What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-12 · 126 added, 305 removed, 371 unchanged (54% of the section changed)

3 unchanged sentences

(In thousands)

October 2, 2021 December 31, 2020

April 2, 2022 December 31, 2021

Current assets:

24 unchanged sentences

(In thousands)

October 2, 2021 December 31, 2020

April 2, 2022 December 31, 2021

Liabilities and equity

5 unchanged sentences

Current portion of operating lease liabilities 4,553 4,610

Current portion of long-term debt — 18

Total current liabilities 58,623 64,628

22 unchanged sentences

Fiscal quarter ended

October 2, 2021 September 26, 2020

Net revenues $ 81,974 $ 67,525

Costs of products sold 50,129 40,176

Gross profit 31,845 27,349

Selling, general, and administrative expenses 24,580 19,144

Restructuring costs — 84

Operating income 7,265 8,121

Other income (expense):

Interest expense ( 328 ) ( 309 )

Other 174 ( 39 )

Other expense ( 154 ) ( 348 )

Income before taxes 7,111 7,773

Income tax expense 1,662 2,109

Net earnings 5,449 5,664

net earnings attributable to noncontrolling interests 70 66

Net earnings attributable to VPG stockholders $ 5,379 $ 5,598

Basic earnings per share attributable to VPG stockholders $ 0.39 $ 0.41

Diluted earnings per share attributable to VPG stockholders $ 0.39 $ 0.41

Weighted average shares outstanding - basic 13,626 13,575

Weighted average shares outstanding - diluted 13,664 13,637

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)

Nine fiscal months ended

October 2, 2021 September 26, 2020

April 2, 2022 April 3, 2021

Net revenues $ 87,665 $ 70,589

2 unchanged sentences

Selling, general, and administrative expenses 26,674 22,183

Acquisition costs 1,198 —

Impairment of goodwill and indefinite-lived intangibles 1,223 —

Restructuring costs 261 —

3 unchanged sentences

Other 439 573

Other expense ( 485 ) ( 1,666 )

Other income 110 268

Income before taxes 8,425 6,707

1 unchanged sentence

Net earnings 6,684 4,943

net earnings attributable to noncontrolling interests 195 34

net loss (earnings) attributable to noncontrolling interests 328 ( 18 )

Net earnings attributable to VPG stockholders $ 6,356 $ 4,961

8 unchanged sentences

Fiscal quarter ended

October 2, 2021 September 26, 2020

Net earnings $ 5,449 $ 5,664

Other comprehensive income (loss):

Foreign currency translation adjustment ( 2,116 ) 2,479

Pension and other postretirement actuarial items, net of tax 113 ( 137 )

Other comprehensive (loss) income ( 2,003 ) 2,342

Comprehensive income 3,446 8,006

comprehensive income attributable to noncontrolling interests 70 66

Comprehensive income attributable to VPG stockholders $ 3,376 $ 7,940

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)

Nine fiscal months ended

October 2, 2021 September 26, 2020

April 2, 2022 April 3, 2021

Net earnings $ 6,684 $ 4,943

Other comprehensive income (loss):

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment ( 1,792 ) ( 1,800 )

Pension and other postretirement actuarial items, net of tax 431 ( 448 )

Pension and other postretirement actuarial items 81 209

Other comprehensive loss ( 1,711 ) ( 1,591 )

Comprehensive income 4,973 3,352

comprehensive income attributable to noncontrolling interests 195 34

comprehensive income (loss) attributable to noncontrolling interests 328 ( 18 )

Comprehensive income attributable to VPG stockholders $ 4,645 $ 3,370

3 unchanged sentences

(Unaudited - In thousands)

Nine fiscal months ended

October 2, 2021 September 26, 2020

Three fiscal months ended

April 2, 2022 April 3, 2021

Operating activities

1 unchanged sentence

Adjustments to reconcile net earnings to net cash provided by operating activities:

Impairment of goodwill and indefinite-lived intangibles 1,223 —

Depreciation and amortization 3,823 3,522

Loss from extinguishment of debt — 30

Gain on sale of property and equipment ( 35 ) ( 140 )

