VISHAY INTERTECHNOLOGY INC 10-Q

Item 1. Financial Statements VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (In thousands) April 1, 2023 December 31, 2022 (Unaudited) Assets Current assets: Cash and cash equivalents $ 847,534 $ 610,825 Short-term investments 186,892 305,272 Accounts receivable, net 444,021 416,178 Inventories: Finished goods 171,404 156,234 Work in process 282,166 261,345 Raw materials 203,111 201,300 Total inventories 656,681 618,879 Prepaid expenses and other current assets 170,767 170,056 Total current assets 2,305,895 2,121,210 Property and equipment, at cost: Land 76,269 75,907 Buildings and improvements 676,678 658,829 Machinery and equipment 2,910,769 2,857,636 Construction in progress 234,481 243,038 Allowance for depreciation ( 2,755,509 ) ( 2,704,951 ) Property and equipment, net 1,142,688 1,130,459 Right of use assets 130,306 131,193 Deferred income taxes 106,197 104,667 Goodwill 201,657 201,432 Other intangible assets, net 75,965 77,896 Other assets 99,960 98,796 Total assets $ 4,062,668 $ 3,865,653 Continues on following page. 4 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (continued) (In thousands) April 1, 2023 December 31, 2022 (Unaudited) Liabilities and equity Current liabilities: Trade accounts payable $ 219,802 $ 189,099 Payroll and related expenses 159,708 166,079 Lease liabilities 25,908 25,319 Other accrued expenses 246,529 261,606 Income taxes 97,307 84,155 Total current liabilities 749,254 726,258 Long-term debt less current portion 566,755 500,937 U.S. transition tax payable 83,010 83,010 Deferred income taxes 125,289 117,183 Long-term lease liabilities 107,221 108,493 Other liabilities 94,216 92,530 Accrued pension and other postretirement costs 189,606 187,092 Total liabilities 1,915,351 1,815,503 Equity: Vishay stockholders' equity Common stock 13,316 13,291 Class B convertible common stock 1,210 1,210 Capital in excess of par value 1,351,622 1,352,321 Retained earnings 870,975 773,228 Treasury stock (at cost) ( 103,145 ) ( 82,972 ) Accumulated other comprehensive income (loss) 9,032 ( 10,827 ) Total Vishay stockholders' equity 2,143,010 2,046,251 Noncontrolling interests 4,307 3,899 Total equity 2,147,317 2,050,150 Total liabilities and equity $ 4,062,668 $ 3,865,653 See accompanying notes. 5 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarters ended April 1, 2023 April 2, 2022 Net revenues $ 871,046 $ 853,793 Costs of products sold 592,333 594,685 Gross profit 278,713 259,108 Selling, general, and administrative expenses 120,145 112,855 Operating income 158,568 146,253 Other income (expense): Interest expense ( 5,120 ) ( 4,222 ) Other 3,329 ( 5,751 ) Total other income (expense) ( 1,791 ) ( 9,973 ) Income before taxes 156,777 136,280 Income tax expense 44,588 32,330 Net earnings 112,189 103,950 Less: net earnings attributable to noncontrolling interests 408 377 Net earnings attributable to Vishay stockholders $ 111,781 $ 103,573 Basic earnings per share attributable to Vishay stockholders $ 0.79 $ 0.71 Diluted earnings per share attributable to Vishay stockholders $ 0.79 $ 0.71 Weighted average shares outstanding - basic 140,636 145,053 Weighted average shares outstanding - diluted 141,251 145,553 Cash dividends per share $ 0.10 $ 0.10 See accompanying notes. 6 VISHAY INTERTECHNOLOGY, INC. Consolidated Statements of Comprehensive Income (Unaudited - In thousands) Fiscal quarters ended April 1, 2023 April 2, 2022 Net earnings $ 112,189 $ 103,950 Other comprehensive income (loss), net of tax Pension and other post-retirement actuarial items 136 1,559 Foreign currency translation adjustment 19,723 ( 13,484 ) Other comprehensive income (loss) 19,859 ( 11,925 ) Comprehensive income 132,048 92,025 Less: comprehensive income attributable to noncontrolling interests 408 377 Comprehensive income attributable to Vishay stockholders $ 131,640 $ 91,648 See accompanying notes. 