What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-02 compared with 2022-08-02 · 327 added, 245 removed, 472 unchanged (55% of the section changed)

39 unchanged sentences

paid to manufacturing employees during the shut-downs, additional wages and hardship allowances for working during lockdown periods, and temporary housing for employees due to travel restrictions , which were partially offset by government subsidies.

The net impact of the costs and subsidies are reported as cost of products sold ($6.7 million ) and selling, general, and administrative expenses ($0.5 million) based on employee function on the consolidated condensed statements of operations for the fiscal quarter and six fiscal months ended July 2, 2022.

We exclude from the amounts reported above any expenses incurred outside of the People's Republic of China and all indirect financial changes from the COVID-19 pandemic such as

general macroeconomic effects and higher shipping costs due to reduced shipping capacity.

In this volatile economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources

to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs.

We will react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess

inventory build in periods of decline and maximize opportunities in periods of growth.

The net impact of the costs and subsidies are reported as cost of products sold ($6.7 million ) and selling, general, and administrative expenses ($0.5 million) based on employee function on the consolidated condensed statement of operations for the nine fiscal months ended October 1, 2022.

We exclude from the amounts reported above any expenses incurred outside of the People's Republic of China and all indirect financial changes from the COVID-19 pandemic such as general macroeconomic

effects and higher shipping costs due to reduced shipping capacity.

In this volatile economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing

conditions and to ensure we have the management, business processes, and resources to meet our future needs.

We will react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in

periods of decline and maximize opportunities in periods of growth.

We have significant liquidity to withstand temporary disruptions in the economic environment.

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“Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below.

Despite ongoing pandemic-related issues and further accelerating inflation, nearly all key financial metrics have increased versus the prior fiscal quarter and

the prior year quarter.

We continue to maximize manufacturing output at all facilities, increase critical manufacturing capacities, and implement broad price increases due to inflationary pressures.

Order levels continue to be high and backlogs

continue to increase.

Net revenues for the fiscal quarter ended July 2, 2022

Despite ongoing global challenges and further accelerating inflation, net revenues and margins have increased versus the prior fiscal quarter and the prior year

We continue to maximize manufacturing output at all facilities and increase critical manufacturing capacities.

Partially due to the resumption of sales in the third fiscal quarter following government mandated shut-downs, the book-to-bill

ratios and backlogs have decreased.

Average selling prices remain stable after broad increases in prior periods.

Net revenues for the fiscal quarter ended October 1, 2022

were $924.8 million, compared to $863.5

million and $819.1 million for the fiscal quarters ended April 2, 2022 and July 3, 2021, respectively.

The net earnings attributable to Vishay stockholders

for the fiscal quarter ended July 2, 2022 were $112.4 million, or $0.78 per diluted share, compared to $103.6 million, or $0.71 per diluted share for the fiscal

quarter ended April 2, 2022, and $93.2

million, or $0.64 per diluted share for the fiscal quarter ended July 3, 2021.

Net revenues for the six fiscal months

ended July 2, 2022 were $1,717.3

million, compared to $1,583.8 million for the six fiscal months ended July 3, 2021.

The net earnings attributable to Vishay

stockholders for the six fiscal months ended July 2, 2022 were $216.0 million, or $1.49 per diluted share, compared to $164.6 million, or $1.13 per diluted share for the six

fiscal months ended July 3, 2021.

million and $813.7 million for the fiscal quarters ended July 2, 2022 and October 2, 2021, respectively.

The net earnings attributable

to Vishay stockholders for the fiscal quarter ended October 1, 2022 were $140.1 million, or $0.98 per diluted share, compared to $112.4 million, or $0.78 per diluted

share for the fiscal quarter ended July 2, 2022, and $96.8 million, or $0.67 per diluted share for the fiscal quarter ended October 2, 2021.

Net revenues for the nine fiscal months

ended October 1, 2022 were $2,642.1

million, compared to $2,397.4 million for the nine fiscal months ended October 2, 2021.

The net earnings attributable to Vishay stockholders for

the nine fiscal months ended October 1, 2022 were $356.0 million, or $2.46 per diluted share, compared to $261.4 million, or $1.80 per diluted share for the nine fiscal months ended October 2, 2021.

We define adjusted net earnings as net earnings determined in accordance with GAAP adjusted for various items that

14 unchanged sentences

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

GAAP net earnings attributable to Vishay stockholders

4 unchanged sentences

Reconciling items affecting tax expense:

Effects of changes in uncertain tax positions

Effects of changes in valuation allowances

Changes in tax laws and regulations

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reconciles gross profit by segment to consolidated gross profit.

Direct cots of the COVID-19 pandemic are not allocated to the segments as the chief operating decision maker's evaluation of segment performance does not include these costs.

Direct costs of the COVID-19 pandemic are not allocated to the segments as the chief operating decision maker's evaluation of segment performance does not include these costs.

