What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-04 · 167 added, 243 removed, 1337 unchanged (23% of the section changed)

17 unchanged sentences

Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

Our evaluation of internal control over financial reporting did not include the internal controls of the business acquired upon the purchase of Diversified Technical Systems, Inc., which is included in our 2021 consolidated financial statements beginning June 1, 2021 and constituted 4.4% of our total assets at December 31, 2021 and 6.0% of our net revenues for the year ended December 31, 2021.

We are currently in the process of integrating Diversified Technical Systems, Inc.

into our internal control over financial reporting process.

Brightman Almagor Zohar & Co., a firm in the Deloitte global network, has issued an attestation report on the effectiveness of our internal control over financial reporting, as stated in their report which is set forth on the next page.

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 4, 2022, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting , management excluded from its assessment the internal control over financial reporting at Diversified Technical Systems, Inc., which was acquired on June 1, 2021, and whose financial statements constitute 4.4% of total assets at December 31, 2021 and 6.0% of net revenues for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Diversified Technical Systems, Inc.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

15 unchanged sentences

/s/ Brightman Almagor Zohar & Co.

Brightman Almagor Zohar & Co.

A Firm in the Deloitte Global Network

84 unchanged sentences

10.26† Vishay Precision Group, Inc.

2010 Stock Incentive Program, as Amended and Restated Effective May 21, 2013 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on May 22, 2013 and incorporated herein by reference).

2022 Stock Incentive Plan, effective May 26, 2022 (previously filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 14, 2022 and incorporated herein by reference).

10.27† Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Advanced Technologies, Ltd.

31 unchanged sentences

Kippen, not individually but solely in its capacity as the representative of the Sellers and Guarantors (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 1, 2021 and incorporated herein by reference).

10.45† Form of Stock Option Agreement under the Vishay Precision Group, Inc.

2022 Stock Incentive Plan (previously filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on May 26, 2022).

10.46† Form of Restricted Stock Unit Agreement (Time-based Vesting) under the Vishay Precision Group, Inc.

2022 Stock Incentive Plan (previously filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on May 26, 2022).

10.47† Form of Restricted Stock Unit Agreement (Performance-based Vesting) under the Vishay Precision Group, Inc.

2022 Stock Incentive Plan (previously filed as Exhibit 4.9 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on May 26, 2022).

10.48† First Amendment to Vishay Precision Group, Inc.

2017 Non-Employee Director Compensation Plan (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 8, 2022 and incorporated herein by reference).

21.1 List of Subsidiaries.

9 unchanged sentences

101 Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2022, furnished in XBRL (eXtensible Business Reporting Language)).

104 Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101.

* Confidential treatment has been accorded to certain portions of this Exhibit.

17 unchanged sentences

Clancy (Principal Financial and Accounting Officer)

/s/ Marc Zandman Director March 4, 2022

Reibstein Director March 1, 2023

/s/ Marc Zandman Director March 1, 2023

/s/ Timothy V.

20 unchanged sentences

We have audited the accompanying consolidated balance sheets of Vishay Precision Group, Inc.

(the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements”).

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Indefinite-lived Intangible Assets –DSI Reporting Unit — Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill – DSI Reporting Unit — Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter Description

The Company's quantitative goodwill and indefinite-lived intangible assets impairment test involves the comparison of the fair value of each reporting unit or asset to its carrying value.

The Company's quantitative goodwill impairment test involves the comparison of the fair value of each reporting unit or asset to its carrying value.

In estimating the fair value of the DSI reporting unit, the Company used the income approach to evaluate the estimated fair value of the reporting unit.

The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of the discount rate and long term growth rate.

Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting unit.

In estimating the fair value of the indefinite-lived trade name, the Company compares the carrying value to the fair value based on current revenue projections of the related operation, under the relief from royalty method.

Any excess carrying value over the applicable fair value is recognized as impairment.

The carrying amount of goodwill and indefinite-lived trade name as of December 31, 2021, for the DSI reporting unit is $16.9 million and $3.3 million, respectively.

The fair value of the DSI reporting unit and indefinite-lived trade name exceeds the carrying value by approximately 12% and 15%, respectively.

We identified goodwill and indefinite-lived trade name for the DSI reporting unit as a critical audit matter because of the significant judgments made by management to estimate fair value and the sensitivity to changes in management estimates and assumptions.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues, profitability, working capital requirements and selection of the discount rate and long term growth rate.

The carrying amount of goodwill as of December 31, 2022, for the DSI reporting unit is $16.9 million.

The fair value of the DSI reporting unit exceeds the carrying value by approximately 8%.

We identified goodwill for the DSI reporting unit as a critical audit matter because of the significant judgments made by management to estimate fair value and the sensitivity to changes in management estimates and assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of future revenues, profitability, working capital requirements and selection of the discount rate and long term growth rate used by management to estimate the fair value of the DSI reporting unit and indefinite-lived trade name included the following, among others:

• We tested the effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value of the DSI reporting unit and indefinite-lived trade name, such as controls related to management’s forecasts of future revenues, profitability, working capital requirements and selection of the discount rate and long term growth rate.

Our audit procedures related to forecasts of future revenues, profitability, working capital requirements and selection of discount and long term growth rate used by management to estimate the fair value of the DSI reporting unit included the following, among others:

• We tested the effectiveness of controls over management’s impairment evaluation, including those over the determination of the fair value of the DSI reporting unit, such as controls related to management’s forecasts of future revenues, profitability, working capital requirements and selection of discount and long term growth rates.

• We evaluated management’s ability to accurately forecast operating performance by comparing actual results to management’s historical forecasts.

2 unchanged sentences

– Internal communications to management and the Board of Directors.

• With the assistance of our fair value specialists, we evaluated the valuation methodologies and the reasonableness of the discount rate and long term growth rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate and long term growth rate selected by management.

Acquisition of Diversified Technical Systems, Inc.

( " DTS " ) — Intangible Assets Acquired — Refer to Notes 1 and 3 to the Financial Statements

Critical Audit Matter Description

The Company completed the acquisition of DTS, for $47.2 million on June 1, 2021.

The Company allocated the purchase price between tangible and intangible assets acquired and liabilities assumed based on estimated fair values, with any residual of the purchase price recorded as goodwill.

