VISHAY INTERTECHNOLOGY INC 10-Q

Item 1. Financial Statements VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (In thousands) April 2, 2022 December 31, 2021 (Unaudited) Assets Current assets: Cash and cash equivalents $ 789,248 $ 774,108 Short-term investments 96,561 146,743 Accounts receivable, net 418,288 396,458 Inventories: Finished goods 159,909 147,293 Work in process 251,722 226,496 Raw materials 191,256 162,711 Total inventories 602,887 536,500 Prepaid expenses and other current assets 163,227 156,689 Total current assets 2,070,211 2,010,498 Property and equipment, at cost: Land 74,237 74,646 Buildings and improvements 642,097 639,879 Machinery and equipment 2,775,615 2,758,262 Construction in progress 129,268 145,828 Allowance for depreciation ( 2,650,810 ) ( 2,639,136 ) Property and equipment, net 970,407 979,479 Right of use assets 114,094 117,635 Deferred income taxes 93,497 95,037 Goodwill 165,032 165,269 Other intangible assets, net 65,546 67,714 Other assets 101,382 107,625 Total assets $ 3,580,169 $ 3,543,257 Continues on following page. 4 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (continued) (In thousands) April 2, 2022 December 31, 2021 (Unaudited) Liabilities and equity Current liabilities: Trade accounts payable $ 235,755 $ 254,049 Payroll and related expenses 156,012 162,694 Lease liabilities 23,080 23,392 Other accrued expenses 210,531 218,089 Income taxes 51,005 35,443 Total current liabilities 676,383 693,667 Long-term debt less current portion 456,484 455,666 U.S. transition tax payable 110,681 110,681 Deferred income taxes 71,435 69,003 Long-term lease liabilities 96,272 99,987 Other liabilities 93,261 95,861 Accrued pension and other postretirement costs 259,531 271,672 Total liabilities 1,764,047 1,796,537 Equity: Vishay stockholders' equity Common stock 13,290 13,271 Class B convertible common stock 1,210 1,210 Capital in excess of par value 1,349,552 1,347,830 Retained earnings 490,776 401,694 Treasury stock (at cost) ( 9,873 ) - Accumulated other comprehensive income (loss) ( 32,177 ) ( 20,252 ) Total Vishay stockholders' equity 1,812,778 1,743,753 Noncontrolling interests 3,344 2,967 Total equity 1,816,122 1,746,720 Total liabilities and equity $ 3,580,169 $ 3,543,257 See accompanying notes. 5 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarters ended April 2, 2022 April 3, 2021 Net revenues $ 853,793 $ 764,632 Costs of products sold 594,685 561,683 Gross profit 259,108 202,949 Selling, general, and administrative expenses 112,855 105,685 Operating income 146,253 97,264 Other income (expense): Interest expense ( 4,222 ) ( 4,376 ) Other ( 5,751 ) ( 5,731 ) Total other income (expense) ( 9,973 ) ( 10,107 ) Income before taxes 136,280 87,157 Income tax expense 32,330 15,514 Net earnings 103,950 71,643 Less: net earnings attributable to noncontrolling interests 377 208 Net earnings attributable to Vishay stockholders $ 103,573 $ 71,435 Basic earnings per share attributable to Vishay stockholders $ 0.71 $ 0.49 Diluted earnings per share attributable to Vishay stockholders $ 0.71 $ 0.49 Weighted average shares outstanding - basic 145,053 144,968 Weighted average shares outstanding - diluted 145,553 145,463 Cash dividends per share $ 0.100 $ 0.095 See accompanying notes. 6 VISHAY INTERTECHNOLOGY, INC. Consolidated Statements of Comprehensive Income (Unaudited - In thousands) Fiscal quarters ended April 2, 2022 April 3, 2021 Net earnings $ 103,950 $ 71,643 Other comprehensive income (loss), net of tax Pension and other post-retirement actuarial items 1,559 1,864 Foreign currency translation adjustment ( 13,484 ) ( 26,949 ) Other comprehensive income (loss) ( 11,925 ) ( 25,085 ) Comprehensive income 92,025 46,558 Less: comprehensive income attributable to noncontrolling interests 377 208 Comprehensive income attributable to Vishay stockholders $ 91,648 $ 46,350 See accompanying notes. 