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Optoelectronic Components

3 unchanged sentences

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Net cash provided by continuing operating activities

1 unchanged sentence

Capital expenditures

Our results for the fiscal quarters ended July 2, 2022,

July 3, 2021, and July 3, 2021 represent the continuation of the favorable business conditions that we have been experiencing.

Our results for the fiscal quarters ended October 1, 2022,

July 2, 2022, and October 2, 2021 represent the continuation of the favorable business conditions that we have been experiencing.

percentage of euro-based sales approximates our percentage of euro-based expenses so the foreign currency impact on revenues was substantially offset by the impact on expenses.

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Fiscal quarter ended

Six fiscal months ended

Nine fiscal months ended

October 1, 2022

Dividends paid to stockholders

Stock repurchases

Despite the slow start in free cash in the first six fiscal months of 2022, for the full year of 2022, we expect to return at least $100 million to

stockholders, consisting of approximately $58 million through our quarterly dividends, and at least $42 million through stock repurchases.

As a direct result of a change in tax law in Israel, we made the determination during the fourth quarter of 2021 that substantially all unremitted

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The following table

shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the second fiscal quarter of 2021 through

the second fiscal quarter of 2022 (dollars in thousands) :

2nd Quarter 2021

the third fiscal quarter of 2022 (dollars in thousands) :

3rd Quarter 2021

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2nd Quarter 2022

3rd Quarter 2022

Gross profit margin (1)

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See “Financial Metrics by Segment” below for net revenues, book-to-bill ratio, and gross profit margin broken out by segment.

Revenues increased significantly versus the second fiscal quarter of 2021 primarily due to higher volume and higher average selling prices.

Revenues increased slightly versus the prior fiscal quarter primarily due to

higher average selling prices.

We continue to experience robust demand for our products, with the backlog continuing to grow.

We continue to increase manufacturing capacity, but sales continue to be limited by our capacity.

Pressure on average

selling prices continues to be very low and we are implementing broad price increases across the product portfolio to offset increased materials and transportation costs and accelerating general inflation.

Sequentially, gross profit margin was flat, with higher average selling prices offset by directly related COVID-19 pandemic costs.

Gross profit margin

increased versus the second fiscal quarter of 2021 primarily due to higher average selling prices and higher volume.

The book-to-bill ratio in the second fiscal quarter of 2022 remained strong at 1.07 versus 1.14 in the first fiscal quarter of 2022.

The book-to-bill

ratios in the second fiscal quarter of 2022 for distributors and original equipment manufacturers ("OEM") were 1.05 and 1.11, respectively, versus ratios of 1.16 and 1.13, respectively, during the first fiscal quarter of 2022.

For the third fiscal quarter of 2022, we anticipate revenues between $860 million and $900 million at a gross margin of 29.0% plus/minus 50 basis points at an exchange rate USD/EUR of 0.98.

Revenues increased significantly versus the third fiscal quarter of 2021 primarily due to higher volume and higher average selling prices.

Revenues increased slightly versus the prior fiscal quarter primarily due to higher

The increased volume is partially due to operations and sales resuming following the two-month government mandated COVID-19 shut-down of our manufacturing facilities in Shanghai, People's Republic of China that significantly impacted our

semiconductor segments in the second fiscal quarter of 2022.

The book-to-bill ratio and backlog were negatively impacted by the catch-up in sales during the third fiscal quarter.

We continue to increase manufacturing capacity for critical product

Average selling prices were stable in the third fiscal quarter following broad price increases that we implemented in prior periods across the product portfolio to offset increased materials and transportation costs and accelerating general

Gross profit margin increased versus prior fiscal quarter and the second fiscal quarter of 2021.

The increase versus the prior fiscal quarter is

primarily due to higher volume.

The increase versus the third fiscal quarter of 2021 is primarily due to higher average selling prices and higher volume.

The book-to-bill ratio in the third fiscal quarter of 2022 decreased to 0.88 versus 1.07 in the second fiscal quarter of 2022.

The book-to-bill ratio

was negatively impacted by the catch-up in semiconductor sales during the third fiscal quarter.

The book-to-bill ratios in the third fiscal quarter of 2022 for distributors and original equipment manufacturers ("OEM") were 0.77 and 1.03,

respectively, versus ratios of 1.05 and 1.11, respectively, during the second fiscal quarter of 2022.

For the fourth fiscal quarter of 2022, we anticipate revenues between $860 million and $900 million at a gross margin of 30.0% plus/minus 50 basis points.

Financial Metrics by Segment

The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal

quarters beginning with the second fiscal quarter of 2021 through the second fiscal quarter of 2022 (dollars in thousands) :

2nd Quarter 2021

quarters beginning with the third fiscal quarter of 2021 through the third fiscal quarter of 2022 (dollars in thousands) :

3rd Quarter 2021

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2nd Quarter 2022

3rd Quarter 2022

Book-to-bill ratio

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Segment operating margin

Acquisition Activity

As part of its growth strategy, the Company seeks to expand through targeted acquisitions of other manufacturers of electronic components.

These acquisition targets include businesses that have

established positions in major markets, reputations for product quality and reliability, and product lines with which the Company has substantial marketing and technical expertise.

It also includes certain businesses that possess technologies which

the Company expects to further develop and commercialize.

To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes,

depreciation, and amortization (“EBITDA”).

For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for Vishay’s four preceding fiscal quarters, with a pro forma adjustment for savings which management

estimates would have been achieved had the target been acquired by Vishay at the beginning of the four fiscal quarter period.

Subsequent Event

On October 28, 2022, we acquired MaxPower Semiconductor, Inc.

("MaxPower"), a San Jose, California-based fabless power semiconductor provider dedicated

to delivering innovative and cost-effective technologies that optimize power management solutions.

MaxPower's proprietary device structures and process techniques provide leading edge silicon and silicon carbide ("SiC") MOSFET products.

product development targets automotive and industrial applications.

We paid cash of $50.0 million, net of cash acquired, at closing.

Related to the transaction, we may also be required to make certain contingent payments

of up to $57.5 million, which would be payable upon the achievement of certain technology milestones and the occurrence of certain non-operating events.

The purchase price for U.S.

GAAP purposes will include the fair value, as of the acquisition

date, of certain future contingent payments.

To the extent contingent payments are deemed compensatory in nature, such payments will be recognized as expense in future periods, and will thus not be included in the U.S.

GAAP purchase price.

There is no assurance that we will be able to identify and acquire additional suitable acquisition candidates at price levels and on terms and conditions we

consider acceptable.

Results of Operations

1 unchanged sentence

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Cost of products sold

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Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands) :

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net

April 2, 2022

October 2, 2021

Changes in net revenues were attributable to the following:

Change attributable to:

Change in volume

Increase in average selling prices

Increase in volume

Change in average selling prices

Foreign currency effects

We continue to experience an excellent economic environment with strong customer demand while we continue to increase

manufacturing capacities.

Due to the high demand, we were able to implement broad price increases across the product portfolio.

Net revenues increased significantly versus the fiscal quarter and six fiscal months ended July 3, 2021 and slightly

versus the prior fiscal quarter primarily due to increases in average selling prices.

Increased volume also contributed to the increase versus the fiscal quarter and six fiscal months ended July 3, 2021.

the second fiscal quarter of 2022 was impacted by a two-month government mandated shut-down of two facilities in Shanghai, People's Republic of China, in response to the COVID-19 pandemic.

We continue to experience good economic conditions while we continue to increase critical manufacturing capacities.

selling prices were stable in the third fiscal quarter following broad price increases implemented across the product portfolio in prior periods.

Net revenues increased significantly versus the prior fiscal quarter and the prior year periods

primarily due to increases in volume and increases in average selling prices versus the prior year periods.

Volume in the third fiscal quarter of 2022 was positively impacted by the resumption of operations and

sales following a two-month government mandated shut-down of two facilities in Shanghai, People's Republic of China, in response to the COVID-19 pandemic in the second fiscal quarter.

Gross Profit Margins

Gross profit margins for the fiscal quarter ended July 2, 2022 were 30.3%, versus 30.3% and 28.0%, for the comparable prior quarter and prior year period,

Gross profit margins for the fiscal quarter ended October 1, 2022 were 31.3%, versus 30.3% and 27.7%, for the comparable prior quarter and prior year period,

respectively.

Gross profit margins for the six fiscal months ended July 2, 2022 were 30.3%, versus 27.3% for the comparable prior year period.

Gross profit margins for the nine fiscal months ended October 1, 2022 were 30.7%, versus 27.4% for the comparable prior year period.

The increases versus the prior year periods are primarily due to higher average selling prices and increased volume, partially

offset by inflationary impacts, particularly increased metals and transportation costs.

The gross profit margin was flat versus the prior fiscal quarter as higher average selling prices were offset by inflationary impacts, particularly increased

metals and transportation costs and direct costs of the COVID-19 pandemic.

offset by inflationary impacts, particularly increased metals and transportation costs, and negative exchange rate impacts.

The gross profit margin increased versus the prior fiscal quarter primarily due to increased volume, partially offset by

inflationary impacts, particularly increased metals and transportation costs and the negative impact of an inventory decrease.

Analysis of revenues and margins for our segments is provided below.

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Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in MOSFETs segment net revenues were attributable to the following:

Change attributable to:

Decrease in volume

Increase in volume

Increase in average selling prices

Foreign currency effects

The MOSFET segment net revenues decreased significantly versus the prior fiscal quarter and prior year quarter, but increased moderately versus the

prior year-to-date period.

Our results for the second fiscal quarter were significantly impacted by the two-month government mandated COVID-19 shut-down in Shanghai, People's Republic of China that required an almost complete closure of our

main manufacturing facility.

Increased sales of our products that are not assembled in Shanghai, particularly our IC products, partially offset the impact of the shut-down.

The increase versus the prior year-to-date period was primarily due

to our IC products.

The MOSFET segment net revenues increased significantly versus the prior fiscal quarter and the prior year periods.

The increases versus the prior

fiscal quarter and prior year quarter are primarily due to increased volume as operations and sales resumed following the two-month government mandated COVID-19 shut-down in Shanghai, People's Republic of China that required an almost complete

closure of our main manufacturing facility in the second fiscal quarter of 2022.

Increased average selling prices are the primary factor for the increase versus the prior year-to-date period and also contributed to the increase versus the

prior year quarter.

All regions and sales channels, particularly distribution customers in the Americas region, contributed to the increased revenue.

Gross profit margin increased versus the prior fiscal quarter and especially versus the prior year periods.

The increases were primarily due to

increased average selling prices, the positive impact of an inventory increase, and our cost reduction measures, partially offset by significant cost inflation and a decrease in volume.

The increases versus the prior year periods were also

supported by a positive change in the sales mix toward more profitable products such as ICs.

The increase versus the prior fiscal

quarter was primarily due to increased sales volume, partially offset by the negative impact of an inventory decrease following the resumption of operations and sales in Shanghai, People's Republic of China in the third fiscal quarter.

increases versus the prior year periods were primarily due to increased average selling prices, increased sales volume, and a positive change in the sales mix toward more profitable products such as ICs.

The segment operating margin increased versus the prior fiscal quarter and prior year periods.

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Increased segment SG&A expenses primarily due to increased R&D activity limited the increases.

We continue to implement strategic price increases.

Average selling prices increased versus the prior fiscal quarter and the prior year periods.

Average selling prices were flat versus the prior fiscal quarter, but increased versus the prior year periods due to the strategic price increases implemented in

prior periods.

We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines.

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Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in Diodes segment net revenues were attributable to the following:

1 unchanged sentence

Increase in volume

Increase in average selling prices

Change in average selling prices

Foreign currency effects

Net revenues of the Diodes segment increased moderately versus the prior fiscal quarter and significantly versus the prior year periods.

markets and all customer channels, particularly distributor customers, contributed to the increases.

The increases were limited by extended government mandated COVID-19 shut-downs of our manufacturing facilities in the People's Republic of

China, particularly Shanghai.

Gross profit margin increased versus the prior fiscal quarter and the prior year periods.

The increases are primarily due to increased average

selling prices, our cost reduction measures, and increases in sales volume, partially offset by significant cost inflation.

Foreign currency exchange impacts, particularly the weaker euro, negatively impacted the gross profit margin versus

the prior fiscal quarter and the prior year-to-date period.

The segment operating margin increased versus the prior fiscal quarter and the prior year periods.

The increases are primarily due to increased

gross profit.

Decreased segment SG&A expenses versus the prior year periods contributed to the increases.

We continue to implement strategic price increases across the product portfolio.

Average selling prices increased versus the prior fiscal quarter and

prior year periods.

Net revenues of the Diodes segment increased significantly versus the prior fiscal quarter and the prior year periods.

Most end markets and customer

channels contributed to the increases.

The increase versus the prior fiscal quarter is also due to increased volume as operations and sales resumed following extended government mandated COVID-19 shut-downs of our manufacturing facilities in

the People's Republic of China, particularly Shanghai, in the second fiscal quarter.

The increases were negatively impacted by increased inventory at distribution customers in Asia.

Gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

The decrease versus the prior fiscal

quarter is due to the negative impact of an inventory decrease following the resumption of operations and sales in Shanghai, People's Republic of China in the third fiscal quarter and cost inflation, partially offset by increased sales

The increases versus the prior year periods are primarily due to increased average selling prices, our cost reduction measures, and increases in sales volume, partially offset by significant cost inflation.

The segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

The fluctuations are primarily

due to gross profit fluctuations.

The impact of a weaker euro decreased segment SG&A expenses, particularly versus the prior year periods.

Average selling prices decreased versus the prior fiscal quarter, but remain significantly higher than the prior year periods due to the strategic price

increases implemented across the product portfolio in prior periods.

Optoelectronic Components

1 unchanged sentence

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in Optoelectronic Components segment net revenues were attributable to the following:

1 unchanged sentence

Change in volume

Increase in average selling prices

Change in average selling prices

Foreign currency effects

Net revenues of our Optoelectronic Components segment decreased moderately versus the prior fiscal quarter but increased slightly versus the prior

year quarter and moderately versus the prior year-to-date period.

All end markets and all customer channels contributed to the decrease versus the prior fiscal quarter, particularly customers in the Asia region.

The increases versus the prior

year periods were due to a significant increase in sales to customers in the Americas region and a moderate increase in sales to customers in the Europe region, partially offset by significant decrease in sales to customers in the Asia region.

The increases versus the prior year periods were primarily due to increased average selling prices, partially offset by negative foreign currency impacts.

Gross profit margin decreased versus the prior fiscal quarter but increased versus the prior year periods.

The decrease versus the prior fiscal

quarter is primarily due to cost inflation and the negative impact of an inventory decrease, partially offset by higher average selling prices.

The increases versus the prior year periods are primarily due to higher average selling prices, a

more profitable product mix, and our cost reduction measures, partially offset by cost inflation.

The segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

The fluctuations are primarily due

to fluctuations in gross profit margin.

Net revenues of our Optoelectronic Components segment decreased versus the prior fiscal quarter, but increased moderately versus the prior year

The decrease versus the prior fiscal quarter is primarily due to decreased sales to customers in the Asia and Europe regions, particularly distributor customers, partially offset by increased sales to customers in the Americas region,

particularly distributor customers.

The increases versus the prior year periods were due to a significant increase in sales to customers in the Americas and Europe regions, partially offset by significant decrease in sales to customers in the

The increases versus the prior year periods were primarily due to increased average selling prices and volume, partially offset by negative foreign currency impacts.

Gross profit margin increased versus the prior fiscal quarter and the prior year periods.

The increase versus the prior fiscal quarter is primarily

due to the positive impact of an inventory increase.

The increases versus the prior year periods are primarily due to higher average selling prices, a more profitable product mix, and our cost reduction measures, partially offset by cost

The segment operating margin increased versus the prior fiscal quarter and the prior year periods.

The fluctuations are primarily due to fluctuations in

gross profit margin.

Decreased segment SG&A expenses, primarily due to the weaker euro, positively impacted the segment operating margin.

The strategic price increases that were implemented throughout the prior year across the product portfolio are significant when comparing to the prior

year quarter.

Average selling prices increased slightly versus the prior fiscal quarter and significantly versus the prior year periods

Average selling prices decreased versus the prior fiscal quarter, but remain higher than the prior year periods due to the strategic price increases

implemented across the product portfolio in prior periods.

We are now using our recently modernized and expanded wafer fab in Heilbronn, Germany.

1 unchanged sentence

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in Resistors segment net revenues were attributable to the following:

Change attributable to:

Increase in volume

Change in volume

Increase in average selling prices

Foreign currency effects

Net revenues of the Resistors segment increased slightly versus the prior fiscal quarter and significantly versus the prior year periods.

versus the prior fiscal quarter is primarily due to increased sales to Americas and Asia region customers and distributor customers, which was partially offset by decreased sales to Europe region customers and automotive and industrial end market

The increase versus the prior year periods is primarily due to increased sales to customers in all regions, particularly the Americas region, distributor customers, and industrial end market customers.

The acquisition of Barry

Industries also contributed to the increase in net revenues versus the prior year periods.

The gross profit margin increased versus the prior fiscal quarter and prior year periods.

The increase versus the prior fiscal quarter is primarily due to

increased average selling prices, higher sales volume, improved efficiencies, and fixed costs control measures, partially offset by significant metal price increases, increased material procurement costs, and negative foreign currency exchange rate

The increases versus the prior year periods are primarily due to increased sales volume, higher average selling prices, and greater efficiencies, partially offset by metal price increases, increased material procurement costs, increased

labor costs, and negative foreign currency exchange rate impacts.

The segment operating margin increased versus the prior fiscal quarter and prior year periods.

The increases are primarily due to increased gross profit.

Net revenues of the Resistors segment decreased slightly versus the prior fiscal quarter, but increased significantly versus the prior year periods.

The decrease versus the prior fiscal quarter is primarily due to decreased sales to customers in all regions, particularly the Europe region, and military and aerospace, industrial, and distributor customers, which was partially offset by

increased sales to EMS customers.

The increase versus the prior year periods is primarily due to increased sales to customers in all regions, particularly the Americas region, distributor and EMS customers, partially offset by decreased sales to

automotive end market customers.

Increased sales to industrial end market customers also contributed to the increase versus the prior year-to-date period.

The acquisition of Barry Industries also contributed to the increase in net revenues

versus the prior year periods.

The gross profit margin decreased slightly versus the prior fiscal quarter, but increased versus the prior year periods.

The slight decrease versus the

prior fiscal quarter is primarily due to wage inflation, negative foreign currency exchange rate impacts, and higher fixed costs, mostly offset by increased average selling prices, lower metal prices, and improved efficiencies.

The increases

versus the prior year periods are primarily due to increased sales volume, higher average selling prices, cost reductions, and greater efficiencies, partially offset by fixed cost increases, metal price increases, increased material procurement

costs, increased labor costs, and negative foreign currency exchange rate impacts.

The segment operating margin decreased slightly versus the prior fiscal quarter, but increased versus the prior year periods.

The fluctuations are primarily due to fluctuations in gross profit.

Average selling prices increased versus the prior fiscal quarter and prior year periods.

4 unchanged sentences

Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in net revenues were attributable to the following:

2 unchanged sentences

Change attributable to:

Increase in volume

Increase in average selling prices

Change in volume

Change in average selling prices

Foreign currency effects

Net revenues of the Inductors segment increased significantly versus the prior fiscal quarter, moderately versus the prior year quarter, and slightly versus the prior year-to-date period.

The increase versus the

prior fiscal quarter is primarily due to increased sales to customers in all regions, particularly the Americas region, and increased sales to distribution and EMS customers, and automotive end market customers.

The increase versus the prior year

periods is primarily due to increased sales to customers in the Europe and Americas regions, partially offset by decreased sales to customers in the Asia region.

The increase versus the prior year quarter is also due to increased sales to EMS

customers and military and aerospace and automotive end market customers.

The increase versus the prior year-to-date period is also due to increased sales to distribution and EMS customers and military and aerospace end market customers.

The gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year periods.

The increase versus the prior fiscal quarter is primarily due to higher sales volume, increased

average selling prices, improved efficiencies, and lower logistics costs, partially offset by increased materials costs.

The decreases versus the prior year periods are primarily due to the impact from higher logistics, labor, and material costs

as well as negative foreign currency exchange rate impacts, partially offset by higher volume, increased average selling prices, and other cost reduction measures.

The segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year periods.

The fluctuations are primarily due to gross profit fluctuations.

Average selling prices increased versus the prior fiscal quarter and the prior year periods.

Net revenues of the Inductors segment decreased versus the prior fiscal quarter and the prior year quarter, but increased versus the prior year-to-date period.

The decrease versus the prior fiscal quarter is

primarily due to decreased sales to customers in all regions, particularly the Europe region, and decreased sales to distributor customers, partially offset by increased sales to EMS customers.

The decrease versus the prior year quarter is

primarily due to decreased sales to customers in the Asia region and distribution customers, partially offset by increased sales to customers in the Americas and Europe regions and increased sales to EMS customers and industrial end market

The increase versus the prior year-to-date period is primarily due to increased sales to customers in the Americas and Europe regions, EMS customers and military and aerospace and automotive end market customers.

The increase versus

the prior year-to-date period is also due to increased sales to distributor and EMS customers, and military and aerospace end market customers, partially offset by decreased sales to customers in the Asia region, decreased sales to distributor

customers, and decreased sales to automotive and industrial end market customers.

The gross profit margin decreased versus the prior fiscal quarter and the prior year periods.

The decrease versus the prior fiscal quarter is primarily due to lower sales volume, inefficiencies, and increased

material prices, partially offset by lower logistics costs and other cost savings measures.

The decrease versus the prior year quarter is primarily due to increased labor and material costs, inefficiencies, and negative foreign currency exchange

rate impacts, partially offset by increased average selling prices.

The decrease versus the prior year-to-date period is primarily due to increased logistics, labor, and material costs, inefficiencies, and negative foreign currency exchange rate

impacts, partially offset by higher sales volume, increased average selling prices.

and other cost reduction measures.

The segment operating margin decreased versus the prior fiscal quarter and the prior year periods.

The decreases are primarily due to gross profit decreases.

Average selling prices decreased versus the prior fiscal quarter, but increased versus the prior year periods.

We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating acquisition opportunities, particularly of specialty businesses.

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Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Gross profit margin

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Fiscal quarter ended

Six fiscal months ended

October 1, 2022

Nine fiscal months ended

October 1, 2022

Change in net revenues

April 2, 2022

October 2, 2021

Changes in Capacitors segment net revenues were attributable to the following:

Change attributable to:

Increase in volume

Increase in average selling prices

Change in volume

Change in average selling prices

Foreign currency effects

Net revenues of the Capacitors segment increased moderately versus the prior fiscal quarter and significantly versus the prior year periods.

increase versus the prior fiscal quarter is primarily due to increased sales to customers in the Europe and Americas regions and industrial end market customers.

The increase versus the prior year quarter is primarily due to increased sales to

customers in the Americas and Asia regions, EMS customers, and industrial end market customers.

The increase versus the prior year-to-date period is primarily due to increased sales to customers in all regions, particularly the Americas region,

distributor and EMS customers, and industrial end market customers.

Net revenues of the Capacitors segment decreased versus the prior fiscal quarter, but increased significantly versus the prior year periods.

decrease versus the prior fiscal quarter is primarily due to decreased sales to customers in all regions, distributor customers, and industrial end market customers, partially offset by increased sales to automotive end market customers.

increase versus the prior year quarter is primarily due to increased sales to customers in the Americas and Asia regions, EMS customers, and industrial end market customers, partially offset by decreased sales to customers in the Europe region.

The increase versus the prior year-to-date period is primarily due to increased sales to customers in all regions, particularly the Americas region, distributor and EMS customers, and industrial end market customers, partially offset by decreased

sales to automotive end market customers.

The gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

The decrease versus the prior fiscal quarter is

primarily due to increased metals prices and negative impact from decreased inventory, partially offset by increased volume, increased average selling prices, and favorable product mix.

primarily due to lower sales volume, decreased average selling prices, and increased materials and utilities costs, partially offset by favorable product mix and decreased metals costs.

The increases versus the prior year periods are

primarily due to higher sales volume, increased average selling prices, and favorable product mix, partially offset by increased materials and labor costs and manufacturing inefficiencies.

primarily due to higher sales volume, increased average selling prices, and favorable product mix, partially offset by increased materials and labor costs, higher fixed costs, and manufacturing inefficiencies.

The segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

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gross profit fluctuations.

Average selling prices increased versus the prior fiscal quarter and the prior year periods.

Average selling prices decreased versus the prior fiscal quarter, but increased versus the prior year periods.

Selling, General, and Administrative Expenses

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Fiscal quarters ended

Six fiscal months ended

April 2, 2022

Nine fiscal months ended

October 1, 2022

October 2, 2021

October 1, 2022

October 2, 2021

Total SG&A expenses

as a percentage of revenues

The sequential decrease in SG&A expenses is primarily attributable to uneven attribution of stock compensation expense in the first fiscal quarter of

the year and foreign currency exchange impacts.

SG&A expenses increased versus the prior year quarter due to cost inflation.

SG&A expenses for the fiscal quarter and six fiscal months ended July 2, 2022 include $0.5 million of incremental

costs separable from normal operations directly attributable to COVID-19 government mandated shut-downs incurred in our People's Republic of China facilities.

The sequential decrease in SG&A expenses is primarily attributable to foreign currency exchange impacts.

SG&A expenses increased versus the prior

year periods due to cost inflation.

Other Income (Expense)

Interest expense for the fiscal quarter ended July 2, 2022

increased $0.1 million versus the fiscal quarter ended April 2, 2022 and decreased $0.1 million versus the fiscal quarter ended July 3, 2021.

Interest expense for the six fiscal months ended July 2, 2022 decreased by $0.3 million versus the six fiscal months ended July 3, 2021.

Interest expense for the fiscal quarter ended October 1, 2022 decreased $0.2 million versus the fiscal quarter ended July 2, 2022 and decreased $0.3 million versus the fiscal quarter ended October 2, 2021.

Interest expense for the nine

fiscal months ended October 1, 2022 decreased by $0.6 million versus the nine fiscal months ended October 2, 2021.

The following tables analyze the components of the line “Other” on the consolidated condensed statements of operations (in thousands):

Fiscal quarters ended

October 1, 2022

October 2, 2021

Foreign exchange gain (loss)

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Fiscal quarters ended

April 2, 2022

October 1, 2022

Foreign exchange gain (loss)

2 unchanged sentences

Investment income (expense)

Six fiscal months ended

Nine fiscal months ended

October 1, 2022

October 2, 2021

Foreign exchange gain (loss)

2 unchanged sentences

Investment income (expense)

For the fiscal quarter ended July 2, 2022, our effective tax rate was 23.8%, as compared

to 23.7% and 20.3%

for the fiscal quarters ended April 2, 2022 and July 3, 2021, respectively.

For the six fiscal months ended July 2, 2022, our effective tax rate was 23.7%,

as compared to 19.2% for the six

fiscal months ended July 3, 2021.

For the fiscal quarter ended October 1, 2022, our effective tax rate was 22.4%, as

compared to 23.8% and 16.6%

for the fiscal quarters ended July 2, 2022 and October 2, 2021, respectively.

For the nine fiscal months ended October 1, 2022, our effective tax rate was 23.2%,

as compared to 18.3% for the nine

fiscal months ended October 2, 2021.

reduction in the U.S.

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statutory rate, excluding unusual transactions.

Discrete tax items impacted our effective tax rate for the

2021 periods presented.

These items were $(3.9) million and $(8.3) million (tax benefits) in the fiscal quarter and six fiscal months ended July 3, 2021.

Discrete tax items of $(5.9) million (tax benefits) and

$(5.7) million (tax benefits) impacted our effective tax rate for the fiscal quarters ended October 1, 2022 and October 2, 2021, respectively.

Discrete tax items of $(5.9) million (tax benefits) and $(14.0) million (tax benefits) impacted our effective tax rate for the nine fiscal months ended October 1, 2022 and

October 2, 2021, respectively.

We recognized tax benefits of $5.9 million in the third fiscal quarter of 2022 for changes in uncertain tax positions following the resolution of a tax

We repatriated $81.2 million to the United States in the second fiscal quarter of 2022 pursuant to the repatriation program initiated in response to a

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Tax expense for the repatriation was recorded in 2021 when the tax law was enacted.

During the six fiscal months ended July 2, 2022, the liabilities for unrecognized tax benefits decreased by $5.1 million on a net basis, primarily due to

payments, statute expiration, and currency translation adjustments, partially offset by accruals for current year tax positions and interest.

During the nine fiscal months ended October 1, 2022, the liabilities for unrecognized tax benefits decreased by $11.5 million on a net basis, primarily

due to payments, settlements, and currency translation adjustments, partially offset by accruals for current year tax positions and interest.

We operate in a global environment with significant operations in various locations outside the United States.

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Financial Condition, Liquidity, and Capital Resources

Our financial condition as of July 2, 2022 continued to be strong.

Cash and short-term investments exceed

our long-term debt balances, and we have historically been a strong generator of operating cash flows.

The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available

to fund our acquisition strategy, to reduce debt levels, and to pay dividends and repurchase stock.

We have generated cash flows from operations in excess of $200 million in each of the last 20 years, and cash flows from operations in excess of $100

million in each of the last 27 years.

Our financial condition as of October 1, 2022 continued to be strong.

Cash and short-term investments

exceed our long-term debt balances, and we have historically been a strong generator of operating cash flows.

The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is

available to fund our acquisition strategy, to reduce debt levels, and to pay dividends and repurchase stock.

We have generated cash flows from operations in excess of $200 million in each of the last 20 years, and cash flows from operations in

excess of $100 million in each of the last 27 years.

Management uses a non-GAAP measure, "free cash," to evaluate our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or

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Cash flows provided by operating activities were $317.8 million

for the six fiscal months ended July 2, 2022, as compared to cash flows provided by operations of $174.8 million for the six fiscal months ended July 3, 2021.

Cash paid for property and equipment for the six fiscal months

ended July 2, 2022 was $95.7

million, as compared to $60.7 million for the six fiscal months ended July 3, 2021.

To be well positioned to service our customers and to fully

participate in growing markets, we intend to increase our capital expenditures for expansion in the mid-term.

for the nine fiscal months ended October 1, 2022, as compared to cash flows provided by operations of $310.5 million for the nine fiscal months ended October 2, 2021.

Cash paid for property and equipment for the nine fiscal months

ended October 1, 2022 was $172.2

million, as compared to $118.2 million for the nine fiscal months ended October 2, 2021.

To be well positioned to service our customers and to

fully participate in growing markets, we intend to increase our capital expenditures for expansion in the mid-term.

For the year 2022, we expect to invest approximately $325 million in capital expenditures.

Free cash flow was lower than historical levels in the six

fiscal months ended July 2, 2022 due to working capital changes, higher than usual capital expenditures, and cash taxes paid for

repatriation.

We expect our business to continue to be a reliable generator of free cash.

There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all,

going forward if the economic environment worsens.

Free cash flow for the nine fiscal months ended October 1, 2022 was negatively impacted by working capital changes, higher than usual capital expenditures, and cash taxes paid for repatriation.

expect our business to continue to be a reliable generator of free cash.

There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all, going forward if the

economic environment worsens.

The COVID-19 pandemic and the mitigation efforts by governments to control its spread have not had a significant impact on our financial condition, liquidity, or capital resources.

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“Stockholder Return Policy” above for additional information.

The following table summarizes the components of net cash and short-term investments (debt) at July 2, 2022 and December 31, 2021 (in thousands) :

The following table summarizes the components of net cash and short-term investments (debt) at October 1, 2022 and December 31, 2021 (in thousands) :

October 1, 2022

December 31, 2021

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consolidated condensed statements of cash flows.

As of July 2, 2022, substantially all of

our cash and cash equivalents and short-term investment were held in countries outside of the United States.

Cash dividends to stockholders, share repurchases, and principal and interest payments on our debt instruments need to be paid by the U.S.

As of October 1, 2022, substantially all

of our cash and cash equivalents and short-term investment were held in countries outside of the United States.

Cash dividends to stockholders, share repurchases, and principal and interest payments on our debt instruments need to be paid by the

parent company, Vishay Intertechnology, Inc.

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conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

At December 31, 2021, we had no amounts outstanding on our revolving credit facility.

We had $6 million outstanding at July 2, 2022.

We borrowed $504 million and repaid $498 million on the revolving credit facility during the six fiscal months ended July 2, 2022.

The average outstanding

balance on our revolving credit facility calculated at fiscal month-ends was $62.5 million and the highest amount outstanding on our revolving credit facility at a fiscal month end was $124 million during the six fiscal months ended July 2, 2022.

We had no amounts outstanding on our revolving credit facility at December 31, 2021 and October 1, 2022.

We borrowed $558 million and repaid $558 million on the revolving credit facility during the nine fiscal months ended October 1, 2022.

outstanding balance on our revolving credit facility calculated at fiscal month-ends was $47.9 million and the highest amount outstanding on our revolving credit facility at a fiscal month end was $124 million during the nine fiscal months ended October 1, 2022.

The revolving credit facility limits or restricts us from, among other things, incurring indebtedness, incurring liens on its respective assets, making

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filed with the SEC as Exhibit 10.1 to our current report on Form 8-K filed June 5, 2019.

We were in compliance with all financial covenants under the credit facility at July 2, 2022.

We were in compliance with all financial covenants under the credit facility at October 1, 2022.

Our interest coverage ratio and leverage ratio were 36.01 to 1 and 0.61 to 1, respectively.

We expect to continue to be in compliance with these covenants based

on current projections.

We expect to continue to be in compliance with these covenants

based on current projections.

If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and any amounts then

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require additional borrowing under our credit facility or may otherwise require us to incur additional debt.

No principal payments on our debt are due before our revolving credit facility expires in June 2024.

No principal payments on our debt are due before 2025 and our revolving credit facility expires in June 2024.

The convertible senior notes due 2025 are not currently convertible.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis