Vishay Precision Group, Inc. 10-K

Item 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including our CEO and CFO, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be prevented or detected. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. - 43 - Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the 2013 framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022. 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. - 44 - Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Vishay Precision Group, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Vishay Precision Group, Inc. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Brightman Almagor Zohar & Co. Brightman Almagor Zohar & Co. A Firm in the Deloitte Global Network Tel Aviv, Israel March 1, 2023 - 45 - Item 9B. OTHER INFORMATION None. Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. None . PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Certain information required under this Item with respect to our Executive Officers is contained under the heading “Executive Officers” in Item 1 hereof. Other information required under this Item will be contained under the heading “Nominees for Election as Directors” in our definitive proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2022, our most recent fiscal year end, and is incorporated herein by reference. The Company has adopted codes of conduct that constitute “codes of ethics” as that term is defined in paragraph (b) of Item 406 of Regulation S-K and that apply to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, and to any persons performing similar functions. Such codes of conduct are posted on the Company’s internet website, the address of which is www.vpgsensors.com. Item 11. EXECUTIVE COMPENSATION Information required under this Item will be contained in our definitive proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2022, our most recent fiscal year end, and is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required under this Item will be contained in our definitive proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2022, our most recent fiscal year end, and is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information required under this Item will be contained in our definitive proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2022, our most recent fiscal year end, and is incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information required under this Item will be contained in our definitive proxy statement for the Company’s 2023 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2022, our most recent fiscal year end, and is incorporated herein by reference. - 46 - PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Documents Filed as part of Form 10-K i) Financial Statements The Consolidated Financial Statements for the year ended December 31, 2022 are filed herewith. See index to the Consolidated Financial Statements on page F-1 of this report. ii) Financial Statement Schedules All financial statement schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. iii) Exhibits Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective June 25, 2010 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2010 and incorporated herein by reference). 3.2 Amendment no. 1 to Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 6, 2011 and incorporated herein by reference). 3.3 Second Amended and Restated Bylaws of Vishay Precision Group, Inc., adopted as of June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 6, 2011 and incorporated herein by reference). 4.1 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 11, 2020 and incorporated herein by reference). 10.1 Master Separation and Distribution Agreement, dated June 22, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Form 10 Registration Statement of Vishay Precision Group, Inc., filed with the Securities and Exchange Commission on June 22, 2010 and incorporated herein by reference). 10.2 Employee Matters Agreement, dated June 22, 2010, by and among Vishay Intertechnology, Inc. and Vishay Precision Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on June 23, 2010 and incorporated herein by reference). 10.3 Tax Matters Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.4 Trademark License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.5 Supply Agreement, dated July 6, 2010, between Vishay Advanced Technology, Ltd. and Vishay Dale Electronics, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.6* Patent License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Dale Electronics, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.7* Supply Agreement, dated July 6, 2010, between Vishay Dale Electronics, Inc. and Vishay Advanced Technology, Ltd. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.8* Lease Agreement, dated July 4, 2010, between Vishay Advanced Technology, Ltd. and V.I.E.C. Ltd. (previously filed as an exhibit to the Registrant's Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.9* Supply Agreement, dated July 6, 2010, between Vishay Measurements Group, Inc. and Vishay S.A. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). - 47 - Exhibit No. Description 10.10* Manufacturing Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil GmbH (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.11 Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil GmbH (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.12* Supply Agreement, dated July 6, 2010, between Vishay Precision Foil GmbH and Vishay S.A. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.13 Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Measurements Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.14 Lease Agreement, between Alpha Electronics Corp. and Vishay Japan Co., Ltd. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by reference). 10.15 Stock Purchase Agreement, dated November 1, 2019, by and among Vishay Precision Group, Inc., DSI Holdings DE Inc., the sellers identified therein, and HCI Equity Partners III, L.P., not individually but solely in its capacity as the representative of the Sellers (previously filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 4, 2019 and incorporated herein by reference). 10.16 Lease Agreement between Vishay Advanced Technologies Ltd and Mega Or Holdings Ltd, dated February 17, 2019 (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 19, 2019 and incorporated herein by reference). 10.17† Form of Stock Option Award Agreement (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference). 10.18† Form of Restricted Stock Unit Award Agreement for Director Grants (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference) . 10.19† Form of Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference). 10.20† Employment Agreement, dated November 17, 2010, by and among Vishay Advanced Technology and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2010 and incorporated herein by reference). 10.21† Employment Agreement, dated November 17, 2010, by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 23, 2010 and incorporated herein by reference). 10.22† Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Advanced Technologies, Ltd. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2011 and incorporated herein by reference). 10.23† Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 13, 2011 and incorporated herein by reference). 10.24† Form of Performance Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit to the Registrant’s Current Report on Form 10-K filed with the SEC on March 12, 2013 and incorporated herein by reference). 10.25 Lease Agreement, between George Kelk Corporation and Anndale Properties Limited (and its successors), dated January 30, 1996 and as amended as of January 17, 2011 (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with SEC on May 8, 2013 and incorporated herein by reference). 10.26† Vishay Precision Group, Inc. 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. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2013 and incorporated herein by reference). 10.28† Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Precision Group, Inc. and William Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on November 12, 2013 and incorporated herein by reference). - 48 - Exhibit No. Description 10.29 Lease agreement, dated January 26, 2014, by and among between Vishay Advanced Technologies, Inc. and Tefen Enterprises Ltd. (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2014 and incorporated herein by reference). 10.30 Stock Purchase Agreement, dated December 14, 2015, by and among VPG Systems U.S., Inc., Stress-Tek, Inc., the shareholders of Stress-Tek, Inc., and Keith Reichow, as Representative (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on December 15, 2015 and incorporated herein by reference). 10.31 Third Amended and Restated Credit Agreement, dated March 20, 2020, by and among Vishay Precision Group, Inc., the lenders party thereto, Citizens Bank, National Association, Wells Fargo Bank, National Association, and JPMorgan Chase Bank, National Association (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 23, 2020 and incorporated herein by reference). 10.32 Stock Purchase Agreement, dated March 30, 2016, by and among Vishay Precision Group, Inc., Pacific Instruments, Inc., the shareholders of Pacific Instruments, Inc., John Hueckel and Norman Hueckel as Owners, and John Hueckel, as Representative (previously filed as an exhibit to the Registrant's Current Report on Form 8-K filed with the SEC on April 5, 2016 and incorporated herein by reference). 10.33† Form of Indemnification Agreement with directors (previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 11, 2016 and incorporated herein by reference). 10.34† Employment Agreement, dated March 15, 2020, by and between Vishay Advanced Technologies, Ltd. and Amir Tal (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 5, 2020 and incorporated herein by reference). 