7 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three fiscal months ended April 2, 2022 April 3, 2021 Operating activities Net earnings $ 103,950 $ 71,643 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 40,650 42,146 (Gain) loss on disposal of property and equipment ( 59 ) ( 177 ) Inventory write-offs for obsolescence 5,825 4,784 Deferred income taxes 2,347 901 Other 8,816 5,728 Net change in operating assets and liabilities ( 127,944 ) ( 67,703 ) Net cash provided by operating activities 33,585 57,322 Investing activities Capital expenditures ( 35,909 ) ( 28,527 ) Proceeds from sale of property and equipment 72 200 Purchase of short-term investments ( 7,753 ) ( 12,853 ) Maturity of short-term investments 56,674 29,519 Other investing activities ( 199 ) 347 Net cash provided by (used in) investing activities 12,885 ( 11,314 ) Financing activities Repurchase of convertible debt instruments - ( 300 ) Dividends paid to common stockholders ( 13,259 ) ( 12,608 ) Dividends paid to Class B common stockholders ( 1,210 ) ( 1,149 ) Repurchase of common stock held in treasury ( 9,873 ) - Cash withholding taxes paid when shares withheld for vested equity awards ( 2,123 ) ( 1,963 ) Net cash used in financing activities ( 26,465 ) ( 16,020 ) Effect of exchange rate changes on cash and cash equivalents ( 4,865 ) ( 6,015 ) Net increase in cash and cash equivalents 15,140 23,973 Cash and cash equivalents at beginning of period 774,108 619,874 Cash and cash equivalents at end of period $ 789,248 $ 643,847 See accompanying notes. 8 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share and per share amounts) Common Stock Class B Convertible Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Vishay Stockholders' Equity Noncontrolling Interests Total Equity Balance at December 31, 2020 $ 13,256 $ 1,210 $ 1,409,200 $ 138,990 $ - $ 13,559 $ 1,576,215 $ 2,800 $ 1,579,015 Cumulative effect of accounting change for adoption of ASU 2020-06 - - ( 66,078 ) 20,566 - - ( 45,512 ) - ( 45,512 ) Net earnings - - - 71,435 - - 71,435 208 71,643 Other comprehensive income (loss) - - - - - ( 25,085 ) ( 25,085 ) - ( 25,085 ) Issuance of stock and related tax withholdings for vested restricted stock units ( 149,722 shares) 15 - ( 1,978 ) - - - ( 1,963 ) - ( 1,963 ) Dividends declared ($ 0.095 per share) - - 20 ( 13,777 ) - - ( 13,757 ) - ( 13,757 ) Stock compensation expense - - 4,120 - - - 4,120 - 4,120 Balance at April 3, 2021 $ 13,271 $ 1,210 $ 1,345,284 $ 217,214 $ - $ ( 11,526 ) $ 1,565,453 $ 3,008 $ 1,568,461 Balance at December 31, 2021 $ 13,271 $ 1,210 $ 1,347,830 $ 401,694 $ - $ ( 20,252 ) $ 1,743,753 $ 2,967 $ 1,746,720 Net earnings - - - 103,573 - - 103,573 377 103,950 Other comprehensive income (loss) - - - - - ( 11,925 ) ( 11,925 ) - ( 11,925 ) Issuance of stock and related tax withholdings for vested restricted stock units ( 189,731 shares) 19 - ( 2,142 ) - - - ( 2,123 ) - ( 2,123 ) Dividends declared ($ 0.100 per share) - - 22 ( 14,491 ) - - ( 14,469 ) - ( 14,469 ) Stock compensation expense - - 3,842 - - - 3,842 - 3,842 Repurchase of common stock held in treasury ( 513,227 shares) - - - - ( 9,873 ) - ( 9,873 ) - ( 9,873 ) Balance at April 2, 2022 $ 13,290 $ 1,210 $ 1,349,552 $ 490,776 $ ( 9,873 ) $ ( 32,177 ) $ 1,812,778 $ 3,344 $ 1,816,122 See accompanying notes. 9 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 1 – Basis of Presentation The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. (“Vishay” or the “Company”) have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the three fiscal months ended April 2, 2022 are not necessarily indicative of the results to be expected for the full year. The Company reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first fiscal quarter, which always begins on January 1, and the fourth fiscal quarter, which always ends on December 31. The four fiscal quarters in 2022 end on April 2, 2022, July 2, 2022, October 1, 2022, and December 31, 2022, respectively. The four fiscal quarters in 2021 ended on April 3, 2021, July 3, 2021, October 2, 2021, and December 31, 2021, respectively. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation. 