Loss (gain) on sale of property and equipment 7 ( 1 )

Reclassification of foreign currency translation adjustment related to disposal of subsidiary 191 —

Share-based compensation expense 497 366

8 unchanged sentences

Other current liabilities ( 2,641 ) ( 601 )

Net cash provided by operating activities 18,081 22,834

Net cash (used in) provided by operating activities ( 273 ) 5,623

Investing activities

1 unchanged sentence

Proceeds from sale of property and equipment 10 3

Purchase of business, net of cash acquired ( 47,216 ) 156

Net cash used in investing activities ( 4,293 ) ( 5,743 )

1 unchanged sentence

Principal payments on long-term debt — ( 18 )

Proceeds from revolving facility 20,000 —

Debt issuance costs — ( 402 )

Purchase of noncontrolling interest — ( 253 )

(Distributions to) contributions from noncontrolling interests ( 244 ) 35

Distributions to noncontrolling interests ( 246 ) ( 111 )

Payments of employee taxes on certain share-based arrangements ( 435 ) ( 846 )

Net cash provided by (used in) financing activities 18,885 ( 4,892 )

Net cash used in financing activities ( 681 ) ( 975 )

Effect of exchange rate changes on cash and cash equivalents ( 907 ) ( 1,189 )

(Decrease) increase in cash and cash equivalents ( 22,894 ) 2,885

Decrease in cash and cash equivalents ( 6,154 ) ( 2,284 )

Cash and cash equivalents at beginning of period 84,335 98,438

8 unchanged sentences

Fiscal quarter ended

October 2, 2021

April 2, 2022

Stock Class B

7 unchanged sentences

Interests Total

Balance at July 3, 2021 $ 1,322 $ 103 $ ( 8,765 ) $ 197,856 $ 108,956 $ ( 33,546 ) $ 265,926 $ ( 8 ) $ 265,918

Balance at December 31, 2021 $ 1,322 $ 103 $ ( 8,765 ) $ 199,151 $ 120,296 $ ( 35,008 ) $ 277,099 $ ( 57 ) $ 277,042

Net earnings — — — — 6,356 — 6,356 328 6,684

5 unchanged sentences

Distributions to noncontrolling interests — — — — — — — ( 246 ) ( 246 )

Balance at October 2, 2021 $ 1,322 $ 103 $ ( 8,765 ) $ 198,235 $ 114,335 $ ( 35,549 ) $ 269,681 $ ( 15 ) $ 269,666

Balance at April 2, 2022 $ 1,324 $ 103 $ ( 8,765 ) $ 199,223 $ 126,652 $ ( 36,719 ) $ 281,818 $ 25 $ 281,843

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

— — — — 5,598 — 5,598 66 5,664

Other comprehensive loss — — — — — 2,342 2,342 — 2,342

Share-based compensation expense

— — — 380 — — 380 — 380

Distribution 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

See accompanying notes.

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)

Nine Fiscal Months Ended October 2, 2021

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 December 31, 2020 $ 1,317 $ 103 $ ( 8,765 ) $ 197,764 $ 100,075 $ ( 32,671 ) $ 257,823 $ 34 $ 257,857

Net earnings — — — — 14,260 — 14,260 195 14,455

Other comprehensive loss

— — — — — ( 2,878 ) ( 2,878 ) — ( 2,878 )

Share-based compensation expense

— — — 1,328 — — 1,328 — 1,328

Restricted stock issuances ( 50,781 shares)

5 — — ( 857 ) — — ( 852 ) — ( 852 )

Distributions to noncontrolling interests — — — — — — — ( 244 ) ( 244 )

Balance at October 2, 2021 $ 1,322 $ 103 $ ( 8,765 ) $ 198,235 $ 114,335 $ ( 35,549 ) $ 269,681 $ ( 15 ) $ 269,666

Nine Fiscal Months Ended September 26, 2020

April 3, 2021

Stock Class B

14 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

Distribution 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

See accompanying notes.

3 unchanged sentences

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.

(“VPG” or the “Company”) is a global, diversified company focused on precision measurement sensing technologies, including specialized sensors, weighing solutions, and measurement systems.

