Vishay Precision Group, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) April 3, 2021 December 31, 2020 (Unaudited) Assets Current assets: Cash and cash equivalents $ 96,154 $ 98,438 Accounts receivable, net 43,884 45,339 Inventories: Raw materials 21,604 21,894 Work in process 23,991 21,534 Finished goods 18,702 18,920 Inventories, net 64,297 62,348 Prepaid expenses and other current assets 15,287 15,761 Total current assets 219,622 221,886 Property and equipment, at cost: Land 4,268 4,282 Buildings and improvements 66,611 67,581 Machinery and equipment 118,136 115,717 Software 10,067 10,026 Construction in progress 6,374 6,341 Accumulated depreciation ( 129,401 ) ( 128,931 ) Property and equipment, net 76,055 75,016 Goodwill 31,167 31,105 Intangible assets, net 31,523 32,039 Operating lease right-of-use assets 20,647 21,788 Other assets 19,586 20,053 Total assets $ 398,600 $ 401,887 Continues on the following page. -3- VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) April 3, 2021 December 31, 2020 Liabilities and equity Current liabilities: Trade accounts payable $ 9,310 $ 10,487 Payroll and related expenses 14,670 17,595 Other accrued expenses 15,211 13,843 Income taxes 1,394 1,593 Current portion of operating lease liabilities 3,812 4,011 Current portion of long-term debt — 18 Total current liabilities 44,397 47,547 Long-term debt, less current portion 40,648 40,626 Deferred income taxes 3,178 3,403 Operating lease liabilities 17,867 19,504 Other liabilities 15,920 16,263 Accrued pension and other postretirement costs 15,971 16,687 Total liabilities 137,981 144,030 Commitments and contingencies Equity: Common stock 1,320 1,317 Class B convertible common stock 103 103 Treasury stock ( 8,765 ) ( 8,765 ) Capital in excess of par value 197,282 197,764 Retained earnings 105,036 100,075 Accumulated other comprehensive loss ( 34,262 ) ( 32,671 ) Total Vishay Precision Group, Inc. stockholders' equity 260,714 257,823 Noncontrolling interests ( 95 ) 34 Total equity 260,619 257,857 Total liabilities and equity $ 398,600 $ 401,887 See accompanying notes. -4- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarter ended April 3, 2021 March 28, 2020 Net revenues $ 70,589 $ 67,696 Costs of products sold 41,967 42,631 Gross profit 28,622 25,065 Selling, general, and administrative expenses 22,183 20,291 Restructuring costs — 130 Operating income 6,439 4,644 Other income (expense): Interest expense ( 305 ) ( 461 ) Other 573 683 Other income (expense) 268 222 Income before taxes 6,707 4,866 Income tax expense 1,764 1,574 Net earnings 4,943 3,292 Less: net earnings attributable to noncontrolling interests ( 18 ) ( 20 ) Net earnings attributable to VPG stockholders $ 4,961 $ 3,312 Basic earnings per share attributable to VPG stockholders $ 0.36 $ 0.24 Diluted earnings per share attributable to VPG stockholders $ 0.36 $ 0.24 Weighted average shares outstanding - basic 13,593 13,541 Weighted average shares outstanding - diluted 13,629 13,586 See accompanying notes. -5- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited - In thousands) Fiscal quarter ended April 3, 2021 March 28, 2020 Net earnings $ 4,943 $ 3,292 Other comprehensive income (loss): Foreign currency translation adjustment ( 1,800 ) ( 5,341 ) Pension and other postretirement actuarial items, net of tax 209 ( 159 ) Other comprehensive loss ( 1,591 ) ( 5,500 ) Comprehensive income (loss) 3,352 ( 2,208 ) Less: comprehensive income attributable to noncontrolling interests ( 18 ) ( 20 ) Comprehensive income (loss) attributable to VPG stockholders $ 3,370 $ ( 2,188 ) See accompanying notes. -6- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three fiscal months ended April 3, 2021 March 28, 2020 Operating activities Net earnings $ 4,943 $ 3,292 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,522 3,199 Loss from extinguishment of debt — 30 Gain on sale of property and equipment ( 1 ) ( 3 ) Share-based compensation expense 366 379 Inventory write-offs for obsolescence 613 631 Deferred income taxes ( 116 ) ( 233 ) Other ( 1,659 ) ( 1,137 ) Net changes in operating assets and liabilities: Accounts receivable, net 