The provisional fair values assigned to the technology, customer relationships and trade name of DTS were $13.2 million, $8.1 million and $2.4 million, respectively.

Management estimated the fair value of these intangible assets using the income approach, which is based on the present value of the future cash flows attributable to each identifiable intangible asset.

The income approach to valuation required management to make significant estimates and assumptions related to future cash flows and discount rates.

We identified the fair value of the intangible assets acquired as a critical audit matter because of the significant judgments, estimates and assumptions made by management to estimate their fair value.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of future cash flows and selection of discount rates used by management to estimate the fair value of the acquired intangible assets included the following, among others:

• We tested the effectiveness of controls over management’s purchase price allocation, including those over the determination of the fair value of the intangible assets, such as controls related to management’s forecasts of future cash flows and selection of discount rate.

• We evaluated the reasonableness of management’s forecasts of future cash flows by comparing the forecasts to historical results and internal communications by management to the Board of Directors.

• With the assistance of our fair value specialists, we evaluated the valuation methodologies and the reasonableness of the discount rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.

With the assistance of our fair value specialists, we evaluated the valuation methodologies and the reasonableness of the discount and long term growth rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount and long term growth rates selected by management.

/s/ Brightman Almagor Zohar & Co.

Brightman Almagor Zohar & Co.

A Firm in the Deloitte Global Network

41 unchanged sentences

Current portion of operating lease liabilities 4,208 4,610

Current portion of long-term debt — 18

Total current liabilities 64,336 64,628

Long-term debt, less current portion 60,714 40,626

Long-term debt 60,799 60,714

Deferred income taxes 4,212 5,848

12 unchanged sentences

1,022,887 shares outstanding as of December 31, 2022 and December 31, 2021

Treasury stock, at cost - 619.667 shares held at December 31, 2021 and December 31, 2020

Treasury stock, at cost - 704,880 shares held at December 31, 2022 and 619,667 shares held at December 31, 2021

( 11,504 ) ( 8,765 )

10 unchanged sentences

( 25 ) ( 57 )

306,522 277,042

Total liabilities and equity

12 unchanged sentences

Impairment of goodwill and indefinite-lived intangibles — 1,223 2,440

Executive severance costs — — 611

Restructuring costs 1,518 76 918

3 unchanged sentences

Other 3,558 ( 230 ) ( 2,982 )

Other expenses - net ( 1,460 ) ( 4,348 ) ( 2,208 )

Other income (expenses) 1,289 ( 1,460 ) ( 4,348 )

Income before taxes 45,088 25,912 18,309

22 unchanged sentences

Pension and other postretirement actuarial items 5,321 2,347 ( 137 )

Other comprehensive income (loss) ( 2,337 ) 5,032 ( 238 )

Other comprehensive income (loss), net of tax ( 5,892 ) ( 2,337 ) 5,032

Comprehensive income 30,661 18,106 15,832

13 unchanged sentences

Loss from extinguishment of debt — — 30

(Gain) loss on disposal of property and equipment ( 5 ) ( 130 ) 34

Gain on disposal of property and equipment ( 117 ) ( 5 ) ( 130 )

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

2 unchanged sentences

Deferred income taxes ( 2,040 ) ( 3,256 ) 1,153

Other ( 2,605 ) 1,735 358

Foreign currency impacts and other items ( 3,915 ) ( 1,018 ) 591

Net changes in operating assets and liabilities, net of acquisition:

4 unchanged sentences

Other current liabilities 3,393 11,637 507

Other non current assets and liabilities, net ( 1,413 ) ( 624 ) 1,011

Accrued pension and other postretirement costs, net ( 426 ) ( 963 ) 133

Net cash provided by operating activities 33,029 33,537 35,313

8 unchanged sentences

Proceeds from revolving facility — 20,000 —

Purchase of treasury stock ( 2,739 ) — —

Purchase of non-controlling interest — — ( 253 )

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 4,334 ) ( 2,410 ) 3,056

(Decrease) increase in cash and cash equivalents ( 14,103 ) 11,528 ( 3,249 )

Increase (decrease) in cash and cash equivalents 4,227 ( 14,103 ) 11,528

Cash and cash equivalents at beginning of year 84,335 98,438 86,910

22 unchanged sentences

5 — — ( 796 ) — — ( 791 ) — ( 791 )

Conversion from Class B to common stock ( 2,271 shares)

— — — — — — — — —

Cumulative effect adjustment for adoption of ASC 842 — — — — 531 — 531 — 531

Impact due to DSI acquisition — — — — — — — 299 299

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

Distributions to noncontrolling interests

8 unchanged sentences

5 — — ( 857 ) — — ( 852 ) — ( 852 )

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

Distributions to noncontrolling interests

7 unchanged sentences

3 — — ( 426 ) — — ( 423 ) — ( 423 )

Purchase of treasury stock ( 85,213 shares)

— — ( 2,739 ) — — — ( 2,739 ) — ( 2,739 )

Distributions to noncontrolling interests — — — — — — — ( 458 ) ( 458 )

5 unchanged sentences

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.

(“VPG” or the “Company”) is a global, diversified company focused on precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one.

Many of our specialized sensors, weighing solutions, and measurement systems are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets.

Our products are marketed under 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.

Principles of Consolidation

2 unchanged sentences

All transactions, accounts, and profits between individual members comprising the Company have been eliminated in consolidation.

Change in Segment Reporting

In the fourth quarter of 2021, the Company formally adopted an operationally diversified structure and strategy, by which each of VPG's operating segments maintains and deploys specific go-to-market strategies, technical expertise, capital requirements, and acquisition opportunities.

This change in structure and strategy impacted the Company's reportable segments beginning in the fourth quarter of 2021, but did not impact the Company's consolidated financial statements.

As a result, we recast our businesses into new reporting segments and the results of operations by reporting segments for prior periods presented in the financial statements have been recast to reflect the new reporting segments.

Refer to Note 13 for further information about the Company's reporting segments.

Use of Estimates

19 unchanged sentences

Warranty related costs continue to be recognized as expense when the products are sold.

Note 1 – Background and Summary of Significant Accounting Policies (continued)

Sales, value added taxes and other taxes collected concurrent with revenue-producing activities are excluded from revenue.