Many of our precision measurement sensing products and solutions are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets.

Our products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality, and we employ an operationally diversified structure to manage our businesses.

Interim Financial Statements

2 unchanged sentences

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 4, 2022.

The results of operations for the fiscal quarter ended October 2, 2021 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the fiscal quarter ended April 2, 2022 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 2022 and 2021 end on the following dates:

Quarter 1 April 3, March 28,

Quarter 2 July 3, June 27,

Quarter 3 October 2, September 26,

Quarter 1 April 2, April 3,

Quarter 2 July 2, July 3,

Quarter 3 October 1, October 2,

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.

Note 2 – Revenues

1 unchanged sentence

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

October 2, 2021 Fiscal quarter ended

September 26, 2020

Foil Technology

Products Force

Sensors Weighing and

Control Systems Total Foil Technology

Products Force

Sensors Weighing and

Control Systems Total

United States $ 11,458 $ 8,183 $ 16,642 $ 36,283 $ 12,733 $ 6,974 $ 8,328 $ 28,035

United Kingdom 875 606 3,760 5,241 778 2,321 2,633 5,732

Other Europe 6,185 5,563 5,191 16,939 7,660 2,357 3,441 13,458

Israel 4,711 232 — 4,943 5,981 78 — 6,059

Asia 9,561 3,120 2,481 15,162 5,754 2,132 2,471 10,357

Canada — — 3,406 3,406 — — 3,884 3,884

Total $ 32,790 $ 17,704 $ 31,480 $ 81,974 $ 32,906 $ 13,862 $ 20,757 $ 67,525

Nine Fiscal Months Ended October 2, 2021 Nine Fiscal Months Ended September 26, 2020

Foil Technology

Products Force

Sensors Weighing and

Control Systems Total Foil Technology

Products Force

Sensors Weighing and

Control Systems Total

April 2, 2022 Fiscal quarter ended

April 3, 2021

Sensors Weighing Solutions Measurement Systems Total Sensors Weighing Solutions Measurement Systems Total

United States $ 13,006 $ 14,078 $ 10,465 $ 37,549 $ 9,706 $ 12,580 $ 3,631 $ 25,917

5 unchanged sentences

Total $ 37,750 $ 32,768 $ 17,147 $ 87,665 $ 31,815 $ 30,968 $ 7,806 $ 70,589

Note 2 – Revenues (continued)

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

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Fiscal quarter ended

April 2, 2022 April 3, 2021

Test & Measurement $ 17,973 $ 14,416

13 unchanged sentences

The outstanding contract assets and liability accounts were as follows (in thousands) :

Note 2 – Revenues (continued)

Contract Asset Contract Liability

1 unchanged sentence

Balance at December 31, 2021 $ 3,570 $ 4,765

Balance at October 2, 2021 6,113 6,018

Balance at April 2, 2022 3,415 7,836

(Decrease)/increase $ ( 155 ) $ 3,071

The amount of revenue recognized during the nine fiscal months ended October 2, 2021 that was included in the contract liability balance at December 31, 2020 was $ 2.6 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.

The amount of revenue recognized during the three fiscal months ended April 2, 2022 that was included in the contract liability balance at December 31, 2021 was $ 1.2 million.

Note 3 - Acquisition

Diversified Technical Systems, Inc.

On June 1, 2021, VPG completed the acquisition of California-based Diversified Technical Systems, Inc.

(“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $ 47.2 million, subject to customary adjustments.

(“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $ 47.2 million.

The Company used cash on hand and borrowings under its revolving credit facility to fund the purchase price under the purchase agreement.

DTS reports into the Company's Weighing and Control Systems segment.

DTS reports into the Company's Measurement Systems segment.

The following table summarizes the provisional fair values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands):

16 unchanged sentences

None of the goodwill associated with DTS will be deductible for income tax purposes.