10.35 Lease agreement, dated July 7, 2016, by and among between Vishay Advanced Technologies, Ltd. and Marshee Estates & Investments Ltd. (previously filed as an exhibit to the Registrant's Current Report on Form 10-K filed with the SEC on March 16, 2016 and incorporated herein by reference). 10.36† Amendment to Employment Agreement, dated May 8, 2017, by and among Vishay Precision Group, Inc. and William M. Clancy (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2017 and incorporated herein by reference). 10.37† Amendment to Employment Agreement, dated August 7, 2017, by and among Vishay Advanced Technologies, Ltd. and Ziv Shoshani (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 8, 2017 and incorporated herein by reference). 10.38† 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 May 9, 2018 and incorporated herein by reference). 10.39† Amendment to Employment Agreement,dated March 10, 2019, by and among Vishay Advanced Technologies Ltd. and Ziv Shoshani (previously filed as Exhibit 10.45 to the Registrant's Annual Report on Form 10-K filed with the SEC on March 14, 2019 and incorporated herein by reference). 10.40† Amendment to Employment Agreement, dated March 11, 2019, by and among Vishay Precision Group, Inc. and William Clancy (previously filed as Exhibit 10.46 to the Registrant's Annual Report on Form 10-K filed with the SEC on March 14, 2019 and incorporated herein by reference). 10.41† Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and Ziv Shoshani (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2021 and incorporated herein by reference). 10.42† Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and William M. Clancy (previously filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2021 and incorporated herein by reference). 10.43† Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and Amir Tal (previously filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2021 and incorporated herein by reference). 10.44 Stock Purchase Agreement, dated June 1, 2021, by and among Vishay Precision Group, Inc., Diversified Technical Systems, Inc., the sellers identified therein, the guarantors identified therein, and Timothy J. 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). - 49 - Exhibit No. Description 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. 23.1 Consent of Brightman Almagor Zohar & Co, a Firm in the Deloitte Global Network, relating to the Registrant’s financial statements. 31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer. 31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Ziv Shoshani, Chief Executive Officer. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - William M. Clancy, Chief Financial Officer. 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. Omitted portions have been filed separately with the Securities and Exchange Commission. † Denotes a management contract or compensatory plan, contract or arrangement. Item 16. FORM 10-K SUMMARY None. - 50 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VISHAY PRECISION GROUP, INC. By: /s/ Ziv Shoshani Ziv Shoshani Date: March 1, 2023 President and Chief Executive Officer P OWER OF A TTORNEY Vishay Precision Group, Inc., a Delaware corporation, and each person whose signature appears below constitutes and appoints each of Ziv Shoshani and William M. Clancy, and either of them, such person’s true and lawful attorney-in-fact, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign on such person’s behalf, individually and in each capacity stated below, any and all amendments to this Annual Report on Form 10-K and other documents in connection therewith, and to file the same and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, thereby ratifying and confirming all that said attorneys-in-fact, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed by the following persons on behalf of the Registrant in the capacities and on the date indicated below. Signature Title Date /s/ Ziv Shoshani Chief Executive Officer and Director March 1, 2023 Ziv Shoshani (Principal Executive Officer) /s/ William M. Clancy Executive Vice President & Chief Financial Officer March 1, 2023 William M. Clancy (Principal Financial and Accounting Officer) /s/ Saul V. Reibstein Director March 1, 2023 Saul V. Reibstein /s/ Marc Zandman Director March 1, 2023 Marc Zandman /s/ Timothy V. Talbert Director March 1, 2023 Timothy V. Talbert /s/ Janet Clarke Director March 1, 2023 Janet Clarke /s/ Bruce Lerner Director March 1, 2023 Bruce Lerner /s/ Wesley Cummins Director March 1, 2023 Wesley Cummins /s/ Sejal Shah Gulati Director March 1, 2023 Sejal Shah Gulati - 51 - Vishay Precision Group, Inc. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1197 ) F- 2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 6 Consolidated Statements of Comprehensive Income F- 7 Consolidated Statements of Cash Flows F- 8 Consolidated Statements of Equity F- 9 Notes to Consolidated Financial Statements F- 10 F-1 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Vishay Precision Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Vishay Precision Group, Inc. 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. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 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 discount and long term growth rates. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting unit. 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%. F-2 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. 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 and long term growth rates. 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 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. • We evaluated the reasonableness of management’s forecasts of future revenues, profitability and working capital requirements by comparing the forecasts to: – Historical revenues, profitability and working capital requirements. – 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 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 Tel Aviv, Israel March 1, 2023 We have served as the Company’s auditor since 2019. F-3 VISHAY PRECISION GROUP, INC. Consolidated Balance Sheets (In thousands, except share amounts) December 31, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 88,562 $ 84,335 Accounts receivable, net of allowances for credit losses of $ 709 and $ 741 , respectively 60,068 58,265 Inventories: Raw materials 31,852 25,464 Work in process 26,401 23,851 Finished goods 26,407 27,112 Inventories 84,660 76,427 Prepaid expenses and other current assets 18,516 15,916 Total current assets 251,806 234,943 Property and equipment: Land 4,117 4,241 Buildings and improvements 71,613 68,778 Machinery and equipment 125,301 122,202 Software 9,539 8,871 Construction in progress 10,075 7,747 Accumulated depreciation ( 133,518 ) ( 130,619 ) Property and equipment, net 87,127 81,220 Goodwill 45,544 45,830 Intangible assets, net 48,217 52,437 Operating lease right-of-use assets 24,342 27,764 Other assets 19,706 19,695 Total assets $ 476,742 $ 461,889 Continues on the following page F-4 VISHAY PRECISION GROUP, INC. Consolidated Balance Sheets (continued) (In thousands, except share amounts) December 31, 2022 December 31, 2021 Liabilities and equity Current liabilities: Trade accounts payable $ 13,792 $ 14,876 Payroll and related expenses 21,966 23,772 Other accrued expenses 20,306 17,596 Income taxes 4,064 3,774 Current portion of operating lease liabilities 4,208 4,610 Total current liabilities 64,336 64,628 Long-term debt 60,799 60,714 Deferred income taxes 4,212 5,848 Operating lease liabilities 20,043 25,140 Other liabilities 13,053 16,264 Accrued pension and other postretirement costs 7,777 12,253 Total liabilities 170,220 184,847 Commitments and contingencies Equity: Preferred stock, par value $ 1.00 per share: authorized - 1,000,000 shares; none issued Common stock, par value $ 0.10 per share: authorized - 25,000,000 shares; 12,546,375 shares outstanding as of December 31, 2022 and 12,603,220 shares outstanding as of December 31, 2021 1,325 1,322 Class B convertible common stock, par value $ 0.10 per share: authorized - 3,000,000 shares; 1,022,887 shares outstanding as of December 31, 2022 and December 31, 2021 103 103 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 ) Capital in excess of par value 201,164 199,151 Retained earnings 156,359 120,296 Accumulated other comprehensive loss ( 40,900 ) ( 35,008 ) Total Vishay Precision Group, Inc. stockholders' equity 306,547 277,099 Noncontrolling interests ( 25 ) ( 57 ) Total equity 306,522 277,042 Total liabilities and equity $ 476,742 $ 461,889 See accompanying notes. F-5 VISHAY PRECISION GROUP, INC. Consolidated Statements of Operations (In thousands, except per share amounts) Years ended December 31, 2022 2021 2020 Net revenues $ 362,580 $ 317,919 $ 269,812 Costs of products sold 212,978 192,777 165,541 Gross profit 149,602 125,142 104,271 Selling, general, and administrative expenses 104,285 95,273 78,256 Acquisition costs — 1,198 — Impairment of goodwill and indefinite-lived intangibles — 1,223 2,440 Restructuring costs 1,518 76 918 Operating income 43,799 27,372 22,657 Other income (expense): Interest expense ( 2,269 ) ( 1,230 ) ( 1,366 ) Other 3,558 ( 230 ) ( 2,982 ) Other income (expenses) 1,289 ( 1,460 ) ( 4,348 ) Income before taxes 45,088 25,912 18,309 Income tax expense 8,535 5,469 7,509 Net earnings 36,553 20,443 10,800 Less: net earnings attributable to noncontrolling interests 490 222 13 Net earnings attributable to VPG stockholders $ 36,063 $ 20,221 $ 10,787 Basic earnings per share attributable to VPG stockholders $ 2.65 $ 1.49 $ 0.80 Diluted earnings per share attributable to VPG stockholders $ 2.63 $ 1.48 $ 0.79 Weighted average shares outstanding - basic 13,628 13,616 13,566 Weighted average shares outstanding - diluted 13,688 13,657 13,623 See accompanying notes. F-6 VISHAY PRECISION GROUP, INC. Consolidated Statements of Comprehensive Income (In thousands) Years ended December 31, 2022 2021 2020 Net earnings $ 36,553 $ 20,443 $ 10,800 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 11,213 ) ( 4,684 ) 5,169 Pension