3 unchanged sentences

The amount charged to expense for research and development was $ 19.8 million, $ 17.2 million, and $ 12.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Note 1 – Background and Summary of Significant Accounting Policies (continued)

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

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Depreciation expense was $ 11.5 million, $ 11.7 million, and $ 10.1 million for the years ended December 31, 2022, 2021, and 2020, respectively, which included software depreciation expense of $ 0.7 million, $ 0.6 million, and $ 0.7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Note 1 – Background and Summary of Significant Accounting Policies (continued)

Business Combinations

3 unchanged sentences

These estimates are based on historical experience and information obtained from the management of the acquired companies, and are inherently uncertain.

Note 1 – Background and Summary of Significant Accounting Policies (continued)

Goodwill and Other Intangible Assets

8 unchanged sentences

The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth fiscal quarter each year.

As described in Note 4 to the consolidated financial statements, the 2021 interim impairment test resulted in an impairment charge in the second quarter of 2021.

The 2020 annual impairment test resulted in an impairment charge in the fourth quarter of 2020.

In 2019 the annual impairment test resulted in no impairment.

As described in Note 4 to the consolidated financial statements, the 2022 annual impairment test resulted in no impairment.

In the second quarter of 2021, an impairment charge was recorded and in 2020, the annual impairment test resulted in an impairment charge in the fourth quarter of 2020.

Definite-lived intangible assets, such as customer relationships, patents and acquired technology, non-competition agreements, and certain trade names are amortized on a straight-line method over their estimated useful lives.

18 unchanged sentences

For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated balance sheets have been translated at the rate of exchange as of the balance sheet date.

Revenues and expenses are translated at the

Note 1 – Background and Summary of Significant Accounting Policies (continued)

average exchange rate for the year.

Revenues and expenses are translated at the average exchange rate for the year.

Translation adjustments do not impact the consolidated statements of operations and are reported as a separate component of accumulated other comprehensive loss within the statement of comprehensive income.

3 unchanged sentences

Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the consolidated statements of operations.

Note 1 – Background and Summary of Significant Accounting Policies (continued)

Share-Based Compensation

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Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

Recently Adopted Accounting Pronouncements

In 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.

Recent Accounting Pronouncements

The Company evaluates the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board.

ASUs that became effective in 2022 or those issued but not yet effective, are either not applicable for the Company or are expected to have no material impact on the Company's consolidated financial statement.

Note 2 – Revenues

The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location (in thousands) :

Note 2 – Revenues (continued)

Year Ended December 31, 2022

7 unchanged sentences

$ 152,221 $ 125,715 $ 84,644 $ 362,580

Note 2 – Revenues (continued)

Year Ended December 31, 2021

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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

Note 2 – Revenues (continued)

performance obligations.

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.

5 unchanged sentences

December 31, 2022 $ 3,990 $ 7,983

Increase ( decrease) $ ( 35 ) $ 1,892

Increase $ 420 $ 3,218

The amount of revenue recognized during the year ended December 31, 2022 that was included in the contract liability balance at December 31, 2021 was $ 3.2 million.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts that have a duration of one year or less and for contracts that are substantially complete.

The Company treats shipping and handling activities as fulfillment costs.

Note 3 – Acquisition Activity

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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 System segment.

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

DTS reports into the Company's Measurement Systems segment.

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

Working capital $ 12,494

11 unchanged sentences

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.

The 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.

Note 3 – Acquisition Activity ( continued)

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

Year Ended December 31,

Legal fees $ 341

Appraisal fees 18

Investment banker fees and insurance costs 839

Included in the results of the operations of the Company, starting on June 1, 2021, are net revenues of $ 19.2 million and net earnings of $ 1.2 million for the year ended December 31, 2021.

DTS results include amortization of the inventory step-up of $ 2.7 million and amortization of intangible assets of $ 0.8 million for year ended December 31, 2021.

None of the goodwill associated with DTS is 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.

Following are 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 (unaudited):

Year ended December 31, Year ended December 31,

(unaudited) (unaudited)

Year ended December 31,

Pro forma net revenues

$ 331,155 $ 301,577

Pro forma net earnings attributable to VPG stockholders

$ 25,109 $ 14,289

Pro forma basic earnings per share attributable to VPG stockholders

$ 1.84 $ 1.05

Pro forma diluted earnings per share attributable to VPG stockholders

$ 1.84 $ 1.05

Dynamic Systems Inc.

On November 1, 2019, VPG completed the acquisition of New York-based Dynamic Systems Inc.

("DSI"), a provider of specialized dynamic thermal-mechanical test and simulation systems used to develop new metal alloys and optimize production processes, for a purchase price of $ 40.3 million.

DSI reports into the Company's Measurement Systems segment.

The following table summarizes the final fair values assigned to the assets and liabilities of DSI as of November 1, 2019 (in thousands):

November 1, 2019

Working capital (a)

Property and equipment 1,727

Long-term deferred income tax liability ( 2,643 )

Non-Controlling interest ( 299 )

Intangible assets:

Patents and acquired technology 10,250

Customer relationships 4,344

Trade names 3,300

Total intangible assets 17,894

Fair value of acquired identifiable assets and liabilities 23,419

Purchase price 40,325

Goodwill $ 16,906

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

Note 3 – Acquisition Activity ( continued)

The weighted average useful lives for the patents and acquired technology and customer relationships are 16 years and 15 years, respectively.

Most of the goodwill associated with DSI is deductible for income tax purposes.

The Company recorded acquisition costs of associated with this transaction in its consolidated statements of operation as follows (in thousands) :

Year ended December 31,

Accounting and legal fees $ 214

Appraisal fees 13

Note 4 – Goodwill and Other Intangible Assets

At the beginning of 2021, the Company had five reporting units to which goodwill was allocated:

steel, on-board weighing, instrumentation, DSI, and DTS.

At the beginning of 2022, the Company had four reporting units to which goodwill was allocated:

steel, on-board weighing, DSI, and DTS.

For the steel and on-board weighing goodwill reporting units, the Company performed the qualitative assessment, which included assessment of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other entity specific events which could impact the reporting unit.

Based on this review, it was determined that the fair value of each of those reporting units was in excess of its carrying value and therefore no quantitative impairment test was required.

During the second quarter of 2021, due to updated financial projections, the Company performed a quantitative impairment test on its instrumentation reporting unit's goodwill and indefinite-lived intangible trade name.