The Company recorded acquisition costs associated with this transaction as follows (in thousands ):

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 October 2, 2021

Legal fees $ — $ 341

Appraisal fees — 18

Other (investment banker and insurance costs) — 839

Note 3 - Acquisition (continued)

Included in the results of the operations of the Company, starting on June 1, 2021, are net revenues of $ 7.6 million and $ 10.7 million from DTS for the fiscal quarter and nine fiscal months ended October 2, 2021 and net earnings of $ 0.3 million and $ 0.1 million for the fiscal quarter and nine fiscal months ended October 2, 2021.

DTS results include amortization of the inventory step-up of $ 1.3 million and $ 2.2 million for the fiscal quarter and nine fiscal months ended October 2, 2021, and amortization of intangible assets of $ 0.4 million and $ 0.5 million for the fiscal quarter and nine fiscal months ended October 2, 2021.

The Company recorded acquisition costs associated with this transaction of $ 1.2 million in the second quarter of 2021, which included legal fees, appraisal fees, investments banker fees and insurance costs.

Included in the results of the operations of the Company, are net revenues of $ 7.7 million from DTS for the fiscal quarter ended April 2, 2022 and net earnings of $ 0.1 million fiscal quarter ended April 2, 2022.

DTS results include amortization of the inventory step-up of $ 0.4 million for the fiscal quarter ended April 2, 2022, and amortization of intangible assets of $ 0.4 million for the fiscal quarter ended April 2, 2022.

Following is the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the DTS acquisition had been consummated on January 1, 2021:

Fiscal quarter ended Nine fiscal months ended Fiscal quarter ended Nine fiscal months ended

September 26, 2020 September 26, 2020 October 2, 2021 October 2, 2021

Fiscal quarter ended

April 3, 2021

Pro forma net revenues

$ 75,605 $ 235,316 81,974 241,138

Pro forma net earnings attributable to VPG stockholders

$ 5,778 $ 18,173 5,737 19,148

Pro forma basic earnings per share attributable to VPG stockholders

$ 0.43 $ 1.34 $ 0.42 $ 1.41

Pro forma diluted earnings per share attributable to VPG stockholders

$ 0.42 $ 1.34 $ 0.42 $ 1.40

Note 4 – Goodwill and Other Intangible Assets

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of it's fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred.

Due to updated financial projections, the Company performed a quantitative impairment test for the instrumentation reporting unit during the second quarter of 2021.

In estimating the fair value of our instrumentation reporting unit the Company used the income approach.

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 second quarter of 2021, the Company recognized a non-cash impairment loss of $ 1.1 million in goodwill and $ 0.1 million to the indefinite-lived trade name.

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 October 2, 2021 was $ 0.0 million and $ 0.3 million, respectively.

Note 4 – Goodwill

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of its fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred.

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 DTS Acquisition Stress-Tek Acquisition Pacific Acquisition

Total Measurement Systems

KELK Acquisition DSI Acquisition DTS Acquisition Stress-Tek Acquisition

Balance at December 31, 2021 $ 45,830 $ 6,706 $ 16,910 $ 15,903 $ 6,311

Goodwill acquired 15,587 15,587

Impairment charges ( 1,126 ) ( 1,126 )

Foreign currency translation adjustment 140 147 ( 7 ) —

Balance at October 2, 2021 $ 45,560 $ 6,743 $ 16,919 $ 15,587 $ 6,311 $ —

Note 4 – Goodwill and Other Intangible Assets (continued)

Intangible assets were as follows (in thousands) :

October 2, 2021 December 31, 2020

Intangible assets subject to amortization

(Definite-lived):

Patents and acquired technology $ 32,938 $ 19,804

Customer relationships 34,117 26,061

Trade names 1,684 1,747

Non-competition agreements 11,576 12,259

80,315 59,871

Accumulated amortization:

Patents and acquired technology ( 6,960 ) ( 5,895 )

Customer relationships ( 14,497 ) ( 13,363 )

Trade names ( 1,684 ) ( 1,747 )

Non-competition agreements ( 11,569 ) ( 12,250 )

( 34,710 ) ( 33,255 )

Net intangible assets subject to amortization $ 45,605 $ 26,616

Intangible assets not subject to amortization

(Indefinite-lived):

Trade names 7,722 5,423

$ 53,327 $ 32,039

The increase in net intangible assets from December 31, 2020 is due to the acquisition of DTS on June 1, 2021.