7 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three fiscal months ended April 1, 2023 April 2, 2022 Operating activities Net earnings $ 112,189 $ 103,950 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 43,301 40,650 (Gain) loss on disposal of property and equipment ( 64 ) ( 59 ) Inventory write-offs for obsolescence 8,986 5,825 Deferred income taxes 7,329 2,347 Other 269 8,816 Net change in operating assets and liabilities ( 42,117 ) ( 127,944 ) Net cash provided by operating activities 129,893 33,585 Investing activities Capital expenditures ( 45,574 ) ( 35,909 ) Proceeds from sale of property and equipment 326 72 Purchase of short-term investments ( 41 ) ( 7,753 ) Maturity of short-term investments 121,768 56,674 Other investing activities ( 892 ) ( 199 ) Net cash provided by investing activities 75,587 12,885 Financing activities Net proceeds on revolving credit facility 65,000 - Dividends paid to common stockholders ( 12,810 ) ( 13,259 ) Dividends paid to Class B common stockholders ( 1,210 ) ( 1,210 ) Repurchase of common stock held in treasury ( 20,173 ) ( 9,873 ) Cash withholding taxes paid when shares withheld for vested equity awards ( 3,653 ) ( 2,123 ) Net cash provided by (used in) financing activities 27,154 ( 26,465 ) Effect of exchange rate changes on cash and cash equivalents 4,075 ( 4,865 ) Net increase in cash and cash equivalents 236,709 15,140 Cash and cash equivalents at beginning of period 610,825 774,108 Cash and cash equivalents at end of period $ 847,534 $ 789,248 See accompanying notes. 8 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share and per share amounts) Common Stock Class B Convertible Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Vishay Stockholders' Equity Noncontrolling Interests Total Equity Balance at December 31, 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 Balance at December 31, 2022 $ 13,291 $ 1,210 $ 1,352,321 $ 773,228 $ ( 82,972 ) $ ( 10,827 ) $ 2,046,251 $ 3,899 $ 2,050,150 Net earnings - - - 111,781 - - 111,781 408 112,189 Other comprehensive income (loss) - - - - - 19,859 19,859 - 19,859 Issuance of stock and related tax withholdings for vested restricted stock units and phantom stock units ( 254,513 shares) 25 - ( 3,678 ) - - - ( 3,653 ) - ( 3,653 ) Dividends declared ($ 0.10 per share) - - 14 ( 14,034 ) - - ( 14,020 ) - ( 14,020 ) Stock compensation expense - - 2,965 - - - 2,965 - 2,965 Repurchase of common stock held in treasury ( 916,221 shares) - - - - ( 20,173 ) - ( 20,173 ) - ( 20,173 ) Balance at April 1, 2023 $ 13,316 $ 1,210 $ 1,351,622 $ 870,975 $ ( 103,145 ) $ 9,032 $ 2,143,010 $ 4,307 $ 2,147,317 See accompanying notes. 9 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 1 – Basis of Presentation The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. (“Vishay” or the “Company”) have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the three fiscal months ended April 1, 2023 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 2023 end on April 1, 2023, July 1, 2023, September 30, 2023, and December 31, 2023, respectively. The four fiscal quarters in 2022 ended on April 2, 2022, July 2, 2022, October 1, 2022, and December 31, 2022, 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. MaxPower Semiconductor, Inc. On October 28, 2022 , the Company acquired all of the outstanding equity interests of 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. The acquisition of MaxPower will enhance the Company's current and future silicon carbide ("SiC") offerings for fast-growing markets such as electric vehicles. The Company 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, upon favorable resolution of certain technology licensing matters with a third party, and upon the disposition of MaxPower's investment in an equity affiliate. The purchase price for U.S. GAAP purposes includes the fair value, as of the acquisition date, of certain future contingent payments to non-employee equity holders of MaxPower. The estimated fair value of this contingent consideration as of the acquisition date was $ 6,851 . The contingent consideration liability is included in other accrued expenses and other liabilities in the accompanying balance sheet and is remeasured each reporting period, with changes reported as selling, general, and administrative expenses on the consolidated condensed statement of operations. See Note 13 for further discussion on the fair value measurement. Based on an estimate of their fair values, the Company allocated $ 18,600 of the purchase price to definite-lived intangible assets. After allocating the purchase price to the assets acquired and liabilities assumed based on a preliminary estimation of their fair values at the date of acquisition, the Company recorded goodwill of $ 36,885 related to this acquisition. The goodwill related to this acquisition is included in the MOSFETs reporting unit for goodwill impairment testing. The purchase price allocation for this acquisition is considered preliminary as the Company is awaiting further information about the contingent payments. The estimated values of definite-lived intangible assets and goodwill have not changed as of April 1, 2023. The results and operations of this acquisition have been included in the MOSFETs segment since October 28, 2022. 