Item 1. Financial Statements
Item 1. Financial Statements
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
October 1, 2022
December 31, 2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
734,992
$
774,108
Short-term investments
182,646
146,743
Accounts receivable, net
425,630
396,458
Inventories:
Finished goods
164,252
147,293
Work in process
252,492
226,496
Raw materials
199,133
162,711
Total inventories
615,877
536,500
Prepaid expenses and other current assets
151,144
156,689
Total current assets
2,110,289
2,010,498
Property and equipment, at cost:
Land
74,118
74,646
Buildings and improvements
617,784
639,879
Machinery and equipment
2,743,049
2,758,262
Construction in progress
167,336
145,828
Allowance for depreciation
( 2,613,506
)
( 2,639,136
)
Property and equipment, net
988,781
979,479
Right of use assets
118,676
117,635
Deferred income taxes
85,288
95,037
Goodwill
163,567
165,269
Other intangible assets, net
59,918
67,714
Other assets
94,027
107,625
Total assets
$
3,620,546
$
3,543,257
Continues on following page.
4
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
October 1, 2022
December 31, 2021
(Unaudited)
Liabilities and equity
Current liabilities:
Trade accounts payable
$
223,898
$
254,049
Payroll and related expenses
164,303
162,694
Lease liabilities
23,650
23,392
Other accrued expenses
220,542
218,089
Income taxes
84,571
35,443
Total current liabilities
716,964
693,667
Long-term debt less current portion
458,120
455,666
U.S. transition tax payable
83,010
110,681
Deferred income taxes
52,382
69,003
Long-term lease liabilities
95,747
99,987
Other liabilities
84,575
95,861
Accrued pension and other postretirement costs
229,467
271,672
Total liabilities
1,720,265
1,796,537
Equity:
Vishay stockholders' equity
Common stock
13,291
13,271
Class B convertible common stock
1,210
1,210
Capital in excess of par value
1,351,470
1,347,830
Retained earnings
714,588
401,694
Treasury stock (at cost)
( 54,671
)
-
Accumulated other comprehensive income (loss)
( 129,093
)
( 20,252
)
Total Vishay stockholders' equity
1,896,795
1,743,753
Noncontrolling interests
3,486
2,967
Total equity
1,900,281
1,746,720
Total liabilities and equity
$
3,620,546
$
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
October 1, 2022
October 2, 2021
Net revenues
$
924,798
$
813,663
Costs of products sold
635,260
587,927
Gross profit
289,538
225,736
Selling, general, and administrative expenses
106,436
102,215
Operating income
183,102
123,521
Other income (expense):
Interest expense
( 4,110
)
( 4,427
)
Other
2,137
( 2,679
)
Total other income (expense)
( 1,973
)
( 7,106
)
Income before taxes
181,129
116,415
Income tax expense
40,566
19,333
Net earnings
140,563
97,082
Less: net earnings attributable to noncontrolling interests
502
262
Net earnings attributable to Vishay stockholders
$
140,061
$
96,820
Basic earnings per share attributable to Vishay stockholders
$
0.98
$
0.67
Diluted earnings per share attributable to Vishay stockholders
$
0.98
$
0.67
Weighted average shares outstanding - basic
142,887
145,017
Weighted average shares outstanding - diluted
143,447
145,458
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
October 1, 2022
October 2, 2021
Net earnings
$
140,563
$
97,082
Other comprehensive income (loss), net of tax
Pension and other post-retirement actuarial items
1,321
1,850
Foreign currency translation adjustment
( 50,070
)
( 17,242
)
Other comprehensive income (loss)
( 48,749
)
( 15,392
)
Comprehensive income
91,814
81,690
Less: comprehensive income attributable to noncontrolling interests
502
262
Comprehensive income attributable to Vishay stockholders
$
91,312
$
81,428
See accompanying notes.
