Vishay Precision Group, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) April 2, 2022 December 31, 2021 (Unaudited) Assets Current assets: Cash and cash equivalents $ 78,181 $ 84,335 Accounts receivable, net 59,056 58,265 Inventories: Raw materials 26,779 25,464 Work in process 27,723 23,851 Finished goods 24,898 27,112 Inventories, net 79,400 76,427 Prepaid expenses and other current assets 18,219 15,916 Total current assets 234,856 234,943 Property and equipment: Land 4,206 4,241 Buildings and improvements 68,617 68,778 Machinery and equipment 123,966 122,202 Software 9,384 8,871 Construction in progress 5,866 7,747 Accumulated depreciation ( 132,141 ) ( 130,619 ) Property and equipment, net 79,898 81,220 Goodwill 45,970 45,830 Intangible assets, net 51,623 52,437 Operating lease right-of-use assets 26,884 27,764 Other assets 18,588 19,695 Total assets $ 457,819 $ 461,889 Continues on the following page. -3- VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands) April 2, 2022 December 31, 2021 Liabilities and equity Current liabilities: Trade accounts payable $ 12,203 $ 14,876 Payroll and related expenses 19,788 23,772 Other accrued expenses 20,870 17,596 Income taxes 1,209 3,774 Current portion of operating lease liabilities 4,553 4,610 Total current liabilities 58,623 64,628 Long-term debt, less current portion 60,736 60,714 Deferred income taxes 5,761 5,848 Operating lease liabilities 23,959 25,140 Other liabilities 15,279 16,264 Accrued pension and other postretirement costs 11,618 12,253 Total liabilities 175,976 184,847 Commitments and contingencies Equity: Common stock 1,324 1,322 Class B convertible common stock 103 103 Treasury stock ( 8,765 ) ( 8,765 ) Capital in excess of par value 199,223 199,151 Retained earnings 126,652 120,296 Accumulated other comprehensive loss ( 36,719 ) ( 35,008 ) Total Vishay Precision Group, Inc. stockholders' equity 281,818 277,099 Noncontrolling interests 25 ( 57 ) Total equity 281,843 277,042 Total liabilities and equity $ 457,819 $ 461,889 See accompanying notes. -4- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarter ended April 2, 2022 April 3, 2021 Net revenues $ 87,665 $ 70,589 Costs of products sold 52,415 41,967 Gross profit 35,250 28,622 Selling, general, and administrative expenses 26,674 22,183 Restructuring costs 261 — Operating income 8,315 6,439 Other income (expense): Interest expense ( 329 ) ( 305 ) Other 439 573 Other income 110 268 Income before taxes 8,425 6,707 Income tax expense 1,741 1,764 Net earnings 6,684 4,943 Less: net loss (earnings) attributable to noncontrolling interests 328 ( 18 ) Net earnings attributable to VPG stockholders $ 6,356 $ 4,961 Basic earnings per share attributable to VPG stockholders $ 0.47 $ 0.36 Diluted earnings per share attributable to VPG stockholders $ 0.46 $ 0.36 Weighted average shares outstanding - basic 13,637 13,593 Weighted average shares outstanding - diluted 13,675 13,629 See accompanying notes. -5- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited - In thousands) Fiscal quarter ended April 2, 2022 April 3, 2021 Net earnings $ 6,684 $ 4,943 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 1,792 ) ( 1,800 ) Pension and other postretirement actuarial items 81 209 Other comprehensive loss ( 1,711 ) ( 1,591 ) Comprehensive income 4,973 3,352 Less: comprehensive income (loss) attributable to noncontrolling interests 328 ( 18 ) Comprehensive income attributable to VPG stockholders $ 4,645 $ 3,370 See accompanying notes. -6- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three fiscal months ended April 2, 2022 April 3, 2021 Operating activities Net earnings $ 6,684 $ 4,943 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,823 3,522 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 Inventory write-offs for obsolescence 396 613 Deferred income taxes 25 ( 116 ) Other ( 1,229 ) ( 1,659 ) Net changes in operating assets and liabilities: Accounts receivable, net ( 1,546 ) 753 Inventories, net ( 3,755 ) ( 3,089 ) Prepaid expenses and other current assets ( 2,367 ) 366 Trade accounts payable ( 358 ) 526 Other current liabilities ( 2,641 ) ( 601 ) Net cash (used in) provided by operating activities ( 273 ) 5,623 Investing activities Capital expenditures ( 4,303 ) ( 5,746 ) Proceeds from sale of property and equipment 10 3 Net cash used in investing activities ( 4,293 ) ( 5,743 ) Financing activities Principal payments on long-term debt — ( 18 ) Distributions to noncontrolling interests ( 246 ) ( 111 ) Payments of employee taxes on certain share-based arrangements ( 435 ) ( 846 ) Net cash used in financing activities ( 681 ) ( 975 ) Effect of exchange rate changes on cash and cash equivalents ( 907 ) ( 1,189 ) Decrease in cash and cash equivalents ( 6,154 ) ( 2,284 ) Cash and cash equivalents at beginning of period 84,335 98,438 Cash and cash equivalents at end of period $ 78,181 $ 96,154 Supplemental