The Company recognized a non-cash impairment loss of $ 1.1 million in goodwill and $ 0.1 million in indefinite-lived intangible trade name.

The impairment was driven mainly by changes in forecasted projections including slower growth rate in revenues.

The Company performed its annual impairment test on indefinite-lived trade names as of the first day of the fourth fiscal quarter of 2021.

The impairment test indicated no additional impairment.

After considering the impact of the second quarter impairment charges, the carrying amount of goodwill and indefinite-lived trade names as of December 31, 2021 was $ 0.0 million and $ 0.3 million, respectively.

For the DSI goodwill reporting unit, the Company performed the quantitative impairment test.

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

For the DSI and DTS goodwill reporting units, the Company performed the quantitative impairment test.

In estimating the fair value of our DSI and DTS reporting units the Company used the income approach.

2 unchanged sentences

In 2022, the results of the quantitative impairment test for the DSI reporting unit indicated no impairment, with the fair value exceeding the carrying value by approximately 8 % for goodwill and 14 % for the indefinite-lived trade name.

The Company's analysis in 2020 resulted in the fair value exceeding the carrying value for the DSI reporting unit and a non-cash impairment loss of $ 2.4 million for the instrumentation reporting unit.

In 2019, the Company did not recognize an impairment for the instrumentation reporting unit, as the fair value exceeded its carrying value by approximately 12 %.

The goodwill and indefinite-lived trade name allocated the DTS goodwill reporting unit is still provisional as of December 31, 2021 and therefore will be tested in the following year's annuals impairment test.

The results for the quantitative impairment test for the DTS reporting unit indicated no impairment, with the fair value exceeding the carrying value by approximately 36 % for goodwill and 34 % for the indefinite-lived trade name.

Prior to 2022, the Company also had an instrumentation reporting unit.

The Company's analysis in 2021 resulted in an impairment for the instrumentation reporting unit, of $ 1.1 million in goodwill, which represented the remainder of the goodwill balance, and $ 0.1 million in indefinite-lived intangible trade name .

The Company's analysis in 2020 resulted in the fair value exceeding the carrying value for the instrumentation reporting unit and a non-cash impairment loss of $ 2.4 million for the instrumentation reporting unit.

The change in the carrying amount of goodwill by segment is as follows ( in thousands) :

Note 4 – Goodwill and Other Intangible Assets (continued)

Total Measurement Systems

KELK Acquisition DSI Acquisition Stress-Tek Acquisition Pacific Instruments Acquisition DTS Acquisition

Total Measurement Systems Weighing Solutions

KELK Acquisition DSI Acquisition Pacific Instruments Acquisition DTS Acquisition Stress-Tek Acquisition

Balance at January 1, 2021 $ 31,105 $ 6,726 $ 16,942 $ 1,126 $ — $ 6,311

Adjustment to goodwill acquired ( 1,700 ) — ( 1,700 ) — — —

Goodwill acquired 15,903 — — — 15,903 —

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

1 unchanged sentence

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

Goodwill acquired 15,903 — — — — 15,903

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

Adjustment to goodwill acquired 130 — — — 130 —

Foreign currency translation adjustment ( 416 ) ( 393 ) ( 23 ) — — —

Balance at December 31, 2022 $ 45,544 $ 6,313 $ 16,887 $ — $ 16,033 $ 6,311

Note 4 – Goodwill and Other Intangible Assets (continued)

Intangible assets were as follows (in thousands) :

18 unchanged sentences

Certain intangible assets are subject to foreign currency translation.

In conjunction with the acquisition of DTS on June 1, 2021 (See Note 3), the Company allocated $ 8.1 million of the purchase price to customer relationships, $ 13.2 million to patents and acquired technology, and $ 2.4 million to indefinite-lived trade names.

Amortization expense was $ 3.9 million, $ 3.3 million, and $ 2.4 million, for the years ended December 31, 2022, 2021, and 2020, respectively.

Amortization expense in 2021 included $ 0.8 million related to the DTS acquisition.

Note 4 – Goodwill and Other Intangible Assets (continued)

Amortization expense in 2022 and 2021 included $ 1.4 million and $ 0.8 million related to the DTS acquisition.

Estimated annual amortization expense for each of the next five years is as follows (in thousands) :

5 unchanged sentences

The Company recorded restructuring costs of $ 1.5 million, $ 0.1 million, and $ 0.9 million during the years ended December 31, 2022, 2021, and 2020, respectively.

In 2021 and 2020, restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.

In 2019, restructuring costs included $ 1.2 million of employee termination costs, including severance and statutory retirement allowances incurred in connection with various cost reduction programs, and $ 1.1 million of other exit costs, including asset write downs and an impairment of a right of use asset associated with the closure and downsizing of facilities as part of the manufacturing transitions of the Company's force sensors products to facilities in India and China.

The restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.

The following table summarizes the activity to date related to these programs in the accrued restructuring liability, which is comprised of the activity associated primarily with the employee termination costs.

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

The accrued restructuring liability balance

Note 5 – Restructuring Costs (continued)

as of December 31, 2022 and 2021, respectively, is included in other accrued expenses in the accompanying consolidated balance sheets (in thousands) :

Balance at beginning of year $ — $ 63

22 unchanged sentences

Total income tax expense $ 8,535 $ 5,469 $ 7,509

Note 6 – Income Taxes (continued)

A reconciliation of income tax expense (benefit) at the U.S.

18 unchanged sentences

Total income tax expense $ 8,535 $ 5,469 $ 7,509

The 2017 Tax Act subjects a U.S.

In 2022, the Company recognized deferred tax benefits of $ 0.1 million on net operating loss carryforwards generated in certain foreign jurisdictions, which is included in deferred tax expense (benefit) above.

The 2017 Tax Cuts and Jobs Act subjects a U.S.

shareholder to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.

2 unchanged sentences

The Company has elected to recognize tax expense related to GILTI in the year the tax is incurred.

Note 6 – Income Taxes (continued)

The Company recognized approximately $ 11.9 million and $ 14.3 million of GILTI income for the years ended December 31, 2021 and 2020, respectively.

tax on the GILTI income, net of foreign tax credits, was $ 0.1 million for the year ended December 31, 2021 and was fully offset by foreign tax credits associated with GILTI and U.S.

operating losses exclusive of GILTI for the year ended December 31, 2020.