753 ( 4,956 ) Inventories, net ( 3,089 ) 1,449 Prepaid expenses and other current assets 366 ( 1,380 ) Trade accounts payable 526 ( 617 ) Other current liabilities ( 601 ) 5,642 Net cash provided by operating activities 5,623 6,296 Investing activities Capital expenditures ( 5,746 ) ( 3,344 ) Proceeds from sale of property and equipment 3 15 Net cash used in investing activities ( 5,743 ) ( 3,329 ) Financing activities Principal payments on long-term debt ( 18 ) ( 3,385 ) Debt issuance costs — ( 402 ) Distributions to noncontrolling interests ( 111 ) ( 25 ) Payments of employee taxes on certain share-based arrangements ( 846 ) ( 813 ) Net cash used in financing activities ( 975 ) ( 4,625 ) Effect of exchange rate changes on cash and cash equivalents ( 1,189 ) ( 2,521 ) Decrease in cash and cash equivalents ( 2,284 ) ( 4,179 ) Cash and cash equivalents at beginning of period 98,438 86,910 Cash and cash equivalents at end of period $ 96,154 $ 82,731 Supplemental disclosure of investing transactions: Capital expenditures purchased $ ( 4,150 ) $ ( 3,178 ) Capital expenditures accrued but not yet paid $ 965 $ 1,016 See accompanying notes. -7- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share amounts) Three Fiscal Months Ended April 3, 2021 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 December 31, 2020 $ 1,317 $ 103 $ ( 8,765 ) $ 197,764 $ 100,075 $ ( 32,671 ) $ 257,823 $ 34 $ 257,857 Net earnings — — — — 4,961 — 4,961 ( 18 ) 4,943 Other comprehensive loss — — — — — ( 1,591 ) ( 1,591 ) — ( 1,591 ) Share-based compensation expense — — — 366 — — 366 — 366 Restricted stock issuances ( 34,572 shares) 3 — — ( 848 ) — — ( 845 ) — ( 845 ) 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 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 December 31, 2019 $ 1,312 $ 103 $ ( 8,765 ) $ 197,125 $ 89,288 $ ( 37,703 ) $ 241,360 $ 392 $ 241,752 Net earnings — — — — 3,312 — 3,312 ( 20 ) 3,292 Other comprehensive loss — — — — — ( 5,500 ) ( 5,500 ) — ( 5,500 ) Share-based compensation expense — — — 379 — — 379 — 379 Restricted stock issuances ( 44,189 shares) 4 — — ( 795 ) — — ( 791 ) — ( 791 ) Distributions to noncontrolling interests — — — — — — — ( 25 ) ( 25 ) Balance at March 28, 2020 $ 1,316 $ 103 $ ( 8,765 ) $ 196,709 $ 92,600 $ ( 43,203 ) $ 238,760 $ 347 $ 239,107 See accompanying notes. -8- Vishay Precision Group, Inc. Notes to Unaudited Consolidated Condensed Financial Statements Note 1 – Basis of Presentation 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. Interim Financial Statements These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore do not include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. 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 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: 2021 2020 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 December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 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. 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 Certain prior year amounts have been reclassified to conform to the current financial statement presentation. Note 2 – Revenues Revenue Recognition 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) : -9- Note 2 – Revenues (continued) Fiscal quarter ended April 3, 2021 Fiscal quarter ended March 28, 2020 Foil Technology Products Force Sensors Weighing and Control Systems Total Foil Technology Products Force Sensors Weighing and Control Systems Total United States $ 10,479 $ 7,771 $ 7,667 $ 25,917 $ 11,934 $ 8,392 $ 8,889 $ 29,215 United Kingdom 898 567 4,013 5,478 950 1,980 3,712 6,642 Other Europe 7,266 5,475 4,561 17,302 7,713 2,374 3,744 13,831 Israel 6,441 130 — 6,571 2,955 97 — 3,052 Asia 7,627 2,990 1,601 12,218 6,925 1,852 1,671 10,448 Canada — — 3,103 3,103 — — 4,508 4,508 Total $ 32,711 $ 16,933 $ 20,945 $ 70,589 $ 30,477 $ 14,695 $ 22,524 $ 67,696 The following table disaggregates net revenue from contracts with customers by market sector (in thousands) . Fiscal quarter ended April 3, 2021 March 28, 2020 Test & Measurement $ 14,416 $ 14,345 Avionics, Military & Space 6,030 6,160 Transportation 