7
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Nine fiscal months ended
October 1, 2022
October 2, 2021
Net revenues
$
2,642,103
$
2,397,415
Costs of products sold
1,832,234
1,739,458
Gross profit
809,869
657,957
Selling, general, and administrative expenses
329,691
311,800
Operating income
480,178
346,157
Other income (expense):
Interest expense
( 12,639
)
( 13,246
)
Other
( 2,234
)
( 12,159
)
Total other income (expense)
( 14,873
)
( 25,405
)
Income before taxes
465,305
320,752
Income tax expense
108,023
58,646
Net earnings
357,282
262,106
Less: net earnings attributable to noncontrolling interests
1,260
659
Net earnings attributable to Vishay stockholders
$
356,022
$
261,447
Basic earnings per share attributable to Vishay stockholders
$
2.47
$
1.80
Diluted earnings per share attributable to Vishay stockholders
$
2.46
$
1.80
Weighted average shares outstanding - basic
143,983
145,000
Weighted average shares outstanding - diluted
144,470
145,455
Cash dividends per share
$
0.300
$
0.285
See accompanying notes.
8
VISHAY INTERTECHNOLOGY, INC.
Consolidated Statements of Comprehensive Income
(Unaudited - In thousands)
Nine fiscal months ended
October 1, 2022
October 2, 2021
Net earnings
$
357,282
$
262,106
Other comprehensive income (loss), net of tax
Pension and other post-retirement actuarial items
4,245
5,734
Foreign currency translation adjustment
( 113,086
)
( 34,906
)
Other comprehensive income (loss)
( 108,841
)
( 29,172
)
Comprehensive income
248,441
232,934
Less: comprehensive income attributable to noncontrolling interests
1,260
659
Comprehensive income attributable to Vishay stockholders
$
247,181
$
232,275
See accompanying notes.
9
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Nine fiscal months ended
October 1, 2022
October 2, 2021
Operating activities
Net earnings
$
357,282
$
262,106
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
121,301
125,095
(Gain) loss on disposal of property and equipment
( 372
)
( 254
)
Inventory write-offs for obsolescence
18,197
14,960
Deferred income taxes
8,843
( 4,208
)
Other
4,272
8,376
Change in U.S. transition tax liability
( 14,757
)
( 14,757
)
Change in repatriation tax liability
( 25,201
)
-
Net change in operating assets and liabilities
( 151,773
)
( 80,866
)
Net cash provided by operating activities
317,792
310,452
Investing activities
Capital expenditures
( 172,175
)
( 118,156
)
Proceeds from sale of property and equipment
472
1,257
Purchase of short-term investments
( 182,079
)
( 55,491
)
Maturity of short-term investments
132,892
126,171
Other investing activities
( 199
)
347
Net cash used in investing activities
( 221,089
)
( 45,872
)
Financing activities
Repurchase of convertible debt instruments
-
( 300
)
Dividends paid to common stockholders
( 39,433
)
( 37,823
)
Dividends paid to Class B common stockholders
( 3,629
)
( 3,448
)
Repurchase of common stock held in treasury
( 54,671
)
-
Distributions to noncontrolling interests
( 741
)
( 800
)
Cash withholding taxes paid when shares withheld for vested equity awards
( 2,123
)
( 1,963
)
Net cash used in financing activities
( 100,597
)
( 44,334
)
Effect of exchange rate changes on cash and cash equivalents
( 35,222
)
( 8,360
)
Net increase (decrease) in cash and cash equivalents
( 39,116
)
211,886
Cash and cash equivalents at beginning of period
774,108
619,874
Cash and cash equivalents at end of period
$
734,992
$
831,760
See accompanying notes.
10
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
(Accumulated
Deficit)
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
Net earnings
-
-
-
93,192
-
93,192
189
93,381
Other comprehensive income
-
-
-
-
11,305
11,305
-
11,305
Distributions to noncontrolling interests
-
-
-
-
-
-
( 800
)
( 800
)
Dividends declared ($ 0.095 per share)
-
-
20
( 13,777
)
-
( 13,757
)
-
( 13,757
)
Stock compensation expense
-
-
828
-
-
828
-
828
Balance at July 3, 2021
$
13,271
$
1,210
$
1,346,132
$
296,629
$
( 221
)
$
1,657,021
$
2,397
$
1,659,418
Net earnings
-
-
-
96,820
-
96,820
262
97,082
Other comprehensive income (loss)
-
-
-
-
( 15,392 )
( 15,392 )
-
( 15,392 )
Dividends declared ($ 0.095 per share)
-
-
20
( 13,777
)
-
( 13,757
)
-
( 13,757
)
Stock compensation expense
-
-
828
-
-
828
-
828
Balance at October 2, 2021
$
13,271
$
1,210
$
1,346,980
$
379,672
$
( 15,613
)
$
1,725,520
$
2,659
$
1,728,179
Continues on following page.
11
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Equity (continued)
(Unaudited - In thousands, except share and per share amounts)
Common
Stock
Class B
Convertible
Common
Stock
Capital in
Excess of Par
Value
Retained
Earnings
(Accumulated
Deficit)
Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss)
Total Vishay
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
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 ($ 0.10 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
Net earnings
-
-
-
112,388
-
-
112,388
381
112,769
Other comprehensive income (loss)
-
-
-
-
-
( 48,167
)
( 48,167
)
-
( 48,167
)
Distributions to noncontrolling interests
-
-
-
-
-
-
-
( 733
)
( 733
)
Issuance of stock and related tax withholdings for vested restricted stock units ( 11,308 shares)
1
-
( 1
)
-
-
-
-
-
-
Dividends declared ($ 0.10 per share)
-
-
22
( 14,361
)
-
-
( 14,339
)
-
( 14,339
)
Stock compensation expense
-
-
1,047
-
-
-
1,047
-
1,047
Repurchase of common stock held in treasury ( 1,400,039 shares)
-
-
-
-
( 26,288
)
-
( 26,288
)
-
( 26,288
)
Balance at July 2, 2022
$
13,291
1,210
1,350,620
588,803
( 36,161
)
( 80,344
)
1,837,419
2,992
1,840,411
Net earnings
-
-
-
140,061
-
-
140,061
502
140,563
Other comprehensive income (loss)
-
-
-
-
-
( 48,749
)
( 48,749
)
-
( 48,749
)
Distributions to noncontrolling interests
-
-
-
-
-
-
-
( 8
)
( 8
)
Dividends declared ($ 0.10 per share)
-
-
22
( 14,276
)
-
-
( 14,254
)
-
( 14,254
)
Stock compensation expense
-
-
828
-
-
-
828
-
828
Repurchase of common stock held in treasury ( 978,338 shares)
-
-
-
-
( 18,510
)
-
( 18,510
)
-
( 18,510
)
Balance at October 1, 2022
$
13,291
1,210
1,351,470
714,588
( 54,671
)
( 129,093
)
1,896,795
3,486
1,900,281
See accompanying notes.
12
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 fiscal quarter and nine fiscal months ended October 1, 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.
Note 2 - Acquisition Activities
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.
Subsequent Event
On October 28, 2022 , 2022, Vishay
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. Its SiC
product development targets automotive and industrial applications.
Vishay paid cash of $ 50,000 , net of cash
acquired, at closing. Related to the transaction, Vishay may also be required to make certain contingent payments of up to $ 57,500 ,
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.
MaxPower will be incorporated into Vishay’s MOSFETs reportable segment, and the goodwill related to this acquisition will be included in the MOSFETs
reporting unit for goodwill impairment testing.
Note 3 – Impact of COVID-19 Pandemic
The Company's operations in the People's Republic of China , particularly in Shanghai, were impacted by COVID-19 government mandated shut-downs of the Company's facilities in the second fiscal quarter of 2022. The Company
incurred incremental costs separable from normal operations that are directly related to the shut-downs, primarily wages 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 ($ 6,661 ) and selling, general, and administrative expenses of ($ 546 ) based on employee function on the consolidated condensed statement of operations for the nine fiscal months ended October 1, 2022.
13
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 4 – 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:
October 1, 2022
December 31, 2021
Right of use assets
Operating Leases
Buildings and improvements
$
114,620
$
112,951
Machinery and equipment
4,056
4,684
Total
$
118,676
$
117,635
Current lease liabilities
Operating Leases
Buildings and improvements
$
21,395
$
20,851
Machinery and equipment
2,255
2,541
Total
$
23,650
$
23,392
Long-term lease liabilities
Operating Leases
Buildings and improvements
$
94,023
$
97,890
Machinery and equipment
1,724
2,097
Total
$
95,747
$
99,987
Total lease liabilities
$
119,397
$
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
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Lease expense
Operating lease expense
$
6,258
$
6,170
$
19,014
$
18,570
Short-term lease expense
212
691
752
1,444
Variable lease expense
119
97
219
290
Total lease expense
$
6,589
$
6,958
$
19,985
$
20,304
The Company paid $ 18,062 and $ 18,000 for its operating leases in the nine
fiscal months ended October 1, 2022 and October 2, 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 8.4 years and the weighted-average discount rate is 5.4 %
as of October 1, 2022.
The undiscounted future lease payments for the Company's operating lease liabilities are as follows:
October 1, 2022
2022 (excluding the nine fiscal months ended October 1, 2022)
$
5,928
2023
23,302
2024
21,174
2025
18,072
2026
16,004
Thereafter
60,917
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.
14
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 5 – 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 October 1, 2022 and October 2, 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.
The Company recognized tax benefits of $ 5,941
in the third fiscal quarter of 2022 for changes in uncertain tax positions following the resolution of a tax audit.
The Company repatriated $ 81,243 to the
United States in the second fiscal quarter of 2022 pursuant to the repatriation program initiated in response to a change in Israeli tax law. The Company paid withholding taxes, foreign taxes, and Israeli clawback taxes of $ 25,201 due to the repatriation. Tax expense for the repatriation was recorded in 2021 when the tax law was enacted.
During the nine fiscal months ended October 1, 2022,
the liabilities for unrecognized tax benefits decreased by $ 11,489 on a net basis, primarily due to payments, settlements, and currency
translation adjustments, partially offset by accruals for current year tax positions and interest.
Note 6 – Long-Term Debt
Long-term debt consists of the following:
October 1, 2022
December 31, 2021
Credit facility
$
-
$
-
Convertible senior notes, due 2025
465,344
465,344
Deferred financing costs
( 7,224
)
( 9,678
)
458,120
455,666
Less current portion
-
-
$
458,120
$
455,666
The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of October 1, 2022:
Convertible
Senior Notes
Due 2025
Issuance date
June 12, 2018
Maturity date
June 15, 2025
Principal amount as of October 1, 2022
$
465,344
Cash coupon rate (per annum)
2.25
%
Nonconvertible debt borrowing rate at issuance (per annum)
5.50
%
Conversion rate effective September 8, 2022 (per $1 principal amount)
32.0259
Effective conversion price effective September 8, 2022 (per share)
$
31.22
130% of the current effective conversion price (per share)
$
40.59
Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) during
any fiscal quarter after the fiscal quarter ending September 29, 2018, if 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.
15
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 7 - 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
Nine fiscal months ended
October 1, 2022
October 1, 2022
Dividends paid to stockholders
$
14,254
$
43,062
Stock repurchases
18,510
54,671
Total
$
32,764
$
97,733
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 October 1, 2022, 2,891,604 shares of
common stock are being held as treasury stock.
Note 8 – Revenue Recognition
Sales returns and allowances accrual activity is shown below:
Fiscal quarters ended
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Beginning balance
$
40,775
$
41,262
$
39,759
$
39,629
Sales allowances
33,015
22,850
79,432
68,689
Credits issued
( 32,202
)
( 28,948
)
( 76,497
)
( 72,744
)
Foreign currency
( 849
)
( 314
)
( 1,955
)
( 724
)
Ending balance
$
40,739
$
34,850
$
40,739
$
34,850
Note 9 – 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 (loss) before reclassifications
-
( 113,086
)
$
( 113,086
)
Tax effect
-
-
$
-
Other comprehensive income before reclassifications, net of tax
-
( 113,086
)
$
( 113,086
)
Amounts reclassified out of AOCI
6,285
-
$
6,285
Tax effect
( 2,040
)
-
$
( 2,040
)
Amounts reclassified out of AOCI, net of tax
4,245
-
$
4,245
Net other comprehensive income (loss)
$
4,245
$
( 113,086
)
$
( 108,841
)
Balance at October 1, 2022
$
( 54,663
)
$
( 74,430
)
$
( 129,093
)
Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. See Note
10 for further information.
16
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 10 – 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 third fiscal quarters of 2022 and 2021 for the Company’s defined benefit pension plans:
Fiscal quarter ended
October 1, 2022
Fiscal quarter ended
October 2, 2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Net service cost
$
-
$
1,010
$
-
$
1,167
Interest cost
280
768
254
738
Expected return on plan assets
-
( 418
)
-
( 414
)
Amortization of prior service cost
36
50
36
49
Amortization of losses
427
1,140
447
1,851
Curtailment and settlement losses
-
257
-
203
Net periodic benefit cost
$
743
$
2,807
$
737
$
3,594
The following table shows the components of the net periodic pension cost for the nine fiscal months ended October 1, 2022 and October 2, 2021 for the Company’s defined benefit pension plans:
Nine fiscal months ended
October 1, 2022
Nine fiscal months ended
October 2, 2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Net service cost
$
-
$
3,195
$
-
$
3,548
Interest cost
841
2,433
762
2,246
Expected return on plan assets
-
( 1,318
)
-
( 1,250
)
Amortization of prior service cost
108
159
108
150
Amortization of losses
1,280
3,616
1,340
5,622
Curtailment and settlement losses
-
801
-
604
Net periodic benefit cost
$
2,229
$
8,886
$
2,210
$
10,920
17
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Other Postretirement Benefits
The following table shows the components of the net periodic benefit cost for the third fiscal quarters of 2022 and 2021 for the Company’s other postretirement benefit plans:
Fiscal quarter ended
October 1, 2022
Fiscal quarter ended
October 2, 2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Service cost
$
10
$
57
$
25
$
70
Interest cost
45
13
41
10
Amortization of losses
86
20
13
29
Net periodic benefit cost
$
141
$
90
$
79
$
109
The following table shows the components of the net periodic pension cost for the nine fiscal months ended October 1, 2022 and October 2, 2021 for the Company’s other postretirement benefit plans:
Nine fiscal months ended
October 1, 2022
Nine fiscal months ended
October 2, 2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Service cost
$
29
$
180
$
76
$
211
Interest cost
134
42
123
32
Amortization of losses
257
64
39
88
Net periodic benefit cost
$
420
$
286
$
238
$
331
18
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 11 – Stock-Based Compensation
The following table summarizes stock-based compensation expense recognized:
Fiscal quarters ended
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Restricted stock units
$
828
$
828
$
5,495
5,567
Phantom stock units
-
-
222
209
Total
$
828
$
828
$
5,717
5,776
The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at October 1, 2022 (amortization periods in years) :
Unrecognized
Compensation
Cost
Weighted
Average
Remaining
Amortization
Periods
Restricted stock units
$
4,068
0.8
Phantom stock units
-
n/a
Total
$
4,068
The Company currently expects all performance-based RSUs to vest and all of the associated unrecognized compensation cost for performance-based RSUs
presented in the table above to be recognized.
19
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Restricted Stock Units
RSU activity under the Company's 2007 Stock Incentive Program (the "2007 Program") as of October 1, 2022 and changes during the nine 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*
( 306
)
20.04
Cancelled or forfeited
( 13
)
20.50
Outstanding at October 1, 2022
894
$
19.73
Expected to vest at October 1, 2022
894
* 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 October 1, 2022 and changes during the nine 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
3
Outstanding at October 1, 2022
225
20
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 12 – Segment Information
The following tables set forth business segment information:
MOSFETs
Diodes
Optoelectronic
Components
Resistors
Inductors
Capacitors
Corporate / Other*
Total
Fiscal quarter ended October 1, 2022 :
Net revenues
$
225,186
$
209,012
$
73,447
$
207,437
$
83,503
$
126,213
$
-
$
924,798
Segment Operating Income
$
71,867
$
51,368
$
22,021
$
61,621
$
22,585
$
25,310
$
-
$
254,772
Fiscal quarter ended October 2, 2021 :
Net revenues
$
175,499
$
185,306
$
70,750
$
181,189
$
84,816
$
116,103
$
-
$
813,663
Segment Operating Income
$
43,717
$
41,363
$
19,708
$
43,547
$
24,368
$
19,913
$
-
$
192,616
Nine fiscal months ended October 1, 2022 :
Net revenues
$
556,255
$
583,429
$
232,399
$
627,645
$
255,888
$
386,487
$
-
$
2,642,103
Segment Operating Income
$
164,993
$
140,307
$
72,575
$
183,414
$
71,698
$
80,330
$
( 6,661
)
$
706,656
Nine fiscal months ended October 2, 2021 :
Net revenues
$
496,659
$
517,299
$
224,316
$
562,513
$
253,813
$
342,815
$
-
$
2,397,415
Segment Operating Income
$
108,434
$
106,304
$
61,070
$
142,288
$
75,902
$
62,462
$
-
$
556,460
* Amounts
reported in Corporate/Other above represent unallocated costs directly related to the COVID-19 pandemic, which are reported as costs of products sold on the consolidated condensed statement of operations.
Fiscal quarters ended
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Reconciliation:
Segment Operating Income
$
254,772
$
192,616
$
706,656
$
556,460
Impact of the COVID-19 Pandemic on Selling, General, and Administrative Expenses
-
-
( 546
)
-
Unallocated Selling, General, and Administrative Expenses
( 71,670
)
( 69,095
)
( 225,932
)
( 210,303
)
Consolidated Operating Income
$
183,102
$
123,521
$
480,178
$
346,157
Unallocated Other Income (Expense)
( 1,973
)
( 7,106
)
( 14,873
)
( 25,405
)
Consolidated Income Before Taxes
$
181,129
$
116,415
$
465,305
$
320,752
21
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
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Distributors
$
536,289
$
483,766
$
1,549,872
$
1,400,700
OEMs
322,260
278,358
908,384
850,413
EMS companies
66,249
51,539
183,847
146,302
Total Revenue
$
924,798
$
813,663
$
2,642,103
$
2,397,415
Net revenues were attributable to customers in the following regions:
Fiscal quarters ended
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Asia
$
352,160
$
365,133
$
1,040,942
$
1,034,936
Europe
296,779
263,650
862,728
800,801
Americas
275,859
184,880
738,433
561,678
Total Revenue
$
924,798
$
813,663
$
2,642,103
$
2,397,415
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
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Industrial
$
362,380
$
335,047
$
1,050,704
$
927,981
Automotive
286,331
240,764
799,504
743,766
Telecommunications
32,288
24,580
92,184
72,438
Computing
52,206
58,703
177,172
183,234
Consumer Products
50,235
43,839
132,090
128,243
Power Supplies
50,822
42,082
132,248
119,373
Military and Aerospace
56,861
40,198
159,062
124,909
Medical
33,675
28,450
99,139
97,471
Total revenue
$
924,798
$
813,663
$
2,642,103
$
2,397,415
22
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 13 – 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
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Numerator:
Net earnings attributable to Vishay stockholders
$
140,061
$
96,820
$
356,022
$
261,447
Denominator:
Denominator for basic earnings per share:
Weighted average shares
142,663
144,808
143,760
144,792
Outstanding phantom stock units
224
209
223
208
Adjusted weighted average shares
142,887
145,017
143,983
145,000
Effect of dilutive securities:
Convertible debt instruments
-
-
-
3
Restricted stock units
560
441
487
452
Dilutive potential common shares
560
441
487
455
Denominator for diluted earnings per share:
Adjusted weighted average shares - diluted
143,447
145,458
144,470
145,455
Basic earnings per share attributable to Vishay stockholders
$
0.98
$
0.67
$
2.47
$
1.80
Diluted earnings per share attributable to Vishay stockholders
$
0.98
$
0.67
$
2.46
$
1.80
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
Nine fiscal months ended
October 1, 2022
October 2, 2021
October 1, 2022
October 2, 2021
Restricted stock units
168
317
278
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.
23
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 14 – 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
October 1, 2022
Assets:
Assets held in rabbi trusts
$
46,802
$
25,050
$
21,752
$
-
Available for sale securities
$
3,317
3,317
-
-
Precious metals
$
3,077
3,077
-
-
$
53,196
$
31,444
$
21,752
$
-
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 has entered 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 Company had no outstanding forward contracts as of
October 1, 2022. The notional amount of the forward contracts was $ 100,000 as of December 31, 2021. The forward contracts were short-term in nature and were renewed at the Company's discretion until the intercompany loans were repaid. We did not designate the forward
contracts as hedges for accounting purposes, and as such the change in the fair value of the contracts would be 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 was considered a Level 2 measurement within the fair value hierarchy. The value of the forward contracts was immaterial as of 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 October 1, 2022 and December 31, 2021 is approximately $ 435,400 and $ 485,500 , respectively,
compared to its carrying value, excluding the deferred financing costs, of $ 465,344 and $ 465,344 , respectively. 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 October 1, 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 October 1, 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.
24