 2021 $ 1,320 $ 103 $ ( 8,765 ) $ 197,282 $ 105,036 $ ( 34,262 ) $ 260,714 $ ( 95 ) $ 260,619

Three Fiscal Months Ended March 28, 2020

Stock Class B

14 unchanged sentences

4 — — ( 795 ) — — ( 791 ) — ( 791 )

Cumulative effect adjustment for adoption of ASU 2016-02

— — — — 531 — 531 — 531

Distributions to noncontrolling interests — — — — — — — ( 25 ) ( 25 )

Balance at September 28, 2019 $ 1,312 $ 103 $ ( 8,765 ) $ 197,381 $ 85,417 $ ( 38,909 ) $ 236,539 $ 112 $ 236,651

Balance at March 28, 2020 $ 1,316 $ 103 $ ( 8,765 ) $ 196,709 $ 92,600 $ ( 43,203 ) $ 238,760 $ 347 $ 239,107

See accompanying notes.

9 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 11, 2021.

The results of operations for the fiscal quarter ended September 26, 2020 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the fiscal quarter ended April 3, 2021 are not necessarily indicative of the results to be expected for the full year.

VPG reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first quarter, which always begins on January 1, and the fourth quarter, which always ends on December 31.

The four fiscal quarters in 2021 and 2020 end on the following dates:

Quarter 1 March 28, March 30,

Quarter 2 June 27, June 29,

Quarter 3 September 26, September 28,

Quarter 1 April 3, March 28,

Quarter 2 July 3, June 27,

Quarter 3 October 2, September 26,

Quarter 4 December 31, December 31,

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 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 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 condensed financial statements was not material.

Recent Accounting Pronouncements

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 amendments in this ASU are

Note 1 – Basis of Presentation (continued)

effective for annual periods beginning after December 15, 2020 and early adoption is permitted.

The Company is evaluating the standard to determine the impact on the consolidated condensed financial statements.

In December 2019, the FASB issued ASU No.

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No.

ASU 2019-12, "Simplifying the Accounting for Income Taxes".

1 unchanged sentence

This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020.

The Company is evaluating the standard to determine the impact on the consolidated condensed financial statements.

The Company adopted this standard in the first quarter of 2021.

The adoption of this ASU did not impact our financial statements or the related disclosures.

Reclassifications

3 unchanged sentences

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) :

Note 2 – Revenues (continued)

Fiscal quarter ended

September 26, 2020 Fiscal quarter ended

September 28, 2019

Foil Technology

Products Force

Sensors Weighing and

Control Systems Total Foil Technology

Products Force

Sensors Weighing and

Control Systems Total

United States $ 12,733 $ 6,974 $ 8,328 $ 28,035 $ 13,737 $ 9,008 $ 5,223 $ 27,968

United Kingdom 778 2,321 2,633 5,732 762 2,554 3,650 6,966

Other Europe 7,660 2,357 3,441 13,458 8,262 2,475 3,116 13,853

Israel 5,981 78 — 6,059 2,768 127 — 2,895

Asia 5,754 2,132 2,471 10,357 6,590 2,053 1,836 10,479

Canada — — 3,884 3,884 — — 5,260 5,260

Total $ 32,906 $ 13,862 $ 20,757 $ 67,525 $ 32,119 $ 16,217 $ 19,085 $ 67,421

Nine Fiscal Months Ended September 26, 2020 Nine Fiscal Months Ended September 28, 2019

April 3, 2021 Fiscal quarter ended

March 28, 2020

Foil Technology

13 unchanged sentences

The following table disaggregates net revenue from contracts with customers by market sector (in thousands) .

The Company revised its market sector categories beginning in 2020.

Prior year data has been reclassified to reflect the current market sectors.

Note 2 – Revenues (continued)

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Test & Measurement $ 14,416 $ 14,345

16 unchanged sentences

Balance at December 31, 2020 $ 3,605 $ 2,873

Balance at September 26, 2020 2,993 4,079

Balance at April 3, 2021 3,542 3,284

(Decrease)/increase $ ( 63 ) $ 411

The amount of revenue recognized during the nine fiscal months ended September 26, 2020 that was included in the contract liability balance at December 31, 2019 was $ 4.2 million.

The amount of revenue recognized during the three fiscal months ended April 3, 2021 that was included in the contract liability balance at December 31, 2020 was $ 1.5 million.

Practical Expedients

1 unchanged sentence

The Company treats shipping and handling activities as fulfillment costs.