The Company recognized approximately $ 26.3 million and $ 11.9 million of GILTI for the years ended December 31, 2022 and 2021, respectively.

For each of the years ended December 31, 2022 and 2021, the U.S.

tax on GILTI, net of foreign tax credits and research credits, was less than $ 0.1 million.

Any excess foreign tax credits associated with GILTI are lost and cannot be carried forward to future years.

For the year ended December 31, 2020, the Company would have generated a net operating loss for U.S.

federal income tax purposes but for the effects of the GILTI provision.

Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands) :

Note 6 – Income Taxes (continued)

Deferred tax assets:

4 unchanged sentences

Deferred compensation 2,921 3,267

Research and development costs 2,940 832

Other accruals and reserves 2,228 3,593

Book over tax depreciation 93

Total gross deferred tax assets 25,353 30,519

17 unchanged sentences

However, there was insufficient positive evidence to overcome the negative evidence.

In November 2019, the Company acquired DSI.

DSI's opening balance sheet included $ 17 million of gross deferred tax liabilities, including $ 4.1 million of indefinite-lived liabilities.

The acquisition contributed to a $ 2.5 million net reduction in valuation allowance and current tax benefit for the Company in 2019.

In the fourth quarter of 2020, the Company completed the purchase accounting for the acquisition of DSI, which resulted in the recognition of additional deferred tax assets of $ 1.7 million and a corresponding increase in valuation allowance.

In June 2021, the Company acquired DTS.

1 unchanged sentence

The acquisition contributed to a $ 1.6 million net reduction in valuation allowance and deferred tax benefit for the Company in 2021.

The Company has one year from the date of acquisition to finalize the purchase accounting for DTS.

In the second quarter of 2022, the Company completed the purchase accounting for the acquisition of DTS, which resulted in a $ 0.3 million reduction of deferred tax assets and corresponding increase in goodwill.

Overall, the cumulative losses and the acquisition impacts still indicate that realization of our U.S.

deferred tax assets remains uncertain such that the Company cannot conclude that it is "more likely than not" that the deferred tax assets will be

Note 6 – Income Taxes (continued)

deferred tax assets remains uncertain such that the Company cannot conclude that it is "more likely than not" that the deferred tax assets will be recoverable.

We will continue to monitor the realization of U.S.

2 unchanged sentences

deferred tax assets was approximately $ 8.7 million and $ 13.9 million, respectively.

The net change in valuation allowance was approximately $ 1.0 million.

The change in valuation allowance related to state taxes was $ 0.6 million and $ 0.7 million expense for the years ended December 31, 2021 and 2020, respectively.

The net change in this valuation allowance was approximately $( 5.2 ) million, of which approximately $( 3.3 ) million related to state tax rate changes.

The change in valuation allowance related to state taxes exclusive of rate changes was $ 0.4 million benefit and $ 0.6 million expense for the years ended December 31, 2022 and 2021, respectively.

The Company also has valuation allowances of $ 2.1 million and $ 2.6 million at December 31, 2022 and 2021, respectively, with respect to certain foreign net operating loss and capital loss carryforwards.

Note 6 – Income Taxes (continued)

Significant valuation allowances are as follows (in thousands) :

4 unchanged sentences

Israel - capital losses 1,287 1,537

The following table summarizes significant net operating losses and credit carryforwards as of December 31, 2021 (in thousands):

The following table summarizes significant net operating losses, capital losses and credit carryforwards as of December 31, 2022 (in thousands):

Jurisdiction 2022 Expiring

6 unchanged sentences

federal net operating losses is taken into account before the GILTI deduction allowable by IRC Section 250.

Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $ 213.9 million at December 31, December 31, 2021 compared to $ 178.2 million at December 31, 2020.

As a result of the 2017 Tax Act, in 2017 the Company had provided for a deferred tax liability of approximately $ 1.8 million of withholding tax associated with a planned cash distribution of approximately $ 25.5 million.

As of December 31, 2021, other than the planned cash distribution of $ 14.1 million, substantially all of the remaining undistributed earnings are considered to be indefinitely reinvested and accordingly no provision has been made with respect to these earnings for incremental foreign income taxes, state income taxes or foreign withholding taxes.

Undistributed earnings of the Company’s foreign subsidiaries were approximately $ 233.2 million at December 31, 2022 compared to $ 213.9 million at December 31, 2021.

As of December 31, 2022, the Company had provided for a deferred tax liability of approximately $ 2.1 million of withholding tax associated with unremitted earnings, including planned cash distributions of $ 19.6 million.

Substantially all of the remaining undistributed earnings are considered to be indefinitely reinvested and accordingly no provision has been made with respect to these earnings for incremental foreign income taxes, state income taxes or foreign withholding taxes.

If those earnings were distributed to the U.S., the Company could be subject to incremental foreign income taxes, state income taxes, and withholding taxes.

Determination of the amount of unrecognized deferred tax liability is not practicable because of the uncertainty regarding the timing of any such distribution and the impact on existing valuation allowances.

In addition to the $ 1.5 million, additional withholding taxes of approximately $ 22.5 million are estimated to be payable upon remittance of the remaining previously unremitted earnings as of December 31, 2021.

In addition to the $ 2.1 million, additional withholding taxes of approximately $ 24.7 million are estimated to be payable upon distribution of the remaining previously unremitted earnings as of December 31, 2022.

Net income taxes paid were $ 10.8 million, $ 7.7 million and $ 4.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

24 unchanged sentences

The Company believes that it is reasonably possible that an increase in unrecognized tax benefits related to foreign exposures of between $ 0.1 million and $ 0.2 million may be necessary in 2023.

As of December 31, 2021, the Company anticipates that it is reasonably possible that it will reverse $ 0.3 million of its current unrecognized tax benefits within the next calendar year due to the expiration of the statute of limitations in certain jurisdictions.

None of the unrecognized tax benefits the Company expects to reverse in 2022 due to statute lapses are covered by the Tax Matters Agreement.

Furthermore, as of December 31, 2022, the Company anticipates that it will pay $ 0.1 million of its reserves for unrecognized tax benefits, and does not anticipate that any of its current unrecognized tax benefits will reverse within the next calendar year due to the expiration of the statute of limitations.

The Company and its subsidiaries file U.S.

3 unchanged sentences

Additionally, the Company's foreign subsidiaries file income tax returns in the countries in which they have operations and the statutes of limitations in those jurisdictions generally range from 3 to 10 years.

During the fourth quarters of 2020 and 2021, the Company concluded tax examinations in Israel for one of its subsidiaries covering 2015 and 2016, respectively.

The conclusions of the audits resulted in no significant changes in tax and a releases of less than $ 0.1 million of reserves for uncertain tax positions for each of those years, including accrued interest.

During the second and third quarters of 2019, the Company concluded tax examinations in Taiwan and Belgium, respectively, for two of its subsidiaries, covering the years 2016 and 2017.

During the fourth quarters of 2021 and 2022, the Company concluded tax examinations in Israel for one of its subsidiaries covering 2016 and 2017 through 2020, respectively.

The conclusions of the audits resulted in the release of $ 1.4 million of reserves for uncertain tax positions, including accrued interest.

During the third quarter of 2022, the Company concluded tax examinations in Germany for two of its subsidiaries, covering the years 2017 through 2019.

The conclusion of the tax examinations resulted in no significant change in tax.

During the fourth quarter of 2022, the Company concluded a tax examination in Taiwan for one of its subsidiaries, covering the year 2020.

The conclusion of the tax examinations resulted in no change in tax.

The Company is subject to ongoing income tax audits, administrative appeals and judicial proceedings in India spanning a number of years.

2 unchanged sentences

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

Other debt — 18

Deferred financing costs ( 201 ) ( 286 )

$ 60,799 $ 60,714

current portion — 18

$ 60,714 $ 40,626

2020 Credit Agreement

18 unchanged sentences

The Company had outstanding letters of credit under these short-term lines of credit of $ 3.2 million and $ 2.0 million at December 31, 2022 and 2021, respectively.

Other debt consisted of zero interest rate debt held by VPG’s Japanese subsidiary, which was fully paid off in 2021.

Note 7 – Long-Term Debt (continued)

Aggregate annual maturities of long-term debt are as follows (in thousands) :

Note 7 – Long-Term Debt (continued)

Interest paid on third-party debt was $ 2.3 million, $ 1.2 million, and $ 1.3 million during the years ended December 31, 2022, 2021, and 2020, respectively.

9 unchanged sentences

Shares of either common stock or Class B convertible common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally.

On August 8, 2022, the Board of Directors of the Company authorized the repurchase of up to 600,000 shares of the Company’s outstanding common stock (the “Stock Repurchase Plan”).

The Stock Repurchase Plan will expire on August 11, 2023, and the Board of Directors authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act.

At December 31, 2022, the Company had repurchased 85,213 shares of its common stock under the Stock Repurchase Plan.

The Board of Directors is authorized, without further stockholder approval, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series.

14 unchanged sentences

( 30,761 ) 5,070 99 5,169 ( 25,592 )

Reclassification adjustment for foreign currency translation

$ ( 37,703 ) $ 4,687 $ 345 $ 5,032 $ ( 32,671 )

14 unchanged sentences

( 30,276 ) ( 11,243 ) ( 161 ) ( 11,404 ) ( 41,680 )

Reclassification adjustment for foreign currency translation

— 191 — 191 191

$ ( 35,008 ) $ ( 4,534 ) $ ( 1,358 ) $ ( 5,892 ) $ ( 40,900 )

In 2022, Reclassification of foreign currency translation adjustment for gain on liquidation of a subsidiary is included in other income (expense) other (See Note 15).

26 unchanged sentences

Interest cost 65 395 57 353

Actuarial (gains) losses ( 103 ) ( 792 ) 338 1,863

Actuarial gains ( 533 ) ( 7,125 ) ( 103 ) ( 792 )

Benefits paid ( 108 ) ( 652 ) ( 75 ) ( 851 )

11 unchanged sentences

Funded status at end of year $ ( 2,050 ) $ 395 $ ( 2,626 ) $ ( 6,440 )

Actuarial gains incurred in 2021 related to our U.S.

plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2021 compared to December 31, 2020.

Actuarial losses incurred in 2020 related to our U.S.

plans are primarily the result of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019.

Actuarial gains incurred in 2022 and 2021 related to our U.S.

plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2022 compared to December 31, 2021 and as of December 31, 2021 compared to December 31, 2020.

Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands) :

2 unchanged sentences

Plans Non-U.S.

Other assets $ — $ 3,301 $ — $ —

Other accrued expenses $ ( 137 ) $ ( 179 ) $ ( 107 ) $ ( 375 )

2 unchanged sentences

$ ( 1,913 ) $ 972 $ ( 1,933 ) $ 324

Note 9 – Pensions and Other Postretirement Benefits (continued)

Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations and from the difference between expected returns and actual returns on plan assets.

6 unchanged sentences

$ 137 $ 577 $ 693 $ 6,764

Note 9 – Pensions and Other Postretirement Benefits (continued)

The following table sets forth additional information regarding the projected and accumulated benefit obligations for the pension plans (in thousands) :

8 unchanged sentences

$ 2,050 $ 2,448

Fair value of plan assets

December 31, 2021

17 unchanged sentences

$ — $ 308 $ — $ 379 $ — $ 402

employee contributions

Net service cost

— 379 — 402 — 336

Interest cost

11 unchanged sentences

See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended December 31, 2022, 2021, and 2020.

Note 9 – Pensions and Other Postretirement Benefits (continued)

The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years:

4 unchanged sentences

Expected return on plan assets N/A 3.96 % N/A 2.10 %

Note 9 – Pensions and Other Postretirement Benefits (continued)

The following weighted-average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2022 and 2021:

22 unchanged sentences

The fair value measurement of the fixed income securities is considered a Level 2 measurement within the fair value hierarchy.

Note 9 – Pensions and Other Postretirement Benefits (continued)

Cash held by the defined benefit retirement plans consists of deposits on account in various financial institutions.

8 unchanged sentences

$ 16,248 $ 1,511 $ 14,737 $ —

Note 9 – Pensions and Other Postretirement Benefits (continued)

As of December 31, 2021 Fair value measurements at reporting date using:

8 unchanged sentences

2028-2032 803 5,590

2025 137 1,216

2025 - 2028 794 5,455

The Company anticipates making contributions to its funded and unfunded pension of approximately $ 1.2 million during 2023.

2 unchanged sentences

These plans provide medical and death benefits to retirees.

Note 9 – Pensions and Other Postretirement Benefits (continued)

The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to other postretirement benefit plans (in thousands) :

15 unchanged sentences

Funded status at end of year $ ( 2,386 ) $ ( 2,885 )

Note 9 – Pensions and Other Postretirement Benefits (continued)

Actuarial gains incurred in 2021 related to our post-retirement plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2021 compared to December 31, 2020.

Actuarial gains incurred in 2020 related to our post-retirement plans are primarily the result of a prior year adjustment of $ 763 , changes in medical claims and age variance assumptions, net of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019.

Actuarial gains incurred in 2022 and 2021 related to our post-retirement plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2022 and December 31, 2021 and as of December 31, 2021 compared to December 31, 2020.

Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands) :

1 unchanged sentence

Accrued pension and other postretirement costs $ ( 2,197 ) $ ( 2,658 )

Accumulated other comprehensive (gain)/loss $ ( 28 ) $ 583

Accumulated other comprehensive gain $ ( 484 ) $ ( 28 )

$ ( 2,870 ) $ ( 2,913 )

Actuarial items consist of the following (in thousands) :

Unrecognized net actuarial (gain)/loss $ ( 28 ) $ 583

Unrecognized net actuarial gain $ ( 484 ) $ ( 28 )

$ ( 484 ) $ ( 28 )

1 unchanged sentence

The following table sets forth the components of net periodic benefit costs (in thousands) :

Note 9 – Pensions and Other Postretirement Benefits (continued)

Years ended December 31,

9 unchanged sentences

The following weighted-average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2022 and 2021:

Note 9 – Pensions and Other Postretirement Benefits (continued)

Discount rate 2.46 % 1.99 %

11 unchanged sentences

employees are eligible to participate in 401(k) savings plans which provide company matching under various formulas.

The Company’s matching expense for the plans was $ 1.0 million, $ 0.8 million, and $ 0.7 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company’s matching expense for the plans was $ 1.1 million, $ 1.0 million, and $ 0.8 million for the

Note 9 – Pensions and Other Postretirement Benefits (continued)

years ended December 31, 2022, 2021, and 2020, respectively.

No material amounts are included in the consolidated balance sheets related to unfunded 401(k) contributions.

7 unchanged sentences

Note 10 – Share-Based Compensation

The Amended and Restated Vishay Precision Group, Inc.

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

On May 26, 2022, t he Company’s stockholders voted to approve the adoption of the Vishay Precision Group, Inc.

2022 Stock Incentive Plan (the "2022 plan"), which replaced the Amended and Restated Vishay Precision Group, Inc.

2010 Stock Incentive Program (the "previous plan").

The 2022 plan permits the issuance of up to 608,000 shares of common stock, which includes approximately 308,000 shares that were reserved for issuance under the previous plan and up to an additional 197,685 additional shares underlying awards outstanding under the previous plan.

At December 31, 2022, the Company had reserved 590,034 shares of common stock for future grant of equity awards (restricted stock, unrestricted stock, restricted stock units (“RSUs”), or stock options).

If any outstanding awards are forfeited by the holder, the underlying shares would be available for future grants under the Plan.

If any outstanding awards expire, are canceled or are forfeited, the underlying shares would be available for future grants under the Plan.

Restricted Stock Units

2 unchanged sentences

VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock.

Compensation cost is recognized over the period that the participant provides service in

Note 10 – Share-Based Compensation (continued)

exchange for the award.

Compensation cost is recognized over the period that the participant provides service in exchange for the award.

The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met.

On March 4, 2021, and in accordance with their respective employment agreements, VPG’s three current executive officers were granted annual equity awards in the form of RSUs, of which 50 % are performance-based.

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 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 vested on May 26, 2022, the date of the 2022 Annual Stockholders Meeting.

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 were comprised of 47,831 RSUs.

1 unchanged sentence

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 8, 2021, certain VPG employees were granted annual equity awards in the form of RSUs, of which 75 % are performance-based and certain employees received awards of which 50 % are performance based.

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 target grant-date fair value of $ 0.5 million and were comprised of 16,324 RSUs.

1 unchanged sentence

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, the Compensation Committee of 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.

On May 26, 2022 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, as amended at such time, the Board of Directors approved the issuance of an aggregate of 16,534 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 $ 0.5 million and will vest on the earlier of the 2023 Annual Stockholders meeting or May 26, 2023, subject to the directors' continued service on the Board of Directors.

On July 1, 2022, a non-executive VPG employee was granted an annual equity award in the form of RSU's, of which 50 % are performance-based.

The award has an aggregate grant-date fair value of $ 0.04 million and was comprised of 1,432 RSU's.

Note 10 – Share-Based Compensation (continued)

non-performance portion of this award will vest on July 1, 2025, subject to the employees' continued employment.

The performance-based portion of the RSUs will also vest on July 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.

Vesting of equity awards may be subject to acceleration under certain circumstances.

12 unchanged sentences

End of year 204 $ 29.92 198 $ 31.07 205 $ 28.23

The fair value of the RSUs vested during 2021 is $ 2.5 million.

The fair value of the RSUs vested during 2022 is $ 1.3 million, which approximates grant date fair value.

Included in the 2022, 2021 and 2020 activity are RSU's forfeited as a result of performance objectives not being met.

4 unchanged sentences

January 1, 2024 33 1 34

January 1, 2024 36 — 36

January 1, 2025 and July 1 2025 33 1 34

Share-Based Compensation Expense

3 unchanged sentences

Restricted stock units $ 2,439 $ 2,244 $ 1,387

Note 10 – Share-Based Compensation (continued)

Share-based compensation expense is recognized ratably over the vesting period of the awards and for RSUs with performance criteria, is recognized for RSU's that are expected to vest and for which performance criteria are expected to be met.

During the fourth quarter of 2022, a net adjustment of $ 0.3 million increasing share-based compensation expense was recorded, based on the valuation of performance objectives associated primarily with awards granted in 2020.

It was determined that certain objectives, which were deemed not likely to be met in previous years, were met.

During the fourth quarter of 2021, a net adjustment of $ 0.5 million increasing share-based compensation expense was recorded, based on the evaluation of performance objectives associated with awards granted in 2019.

3 unchanged sentences

This was partially offset by additional share based compensation expense being recorded for certain objectives being fully met, which had been reversed in the prior year.

During 2019, it was determined that certain performance objectives associated with awards granted in 2017, 2018 and 2019 were not likely to be fully met, necessitating a reversal of certain compensation expense associated with those awards.

As a net result, adjustments decreasing share based compensation expense totaling $ 0.8 million were recorded during the year based on anticipated performance levels.

Note 10 – Share-Based Compensation (continued)

The total tax benefit on share-based compensation expense was $ 0.5 million, $ 0.5 million and $ 0.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The deferred tax benefit on share-based compensation expense was $ 0.2 million , $ 0.4 million, and $ 0.0 million for the years ended December 31, 2022, 2021, and 2020, respectively.

32 unchanged sentences

Note 12 - Leases

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

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

10 unchanged sentences

Operating lease cost $ 5,098 $ 5,185 $ 4,389

Variable lease cost — — 44

Short-term lease cost 121 141 124

3 unchanged sentences

The Company paid $ 5.1 million for its operating leases for the year ended December 31, 2022 and $ 5.1 million for the year ended December 31, 2021, which are included in operating cash flows on the consolidated statements of cash flows.

Note 12 - Leases ( continued)

Undiscounted maturities of operating lease payments as of December 31, 2022 are summarized as follows (in thousands) :

10 unchanged sentences

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

Starting from the fourth quarter of 2021, the CODM evaluates the operating segments performance based on the new segments structure.

The evaluation of the segments performance is based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items.

10 unchanged sentences

Segment operating income (loss) 41,671 21,232 18,399 ( 37,503 ) 43,799

Acquisition costs — — 1,198 — 1,198

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

Restructuring costs 1,460 — 58 — 1,518

6 unchanged sentences

Segment operating income (loss) 26,527 23,184 13,480 ( 35,819 ) 27,372

Acquisition costs — — 1,198 — 1,198

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

7 unchanged sentences

Segment operating income (loss) 29,486 12,145 11,763 ( 30,737 ) 22,657

Acquisition costs — — 443 — 443

Executive severance costs — — — 611 611

Impairment of goodwill and indefinite-lived intangibles — — 2,440 — 2,440

Restructuring costs 551 234 51 82 918

2 unchanged sentences

Total assets 138,932 160,679 78,810 23,466 401,887

Note 13 – Segment and Geographic Data (continued)

The “Corporate/Other” column for segment operating income (loss) includes unallocated selling, general, and administrative expenses and certain items which management excludes from segment results when evaluating segment performance, as follows (in thousands) :

4 unchanged sentences

Impairment of goodwill and indefinite-lived intangibles — ( 1,223 ) ( 2,440 )

Executive severance costs — — ( 611 )

Restructuring costs ( 1,518 ) ( 76 ) ( 918 )

$ ( 37,503 ) $ ( 35,819 ) $ ( 30,737 )

Note 13 – Segment and Geographic Data (continued)

The following geographic data includes property and equipment based on physical location (in thousands) :

13 unchanged sentences

2022 2021 2020

Numerator for basic earnings per share:

Numerator for diluted earnings per share:

Numerator for basic and diluted earnings per share:

Net earnings attributable to VPG stockholders

17 unchanged sentences

2022 2021 2020

Foreign exchange loss $ ( 110 ) $ ( 2,246 ) $ ( 1,638 )

Foreign exchange gain/(loss) $ 3,579 $ ( 110 ) $ ( 2,246 )

Interest income 401 252 246

3 unchanged sentences

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

The change in foreign exchange gains / (losses) for the year ended December 31, 2021, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel.

Additionally in 2021, there were favorable foreign exchange impacts from the Japanese yen and the Canadian dollar.

The change in foreign exchange gains / (losses) for the year ended December 31, 2022, as compared to the prior year period, is primarily due to fluctuations in the Israeli shekel, the Japanese yen and the British pound.

The change in the dollar-shekel exchange rate resulted in a favorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel.

Note 15 – Additional Financial Statement Information (continued)

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

The change in foreign exchange gains / (losses) for the year ended December 31, 2021, as compared to the prior year period, was primarily due to fluctuations in the Israeli shekel.

The change in the dollar-shekel exchange rate, particularly in the fourth quarter of 2020, resulted in an unfavorable foreign exchange impact primarily related to the shekel-denominated lease liability for a new Sensors facility in Israel .

The change in the dollar-shekel exchange rate in 2020 reflected an unfavorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel.

Additionally, in 2021, there were favorable foreign exchange impacts from the Japanese yen and the Canadian dollar.

Pension expense represents the net periodic benefit cost excluding the service cost.

Included in Other for the year ended December 31, 2019, is a one-time $ 0.8 million gain on liquidation of one of the Company's subsidiaries.

Other accrued expenses consist of the following (in thousands) :

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Any unfunded amounts would be paid from operating funds and are covered by a provision established by the subsidiary.

The accompanying consolidated balance sheets at December 31, 2021 and December 31, 2020 include a $ 8.4 million and $ 8.3 million liability, respectively, associated with Israeli severance requirements in other liabilities.

The accompanying consolidated balance sheets at December 31, 2022 and December 31, 2021 include a $ 7.0 million and $ 8.4 million non-current liability, respectively, associated with Israeli severance requirements in other liabilities and a $ 5.3 million and $ 6.6 million non-current asset, respectively, associated with Israeli severance requirements in other assets.

Note 16 – Fair Value Measurements

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Unobservable inputs that reflect the Company’s own assumptions.

Note 16 – Fair Value Measurements (continued)

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.

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The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts.

The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The fair value measurement of cash and cash equivalents held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The fair value of the long-term debt, excluding capitalized deferred financing costs at December 31, 2022 and December 31, 2021 approximates its carrying value, as the revolving debt and term loans are reset monthly based on current market rates, plus a base rate as specified in the 2020 Credit Agreement.

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Executive RSU grant

On March 3, 2022, VPG’s three current executive officers were granted annual equity awards in the form of RSUs, of which 50 % are performance-based and 50 % are service-based.

On February 28, 2023, VPG’s three current executive officers were granted annual equity awards in the form of RSUs, of which 50 % are performance-based and 50 % are service-based.

The awards have an aggregate target grant-date fair value of $ 1.9 million and were comprised of 43,243 RSUs.

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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-K

Item 9A. Controls and Procedures