10 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 2 – Leases The net right of use assets and lease liabilities recognized on the consolidated condensed balance sheets for the Company's operating leases were as follows: April 2, 2022 December 31, 2021 Right of use assets Operating Leases Buildings and improvements $ 109,682 $ 112,951 Machinery and equipment 4,412 4,684 Total $ 114,094 $ 117,635 Current lease liabilities Operating Leases Buildings and improvements $ 20,655 $ 20,851 Machinery and equipment 2,425 2,541 Total $ 23,080 $ 23,392 Long-term lease liabilities Operating Leases Buildings and improvements $ 94,333 $ 97,890 Machinery and equipment 1,939 2,097 Total $ 96,272 $ 99,987 Total lease liabilities $ 119,352 $ 123,379 Lease expense is classified in the statements of operations based on asset use. Total lease cost recognized on the consolidated condensed statements of operations is as follows: Fiscal quarters ended April 2, 2022 April 3, 2021 Lease expense Operating lease expense $ 6,452 $ 6,152 Short-term lease expense 304 325 Variable lease expense 100 127 Total lease expense $ 6,856 $ 6,604 The Company paid $ 6,332 and $ 6,161 for its operating leases in the three fiscal months ended April 2, 2022 and April 3, 2021, respectively, which are included in operating cash flows on the consolidated condensed statements of cash flows. The weighted-average remaining lease term for the Company's operating leases is 8.7 years and the weighted-average discount rate is 5.4 % as of April 2, 2022. The undiscounted future lease payments for the Company's operating lease liabilities are as follows: April 2, 2022 2022 (excluding the three fiscal months ended April 2, 2022) $ 17,794 2023 22,072 2024 19,910 2025 17,388 2026 15,868 Thereafter 57,407 The undiscounted future lease payments presented in the table above include payments through the term of the lease, which may include periods beyond the noncancellable term. The difference between the total payments above and the lease liability balance is due to the discount rate used to calculate lease liabilities. 11 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 3 – Income Taxes The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended April 2, 2022 and April 3, 2021 reflect the Company’s expected tax rate on reported income before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates. During the three fiscal months ended April 2, 2022, the liabilities for unrecognized tax benefits decreased by $ 3,047 on a net basis, primarily due to a payment and currency translation adjustments, partially offset by accruals for current year tax positions and interest. Note 4 – Long-Term Debt Long-term debt consists of the following: April 2, 2022 December 31, 2021 Credit facility $ - $ - Convertible senior notes, due 2025 465,344 465,344 Deferred financing costs ( 8,860 ) ( 9,678 ) 456,484 455,666 Less current portion - - $ 456,484 $ 455,666 The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of April 2, 2022: Convertible Senior Notes Due 2025 Issuance date June 12, 2018 Maturity date June 15, 2025 Principal amount as of April 2, 2022 $ 465,344 Cash coupon rate (per annum) 2.25 % Nonconvertible debt borrowing rate at issuance (per annum) 5.50 % Conversion rate effective March 16, 2022 (per $1 principal amount) 31.9749 Effective conversion price effective March 16, 2022 (per share) $ 31.27 130% of the current effective conversion price (per share) $ 40.65 Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) the sale price of Vishay common stock reaches 130 % of the conversion price for a specified period; (2) the trading price of the notes falls below 98 % of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate transactions. The convertible senior notes due 2025 are not currently convertible. Upon conversion of the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock. The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible senior notes due 2025 effective as of the ex-dividend date of each cash dividend. The conversion rate and effective conversion price for the convertible senior notes due 2025 is adjusted for quarterly cash dividends to the extent such dividends exceed $ 0.085 per share of common stock. 12 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 5 - Stockholders' Equity On February 7, 2022, the Company's Board of Directors adopted a Stockholder Return Policy that will remain in effect until such time as the Board votes to amend or rescind the policy. The Stockholder Return Policy calls for the Company to return a prescribed amount of cash flows on an annual basis. The Company intends to return such amounts directly, in the form of dividends, or indirectly, in the form of stock repurchases. The following table summarizes activity pursuant to this policy: Fiscal quarter ended April 2, 2022 Dividends paid to stockholders $ 14,469 Stock repurchases 9,873 Total $ 24,342 The repurchased shares are being held as treasury stock. The Company records treasury stock at cost, inclusive of fees, commissions and other expenses, when outstanding common shares are repurchased. As of December 31, 2021, no shares of common stock were held as treasury stock. As of April 2, 2022, 513,227 shares of common stock are being held as treasury stock. Note 6 – Revenue Recognition Sales returns and allowances accrual activity is shown below: Fiscal quarters ended April 2, 2022 April 3, 2021 Beginning balance $ 39,759 $ 39,629 Sales allowances 27,377 23,796 Credits issued ( 27,726 ) ( 28,446 ) Foreign currency ( 249 ) ( 530 ) Ending balance $ 39,161 $ 34,449 See disaggregated revenue information in Note 10. Note 7 – Accumulated 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: Pension and other post- retirement actuarial items Currency translation adjustment Total Balance at January 1, 2022 $ ( 58,908 ) $ 38,656 $ ( 20,252 ) Other comprehensive income before reclassifications - ( 13,484 ) $ ( 13,484 ) Tax effect - - $ - Other comprehensive income before reclassifications, net of tax - ( 13,484 ) $ ( 13,484 ) Amounts reclassified out of AOCI 2,178 - $ 2,178 Tax effect ( 619 ) - $ ( 619 ) Amounts reclassified out of AOCI, net of tax 1,559 - $ 1,559 Net other comprehensive income $ 1,559 $ ( 13,484 ) $ ( 11,925 ) Balance at April 2, 2022 $ ( 57,349 ) $ 25,172 $ ( 32,177 ) Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. See Note 8 for further information. 13 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 8 – Pensions and Other Postretirement Benefits The Company maintains various retirement benefit plans. The service cost component of net periodic pension cost is classified in costs of products sold or selling, general, and administrative expenses on the consolidated condensed statements of operations based on the respective employee's function. The other components of net periodic pension cost are classified as other expense on the consolidated condensed statements of operations. Defined Benefit Pension Plans The following table shows the components of the net periodic pension cost for the first fiscal quarters of 2022 and 2021 for the Company’s defined benefit pension plans: Fiscal quarters ended April 2, 2022 Fiscal quarters ended April 3, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Net service cost $ - $ 1,117 $ - $ 1,190 Interest cost 280 852 254 754 Expected return on plan assets - ( 460 ) - ( 417 ) Amortization of prior service cost 36 56 36 51 Amortization of losses 427 1,271 447 1,884 Curtailment and settlement losses - 279 - 199 Net periodic benefit cost $ 743 $ 3,115 $ 737 $ 3,661 Other Postretirement Benefits The following table shows the components of the net periodic benefit cost for the first fiscal quarters of 2022 and 2021 for the Company’s other postretirement benefit plans: Fiscal quarters ended April 2, 2022 Fiscal quarters ended April 3, 2021 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Service cost $ 10 $ 63 $ 25 $ 71 Interest cost 45 15 41 11 Amortization of losses (gains) 86 23 13 29 Net periodic benefit cost $ 141 $ 101 $ 79 $ 111 14 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 9 – Stock-Based Compensation The following table summarizes stock-based compensation expense recognized: Fiscal quarters ended April 2, 2022 April 3, 2021 Restricted stock units ("RSUs") $ 3,620 $ 3,911 Phantom stock units 222 209 Total $ 3,842 $ 4,120 The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at April 2, 2022 (amortization periods in years) : Unrecognized Compensation Cost Weighted Average Remaining Amortization Periods Restricted stock units $ 5,943 1.0 Phantom stock units - n/a Total $ 5,943 15 Restricted Stock Units RSU activity under the Company's 2007 Stock Incentive Program (the "2007 Program") as of April 2, 2022 and changes during the three fiscal months then ended are presented below (number of RSUs in thousands) : Number of RSUs Weighted Average Grant-date Fair Value per Unit Outstanding: January 1, 2022 877 $ 20.08 Granted 336 19.13 Vested* ( 294 ) 20.04 Cancelled or forfeited - - Outstanding at April 2, 2022 919 $ 19.75 Expected to vest at April 2, 2022 905 * The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements. The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance criteria between the established target and maximum levels. 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 152 - 152 January 1, 2024 165 - 165 January 1, 2025 168 - 168 Phantom Stock Units Phantom stock unit activity under the 2007 Program as of April 2, 2022 and changes during the three fiscal months then ended are presented below (number of phantom stock units in thousands) : Number of units Grant-date Fair Value per Unit Outstanding: January 1, 2022 212 Granted 10 $ 22.20 Dividend equivalents issued 1 Outstanding at April 2, 2022 223 16 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 10 – Segment Information The following tables set forth business segment information: MOSFETs Diodes Optoelectronic Components Resistors Inductors Capacitors Total Fiscal quarter ended April 2, 2022 : Net revenues $ 172,674 $ 182,334 $ 81,016 $ 207,032 $ 82,777 $ 127,960 $ 853,793 Segment operating income $ 48,524 $ 40,426 $ 28,159 $ 58,143 $ 22,199 $ 27,400 $ 224,851 Fiscal quarter ended April 3, 2021: Net revenues $ 153,223 $ 157,178 $ 77,771 $ 186,602 $ 83,458 $ 106,400 $ 764,632 Segment operating income $ 27,207 $ 28,821 $ 21,210 $ 47,376 $ 25,290 $ 18,863 $ 168,767 Fiscal quarters ended April 2, 2022 April 3, 2021 Reconciliation: Segment Operating Income $ 224,851 $ 168,767 Unallocated Selling, General, and Administrative Expenses ( 78,598 ) ( 71,503 ) Consolidated Operating Income $ 146,253 $ 97,264 Unallocated Other Income (Expense) ( 9,973 ) ( 10,107 ) Consolidated Income Before Taxes $ 136,280 $ 87,157 17 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) The Company has a broad line of products that it sells to OEMs, EMS companies, and independent distributors. The distribution of sales by customer type is shown below: Fiscal quarters ended April 2, 2022 April 3, 2021 Distributors $ 497,869 $ 424,125 OEMs 297,429 294,637 EMS companies 58,495 45,870 Total Revenue $ 853,793 $ 764,632 Net revenues were attributable to customers in the following regions: Fiscal quarters ended April 2, 2022 April 3, 2021 Asia $ 344,012 $ 322,460 Europe 289,984 268,323 Americas 219,797 173,849 Total Revenue $ 853,793 $ 764,632 The Company generates substantially all of its revenue from product sales to end customers in the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. Sales by end market are presented below: Fiscal quarters ended April 2, 2022 April 3, 2021 Industrial $ 337,369 $ 270,801 Automotive 259,501 255,973 Telecommunications 31,013 24,902 Computing 67,931 59,899 Consumer Products 38,708 40,795 Power Supplies 40,282 35,246 Military and Aerospace 46,498 41,538 Medical 32,491 35,478 Total revenue $ 853,793 $ 764,632 18 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 11 – Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share attributable to Vishay stockholders (shares in thousands) : Fiscal quarters ended April 2, 2022 April 3, 2021 Numerator: Net earnings attributable to Vishay stockholders $ 103,573 $ 71,435 Denominator: Denominator for basic earnings per share: Weighted average shares 144,832 144,760 Outstanding phantom stock units 221 208 Adjusted weighted average shares - basic 145,053 144,968 Effect of dilutive securities: Convertible debt instruments - 9 Restricted stock units 500 486 Dilutive potential common shares 500 495 Denominator for diluted earnings per share: Adjusted weighted average shares - diluted 145,553 145,463 Basic earnings per share attributable to Vishay stockholders $ 0.71 $ 0.49 Diluted earnings per share attributable to Vishay stockholders $ 0.71 $ 0.49 Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares that would have an antidilutive effect or have unsatisfied performance conditions (in thousands) : Fiscal quarters ended April 2, 2022 April 3, 2021 Restricted stock units 333 317 If the average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2025, no shares are included in the diluted earnings per share computation for the convertible senior notes due 2025. Upon Vishay exercising its existing right to legally amend the indenture governing the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock. Accordingly, the notes are not anti-dilutive when t he average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2025. 