and other postretirement actuarial items 5,321 2,347 ( 137 ) Other comprehensive income (loss), net of tax ( 5,892 ) ( 2,337 ) 5,032 Comprehensive income 30,661 18,106 15,832 Less: comprehensive income attributable to noncontrolling interests 490 222 13 Comprehensive income attributable to VPG stockholders $ 30,171 $ 17,884 $ 15,819 See accompanying notes. F-7 VISHAY PRECISION GROUP, INC. Consolidated Statements of Cash Flows (In thousands) Years ended December 31, 2022 2021 2020 Operating activities Net earnings $ 36,553 $ 20,443 $ 10,800 Adjustments to reconcile net earnings to net cash provided by operating activities: Impairment of goodwill and indefinite-lived intangibles — 1,223 2,440 Depreciation and amortization 15,353 14,996 12,507 Loss from extinguishment of debt — — 30 Gain on disposal of property and equipment ( 117 ) ( 5 ) ( 130 ) Reclassification of foreign currency translation adjustment related to disposal of subsidiary 191 — — Share-based compensation expense 2,439 2,244 1,387 Inventory write-offs for obsolescence 1,650 2,288 2,525 Deferred income taxes ( 2,040 ) ( 3,256 ) 1,153 Foreign currency impacts and other items ( 3,915 ) ( 1,018 ) 591 Net changes in operating assets and liabilities, net of acquisition: Accounts receivable ( 4,777 ) ( 8,038 ) ( 753 ) Inventories ( 11,943 ) ( 8,626 ) 2,986 Prepaid expenses and other current assets ( 2,808 ) ( 56 ) 67 Trade accounts payable 889 3,292 59 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 Investing activities Capital expenditures ( 21,288 ) ( 17,061 ) ( 22,949 ) Proceeds from sale of property and equipment 451 231 983 Purchase of business — ( 47,216 ) 156 Net cash used in investing activities ( 20,837 ) ( 64,046 ) ( 21,810 ) Financing activities Principal payments on long-term debt — ( 18 ) ( 3,493 ) Debt issuance costs — — ( 402 ) Proceeds from revolving facility — 20,000 — Purchase of treasury stock ( 2,739 ) — — Purchase of non-controlling interest — — ( 253 ) Distributions to noncontrolling interests ( 457 ) ( 313 ) ( 70 ) Payments of employee taxes on certain share-based arrangements ( 435 ) ( 853 ) ( 813 ) Net cash (used in) provided by financing activities ( 3,631 ) 18,816 ( 5,031 ) Effect of exchange rate changes on cash and cash equivalents ( 4,334 ) ( 2,410 ) 3,056 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 Cash and cash equivalents at end of year $ 88,562 $ 84,335 $ 98,438 Supplemental disclosure of investing transactions: Capital expenditures purchased $ ( 19,951 ) $ ( 17,567 ) $ ( 24,327 ) Capital expenditures accrued but not yet paid $ 1,731 $ 3,068 $ 2,561 See accompanying notes. F-8 VISHAY PRECISION GROUP, INC. Consolidated Statements of Equity (In thousands, except share amounts) 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 January 1, 2020 $ 1,312 $ 103 $ ( 8,765 ) $ 197,125 $ 89,288 $ ( 37,703 ) $ 241,360 $ 392 $ 241,752 Net earnings — — — — 10,787 — 10,787 13 10,800 Other comprehensive loss — — — — — 5,032 5,032 — 5,032 Share-based compensation expense — — — 1,387 — — 1,387 — 1,387 Restricted stock issuances ( 52,433 shares) 5 — — ( 796 ) — — ( 791 ) — ( 791 ) Purchase of noncontrolling interest — — — 48 — — 48 ( 301 ) ( 253 ) Distributions to noncontrolling interests — — — — — — — ( 70 ) ( 70 ) Balance at December 31, 2020 $ 1,317 $ 103 $ ( 8,765 ) $ 197,764 $ 100,075 $ ( 32,671 ) $ 257,823 $ 34 $ 257,857 Net earnings — — — — 20,221 — 20,221 222 20,443 Other comprehensive income — — — — — ( 2,337 ) ( 2,337 ) — ( 2,337 ) Share-based compensation expense — — — 2,244 — — 2,244 — 2,244 Restricted stock issuances ( 50,781 shares) 5 — — ( 857 ) — — ( 852 ) — ( 852 ) Distributions to noncontrolling interests — — — — — — — ( 313 ) ( 313 ) Balance at December 31, 2021 $ 1,322 $ 103 $ ( 8,765 ) $ 199,151 $ 120,296 $ ( 35,008 ) $ 277,099 $ ( 57 ) $ 277,042 Net earnings — — — — 36,063 — 36,063 490 36,553 Other comprehensive loss — — — — — ( 5,892 ) ( 5,892 ) — ( 5,892 ) Share-based compensation expense — — — 2,439 — — 2,439 — 2,439 Restricted stock issuances ( 28,368 shares) 3 — — ( 426 ) — — ( 423 ) — ( 423 ) Purchase of treasury stock ( 85,213 shares) — — ( 2,739 ) — — — ( 2,739 ) — ( 2,739 ) Distributions to noncontrolling interests — — — — — — — ( 458 ) ( 458 ) Balance at December 31, 2022 $ 1,325 $ 103 $ ( 11,504 ) $ 201,164 $ 156,359 $ ( 40,900 ) $ 306,547 $ ( 25 ) $ 306,522 See accompanying notes. F-9 Vishay Precision Group, Inc. Notes to Consolidated Financial Statements Note 1 – Background and Summary of Significant Accounting Policies Background Vishay Precision Group, Inc. (“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 The consolidated financial statements include the accounts of the individual entities in which the Company maintained a controlling financial interest. For those subsidiaries in which the Company’s ownership is less than 100 percent, the outside stockholders’ interests are shown as noncontrolling interests in the accompanying consolidated balance sheets. All transactions, accounts, and profits between individual members comprising the Company have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates. Revenue Recognition The Company derives substantially all of its revenue from product sales. The Company recognizes the vast majority of its sales at a point-in-time. It utilizes the core principle of recognizing revenue when the Company satisfies performance obligations as evidenced by the transfer of control of its products to the customer. Such revenues are derived from purchase orders and/or contracts with customers. Each contract has the promise to transfer the control of the products, each of which is individually distinct and is considered the identified performance obligation. As part of the decision to enter into each contract, the Company evaluates the customer’s credit risk, but its contracts do not have any significant financing components, as payment is generally due net 30 to 60 days after delivery. In accordance with contract terms, revenue from the Company’s product sales is recognized at the time of product shipment from its facilities or delivery to the customer location, as determined by the agreed upon shipping terms. Under the terms of some of its contracts, the Company may be required to perform certain installation services. These installation services are performed at the time of product delivery or at some point thereafter. The installation services do not significantly modify the product provided, and although the Company may be required contractually to provide these services, the installation services could be performed by a third party or the customer. Thus, these installation services are a distinct performance obligation. In most of the applicable contracts, this installation service element is immaterial in the context of the agreement. When the installation services are accounted for as a separate performance obligation, the Company allocates the transaction price to this element based on its relative standalone selling price. Given the specialized nature of the Company's products, the Company generally does not allow product returns. Shipping and handling costs are recorded to Costs of product sold when control of the product has transferred to the customer. The Company offers standard product warranties. Warranty related costs continue to be recognized as expense when the products are sold. Sales, value added taxes and other taxes collected concurrent with revenue-producing activities are excluded from revenue. See Note 2 for further details on Revenues. Research and Development Expenses Research and development costs are expensed as incurred. 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. F-10 Note 1 – Background and Summary of Significant Accounting Policies (continued) Income Taxes 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. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income tax expense in the period that includes the enactment date. The Company records net deferred tax assets to the extent it believes such assets will "more likely than not" be realized. In making this determination, the Company considers all positive and negative evidence, including historic earnings, projected future income, and cost-effective tax-planning strategies. When the Company determines that its ability to realize deferred tax assets is not "more likely than not", the Company adjusts its deferred tax asset valuation allowance, which increases income tax expense. The Company records uncertain tax positions on the basis of a two-step process in which the Company first determines whether it is "more likely than not" that the tax positions will be sustained based on the technical merits of the position and then measures those tax positions that meet the more-likely-than-not recognition threshold. The Company recognizes the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets. Cash and Cash Equivalents Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or less when purchased. Highly liquid investments with maturities greater than three months are classified as short-term investments. There were no investments classified as short-term investments at December 31, 2022 or 2021. Allowance for Credit Losses The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments. In determining the amount of the allowance for credit losses, the Company considers historical loss data, customer specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. The allowance for credit losses was $ 0.7 million and $ 0.7 million at December 31, 2022 and 2021, respectively. The credit loss was $ 0.0 million, $ 0.1 million, and $ 0.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. Inventories Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market based on net realizable value. Inventories are adjusted for estimated excess and obsolescence and written down to net realizable value based upon estimates of future demand, technology developments, and market conditions. Property and Equipment Property and equipment are carried at cost and is depreciated principally by the straight-line method based upon the estimated useful lives of the assets. Machinery and equipment are being depreciated over useful lives of seven to fifteen years . Buildings and building improvements are being depreciated over useful lives of twenty to forty years or the lease term. Software is being depreciated over useful lives of three to five years . Construction in progress is not depreciated until the assets are placed in service. 