The Company has preliminarily allocated $ 21.3 million of the purchase price to definite-lived intangible assets and $ 2.4 million to indefinite-lived intangible assets.

Amortization expense for the fiscal quarter and nine fiscal months ended October 2, 2021 was $ 1.0 million and $ 2.3 million, respectively.

The DTS intangible assets accounted for $ 0.4 million and $ 0.5 million of amortization expense for the fiscal quarter and nine fiscal months ended October 2, 2021.

Estimated annual amortization expense for the full year of 2021 and each of the next four years, is as follows ( in thousands) :

Balance at April 2, 2022 $ 45,970 $ 6,853 $ 16,903 $ 15,903 $ 6,311

Note 5 – 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 primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to fourteen years .

The Company has no finance leases.

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

Note 5 - Leases (continued)

Leases October 2, 2021 December 31, 2020

Leases April 2, 2022 December 31, 2021

Operating lease right of use asset $ 26,884 $ 27,764

2 unchanged sentences

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

October 2, 2021

April 2, 2022

Operating leases weighted average remaining lease term (in years) 8.33 years

1 unchanged sentence

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

Fiscal quarter ended Nine Fiscal Months Ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Fiscal quarter ended

April 2, 2022 April 3, 2021

Operating lease cost $ 1,310 $ 1,181

3 unchanged sentences

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

The Company paid $ 3.8 million and $ 2.6 million for its operating leases for each of the nine fiscal months ended October 2, 2021 and September 26, 2020, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of October 2, 2021 are summarized as follows (in thousands) :

2021 (excluding the nine months ended October 2, 2021) $ 1,322

The Company paid $ 1.3 million and $ 1.2 million for its operating leases for each of the three fiscal months ended April 2, 2022 and April 3, 2021, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of April 2, 2022 are summarized as follows (in thousands) :

Note 5 - Leases (continued)

2022 (excluding the three months ended April) $ 3,842

Thereafter 13,302

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 October 2, 2021 was 23.4 % compared to 27.1 % for the fiscal quarter ended September 26, 2020, and the effective tax rate for the nine fiscal months ended October 2, 2021 was 20.3 % compared to 29.0 % for the nine fiscal months ended September 26, 2020.

The tax rate for both periods presented in 2021 is lower than the prior year periods primarily due to the acquisition of DTS, which enabled the Company to reduce its valuation allowance against deferred tax assets, tax rate changes in certain foreign jurisdictions, and changes in the mix of worldwide income.

The effective tax rate for the fiscal quarter ended April 2, 2022 was 20.7 % compared to 26.3 % for the fiscal quarter ended April 3, 2021.

The tax rate for the fiscal quarter ended April 2, 2022 is lower than the prior year period primarily due to the reduction of the valuation allowance on certain tax credits.

On December 28, 2021, the United States Treasury Department and the Internal Revenue Service issued final regulations relating to the foreign tax credit and clarifying the rules relating to foreign derived intangible income.

These new regulations apply to tax years beginning on or after December 28, 2021.

The Company is still in the process of analyzing the potential tax impact that these regulations could have on the Company’s tax position.

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

Note 6 - Income Taxes (continued)

may still be challenged by the jurisdiction's 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.

5 unchanged sentences

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

October 2, 2021 December 31, 2020

April 2, 2022 December 31, 2021

2020 Credit Agreement - Revolving Facility $ 61,000 $ 61,000

Other debt — 18

Deferred financing costs ( 264 ) ( 286 )

Total long-term debt 60,736 60,714

current portion — 18

Long-term debt, less current portion $ 60,692 $ 40,626

Note 8 – Accumulated Other Comprehensive Income (Loss)

5 unchanged sentences

Other comprehensive loss before reclassifications ( 1,983 ) — ( 1,983 )

Amounts reclassified from accumulated other comprehensive income (loss) — 431 431

Balance at October 2, 2021 $ ( 28,900 ) $ ( 6,649 ) $ ( 35,549 )