19 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 12 – Fair Value Measurements The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis: Total Fair Value Level 1 Level 2 Level 3 April 2, 2022 Assets: Assets held in rabbi trusts $ 53,881 $ 28,280 $ 25,601 $ - Available for sale securities $ 4,165 4,165 - - Precious metals $ 5,666 5,666 - - $ 63,712 $ 38,111 $ 25,601 $ - December 31, 2021 Assets: Assets held in rabbi trusts $ 59,687 $ 32,713 26,974 $ - Available for sale securities $ 4,455 4,455 - - $ 64,142 $ 37,168 $ 26,974 $ - There have been no changes in the classification of any financial instruments within the fair value hierarchy in the periods presented. The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy. The Company holds investments in debt securities that are intended to fund a portion of its pension and other postretirement benefit obligations outside of the United States. The investments are valued based on quoted market prices on the last business day of the period. The fair value measurement of the investments is considered a Level 1 measurement within the fair value hierarchy. From time to time, the Company purchases precious metals bullion in excess of its immediate manufacturing needs to mitigate the risk of supply shortages or volatile price fluctuations. The metals are valued based on quoted market prices on the last business day of the period. The fair value measurement of the metals are considered a Level 1 measurement within the fair value hierarchy. The Company enters into forward contracts with highly-rated financial institutions to mitigate the foreign currency risk associated with intercompany loans denominated in a currency other than the legal entity's functional currency. The notional amount of the forward contracts was $ 80,000 and $ 100,000 as of April 2, 2022 and December 31, 2021, respectively. The forward contracts are short-term in nature and are expected to be renewed at the Company's discretion until the intercompany loans are repaid. We have not designated the forward contracts as hedges for accounting purposes, and as such the change in the fair value of the contracts is recognized in the consolidated condensed statements of operations as a component of other income (expense). The Company estimates the fair value of the forward contracts based on applicable and commonly used pricing models using current market information and is considered a Level 2 measurement within the fair value hierarchy. The value of the forward contracts was immaterial as of April 2, 2022 and December 31, 2021. The Company does not utilize derivatives or other financial instruments for trading or other speculative purposes. The fair value of the long-term debt, excluding the derivative liabilities and deferred financing costs, at April 2, 2022 and December 31, 2021 is approximately $ 463,800 and $ 485,500 , respectively, compared to its carrying value, excluding the deferred financing costs, of $ 465,344 . The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered Level 2 inputs. At April 2, 2022 and December 31, 2021, the Company’s short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates. The Company's short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value. The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity. At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary. No other-than-temporary impairments have been recognized on these securities, and there are no unrecognized holding gains or losses for these securities during the periods presented. There have been no transfers to or from the held-to-maturity classification. All decreases in the account balance are due to returns of principal at the securities’ maturity dates. Interest on the securities is recognized as interest income when earned. At April 2, 2022 and December 31, 2021, the Company’s cash and cash equivalents were comprised of demand deposits, time deposits with maturities of three months or less when purchased, and money market funds. The Company estimates the fair value of its cash, cash equivalents, and short-term investments using level 2 inputs. Based on the current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of the Company's cash, cash equivalents, and held-to-maturity short-term investments approximate the carrying amounts reported in the consolidated condensed balance sheets. The Company’s financial instruments also include accounts receivable and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values. 20