9,554 8,244 Other Markets 17,545 13,128 Industrial Weighing 12,005 12,467 General Industrial 4,082 4,039 Steel 6,957 9,313 Total $ 70,589 $ 67,696 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 Balance at December 31, 2020 $ 3,605 $ 2,873 Balance at April 3, 2021 3,542 3,284 (Decrease)/increase $ ( 63 ) $ 411 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 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. -10- Note 3 – Goodwill The change in the carrying amount of goodwill by segment is as follows (in thousands) : Total Weighing and Control Systems Segment Foil Technology Products Segment KELK Acquisition DSI Acquisition Stress-Tek Acquisition Pacific Acquisition Balance at December 31, 2020 $ 31,105 $ 6,726 $ 16,942 $ 6,311 $ 1,126 Foreign currency translation adjustment 62 80 ( 18 ) — — Balance at April 3, 2021 $ 31,167 $ 6,806 $ 16,924 $ 6,311 $ 1,126 Note 4 – Leases 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. Leases recorded on the balance sheet consist of the following (in thousands) : Leases April 3, 2021 December 31, 2020 Assets Operating lease right of use asset $ 20,647 $ 21,788 Liabilities Operating lease - current $ 3,812 $ 4,011 Operating lease - non-current $ 17,867 $ 19,504 Other information related to lease term and discount rate is as follows: April 3, 2021 Operating leases weighted average remaining lease term (in years) 9.07 years Operating leases weighted average discount rate 3.53 % The components of lease expense are as follows (in thousands) : Fiscal quarter ended April 3, 2021 March 28, 2020 Operating lease cost $ 1,181 $ 874 Short-term lease cost 33 23 Total lease cost $ 1,214 $ 897 Right of use assets obtained in exchange for new operating lease liability during 2021 were $ 0.2 million. 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. -11- Note 4 - Leases (continued) 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 2022 3,299 2023 2,812 2024 2,534 2025 1,994 Thereafter 10,236 Total future minimum lease payments $ 25,056 Less: amount representing interest ( 3,377 ) Present value of future minimum lease payments $ 21,679 Note 5 – Income Taxes 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 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. 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. Note 6 – Long-Term Debt Long-term debt consists of the following (in thousands) : April 3, 2021 December 31, 2020 2020 Credit Agreement - Revolving Facility $ 41,000 $ 41,000 Other debt — 18 Deferred financing costs ( 352 ) ( 374 ) Total long-term debt 40,648 40,644 Less: current portion — 18 Long-term debt, less current portion $ 40,648 $ 40,626 -12- Note 7 – Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands) : Foreign Currency Translation Adjustment Pension and Other Postretirement Actuarial Items Total Balance at January 1, 2021 $ ( 25,591 ) $ ( 7,080 ) $ ( 32,671 ) Other comprehensive loss before reclassifications ( 1,800 ) — ( 1,800 ) Amounts reclassified from accumulated other comprehensive income (loss) — 209 209 Balance at April 3, 2021 $ ( 27,391 ) $ ( 6,871 ) $ ( 34,262 ) Foreign Currency Translation Adjustment Pension and Other Postretirement Actuarial Items Total Balance at January 1, 2020 $ ( 30,761 ) $ ( 6,942 ) $ ( 37,703 ) Other comprehensive loss before reclassifications ( 5,341 ) — ( 5,341 ) Amounts reclassified from accumulated other comprehensive income (loss) — ( 159 ) ( 159 ) 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). Note 8 – Pension and Other Postretirement Benefits Employees of VPG participate in various defined benefit pension and other postretirement benefit ("OPEB") plans. 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) : Fiscal quarter ended April 3, 2021 Fiscal quarter ended March 28, 2020 Pension Plans OPEB Plans Pension Plans OPEB Plans Net service cost $ 97 $ 9 $ 99 $ 31 Interest cost 103 17 129 33 Expected return on plan assets ( 97 ) — ( 111 ) — Amortization of actuarial losses 102 5 77 34 Net periodic benefit cost $ 205 $ 31 $ 194 $ 98 Note 9 – Share-Based Compensation The Amended and Restated Vishay Precision Group, Inc. 2010 Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. 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 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. 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 -13- 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. 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. Vesting of equity awards is subject to acceleration under certain circumstances. 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. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. The following table summarizes share-based compensation expense recognized (in thousands) : Fiscal quarter ended April 3, 2021 March 28, 2020 Restricted stock units $ 366 $ 379 -14- Note 10 – Segment Information 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 on-board weighing applications. VPG evaluates reporting segment performance based on multiple performance measures including third party net revenues, gross profits and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring costs, executive severance costs, and other items is meaningful because it provides insight with respect to the intrinsic operating results of VPG. The following table sets forth reporting segment information (in thousands) : Fiscal quarter ended April 3, 2021 March 28, 2020 Net revenues: Foil Technology Products $ 32,711 $ 30,477 Force Sensors 16,933 14,695 Weighing and Control Systems 20,945 22,524 Total $ 70,589 $ 67,696 Gross profit: Foil Technology Products $ 13,039 $ 11,201 Force Sensors 6,040 3,572 Weighing and Control Systems 9,543 10,292 Total $ 28,622 $ 25,065 Reconciliation of segment operating income to consolidated results: Foil Technology Products $ 6,832 $ 5,384 Force Sensors 3,504 1,204 Weighing and Control Systems 3,824 4,668 Unallocated G&A expenses ( 7,721 ) ( 6,482 ) Restructuring costs — ( 130 ) Operating income $ 6,439 $ 4,644 Restructuring costs: Foil Technology Products $ — $ ( 130 ) $ — $ ( 130 ) 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 April 3, 2021 March 28, 2020 Foil Technology Products to Force Sensors and Weighing and Control Systems $ 961 $ 724 Weighing and Control Systems to Foil Technology Products and Force Sensors $ 114 $ 87 -15- Note 11 – Earnings Per Share 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 April 3, 2021 March 28, 2020 Numerator: Numerator for basic earnings per share: Net earnings attributable to VPG stockholders $ 4,961 $ 3,312 Denominator: Denominator for basic earnings per share: Weighted average shares 13,593 13,541 Effect of dilutive securities: Restricted stock units 36 45 Dilutive potential common shares 36 45 Denominator for diluted earnings per share: Adjusted weighted average shares 13,629 13,586 Basic earnings per share attributable to VPG stockholders $ 0.36 $ 0.24 Diluted earnings per share attributable to VPG stockholders $ 0.36 $ 0.24 -16- Note 12 – Additional Financial Statement Information Other Income (Expense) Other The caption “Other” on the consolidated condensed statements of operations consists of the following (in thousands) : Fiscal quarter ended April 3, 2021 March 28, 2020 Foreign exchange gain $ 735 $ 900 Interest income 45 67 Pension expense ( 137 ) ( 159 ) Other ( 70 ) ( 125 ) $ 573 $ 683 Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. 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 ASC Topic 820, Fair Value Measurement, 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 table provides the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands) : Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs April 3, 2021 Assets Assets held in rabbi trusts $ 5,820 $ 99 $ 5,721 $ — December 31, 2020 Assets Assets held in rabbi trusts $ 5,601 $ 61 $ 5,540 $ — 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 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 -17- 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, 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 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 $ 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 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 Cash payments ( 36 ) Balance at April 3, 2021 $ 27 -18-