Amounts reclassified from accumulated other comprehensive income 191 81 272

Balance at April 2, 2022 $ ( 32,068 ) $ ( 4,651 ) $ ( 36,719 )

Foreign Currency Translation Adjustment Pension

3 unchanged sentences

Other comprehensive loss before reclassifications ( 1,800 ) — ( 1,800 )

Amounts reclassified from accumulated other comprehensive income (loss) — ( 448 ) ( 448 )

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

Amounts reclassified from accumulated other comprehensive income — 209 209

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

Reclassification of foreign currency translation adjustment for the loss on liquidation of subsidiaries is included in other income and expense other (see Note 13) .

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).

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

October 2, 2021 Fiscal quarter ended

September 26, 2020

Plans Pension

Net service cost $ 96 $ 9 $ 99 $ 31

Interest cost 102 17 128 33

Expected return on plan assets ( 97 ) ( 110 ) —

Amortization of actuarial losses 102 5 77 34

Net periodic benefit cost $ 203 $ 31 $ 194 $ 98

Nine fiscal months ended October 2, 2021 Nine fiscal months ended September 26, 2020

April 2, 2022 Fiscal quarter ended

April 3, 2021

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 October 2, 2021, the Company had reserved 328,418 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 2, 2022, the Company had reserved 308,645 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.

8 unchanged sentences

The performance-based portion of the RSUs will also vest on January 1, 2025, 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 27, 2021 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 9,936 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 2022 Annual Stockholders Meeting or May 27, 2022, subject to the directors' continued service on the Board of Directors.

Vesting of equity awards is subject to acceleration under certain circumstances.

On January 1, 2022 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan (the "Director Plan"), the Board of Directors approved the issuance of an aggregate of 595 RSUs to the newly-appointed independent member

Note 10 - Share-Based Compensation (continued)

of the Board of Directors.

This award represented a pro-rated portion of the annual equity grant made to non-executive directors pursuant to the Director Plan.

The aggregate grant-date fair value of this award is immaterial, and the award will vest on the earlier of the 2022 Annual Stockholders Meeting or May 27, 2022, subject to the director's continued service on the Board of Directors.

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.

2 unchanged sentences

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

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Fiscal quarter ended

April 2, 2022 April 3, 2021

Restricted stock units $ 497 $ 366

1 unchanged sentence

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 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) :

the Sensors segment, the Weighing Solutions segment, and the Measurement Systems segment.

The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments.

The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure.

The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

The chief operating decision maker ("CODM") is our chief executive officer.

The CODM evaluates each operating segment's performance.

The evaluation of the segment's performance is 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, impairment of goodwill and indefinite-lived intangible assets, acquisition costs, and other items is meaningful because they relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.

The following table sets forth reporting segment information.

The reporting segment information reported for the fiscal quarter ended April 3, 2021 has been recast to reflect the new reporting segments adopted by the Company in the fourth quarter of 2021, as described in the consolidated financial statements as of December 31, 2021, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2022 (in thousands) :

Note 11 - Segment Information (continued)

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Fiscal quarter ended

April 2, 2022 April 3, 2021

Net revenues:

Foil Technology Products $ 32,790 $ 32,906 $ 98,809 $ 95,168

Force Sensors 17,704 13,862 51,853 37,473

Weighing and Control Systems 31,480 20,757 77,240 61,726

Sensors $ 37,750 $ 31,815

Weighing Solutions 32,768 30,968

Measurement Systems 17,147 7,806

Total $ 87,665 $ 70,589

Gross profit:

Foil Technology Products $ 10,530 $ 13,515 $ 36,511 $ 38,002

Force Sensors 6,108 4,235 18,116 8,845

Weighing and Control Systems 15,207 9,599 35,638 28,677

Sensors $ 14,286 $ 12,833

Weighing Solutions 12,079 11,774

Measurement Systems 8,885 4,015

Total $ 35,250 $ 28,622

Reconciliation of segment operating income to consolidated results:

Foil Technology Products $ 5,087 $ 8,078 $ 19,138 $ 21,532

Force Sensors 3,511 2,010 10,489 2,201

Weighing and Control Systems 7,048 5,222 15,467 13,909

Sensors $ 8,958 $ 7,669

Weighing Solutions 6,214 5,817

Measurement Systems 2,211 674

Unallocated G&A expenses ( 8,807 ) ( 7,721 )

Acquisition costs — — ( 1,198 ) —

Impairment of goodwill and indefinite-lived intangibles — — ( 1,223 ) —

Restructuring costs ( 261 ) —

Operating income $ 8,315 $ 6,439

Acquisition costs:

Weighing and Control Systems — — ( 1,198 ) —

$ — $ — $ ( 1,198 ) $ —

Impairment of goodwill and indefinite-lived intangibles:

Foil Technology Products $ — $ — $ ( 1,223 ) $ —

$ — $ — $ ( 1,223 ) $ —

Restructuring costs:

Foil Technology Products $ — $ ( 23 ) $ — $ ( 466 )

Force Sensors — — — ( 108 )

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

Corporate/Other — — — ( 78 )

Sensors $ ( 203 ) $ —

Measurement Systems ( 58 ) —

$ ( 261 ) $ —

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The table below summarizes intersegment sales (in thousands) :

Note 11 - Segment Information (continued)

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Foil Technology Products to Force Sensors and Weighing and Control Systems $ 875 $ 858 $ 2,795 $ 2,451

Weighing and Control Systems to Foil Technology Products and Force Sensors $ 155 $ 83 $ 419 $ 294

Fiscal quarter ended

April 2, 2022 April 3, 2021

Sensors to Weighing Solutions $ 389 $ 954

Sensors to Measurement Systems 61 8

Note 12 – 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 Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Fiscal quarter ended

April 2, 2022 April 3, 2021

Numerator for basic earnings per share:

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

Fiscal quarter ended Nine fiscal months ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Foreign exchange (loss) gain $ ( 38 ) $ 162 $ 522 $ ( 123 )

Fiscal quarter ended

April 2, 2022 April 3, 2021

Foreign exchange gain $ 554 $ 735

Interest income 64 45

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Other ( 103 ) ( 70 )

$ 174 $ ( 39 ) $ 421 $ ( 629 )

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

For the fiscal quarter ended October 2, 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 euro, the Israeli shekel and the British pound.

For the nine fiscal months ended October 2, 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 euro, the Israeli shekel, and the Japanese yen.

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

For the fiscal quarter ended April 2, 2022, 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 Japanese yen and the British pound.

Included in Other for the fiscal quarter ended April 2, 2022 is a $ 0.2 million loss on the liquidation of two of the Company's European subsidiaries.

Note 14 – Fair Value Measurements

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Inputs Level 3

October 2, 2021

April 2, 2022

Assets held in rabbi trusts $ 5,980 $ 124 $ 5,856 $ —

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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 October 2, 2021 and December 31, 2020, and company-owned life insurance assets.

The marketable securities

Note 14 - Fair Value Measurements (continued)

held in the rabbi trusts are valued using quoted market prices on the last business day of the period.

Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at April 2, 2022 and December 31, 2021, 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 cash equivalents held in the rabbi trust are 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 October 2, 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 the long-term debt, excluding capitalized deferred financing costs, at April 2, 2022 and December 31, 2021 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.

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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 October 2, 2021 and September 26, 2020, respectively and $ 0.0 million and $ 0.7 million of restructuring costs during the nine fiscal months ended October 2, 2021 and September 26, 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 Company recorded $ 0.3 million and $ 0.0 million of restructuring costs during the fiscal quarter ended April 2, 2022 and April 3, 2021, respectively.

Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, in connection with the closure of one of the Company's facilities.

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

The accrued restructuring liability balance as of October 2, 2021 and December 31, 2020, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands) :

The accrued restructuring liability balance as of April 2, 2022 and December 31, 2021, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands) :

Balance at December 31, 2021 $ —

Restructuring charges in 2022 261

Cash payments ( 78 )

Balance at October 2, 2021 $ 20

Balance at April 2, 2022 $ 183

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