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. Business Combinations The Company allocates the purchase price of an acquired company, including when applicable, the fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired businesses based on estimated fair values, with any residual of the purchase price recorded as goodwill. Estimating fair values requires significant judgments, estimates and assumptions including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, and customer relationships. These estimates are based on historical experience and information obtained from the management of the acquired companies, and are inherently uncertain. F-11 Note 1 – Background and Summary of Significant Accounting Policies (continued) Goodwill and Other Intangible Assets Goodwill and indefinite-lived trademarks are tested for impairment at least annually, and whenever events or changes in circumstances occur indicating that it is "more likely than not" impairment may have been incurred. The Company has the option to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining if it is necessary to perform the quantitative goodwill impairment test. However, if the Company concludes otherwise, then it is required to perform the quantitative impairment test by calculating the fair value of the reporting unit and comparing it against its carrying amount. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying amount of goodwill exceeds the reporting unit fair value. The indefinite-lived trade names are tested for impairment either by employing the qualitative approach outlined above, or by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess carrying value over the applicable fair value is recognized as impairment. Any impairment would be recognized in the reporting period in which it has been identified. 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 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. Patents and acquired technology are being amortized over useful lives of seven to twenty years . Customer relationships are being amortized over useful lives of five to fifteen years . Trade names are being amortized over useful lives of seven to ten years . Non-competition agreements are being amortized over periods of five to ten years . The Company continually evaluates the reasonableness of the useful lives of these assets. Additionally, the Company reviews the carrying values of these assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable based on undiscounted estimated cash flows expected to result from its use and eventual disposition. Impairment of Long-Lived Assets The carrying value of long-lived assets held-and-used, other than goodwill and indefinite-lived intangible assets, is evaluated when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived asset group is considered impaired when the total projected undiscounted cash flows from such asset group are separately identifiable and are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset group. Fair market value is determined primarily using present value techniques based on projected cash flows from the asset group. Losses on long-lived assets held-for-sale, other than goodwill and indefinite-lived intangible assets, are determined in a similar manner, except that fair market values are reduced for disposal costs. Foreign Currency Translation The Company has significant operations outside of the United States. The Company's operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash in local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. The Company’s operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. 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 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. Foreign currency transaction gains and losses are included in the results of operations. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the consolidated statements of operations. F-12 Note 1 – Background and Summary of Significant Accounting Policies (continued) Share-Based Compensation Compensation costs related to share-based payments are recognized in the consolidated financial statements. The amount of compensation cost is measured based on the grant-date fair value of the equity instruments issued. For service-based awards, compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award. The Company recognizes forfeitures as they occur. For performance based awards, the Company recognizes compensation cost for awards that are expected to vest based on whether performance criteria are expected to be met. Leases The Company determines if an arrangement is or contains a lease at inception or modification of such agreement. The arrangement is or contains a lease if the contract conveys the right to control the use of the identified asset for a period in exchange for consideration. Lease right of use assets and liabilities are recognized based on the present value of future minimum lease payments over the expected term at commencement date. As the implicit rate is not determinable in most of the Company's leases, the Company's incremental borrowing rate is used as the basis to determine the present value of future lease payments. The expected lease terms include options to extend or terminate. The period which is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised. Some of these leases contain variable payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date and are therefore not included in our future minimum lease payments. Variable payments are expensed in the periods incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term. The Company uses the practical expedients to exclude from balance sheet reporting leases with initial terms of 12 months or less and to exclude non-lease components from lease right of use assets and corresponding liabilities. Commitments and Contingencies 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. 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) : Year Ended December 31, 2022 Sensors Weighing Solutions Measurement Systems Total United States $ 51,246 $ 58,076 $ 52,435 $ 161,757 United Kingdom 3,481 15,697 572 19,750 Other Europe 31,938 37,490 5,168 74,596 Israel 28,413 470 — 28,883 Asia 37,143 13,974 7,537 58,654 Canada — 8 18,932 18,940 $ 152,221 $ 125,715 $ 84,644 $ 362,580 F-13 Note 2 – Revenues (continued) Year Ended December 31, 2021 Sensors Weighing Solutions Measurement Systems Total United States $ 39,845 $ 52,542 $ 40,095 $ 132,482 United Kingdom 3,083 16,577 752 20,412 Other Europe 25,859 39,549 2,503 67,911 Israel 22,391 994 — 23,385 Asia 36,683 15,719 7,476 59,878 Canada — 9 13,842 13,851 $ 127,861 $ 125,390 $ 64,668 $ 317,919 Year Ended December 31, 2020 Sensors Weighing Solutions Measurement Systems Total United States $ 39,624 $ 46,980 $ 21,656 $ 108,260 United Kingdom 3,047 19,866 229 23,142 Other Europe 29,473 23,114 2,098 54,685 Israel 21,432 384 — 21,816 Asia 27,178 10,876 5,376 43,430 Canada — 166 18,313 18,479 $ 120,754 $ 101,386 $ 47,672 $ 269,812 The following table disaggregates net revenue by market sector (in thousands) : Years Ended December 31, 2022 2021 2020 Test & Measurement $ 78,406 $ 64,124 $ 53,633 Avionics, Military & Space 31,399 27,303 32,607 Transportation 55,892 49,562 29,483 Other Markets 79,750 71,577 58,256 Industrial Weighing 52,109 50,626 43,441 General Industrial 21,179 16,771 15,351 Steel 43,845 37,956 37,041 $ 362,580 $ 317,919 $ 269,812 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 December 31, 2021 $ 3,570 $ 4,765 December 31, 2022 $ 3,990 $ 7,983 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. F-14 Note 3 – Acquisition Activity 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 final fair values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands): June 1, 2021 Working capital $ 12,494 Property and equipment 1,209 Deferred income tax liability ( 6,215 ) 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 31,183 Purchase price $ 47,216 Goodwill $ 16,033 (a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll. The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. 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 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, 2021 (unaudited) Pro forma net revenues $ 331,155 Pro forma net earnings attributable to VPG stockholders $ 23,602 Pro forma basic earnings per share attributable to VPG stockholders $ 1.73 Pro forma diluted earnings per share attributable to VPG stockholders $ 1.73 F-15 Note 4 – Goodwill and Other Intangible Assets 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. 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. The income approach to valuation requires management to make significant estimates and assumptions related to future revenues, profitability, working capital requirements and selection of 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 units. 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. 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 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) : 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 Goodwill acquired 15,903 — — — 15,903 — Impairment charges ( 1,126 ) — — ( 1,126 ) — — Foreign currency translation adjustment ( 52 ) ( 20 ) ( 32 ) — — — Balance at December 31, 2021 45,830 6,706 16,910 — 15,903 6,311 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 F-16 Note 4 – Goodwill and Other Intangible Assets (continued) Intangible assets were as follows (in thousands) : December 31, 2022 2021 Intangible assets subject to amortization (Definite-lived): Patents and acquired technology $ 32,570 $ 33,026 Customer relationships 33,226 34,036 Trade names 1,521 1,665 Non-competition agreements 10,133 11,335 77,450 80,062 Accumulated amortization: Patents and acquired technology ( 9,059 ) ( 7,430 ) Customer relationships ( 16,209 ) ( 14,918 ) Trade names ( 1,521 ) ( 1,665 ) Non-competition agreements ( 10,098 ) ( 11,329 ) ( 36,887 ) ( 35,342 ) Net intangible assets subject to amortization $ 40,563 $ 44,720 Intangible assets not subject to amortization (Indefinite-lived): Trade names 7,654 7,717 $ 48,217 $ 52,437 Certain intangible assets are subject to foreign currency translation. 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 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) : 2023 $ 3,729 2024 3,698 2025 3,681 2026 3,681 2027 3,647 Note 5 – Restructuring Costs Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges. The Company recorded restructuring costs of $ 1.5 million, $ 0.1 million, and $ 0.9 million during the years ended December 31, 2022, 2021, and 2020, respectively. 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 F-17 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) : December 31, 2022 2021 Balance at beginning of year $ — $ 63 Restructuring charges 1,518 76 Cash payments ( 1,338 ) ( 138 ) Foreign currency translation 3 ( 1 ) Balance at end of year $ 183 $ — Note 6 – Income Taxes For financial reporting purposes, income before taxes includes the following components (in thousands) : Years ended December 31, 2022 2021 2020 Domestic $ ( 4,979 ) $ ( 5,956 ) $ ( 9,476 ) Foreign 50,067 31,868 27,785 $ 45,088 $ 25,912 $ 18,309 The expense (benefit) for income taxes is comprised of (in thousands) : Years ended December 31, 2022 2021 2020 Current: Federal $ 21 $ 245 $ 106 State and local 97 38 ( 18 ) Foreign 10,457 8,442 6,268 10,575 8,725 6,356 Deferred: Federal ( 2,808 ) ( 2,992 ) 1,718 State and local 109 ( 588 ) ( 422 ) Foreign 659 324 ( 143 ) ( 2,040 ) ( 3,256 ) 1,153 Total income tax expense $ 8,535 $ 5,469 $ 7,509 F-18 Note 6 – Income Taxes (continued) A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate to the actual income tax provision is as follows (in thousands) : Years ended December 31, 2022 2021 2020 Tax at statutory rate $ 9,468 $ 5,441 $ 3,845 State income taxes, net of U.S. federal tax benefit 164 ( 391 ) ( 176 ) U.S. GILTI tax, net of foreign tax credits 8 77 — Effect of foreign operations 1,246 2,096 729 Change in valuation allowance ( 1,629 ) ( 1,204 ) 2,448 Change in unrecognized tax benefits, net ( 1,000 ) 107 ( 32 ) Impairment of goodwill — 237 507 Specialty tax credits ( 639 ) ( 333 ) ( 249 ) Statutory rate changes 3 ( 282 ) ( 119 ) Effect of foreign exchange 667 ( 35 ) ( 346 ) Loss of benefit of U.S. net operating loss — — 1,064 Excess tax benefits related to share based compensation — — ( 168 ) Other 247 ( 244 ) 6 Total income tax expense $ 8,535 $ 5,469 $ 7,509 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. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in the future years or provide for tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize tax expense related to GILTI in the year the tax is incurred. 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. 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) : F-19 Note 6 – Income Taxes (continued) December 31, 2022 2021 Deferred tax assets: Pension and other postretirement costs $ 1,775 $ 3,580 Inventories 4,057 2,659 Net operating/capital loss and interest carryforwards 9,060 13,562 Tax credit carryforwards 2,372 3,026 Deferred compensation 2,921 3,267 Research and development costs 2,940 832 Other accruals and reserves 2,228 3,593 Total gross deferred tax assets 25,353 30,519 Less: valuation allowance ( 10,726 ) ( 16,486 ) 14,627 14,033 Deferred tax liabilities: Tax over book depreciation ( 1,453 ) ( 780 ) Investment in subsidiary ( 2,137 ) ( 1,958 ) Intangible assets, including tax deductible goodwill ( 10,675 ) ( 11,106 ) Total gross deferred tax liabilities ( 14,265 ) ( 13,844 ) Net deferred tax assets $ 362 $ 189 In 2015, the Company established a valuation allowance with respect to substantially all of its U.S. deferred tax assets due to uncertainty regarding the realization of these assets. Throughout 2022 and 2021, the Company reassessed its ability to realize its U.S. and other deferred tax assets by considering both positive and negative evidence regarding realization. The most significant negative evidence is continuing cumulative operating losses in the U.S. The impact of the acquisitions of Stress-Tek, Pacific Instruments, DSI and DTS was also considered in determining the realization of the U.S. deferred tax assets. Other aspects, such as operating results, additional interest expense and additional tax deductions related to the Stress-Tek acquisition, were also considered. The Company also considered positive evidence such as tax planning strategies and the projected benefits of our restructuring efforts. However, there was insufficient positive evidence to overcome the negative evidence. In June 2021, the Company acquired DTS. DTS's opening balance sheet included $ 26.4 million of gross deferred tax liabilities, including $ 2.4 million of indefinite-lived liabilities. The acquisition contributed to a $ 1.6 million net reduction in valuation allowance and deferred tax benefit for the Company in 2021. 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 recoverable. We will continue to monitor the realization of U.S. deferred tax assets and reduce the valuation allowance if, and when, sufficient positive evidence of realization exists. At December 31, 2022 and 2021, the valuation allowance on U.S. deferred tax assets was approximately $ 8.7 million and $ 13.9 million, 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. F-20 Note 6 – Income Taxes (continued) Significant valuation allowances are as follows (in thousands) : December 31, Jurisdiction 2022 2021 U.S. federal $ 2,647 $ 4,233 U.S. state (net of U.S. federal tax benefit) 6,026 9,648 Israel - capital losses 1,287 1,537 The following table summarizes significant net operating losses, capital losses and credit carryforwards as of December 31, 2022 (in thousands): December 31, Jurisdiction 2022 Expiring U.S. federal net operating losses $ 4,332 No expiration U.S. federal interest expense carryover 6,112 No expiration U.S. foreign tax credit 1,441 2028-2032 U.S. state net operating losses 115,028 2023-2042 Israel capital losses 5,594 No expiration Utilization of U.S. 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 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 $ 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. 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. F-21 Note 6 – Income Taxes (continued) The following table summarizes changes in the Company's gross liabilities, excluding interest and penalties, associated with unrecognized tax benefits (in thousands) : December 31, 2022 2021 2020 Balance at beginning of year $ 1,282 $ 1,244 $ 1,355 Addition based on tax positions related to current year 176 52 51 Addition based on tax positions related to prior years 216 — — Reduction based on tax positions related to prior years — — ( 57 ) Currency translation adjustments ( 6 ) 41 92 Reduction for settled tax examinations ( 1,229 ) — ( 73 ) Reduction for payments made — — ( 22 ) Reduction for lapses of statute of limitations — ( 55 ) ( 102 ) Balance at end of year $ 439 $ 1,282 $ 1,244 The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Related to the unrecognized tax benefits noted above, for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, the Company accrued total penalties and interest of ( 0.2 ) million, $ 0.1 million and $ 0.0 million , respectively. As of December 31, 2022, December 31, 2021 and December 31, 2020, accrued penalties and interest were $ 0.0 million , $ 0.2 million and $ 0.1 million, respectively. Included in the balance of unrecognized tax benefits as of December 31, 2022, 2021, and 2020 is $ 0.4 million, $ 1.3 million, and $ 1.2 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. 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. 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. federal income tax returns, as well as income tax returns in various state, local, and foreign jurisdictions. The Company files federal, state, and local income tax returns on a combined, unitary, or stand-alone basis. The statute of limitations in those jurisdictions generally ranges from 3 to 4 years. 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 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. F-22 Note 7 – Long-Term Debt Long-term debt consists of the following (in thousands) : December 31, 2022 2021 2020 Credit Agreement - Revolving Facility $ 61,000 $ 61,000 Deferred financing costs ( 201 ) ( 286 ) $ 60,799 $ 60,714 2020 Credit Agreement On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the “Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $ 75.0 million, with a sublimit of $ 10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $ 25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025. Interest payable on amounts borrowed under the 2020 Revolving Facility is based upon, at the Company’s option, (1) the greatest of: the Agent’s prime rate, the Federal Funds rate, or a LIBOR floor (the “Base Rate”), or (2) LIBOR or CDOR plus a specified margin. An interest margin of 0.25 % is added to Base Rate loans. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50 % to 2.75 % per annum is added to the applicable LIBOR or CDOR rate to determine the interest payable on the LIBOR or CDOR loans. The Company is required to pay a quarterly fee of 0.25 % per annum to 0.40 % per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit. The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at December 31, 2022. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable. Other Lines of Credit In addition to the 2020 Revolving Facility discussed above, certain subsidiaries of the Company had committed short-term lines of credit with a foreign bank aggregating approximately $ 5.0 million and $ 3.0 million at December 31, 2022 and 2021, respectively. 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. Aggregate annual maturities of long-term debt are as follows (in thousands) : 2023 $ — 2024 — 2025 61,000 2026 — 2027 — Thereafter — F-23 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. Note 8 – Stockholders’ Equity The Company’s Class B convertible common stock carries ten votes per share. The common stock carries one vote per share. Class B shares are transferable only to certain permitted transferees while the common stock is freely transferable. Class B shares are convertible on a one -for-one basis at any time into shares of common stock. Transfers of Class B shares other than to permitted transferees result in the automatic conversion of the Class B shares into common stock. The Board of Directors may only declare dividends or other distributions with respect to the common stock or the Class B convertible common stock if it grants such dividends or distributions in the same amount per share with respect to the other class of stock. As discussed in Note 7, the Company is restricted from paying cash dividends. Stock dividends or distributions, on any class of stock, are payable only in shares of stock of that class. 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. The Board of Directors may fix or alter the designation, preferences, rights and any qualification, limitations, restrictions of the shares of any series, including the dividend rights, dividend rates, conversion rights, voting rights, redemption terms and prices, liquidation preferences and the number of shares constituting any series. No shares of the Company’s preferred stock are currently outstanding. F-24 Note 8 – Stockholders’ Equity (continued) Other Comprehensive Income (Loss) The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows (in thousands) : Beginning Balance Before-Tax Amount Tax Effect Net-of-Tax Amount Ending Balance December 31, 2020 Pension and other postretirement actuarial items $ ( 6,942 ) $ ( 920 ) $ 319 $ ( 601 ) $ ( 7,543 ) Reclassification adjustment for recognition of actuarial items — 537 ( 73 ) 464 464 Foreign currency translation adjustment ( 30,761 ) 5,070 99 5,169 ( 25,592 ) $ ( 37,703 ) $ 4,687 $ 345 $ 5,032 $ ( 32,671 ) December 31, 2021 Pension and other postretirement actuarial items $ ( 7,079 ) $ 2,332 $ ( 376 ) $ 1,956 $ ( 5,123 ) Reclassification adjustment for recognition of actuarial items — 498 ( 107 ) 391 391 Foreign currency translation adjustment ( 25,592 ) ( 4,606 ) ( 78 ) ( 4,684 ) ( 30,276 ) $ ( 32,671 ) $ ( 1,776 ) $ ( 561 ) $ ( 2,337 ) $ ( 35,008 ) December 31, 2022 Pension and other postretirement actuarial items $ ( 4,732 ) $ 5,797 $ ( 1,021 ) $ 4,776 $ 44 Reclassification adjustment for recognition of actuarial items — 721 ( 176 ) 545 545 Foreign currency translation adjustment ( 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). 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 – Pensions and Other Postretirement Benefits Defined Benefit Plans Employees of the Company participate in various defined benefit pension and other postretirement benefit plans. U.S. Pension Plan The Vishay Precision Group Non-Qualified Retirement Plan, like all nonqualified plans, is considered to be unfunded. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund benefits under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified pension plan of $ 1.5 million at December 31, 2022 and $ 1.9 million at December 31, 2021, and the related liabilities of $ 2.1 million and $ 2.6 million at December 31, 2022 and 2021, respectively. The Vishay Precision Group Non-Qualified Retirement Plan is frozen. Accordingly, no new employees may participate in the plan, no further participant contributions are permitted, and no further benefits accrue. Benefits accumulated prior to the freezing of the U.S. pension plan will be paid to employees upon retirement, and the Company will likely need to make additional cash contributions to the rabbi trust to fund this accumulated benefit obligation. Non-U.S. Pension Plans The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local practices. Pension benefits earned are generally based on years of service and compensation during active employment. F-25 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 pension plans (in thousands) : December 31, 2022 December 31, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Change in benefit obligation: Benefit obligation at beginning of year $ 2,626 $ 26,157 $ 2,747 $ 28,088 Service cost (adjusted for actual employee contributions) — 308 — 379 Interest cost 65 395 57 353 Actuarial gains ( 533 ) ( 7,125 ) ( 103 ) ( 792 ) Benefits paid ( 108 ) ( 652 ) ( 75 ) ( 851 ) Curtailments and settlements — ( 567 ) — ( 108 ) Plan amendments and other — — — ( 172 ) Currency translation — ( 2,663 ) — ( 740 ) Benefit obligation at end of year $ 2,050 $ 15,853 $ 2,626 $ 26,157 Change in plan assets: Fair value of plan assets at beginning of year $ — $ 19,717 $ — $ 18,157 Actual return on plan assets — ( 1,773 ) — 1,044 Company contributions 108 1,064 75 1,613 Benefits paid ( 108 ) ( 652 ) ( 75 ) ( 851 ) Currency translation — ( 2,047 ) — ( 246 ) Fair value of plan assets at end of year $ — $ 16,248 $ — $ 19,717 Funded status at end of year $ ( 2,050 ) $ 395 $ ( 2,626 ) $ ( 6,440 ) Actuarial gains incurred in 2022 and 2021 related to our U.S. and non-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) : December 31, 2022 December 31, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Other assets $ — $ 3,301 $ — $ — Other accrued expenses $ ( 137 ) $ ( 179 ) $ ( 107 ) $ ( 375 ) Accrued pension and other postretirement costs $ ( 1,913 ) $ ( 2,727 ) $ ( 2,519 ) $ ( 6,065 ) Accumulated other comprehensive loss $ 137 $ 577 $ 693 $ 6,764 $ ( 1,913 ) $ 972 $ ( 1,933 ) $ 324 F-26 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. Actuarial items consist of the following (in thousands) : December 31, 2022 December 31, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Unrecognized net actuarial loss $ 137 $ 532 $ 693 $ 6,709 Unrecognized prior service cost — 45 — 55 $ 137 $ 577 $ 693 $ 6,764 The following table sets forth additional information regarding the projected and accumulated benefit obligations for the pension plans (in thousands) : December 31, 2022 U.S. Plans Non-U.S. Plans Accumulated benefit obligation, all plans $ 2,050 $ 14,489 Plans for which the accumulated benefit obligation exceeds plan assets: Projected benefit obligation $ 2,050 $ 3,008 Accumulated benefit obligation $ 2,050 $ 2,448 December 31, 2021 U.S. Plans Non-U.S. Plans Accumulated benefit obligation, all plans $ 2,626 $ 23,796 Plans for which the accumulated benefit obligation exceeds plan assets: Projected benefit obligation $ 2,626 $ 23,451 Accumulated benefit obligation $ 2,626 $ 22,634 Fair value of plan assets $ — $ 17,778 Unrecognized gains and losses are amortized into future net periodic pension cost using the 10% corridor method over the expected remaining service life of the employee group. The following table sets forth the components of net periodic cost of pension (in thousands) : Years ended December 31, 2022 2021 2020 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Annual service cost $ — $ 308 $ — $ 379 $ — $ 402 Interest cost 65 395 57 353 70 442 Expected return on plan assets — ( 454 ) — ( 393 ) — ( 442 ) Amortization of actuarial losses 22 736 27 459 109 286 Amortization of transition obligation — ( 40 ) — ( 8 ) — 5 Curtailment and settlement losses — ( 512 ) — ( 108 ) — — Net periodic benefit cost $ 87 $ 433 $ 84 $ 682 $ 179 $ 693 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. F-27 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: 2022 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 4.91 % 4.23 % 2.53 % 1.66 % Rate of compensation increase N/A 2.49 % N/A 2.97 % Expected return on plan assets N/A 3.96 % N/A 2.10 % The following weighted-average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2022 and 2021: 2022 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 2.53 % 1.66 % 2.11 % 1.29 % Rate of compensation increase N/A 2.97 % N/A 2.77 % Expected return on plan assets N/A 2.10 % N/A 2.66 % The plans’ expected return on assets is based on management’s expectation of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions. The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities. The target allocation of plan assets approximates the actual allocation of plan assets at December 31, 2022 and 2021. Plan assets are comprised of: December 31, 2022 December 31, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Equity securities — 48 % — 47 % Fixed income securities — 42 % — 39 % Cash and cash equivalents — 10 % — 14 % Total — 100 % — 100 % The Company maintains defined benefit retirement plans in certain of its subsidiaries. The assets of the plans are measured at fair value. Equity securities held by the defined benefit retirement plans consist of equity securities that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the equity securities is considered a Level 2 measurement within the fair value hierarchy. Fixed income securities held by the defined benefit retirement plans consist of government bonds and corporate notes that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the fixed income securities is considered a Level 2 measurement within the fair value hierarchy. F-28 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. The carrying amount of the cash approximates its fair value. A summary of the Company’s pension plan assets for each fair value hierarchy level are as follows for the periods presented (see Note 16 for further description of the levels within the fair value hierarchy (in thousands)) : As of December 31, 2022 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Defined benefit pension plan assets Equity securities $ 7,736 $ — $ 7,736 $ — Fixed income securities 6,813 — 6,813 — Cash and cash equivalents 1,699 1,511 188 — $ 16,248 $ 1,511 $ 14,737 $ — As