disclosure of investing transactions: Capital expenditures purchased $ ( 2,085 ) $ ( 4,150 ) Capital expenditures accrued but not yet paid $ 850 $ 965 See accompanying notes. -7- VISHAY PRECISION GROUP, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share amounts) Fiscal quarter ended April 2, 2022 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, 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 Other comprehensive income — — — — — ( 1,711 ) ( 1,711 ) — ( 1,711 ) Share-based compensation expense — — — 497 — — 497 — 497 Restricted stock issuances ( 17,837 shares) 2 — — ( 425 ) — — ( 423 ) — ( 423 ) Distributions to noncontrolling interests — — — — — — — ( 246 ) ( 246 ) Balance at April 2, 2022 $ 1,324 $ 103 $ ( 8,765 ) $ 199,223 $ 126,652 $ ( 36,719 ) $ 281,818 $ 25 $ 281,843 Fiscal quarter 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 ) 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. -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 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 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, 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 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: 2022 2021 Quarter 1 April 2, April 3, Quarter 2 July 2, July 3, Quarter 3 October 1, October 2, Quarter 4 December 31, December 31, 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) : Fiscal quarter ended 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 United Kingdom 877 4,334 298 5,509 860 4,580 38 5,478 Other Europe 7,792 10,531 1,882 20,205 7,181 9,933 188 17,302 Israel 7,331 190 — 7,521 6,441 130 — 6,571 Asia 8,744 3,635 1,010 13,389 7,627 3,736 855 12,218 Canada — — 3,492 3,492 — 9 3,094 3,103 Total $ 37,750 $ 32,768 $ 17,147 $ 87,665 $ 31,815 $ 30,968 $ 7,806 $ 70,589 -9- Note 2 – Revenues (continued) The following table disaggregates net revenue from contracts with customers by market sector (in thousands) . Fiscal quarter ended April 2, 2022 April 3, 2021 Test & Measurement $ 17,973 $ 14,416 Avionics, Military & Space 8,162 6,030 Transportation 13,954 9,554 Other Markets 21,150 17,545 Industrial Weighing 13,209 12,005 General Industrial 5,866 4,082 Steel 7,351 6,957 Total $ 87,665 $ 70,589 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, 2021 $ 3,570 $ 4,765 Balance at April 2, 2022 3,415 7,836 (Decrease)/increase $ ( 155 ) $ 3,071 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. 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 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): -10- June 1, 2021 Working capital $ 12,587 Property and equipment 1,209 Deferred income tax liability ( 6,178 ) Intangible assets: Acquired technology 13,167 Customer relationships 8,135 Trade names 2,393 Total intangible assets 23,695 Fair value of acquired identifiable assets 31,313 Purchase price $ 47,216 Goodwill $ 15,903 The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. These valuations and studies are currently being analyzed and have yet to be finalized. Accordingly, the assets and liabilities assumed are subject to adjustment once the detailed analysis is completed. The provisional estimated weighted average useful lives for the acquired technology and customer relationships are 15 years. Trade names are treated as indefinite-lived intangible assets. None of the goodwill associated with DTS will be deductible for income tax purposes. 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 April 3, 2021 Pro forma net revenues $ 78,921 Pro forma net earnings attributable to VPG stockholders $ 5,333 Pro forma basic earnings per share attributable to VPG stockholders $ 0.39 Pro forma diluted earnings per share attributable to VPG stockholders $ 0.39 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. -11- The change in the carrying amount of goodwill by segment is as follows (in thousands): 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 Foreign currency translation adjustment 140 147 ( 7 ) — 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 fourteen years . The Company has no finance leases. Leases recorded on the balance sheet consist of the following (in thousands) : Leases April 2, 2022 December 31, 2021 Assets Operating lease right of use asset $ 26,884 $ 27,764 Liabilities Operating lease - current $ 4,553 $ 4,610 Operating lease - non-current $ 23,959 $ 25,140 Other information related to lease term and discount rate is as follows: April 2, 2022 Operating leases weighted average remaining lease term (in years) 8.33 years Operating leases weighted average discount rate 3.1 % The components of lease expense are as follows (in thousands) : Fiscal quarter ended April 2, 2022 April 3, 2021 Operating lease cost $ 1,310 $ 1,181 Short-term lease cost 26 33 Sublease income ( 112 ) — Total net lease cost $ 1,224 $ 1,214 Right of use assets obtained in exchange for new operating lease liability during 2021 were $ 0.2 million. 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) : -12- Note 5 - Leases (continued) 2022 (excluding the three months ended April) $ 3,842 2023 4,670 2024 3,992 2025 3,419 2026 3,087 Thereafter 13,302 Total future minimum lease payments $ 32,312 Less: amount representing interest ( 3,800 ) Present value of future minimum lease payments $ 28,512 Note 6 – 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 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 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 7 – Long-Term Debt Long-term debt consists of the following (in thousands) : April 2, 2022 December 31, 2021 2020 Credit Agreement - Revolving Facility $ 61,000 $ 61,000 Deferred financing costs ( 264 ) ( 286 ) Total long-term debt 60,736 60,714 Note 8 – 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, 2022 $ ( 30,276 ) $ ( 4,732 ) $ ( 35,008 ) Other comprehensive loss before reclassifications ( 1,983 ) — ( 1,983 ) Amounts reclassified from accumulated other comprehensive income 191 81 272 Balance at April 2, 2022 $ ( 32,068 ) $ ( 4,651 ) $ ( 36,719 ) -13- 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 — 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). Note 9 – 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 2, 2022 Fiscal quarter ended April 3, 2021 Pension Plans OPEB Plans Pension Plans OPEB Plans Net service cost $ 84 $ 7 $ 97 $ 9 Interest cost 123 17 103 17 Expected return on plan assets ( 123 ) ( 97 ) — Amortization of actuarial losses 74 1 102 5 Net periodic benefit cost $ 158 $ 25 $ 205 $ 31 Note 10 – 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 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. On March 3, 2022 and in accordance with their respective employment agreements, 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 $ 1.5 million and were comprised of 47,831 RSUs. Fifty percent of these awards will vest on January 1, 2025, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2025, 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 9, 2022, 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 $ 0.5 million and were comprised of 16,324 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, 2025 subject to the employees' continued employment. 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 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 -14- 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. 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 2, 2022 April 3, 2021 Restricted stock units $ 497 $ 366 Note 11 – Segment Information VPG reports in three product segments: 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) : -15- Note 11 - Segment Information (continued) Fiscal quarter ended April 2, 2022 April 3, 2021 Net revenues: Sensors $ 37,750 $ 31,815 Weighing Solutions 32,768 30,968 Measurement Systems 17,147 7,806 Total $ 87,665 $ 70,589 Gross profit: 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: Sensors $ 8,958 $ 7,669 Weighing Solutions 6,214 5,817 Measurement Systems 2,211 674 Unallocated G&A expenses ( 8,807 ) ( 7,721 ) Restructuring costs ( 261 ) — Operating income $ 8,315 $ 6,439 Restructuring costs: Sensors $ ( 203 ) $ — Measurement Systems ( 58 ) — $ ( 261 ) $ — 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 2, 2022 April 3, 2021 Sensors to Weighing Solutions $ 389 $ 954 Sensors to Measurement Systems 61 8 -16- 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 April 2, 2022 April 3, 2021 Numerator: Numerator for basic earnings per share: Net earnings attributable to VPG stockholders $ 6,356 $ 4,961 Denominator: Denominator for basic earnings per share: Weighted average shares 13,637 13,593 Effect of dilutive securities: Restricted stock units 38 36 Dilutive potential common shares 38 36 Denominator for diluted earnings per share: Adjusted weighted average shares 13,675 13,629 Basic earnings per share attributable to VPG stockholders $ 0.47 $ 0.36 Diluted earnings per share attributable to VPG stockholders $ 0.46 $ 0.36 Note 13 – 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 2, 2022 April 3, 2021 Foreign exchange gain $ 554 $ 735 Interest income 64 45 Pension expense ( 76 ) ( 137 ) Other ( 103 ) ( 70 ) $ 439 $ 573 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. -17- Note 14 – 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 2, 2022 Assets Assets held in rabbi trusts $ 5,980 $ 124 $ 5,856 $ — December 31, 2021 Assets Assets held in rabbi trusts $ 6,158 $ 49 $ 6,109 $ — 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 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 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. 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 15 – 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. -18- 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 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 April 2, 2022 $ 183 -19-