10 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 3 – Leases The net right of use assets and lease liabilities recognized on the consolidated condensed balance sheets for the Company's operating leases were as follows: April 1, 2023 December 31, 2022 Right of use assets Operating Leases Buildings and improvements $ 125,579 $ 126,933 Machinery and equipment 4,727 4,260 Total $ 130,306 $ 131,193 Current lease liabilities Operating Leases Buildings and improvements $ 23,351 $ 22,926 Machinery and equipment 2,557 2,393 Total $ 25,908 $ 25,319 Long-term lease liabilities Operating Leases Buildings and improvements $ 105,119 $ 106,693 Machinery and equipment 2,102 1,800 Total $ 107,221 $ 108,493 Total lease liabilities $ 133,129 $ 133,812 Lease expense is classified in the statements of operations based on asset use. Total lease cost recognized on the consolidated condensed statements of operations is as follows: Fiscal quarters ended April 1, 2023 April 2, 2022 Lease expense Operating lease expense $ 6,881 $ 6,452 Short-term lease expense 256 304 Variable lease expense 152 100 Total lease expense $ 7,289 $ 6,856 The Company paid $ 7,199 and $ 6,332 for its operating leases in the three fiscal months ended April 1, 2023 and April 2, 2022, 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 9.7 years and the weighted-average discount rate is 6.1 % as of April 1, 2023. The undiscounted future lease payments for the Company's operating lease liabilities are as follows: April 1, 2023 2023 (excluding the three fiscal months ended April 1, 2023) $ 20,012 2024 25,008 2025 21,643 2026 18,083 2027 16,675 Thereafter 76,142 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. Note 4 – Income Taxes The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended April 1, 2023 and April 2, 2022 reflect the Company’s expected tax rate on reported income before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates. During the three fiscal months ended April 1, 2023, the liabilities for unrecognized tax benefits increased by $ 511 on a net basis, primarily due to currency translation adjustments, accruals for current year tax positions, and interest. 11 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 5 – Long-Term Debt Long-term debt consists of the following: April 1, 2023 December 31, 2022 Credit facility $ 107,000 $ 42,000 Convertible senior notes, due 2025 465,344 465,344 Deferred financing costs ( 5,589 ) ( 6,407 ) 566,755 500,937 Less current portion - - $ 566,755 $ 500,937 The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of April 1, 2023: Convertible Senior Notes Due 2025 Issuance date June 12, 2018 Maturity date June 15, 2025 Principal amount as of April 1, 2023 $ 465,344 Cash coupon rate (per annum) 2.25 % Nonconvertible debt borrowing rate at issuance (per annum) 5.50 % Conversion rate effective March 16, 2023 (per $1 principal amount) 32.0705 Effective conversion price effective March 16, 2023 (per share) $ 31.18 130% of the current effective conversion price (per share) $ 40.53 Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) the sale price of Vishay common stock reaches 130 % of the conversion price for a specified period; (2) the trading price of the notes falls below 98 % of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate transactions. The convertible senior notes due 2025 are not currently convertible. Upon conversion of the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock. The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible senior notes due 2025 effective as of the ex-dividend date of each cash dividend. The conversion rate and effective conversion price for the convertible senior notes due 2025 is adjusted for quarterly cash dividends to the extent such dividends exceed $ 0.085 per share of common stock. Credit Facility The Company maintains a credit facility with a consortium of banks led by JPMorgan Chase Bank, N.A., as administrative agent, and the lenders, which was scheduled to mature on June 5, 2024 (the "Existing Credit Facility"). On May 8, 2023 , the Company entered into an Amendment and Restatement Agreement, which provides an aggregate commitment of $ 750,000 of revolving loans available until May 8, 2028 (the “Amended and Restated Credit Facility”). The maturity date of the Amended and Restated Credit Facility will accelerate if within ninety-one days prior to the maturity of the Company’s convertible senior notes due 2025, the outstanding principal amount of such notes exceeds a defined liquidity measure as set forth in the Amended and Restated Credit Facility. U.S. Dollar borrowings under the Amended and Restated Credit Facility bear interest at the Secured Overnight Financing Rate (“SOFR”) plus a credit spread and an interest margin. The Amended and Restated Credit Facility also allows for borrowings in euro, British sterling, and Japanese yen, subject to a $ 250,000 limit. Borrowings in foreign currency bear interest at a local reference rate plus an interest margin. The applicable interest margin is based on Vishay's total leverage ratio. Based on Vishay's current total leverage ratio, borrowings bear interest at SOFR plus 1.60 %, including the applicable credit spread. Vishay also pays a commitment fee, also based on its total leverage ratio, on undrawn amounts. The undrawn commitment fee, based on Vishay's current total leverage ratio, is 0.25 % per annum. Similar to the Existing Credit Facility, the Amended and Restated Credit Facility requires the maintenance of financial covenant ratios. For compliance purposes, pursuant to the Amended and Restated Credit Facility, the leverage ratio is computed on a net basis, reducing the measure of outstanding debt by up to $ 250,000 of unrestricted cash. The Company must maintain a net leverage ratio of at least 3.25 to 1.00. Permitted investments and restricted payments are also subject to a pro forma net leverage ratio ( 2.75 to 1.00 and 2.50 to 1.00, respectively). Other terms and conditions of the Amended and Restated Credit Facility are substantially similar to the Existing Credit Facility. 12 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 6 – Stockholders' Equity In 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 quarters ended April 1, 2023 April 2, 2022 Dividends paid to stockholders $ 14,020 $ 14,469 Stock repurchases 20,173 9,873 Total $ 34,193 $ 24,342 The repurchased shares are being held as treasury stock. The number of shares of common stock being held as treasury stock was 5,156,794 and 4,240,573 as of April 1, 2023 and December 31, 2022, respectively. Note 7 – Revenue Recognition Sales returns and allowances accrual activity is shown below: Fiscal quarters ended April 1, 2023 April 2, 2022 Beginning balance $ 46,979 $ 39,759 Sales allowances 25,837 27,377 Credits issued ( 33,275 ) ( 27,726 ) Foreign currency ( 1,261 ) ( 249 ) Ending balance $ 38,280 $ 39,161 See disaggregated revenue information in Note 11. Note 8 – 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, 2023 $ ( 7,598 ) $ ( 3,229 ) $ ( 10,827 ) Other comprehensive income (loss) before reclassifications - 19,723 $ 19,723 Tax effect - - $ - Other comprehensive income before reclassifications, net of tax - 19,723 $ 19,723 Amounts reclassified out of AOCI 177 - $ 177 Tax effect ( 41 ) - $ ( 41 ) Amounts reclassified out of AOCI, net of tax 136 - $ 136 Net other comprehensive income (loss) $ 136 $ 19,723 $ 19,859 Balance at April 1, 2023 $ ( 7,462 ) $ 16,494 $ 9,032 Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. See Note 9 for further information. 13 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 9 – Pensions and Other Postretirement Benefits The Company maintains various retirement benefit plans. The service cost component of net periodic pension cost is classified in costs of products sold or selling, general, and administrative expenses on the consolidated condensed statements of operations based on the respective employee's function. The other components of net periodic pension cost are classified as other expense on the consolidated condensed statements of operations. Defined Benefit Pension Plans The following table shows the components of the net periodic pension cost for the first fiscal quarters of 2023 and 2022 for the Company’s defined benefit pension plans: Fiscal quarter ended April 1, 2023 Fiscal quarter ended April 2, 2022 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Net service cost $ - $ 724 $ - $ 1,117 Interest cost 499 1,695 280 852 Expected return on plan assets - ( 570 ) - ( 460 ) Amortization of prior service cost 36 55 36 56 Amortization of losses (gains) ( 30 ) 86 427 1,271 Curtailment and settlement losses - 107 - 279 Net periodic benefit cost $ 505 $ 2,097 $ 743 $ 3,115 Other Postretirement Benefits The following table shows the components of the net periodic benefit cost for the first fiscal quarters of 2023 and 2022 for the Company’s other postretirement benefit plans: Fiscal quarter ended April 1, 2023 Fiscal quarter ended April 2, 2022 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Service cost $ 5 $ 34 $ 10 $ 63 Interest cost 56 31 45 15 Amortization of losses (gains) ( 80 ) 3 86 23 Net periodic benefit cost $ ( 19 ) $ 68 $ 141 $ 101 14 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 10 – Stock-Based Compensation The following table summarizes stock-based compensation expense recognized: Fiscal quarters ended April 1, 2023 April 2, 2022 Restricted stock units ("RSUs") $ 2,858 $ 3,620 Phantom stock units 107 222 Total $ 2,965 $ 3,842 The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at April 1, 2023 (amortization periods in years) : Unrecognized Compensation Cost Weighted Average Remaining Amortization Periods Restricted stock units $ 10,041 0.9 Phantom stock units - n/a Total $ 10,041 15 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 April 1, 2023 and changes during the three fiscal months then ended are presented below (number of RSUs in thousands) : Number of RSUs Weighted Average Grant-date Fair Value per Unit Outstanding: January 1, 2023 894 $ 19.73 Granted 419 23.05 Vested* ( 328 ) 18.76 Cancelled or forfeited - - Outstanding at April 1, 2023 985 $ 21.47 Expected to vest at April 1, 2023 991 * The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements. In addition to RSUs that vest based upon satisfaction of service or performance conditions, in 2023, the Company granted RSUs that vest based upon achievement of market conditions to certain executive officers. For RSUs with market conditions, the Company estimates the grant date fair value using a Monte Carlo valuation model and recognizes the expense for the awards over the period in which the condition is assessed regardless of whether the market condition is ultimately achieved. The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance and market criteria between the established target and maximum levels. RSUs with performance-based and market-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, 2024 165 - 165 January 1, 2025 168 - 168 January 1, 2026 178 - 178 Phantom Stock Units Phantom stock unit activity under the 2007 Program as of April 1, 2023 and changes during the three fiscal months then ended are presented below (number of phantom stock units in thousands) : Number of units Grant-date Fair Value per Unit Outstanding: January 1, 2023 226 Granted 5 $ 21.48 Dividend equivalents issued 1 Redeemed for common stock* ( 94 ) Outstanding at April 1, 2023 138 * The number of phantom stock units redeemed for common stock includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements. 16 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 11 – Segment Information The following tables set forth business segment information: MOSFETs Diodes Optoelectronic Components Resistors Inductors Capacitors Total Fiscal quarter ended April 1, 2023 : Net revenues $ 198,181 $ 175,693 $ 60,403 $ 223,140 $ 80,338 $ 133,291 $ 871,046 Segment operating income $ 58,017 $ 42,686 $ 17,300 $ 66,699 $ 20,979 $ 32,996 $ 238,677 Fiscal quarter ended April 2, 2022: Net revenues $ 172,674 $ 182,334 $ 81,016 $ 207,032 $ 82,777 $ 127,960 $ 853,793 Segment operating income $ 48,524 $ 40,426 $ 28,159 $ 58,143 $ 22,199 $ 27,400 $ 224,851 Fiscal quarters ended April 1, 2023 April 2, 2022 Reconciliation: Segment Operating Income $ 238,677 $ 224,851 Unallocated Selling, General, and Administrative Expenses ( 80,109 ) ( 78,598 ) Consolidated Operating Income $ 158,568 $ 146,253 Unallocated Other Income (Expense) ( 1,791 ) ( 9,973 ) Consolidated Income Before Taxes $ 156,777 $ 136,280 17 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) The Company has a broad line of products that it sells to OEMs, EMS companies, and independent distributors. The distribution of sales by customer type is shown below: Fiscal quarters ended April 1, 2023 April 2, 2022 Distributors $ 470,788 $ 497,869 OEMs 340,428 297,429 EMS companies 59,830 58,495 Total Revenue $ 871,046 $ 853,793 Net revenues were attributable to customers in the following regions: Fiscal quarters ended April 1, 2023 April 2, 2022 Asia $ 310,429 $ 344,012 Europe 326,561 289,984 Americas 234,056 219,797 Total Revenue $ 871,046 $ 853,793 The Company generates substantially all of its revenue from product sales to end customers in the industrial, automotive, computing, military and aerospace, consumer products, power supplies, medical, and telecommunications end markets. Sales by end market are presented below: Fiscal quarters ended April 1, 2023 April 2, 2022 Industrial $ 325,960 $ 337,369 Automotive 284,499 259,501 Computing 43,169 67,931 Military and Aerospace 62,125 46,498 Consumer Products 46,534 38,708 Power Supplies 44,156 40,282 Medical 42,103 32,491 Telecommunications 22,500 31,013 Total revenue $ 871,046 $ 853,793 18 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 12 – Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share attributable to Vishay stockholders (shares in thousands) : Fiscal quarters ended April 1, 2023 April 2, 2022 Numerator: Net earnings attributable to Vishay stockholders $ 111,781 $ 103,573 Denominator: Denominator for basic earnings per share: Weighted average shares 140,496 144,832 Outstanding phantom stock units 140 221 Adjusted weighted average shares - basic 140,636 145,053 Effect of dilutive securities: Restricted stock units 615 500 Dilutive potential common shares 615 500 Denominator for diluted earnings per share: Adjusted weighted average shares - diluted 141,251 145,553 Basic earnings per share attributable to Vishay stockholders $ 0.79 $ 0.71 Diluted earnings per share attributable to Vishay stockholders $ 0.79 $ 0.71 Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares that would have an antidilutive effect or have unsatisfied performance conditions (in thousands) : Fiscal quarters ended April 1, 2023 April 2, 2022 Restricted stock units - 333 If the average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2025, no shares are included in the diluted earnings per share computation for the convertible senior notes due 2025. Upon Vishay exercising its existing right to legally amend the indenture governing the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock. Accordingly, the notes are not anti-dilutive when t he average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2025. 19 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 13 – Fair Value Measurements The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis: Total Fair Value Level 1 Level 2 Level 3 April 1, 2023 Assets: Assets held in rabbi trusts $ 50,154 $ 26,269 $ 23,885 $ - Available for sale securities $ 3,785 3,785 - - $ 53,939 $ 30,054 $ 23,885 $ - Liability: MaxPower acquisition contingent consideration $ 6,898 $ - $ - $ 6,898 December 31, 2022 Assets: Assets held in rabbi trusts $ 50,173 $ 27,168 $ 23,005 $ - Available for sale securities $ 3,677 3,677 - - Precious metals $ 1,252 1,252 - - $ 55,102 $ 32,097 $ 23,005 $ - Liability: MaxPower acquisition contingent consideration $ 6,870 $ - $ - $ 6,870 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 is considered a Level 1 measurement within the fair value hierarchy. The inventory of precious metals bullion in excess of its immediate manufacturing needs was not material at April 1, 2023. The Company may be required to make certain contingent payments to non-employee equity holders of MaxPower pursuant to the acquisition agreement, which would be payable upon the achievement of certain technology milestones, upon favorable resolution of certain technology licensing matters with a third party, and upon the disposition of MaxPower's investment in an equity affiliate. The fair value of these contingent consideration payments is determined by estimating the net present value of the expected cash flows based on the probability of expected payments. The fair value measurement of the contingent consideration is considered a Level 3 measurement within the fair value hierarchy. The fair value of the long-term debt, excluding the derivative liabilities and deferred financing costs, at April 1, 2023 and December 31, 2022 is approximately $ 571,600 and $ 491,100 , respectively, compared to its carrying value, excluding the deferred financing costs, of $ 572,344 and $ 507,344 , 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. 20 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) At April 1, 2023 and December 31, 2022, the Company’s short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates. The Company's short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value. The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity. At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary. No other-than-temporary impairments have been recognized on these securities, and there are no unrecognized holding gains or losses for these securities during the periods presented. There have been no transfers to or from the held-to-maturity classification. All decreases in the account balance are due to returns of principal at the securities’ maturity dates. Interest on the securities is recognized as interest income when earned. At April 1, 2023 and December 31, 2022, 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. 21