of December 31, 2021 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Defined benefit pension plan assets Equity securities $ 9,262 $ — $ 9,262 $ — Fixed income securities 7,646 — 7,646 — Cash and cash equivalents 2,809 1,577 1,232 — $ 19,717 $ 1,577 $ 18,140 $ — Estimated future benefit payments are as follows (in thousands) : US Pension Plans Non-US Plans 2023 $ 137 $ 721 2024 136 740 2025 138 923 2026 138 598 2027 138 889 2028-2032 803 5,590 The Company anticipates making contributions to its funded and unfunded pension of approximately $ 1.2 million during 2023. Other Postretirement Benefit Plans In the U.S., the Company maintains two unfunded non-pension other postretirement benefit plans (“OPEB”) which are funded as costs are incurred. These plans provide medical and death benefits to retirees. F-29 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) : OPEB Plans December 31, 2022 2021 Change in benefit obligation: Benefit obligation at beginning of year $ 2,885 $ 3,577 Service cost (adjusted for actual employee contributions) 29 36 Interest cost 67 68 Contributions by participants — — Actuarial gains ( 453 ) ( 591 ) Benefits paid ( 142 ) ( 205 ) Plan amendments and other — — Benefit obligation at end of year $ 2,386 $ 2,885 Change in plan assets: Fair value of plan assets at beginning of year $ — $ — Company contributions 142 205 Contributions by participants — — Benefits paid ( 142 ) ( 205 ) Fair value of plan assets at end of year $ — $ — Funded status at end of year $ ( 2,386 ) $ ( 2,885 ) 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) : OPEB Plans December 31, 2022 2021 Other accrued expenses $ ( 189 ) $ ( 227 ) Accrued pension and other postretirement costs $ ( 2,197 ) $ ( 2,658 ) Accumulated other comprehensive gain $ ( 484 ) $ ( 28 ) $ ( 2,870 ) $ ( 2,913 ) Actuarial items consist of the following (in thousands) : OPEB Plans December 31, 2022 2021 Unrecognized net actuarial gain $ ( 484 ) $ ( 28 ) $ ( 484 ) $ ( 28 ) Unrecognized gains and losses are amortized into future net periodic benefit cost using the 10% corridor method over the expected remaining service life of the employee group. The following table sets forth the components of net periodic benefit costs (in thousands) : F-30 Note 9 – Pensions and Other Postretirement Benefits (continued) OPEB Plans Years ended December 31, 2022 2021 2020 OPEB Plans OPEB Plans OPEB Plans Net service cost 29 36 123 Interest cost 67 68 133 Amortization of actuarial losses 3 20 137 Net periodic benefit cost $ 99 $ 124 $ 393 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. The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years: OPEB Plans December 31, 2022 2021 Discount rate 4.88 % 2.46 % The following weighted-average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2022 and 2021: OPEB Plans December 31, 2022 2021 Discount rate 2.46 % 1.99 % Health care trend rate 6.50 % 6.00 % The health care trend ultimate rate is 4.14 % per the terms of the plan. The impact of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material. Estimated future benefit payments are as follows (in thousands) : OPEB Plans 2023 $ 189 2024 201 2025 199 2026 188 2027 218 2028-2032 940 As the plans are unfunded, the Company's anticipated contributions for 2023 are equal to the estimated benefit payment. Other Retirement Obligations The Company participates in various other defined contribution plans based on local law or custom. The Company periodically makes contributions to these plans. At December 31, 2022 and 2021, the consolidated balance sheets include $ 0.9 million and $ 1.0 million, respectively, within accrued pension and other postretirement costs related to these plans. Most of the Company’s U.S. 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 $ 1.1 million, $ 1.0 million, and $ 0.8 million for the F-31 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. Certain key employees participate in a nonqualified deferred compensation plan, which allows these employees to defer a portion of their compensation until retirement, or elect shorter deferral periods. The accompanying consolidated balance sheets include a liability within other noncurrent liabilities related to these deferrals. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund payments under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified deferred compensation plan of $ 3.9 million at December 31, 2022 and $ 4.2 million at December 31, 2021, and the related liabilities of $ 5.3 million and $ 6.0 million at December 31, 2022 and 2021, respectively. Note 10 – Share-Based Compensation 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 expire, are canceled or are forfeited, the underlying shares would be available for future grants under the Plan. Restricted Stock Units Pursuant to the 2022 plan, the Company issued RSUs to board members, executive officers, and certain employees of the Company during 2022. 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. 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 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. 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 target 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 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. The F-32 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. RSU activity is presented below (number of RSUs in thousands) : Years ended December 31, 2022 2021 2020 Number of RSUs Weighted Average Grant-date Fair Value Number of RSUs Weighted Average Grant-date Fair Value Number of RSUs Weighted Average Grant-date Fair Value Outstanding: Beginning of year 198 $ 31.07 205 $ 28.23 212 $ 25.97 Granted 82 30.68 80 33.13 79 24.16 Vested ( 40 ) 34.29 ( 77 ) 25.87 ( 81 ) 19.02 Forfeited ( 36 ) 33.15 ( 10 ) 29.43 ( 5 ) 15.75 End of year 204 $ 29.92 198 $ 31.07 205 $ 28.23 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. These awards are therefore available for future grants under the Plan. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands) : Vesting Date Expected to Vest Not Expected to Vest Total January 1, 2023 35 8 43 January 1, 2024 33 1 34 January 1, 2025 and July 1 2025 33 1 34 Share-Based Compensation Expense The following table summarizes pre-tax share-based compensation expense recognized (in thousands) : Years ended December 31, 2022 2021 2020 Restricted stock units $ 2,439 $ 2,244 $ 1,387 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. It was determined that certain objectives, which were deemed not likely to be met in previous years, were met. During the fourth quarter of 2020, a net adjustment decreasing share-based compensation expense by $ 0.1 million was recorded, based on the evaluation of performance objectives associated with awards granted in 2018, 2019 and 2020. It was determined that certain objectives were not likely to be fully met, necessitating a reversal of certain compensation expense associated with those awards. 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. F-33 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. As of December 31, 2022, the Company had $ 2.2 million of unrecognized share-based compensation expense related to share-based awards that will be recognized over a weighted-average period of approximately 1.5 years. Note 11 – Commitments, Contingencies, and Concentrations Litigation The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. The Company is of the opinion that the disposition of these proceedings will not have a material adverse effect on its business or its financial condition, results of operations, and cash flows. Executive Employment Agreements The Company has employment agreements with its executive officers which outline base salary, incentive compensation, and equity-based compensation. The employment agreements with the Company's executive officers also provide for incremental compensation in the event of termination without cause or resignation for good reason. Sources of Supplies Although most materials incorporated in the Company’s products are available from a number of sources, certain materials are available only from a relatively limited number of suppliers. Some of the most highly specialized materials for the Company’s sensors are sourced from a single vendor. The Company maintains a safety stock inventory of certain critical materials at its facilities. Certain metals used in the manufacture of the Company’s products are traded on active markets, and can be subject to significant price volatility. Market Concentrations No single customer comprises greater than 10% of net revenues. The vast majority of the Company’s products are used in the broad industrial market, with selected uses in military and aerospace, medical, agriculture, and construction. Within the broad industrial segment, the Company’s products serve wide applications in the waste management, bulk hauling, logging, scale manufacturing, engineering systems, pharmaceutical, oil, chemical, steel, paper, and food industries. Credit Risk Concentrations Financial instruments with potential credit risk consist principally of cash and cash equivalents, accounts receivable, and notes receivable. The Company maintains cash and cash equivalents with various major financial institutions. Concentrations of credit risk with respect to receivables are generally limited due to the Company’s large number of customers and their dispersion across many countries and industries. At December 31, 2022 and 2021, the Company had no significant concentrations of credit risk. F-34 Note 11 – Commitments, Contingencies, and Concentrations (continued) Geographic Concentrations At December 31, 2022 and 2021, a significant percentage of the Company’s cash and cash equivalents are held outside the United States. See the following table for the percentage of cash and cash equivalents by region at December 31, 2022 and December 31, 2021: December 31, 2022 2021 Asia 27 % 24 % United States 17 % 13 % Israel 28 % 25 % Europe 13 % 18 % United Kingdom 10 % 12 % Canada 5 % 8 % Total 100 % 100 % 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 fourteen years . Leases recorded on the balance sheet consist of the following (in thousands) : Leases December 31, 2022 December 31, 2021 Assets Operating lease right of use asset $ 24,342 $ 27,764 Liabilities Operating lease - current $ 4,208 $ 4,610 Operating lease - non-current $ 20,043 $ 25,140 Other information related to lease term and discount rate is as follows: December 31, 2022 Operating leases weighted average remaining lease term (in years) 7.7 years Operating leases weighted average discount rate 3.13 % The components of lease expense are as follows (in thousands) : Year Ended December 31, 2022 December 31, 2021 December 31, 2020 Operating lease cost $ 5,098 $ 5,185 $ 4,389 Short-term lease cost 121 141 124 Sublease income ( 423 ) ( 220 ) — — Total net lease cost $ 4,796 $ 5,106 $ 4,513 Right of use assets obtained in exchange for new operating lease liability during 2022 were $ 1.2 million and in 2021 were $ 10.7 million. 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. F-35 Note 12 - Leases ( continued) Undiscounted maturities of operating lease payments as of December 31, 2022 are summarized as follows (in thousands) : 2023 $ 4,635 2024 3,980 2025 3,377 2026 2,988 2027 2,915 Thereafter 9,341 Total future minimum lease payments $ 27,236 Less: amount representing interest ( 2,985 ) Present value of future minimum lease payments $ 24,251 Note 13 – Segment and Geographic Data VPG reports in three reportable segments: Sensors segment, Weighing Solutions segment, and 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 evaluation of the segments 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 accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 1). Reporting segment assets are the owned or allocated assets used by each segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. F-36 Note 13 – Segment and Geographic Data (continued) The following table sets forth reporting segment information (in thousands) : Sensors Weighing Solutions Measurement Systems Corporate/ Other Total 2022 Net third-party revenues $ 152,221 $ 125,715 $ 84,644 $ — $ 362,580 Intersegment revenues 2,121 — — ( 2,121 ) — Gross profit 61,087 43,178 45,337 — 149,602 Segment operating income (loss) 41,671 21,232 18,399 ( 37,503 ) 43,799 Restructuring costs 1,460 — 58 — 1,518 Depreciation and amortization expense 5,816 3,343 4,308 1,886 15,353 Capital expenditures 11,515 7,094 1,324 18 19,951 Total assets 156,816 148,041 153,547 18,338 476,742 2021 Net third-party revenues $ 127,861 $ 125,390 $ 64,668 $ — $ 317,919 Intersegment revenues 3,487 — — ( 3,487 ) — Gross profit 45,474 45,900 33,768 — 125,142 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 Restructuring costs — 76 — — 76 Depreciation and amortization expense 5,967 3,415 3,834 1,780 14,996 Capital expenditures 13,213 3,434 913 7 17,567 Total assets 142,510 152,399 159,816 7,164 461,889 2020 Net third-party revenues $ 120,754 $ 101,386 $ 47,672 $ — $ 269,812 Intersegment revenues 3,183 — — ( 3,183 ) — Gross profit 47,530 32,250 24,491 — 104,271 Segment operating income (loss) 29,486 12,145 11,763 ( 30,737 ) 22,657 Impairment of goodwill and indefinite-lived intangibles — — 2,440 — 2,440 Restructuring costs 551 234 51 82 918 Depreciation and amortization expense 5,227 3,291 2,653 1,336 12,507 Capital expenditures 21,885 1,961 468 13 24,327 Total assets 138,932 160,679 78,810 23,466 401,887 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) : Years ended December 31, 2022 2021 2020 Unallocated selling, general, and administrative expenses $ ( 35,985 ) $ ( 33,322 ) $ ( 27,379 ) Acquisition costs — ( 1,198 ) — Impairment of goodwill and indefinite-lived intangibles — ( 1,223 ) ( 2,440 ) Restructuring costs ( 1,518 ) ( 76 ) ( 918 ) $ ( 37,503 ) $ ( 35,819 ) $ ( 30,737 ) F-37 Note 13 – Segment and Geographic Data (continued) The following geographic data includes property and equipment based on physical location (in thousands) : December 31, Property and Equipment - Net 2022 2021 United States $ 12,651 $ 12,255 United Kingdom 3,368 4,024 Other Europe 1,721 1,774 Israel 44,551 41,540 Asia 23,264 20,057 Canada and Other 1,572 1,570 $ 87,127 $ 81,220 F-38 Note 14 – Earnings Per Share Basic earnings per share are computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding, adjusted to include the potentially dilutive effect of stock options and restricted stock units (see Note 10), and other potentially dilutive securities. The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share) : Years ended December 31, 2022 2021 2020 Numerator: Numerator for basic and diluted earnings per share: Net earnings attributable to VPG stockholders $ 36,063 $ 20,221 $ 10,787 Denominator: Denominator for basic earnings per share: Weighted average shares 13,628 13,616 13,566 Effect of dilutive securities: Restricted stock units 60 41 57 Dilutive potential common shares 60 41 57 Denominator for diluted earnings per share: Adjusted weighted average shares 13,688 13,657 13,623 Basic earnings per share attributable to VPG stockholders $ 2.65 $ 1.49 $ 0.80 Diluted earnings per share attributable to VPG stockholders $ 2.63 $ 1.48 $ 0.79 Note 15 – Additional Financial Statement Information The caption “Other” on the consolidated statements of operations consists of the following (in thousands) : Years ended December 31, 2022 2021 2020 Foreign exchange gain/(loss) $ 3,579 $ ( 110 ) $ ( 2,246 ) Interest income 401 252 246 Pension expense ( 241 ) ( 468 ) ( 738 ) Other ( 181 ) 96 ( 244 ) $ 3,558 $ ( 230 ) $ ( 2,982 ) 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, 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. F-39 Note 15 – Additional Financial Statement Information (continued) 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 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. Other accrued expenses consist of the following (in thousands) : December 31, 2022 2021 Customer advance payments $ 7,983 $ 4,765 Accrued restructuring 183 — Goods received, not yet invoiced 2,523 2,998 Accrued taxes, other than income taxes 1,141 1,425 Accrued commissions 3,217 2,605 Accrued professional fees 1,360 1,336 Accrued technical warranty 740 761 Current accrued pension and other post retirement costs 505 709 Other 2,654 2,997 $ 20,306 $ 17,596 Israeli Severance Pay The Israeli Severance Pay Law, 1963 ("Severance Pay Law"), specifies that employees of our Israeli subsidiary are entitled to severance payment, following the termination of their employment. Under the Severance Pay Law, the severance payment is calculated as one month salary for each year of employment, or a portion thereof. Part of the subsidiary's liability for severance pay is covered by the provisions of Section 14 of the Severance Pay Law ("Section 14"). Under Section 14, employees are entitled to monthly deposits, at a rate of 8.33 % of their monthly salary, contributed on their behalf to their insurance funds. Payments in accordance with Section 14 release the subsidiary from any future severance payments in respect of those employees. As a result, the Company does not recognize any liability for severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in the Company's balance sheet. For the subsidiary's employees in Israel who are not subject to Section 14, the Company calculated the liability for severance pay pursuant to the Severance Pay Law based on the most recent salary of these employees multiplied by the number of years of employment as of the balance sheet date. The Company recorded as expenses the increase in the severance liability, net of earnings (losses) from the related investment fund. The subsidiary's liability was partially funded by monthly payments deposited with insurers and the value of these deposits is recorded as an asset on the Company's balance sheet. 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, 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 ASC Topic 820, Fair Value Measurements and Disclosures, 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. F-40 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. The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands) : As of December 31, 2022 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Assets held in rabbi trusts $ 5,427 $ 53 $ 5,374 $ — As of December 31, 2021 Fair value measurements at reporting date using: Total Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Assets: Assets held in rabbi trusts $ 6,158 $ 49 $ 6,109 $ — The Company maintains nonqualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and nonqualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at December 31, 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 year. 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 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. The fair value measurement of long-term debt is considered a Level 2 measurement. 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 balance sheets approximate their fair values. Note 17 – Related Party Transactions Following the spin-off from Vishay Intertechnology, Inc. on July 6, 2010, VPG is an independent, publicly-traded company, and Vishay Intertechnology does not retain any ownership interest in VPG, although a common group of stockholders control a significant portion of the voting power of each company and the companies have three common board members. Subsequent to the spin-off, VPG and Vishay Intertechnology continue to share certain manufacturing locations. VPG owns one location in Japan at which it leases space to Vishay Intertechnology. Vishay Intertechnology owns one location in the United States, at which it leases space to VPG. Lease receipts and payments related to the shared facilities are immaterial. Note 18 – Subsequent Events Executive RSU grant 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. The service-based awards will vest on January 1, 2026, subject to the executives continued employment. The performance-based awards will also vest on January 1, 2026, 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. F-41