Note 3 – Acquisitions

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 preliminary fair values assigned to the assets and liabilities of DSI as of November 1, 2019 (in thousands):

Note 3 - Acquisitions ( continued)

November 1, 2019 Adjustments Adjusted

Working capital (a)

$ 6,874 $ 6,874

Property and equipment 1,727 1,727

Long-term deferred income tax liability ( 4,321 ) ( 4,321 )

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 21,875 — 21,875

Purchase price $ 40,481 $ ( 156 ) $ 40,325

Goodwill $ 18,606 $ ( 156 ) $ 18,450

(a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll.

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 will be deductible for income tax purposes.

The Company recorded acquisition costs associated with this transaction of $ 0.4 million during the fourth quarter of 2019.

Following is 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:

Fiscal quarter ended Nine fiscal months ended

September 28, 2019 September 28, 2019

Pro forma net revenues

$ 70,953 $ 228,774

Pro forma net earnings attributable to VPG stockholders

$ 3,068 $ 20,203

Pro forma basic earnings per share attributable to VPG stockholders

$ 0.23 $ 1.50

Pro forma diluted earnings per share attributable to VPG stockholders

$ 0.23 $ 1.49

Note 3 – Goodwill

3 unchanged sentences

Balance at December 31, 2020 $ 31,105 $ 6,726 $ 16,942 $ 6,311 $ 1,126

Adjustment to purchase price $ ( 156 ) — ( 156 ) — —

Foreign currency translation adjustment 62 80 ( 18 ) — —

Balance at September 26, 2020 $ 34,724 $ 6,406 $ 18,465 $ 6,311 $ 3,542

Balance at April 3, 2021 $ 31,167 $ 6,806 $ 16,924 $ 6,311 $ 1,126

Note 4 – Leases

Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective method of applying the new standard at the adoption date.

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.

Note 5 - Leases (continued)

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.

Refer to Note 7 for discussion of the Company's borrowing rate.

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.

Additionally, the Company elected the package of practical expedients permitted under the transition guidance, which allows the carryforward the historical lease classification.

The Company also made an election 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.

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 primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to eleven years .

The Company has no finance leases.

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 $ 14.8 million, in accordance with the terms of the lease agreement.

Leases recorded on the balance sheet consist of the following (in thousands) :

Leases September 26, 2020 December 31, 2019

Leases April 3, 2021 December 31, 2020

Operating lease right of use asset $ 20,647 $ 21,788

2 unchanged sentences

Other information related to lease term and discount rate is as follows:

September 26, 2020

April 3, 2021

Operating leases weighted average remaining lease term (in years) 9.07 years

1 unchanged sentence

The components of lease expense are as follows (in thousands) :

Fiscal quarter ended Nine Fiscal Months Ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Operating lease cost $ 1,181 $ 874

Variable lease cost — 5 — 14

Short-term lease cost 33 23

1 unchanged sentence

Right of use assets obtained in exchange for new operating lease liability during 2021 were $ 0.2 million.

The Company paid $ 2.6 million for its operating leases for each of the nine fiscal months ended September 26, 2020 and September 28, 2019, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of September 26, 2020 are summarized as follows (in thousands) :

The Company paid $ 1.2 million and $ 0.9 million for its operating leases for each of the fiscal quarters ended April 3, 2021 and March 28, 2020, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Note 4 - Leases (continued)

2020 (excluding the nine months ended September 26, 2020) $ 1,318

Undiscounted maturities of operating lease payments as of April 3, 2021 are summarized as follows (in thousands) :

2021 (excluding the three months ended April 3, 2021) $ 4,181

Thereafter 10,236

4 unchanged sentences

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items.

The effective tax rate for the fiscal quarter ended September 26, 2020 was 27.1 % compared to 29.3 % for the fiscal quarter ended September 28, 2019.

The effective tax rate for the nine fiscal months ended September 26, 2020 was 29.0 % compared to 27.5 % for the nine fiscal months ended September 28, 2019.

The tax rate for the nine fiscal months of 2020 is higher than the prior year period primarily due to changes in the mix of worldwide income.

The effective tax rate for the fiscal quarter ended April 3, 2021 was 26.3 % compared to 32.3 % for the fiscal quarter ended March 28, 2020.

The tax rate for the fiscal quarter ended of 2021 is lower than the prior year period primarily due to changes in the mix of worldwide income.

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.

8 unchanged sentences

Long-term debt consists of the following (in thousands) :

September 26, 2020 December 31, 2019

2020 Credit Agreement - Revolving Facility $ 41,000 $ —

April 3, 2021 December 31, 2020

2020 Credit Agreement - Revolving Facility $ 41,000 $ 41,000

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

3 unchanged sentences

Long-term debt, less current portion $ 40,648 $ 40,626

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, 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 was 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 which may be used for working capital and general corporate purposes, and a portion of which were used to refinance the Company’s existing revolving credit facility in the amount of $ 34 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

Note 7 - Long-Term Debt (continued)

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.

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 interest coverage ratio and a leverage ratio.

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.

Note 7 – Accumulated Other Comprehensive Income (Loss)

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive income (loss) — 209 209

Balance at September 26, 2020 $ ( 30,352 ) $ ( 7,390 ) $ ( 37,742 )

Balance at April 3, 2021 $ ( 27,391 ) $ ( 6,871 ) $ ( 34,262 )

Foreign Currency Translation Adjustment Pension

4 unchanged sentences

Amounts reclassified from accumulated other comprehensive income (loss) — ( 159 ) ( 159 )

Balance at September 28, 2019 $ ( 32,927 ) $ ( 5,982 ) $ ( 38,909 )

Reclassification of foreign currency translation adjustment for a gain on liquidation of a subsidiary is included in other income (expense) other ( see Note 13).

Balance at March 28, 2020 $ ( 36,102 ) $ ( 7,101 ) $ ( 43,203 )

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 8).

2 unchanged sentences

The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and OPEB plans (in thousands) :

Note 9 - Pension and Other Postretirement Benefits ( continued)

Fiscal quarter ended

September 26, 2020 Fiscal quarter ended

September 28, 2019

Plans Pension

Net service cost $ 99 $ 31 $ 82 $ 32

Interest cost 128 33 154 45

Expected return on plan assets ( 110 ) — ( 130 ) —

Amortization of actuarial losses 77 34 50 39

Net periodic benefit cost $ 194 $ 98 $ 156 $ 116

Nine fiscal months ended September 26, 2020 Nine fiscal months ended September 28, 2019

April 3, 2021 Fiscal quarter ended

March 28, 2020

Plans Pension

7 unchanged sentences

2010 Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock.

At September 26, 2020, the Company had reserved 371,637 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the Plan.

At April 3, 2021, the Company had reserved 330,590 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the Plan.

If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others.

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.

On March 4, 2021, VPG’s three executive officers were granted annual equity awards in the form of RSUs, of which 50 % are performance-based.

The awards have an aggregate target grant-date fair value of $ 1.7 million and were comprised of 52,486 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.

On March 16, 2020, certain VPG employees were granted annual equity awards in the form of RSUs, of which 75 % are performance-based.

Fifty percent of these awards will vest on January 1, 2024, subject to the executives’ continued employment.

The performance-based portion of the RSUs will also vest on January 1, 2024, subject to the executives' continued employment and

Note 9 - Share-Based Compensation (continued)

the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and "net earnings goals", each weighted equally.

On March 8, 2021, certain non-executive VPG employees were granted annual equity awards in the form of RSUs.

Certain employees received awards, of which 75 % are performance-based and certain employees received awards of which 50 % are performance-based.

The awards have an aggregate grant-date fair value of $ 0.6 million and were comprised of 17,793 RSUs.

Twenty-five percent of these awards will vest on January 1, 2023 subject to the employees' continued employment.

The non-performance portion of these awards ( twenty-five percent for certain employees and fifty percent for certain employees) will vest on January 1, 2024 subject to the employees' continued employment.

The performance-based portion of the RSUs will also vest on January 1, 2024, subject to the employees' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings and cash flow goals, each weighted equally.

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 is subject to acceleration under certain circumstances.

Note 10 - Share-Based Compensation (continued)

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.

2 unchanged sentences

The following table summarizes share-based compensation expense recognized (in thousands) :

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Restricted stock units $ 366 $ 379

8 unchanged sentences

The following table sets forth reporting segment information (in thousands) :

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Net revenues:

13 unchanged sentences

Unallocated G&A expenses ( 7,721 ) ( 6,482 )

Executive severance costs — — — ( 611 )

Restructuring costs — ( 130 )

2 unchanged sentences

Foil Technology Products $ — $ ( 130 )

Force Sensors $ — $ ( 429 ) $ ( 108 ) $ ( 429 )

Weighing and Control Systems ( 61 ) — ( 61 ) —

Corporate/Other — ( 118 ) ( 78 ) ( 118 )

$ — $ ( 130 )

Executive severance costs:

Corporate/Other $ — $ — $ — $ ( 611 )

$ — $ — $ — $ ( 611 )

Note 11 - Segment Information (continued)

Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products.

The table below summarizes intersegment sales (in thousands) :

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Foil Technology Products to Force Sensors and Weighing and Control Systems $ 961 $ 724

Force Sensors to Foil Technology Products and Weighing and Control Systems $ — $ 369 $ — $ 980

Weighing and Control Systems to Foil Technology Products and Force Sensors $ 114 $ 87

1 unchanged sentence

The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share) :

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Fiscal quarter ended

April 3, 2021 March 28, 2020

Numerator for basic earnings per share:

14 unchanged sentences

The caption “Other” on the consolidated condensed statements of operations consists of the following (in thousands) :

Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019

Foreign exchange gain (loss) $ 162 $ ( 306 ) $ ( 123 ) $ ( 1,360 )

Fiscal quarter ended

April 3, 2021 March 28, 2020

Foreign exchange gain $ 735 $ 900

Interest income 45 67

1 unchanged sentence

Other ( 70 ) ( 125 )

$ ( 39 ) $ 547 $ ( 629 ) $ ( 385 )

Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates.

For the fiscal quarter and nine fiscal months ended September 26, 2020, the change in foreign exchange gains and losses during the period, as compared to the prior year period, is largely due to exposure to currency fluctuations with the Canadian dollar, the Israeli Shekel, the Euro, and the British pound.

Included in Other for the fiscal quarter and nine fiscal months ended September 28, 2019, respectively, is a one-time $ 0.8 million gain on liquidation of one of the Company's subsidiaries.

Executive Severance Costs

During the second fiscal quarter of 2019, the Company recorded $ 0.6 million of severance costs associated with the resignation of an executive office of the Company.

The severance costs consisted of payments and other benefits as specified in the executive officer's resignation agreement.

For the fiscal quarter ended April 3, 2021, the change in foreign exchange gains and losses during the period, as compared to the prior year period, is largely due to exposure to currency fluctuations with the Canadian dollar, the Israeli shekel, and the British pound.

Note 13 – Fair Value Measurements

8 unchanged sentences

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands) :

Note 14 - Fair Value Measurements (continued)

Fair value measurements at reporting date using:

2 unchanged sentences

Inputs Level 3

September 26, 2020

April 3, 2021

Assets held in rabbi trusts $ 5,820 $ 99 $ 5,721 $ —

2 unchanged sentences

The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans.

Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at September 26, 2020 and December 31, 2019, and company-owned life insurance assets.

Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at April 3, 2021 and December 31, 2020, 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 period.

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 September 26, 2020 and December 31, 2019 approximates its carrying value.

The revolving debt at September 26, 2020 is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement.

The revolving debt and term loans at December 31, 2019 were reset on a quarterly basis based on current market rates, plus a base rate as specified in the corresponding debt agreements.

The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1

Note 13 - Fair Value Measurements (continued)

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 April 3, 2021 and December 31, 2020 approximates its carrying value as the revolving debt is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement.

The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy.

The Company’s financial instruments include cash and cash equivalents whose carrying amounts reported in the consolidated condensed balance sheets approximate their fair values.

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 condensed balance sheets approximate their fair values.

Note 14 – Restructuring Costs

3 unchanged sentences

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 $ 0.1 million and $ 0.5 million of restructuring costs during the fiscal quarter ended September 26, 2020 and September 28, 2019, respectively, and $ 0.7 million and $ 0.5 million for the nine fiscal months ended September 26, 2020 and September 28, 2019, respectively.

The Company recorded $ 0.0 million and $ 0.1 million of restructuring costs during the fiscal quarter ended April 3, 2021 and March 28, 2020, respectively.

Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, and were incurred in connections with various cost reduction programs.

The following table summarizes recent activity related to all restructuring programs.

The accrued restructuring liability balance as of September 26, 2020 and December 31, 2019, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands) :

The accrued restructuring liability balance as of April 3, 2021 and December 31, 2020, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands) :

Balance at December 31, 2020 $ 63

Restructuring charges in 2020 713

Cash payments ( 36 )

Foreign currency translation ( 2 )

Balance at September 26, 2020 $ 175

Balance at April 3, 2021 $ 27

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements