What changed in this filing

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Item 1A. Risk Factors

2024-02-16 compared with 2023-02-22 · 120 added, 32 removed, 390 unchanged (28% of the section changed)

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Risks relating to our business

Our business may be adversely affected by the widespread outbreak of diseases, including the COVID-19

pandemic, and the mitigation efforts by governments worldwide to control its spread.

Although the widespread economic impact of the COVID-19 pandemic on Vishay was temporary, the pandemic continues to adversely affect global business.

included disruptions in our ability to manufacture products and disruptions in the operations of our customers and modes of shipping.

While we are unable to accurately predict the full extent to which the COVID-19 pandemic and the mitigation efforts

by governments to attempt to control its spread will have on our business due to numerous uncertainties, thus far the impacts have resulted in increased costs and a reduction in sales to certain regions and end-markets.

We cannot predict when the

impact of the COVID-19 pandemic will end globally or when future coronavirus outbreaks or pandemics will occur.

The potential risks and effects of the COVID-19 or future pandemics and the related economic impact that could have an adverse effect on our business include, but are

not limited to:

Adverse impact on our customers and supply channels;

Decrease in sales, product demand and pricing and unfavorable economic and market conditions;

Increased costs, including higher shipping costs due to reduced shipping capacity;

Restrictions on our manufacturing, support operations or workforce, or similar limitations for our customers, vendors, and suppliers, that could limit our

ability to meet customer demand;

Potential increased credit risk if customers, distributors, and resellers are unable to pay us, or must delay paying their obligations to us;

Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures could

result in delays;

Impact on our workforce/employees due to the spread of the virus and any shelter-in-place orders;

Cybersecurity risks as a result of extended periods of remote work arrangements.

Such effects could result in us being required to record impairment charges related to our property and equipment, intangible assets, or goodwill.

Our business is cyclical and future periods of decline and increased demand are not predictable.

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A downturn in our business in general, or isolated to a particular sector, could require us to incur restructuring and severance charges and/or asset write-downs.

We face significant challenges managing our capacity expansion strategy.

As part of our strategy to drive growth and increase capacity, we are increasing internal capacity

by investing $329 million in 2023 and plan to invest $1.2 billion total from 2023 to 2025 and plan to increase external capacity by outsourcing additional commodity products to subcontractors.

Our capacity expansion plans include building a

12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab , a new power inductor site in Mexico, a resistor manufacturing expansion in Mexico, and expanded diode manufacturing in

Taiwan and Turin, Italy.

Additionally, the planned transaction with Nexperia BV will add a wafer fabrication facility and operations in Newport, South Wales, U.K.

There is no assurance that we will be

able to close the transaction for the Nexperia wafer fabrication facility.

There are demand-related risks associated with all growth initiatives.

There are also inherent execution risks in building and starting new wafer fabs, acquiring

existing wafer fabs, and expanding production capacity at our own facilities or that of new or existing subcontractors that could significantly increase costs and negatively impact our operating results.

The risks include, but are not limited

to, the following:

design and construction delays and cost overruns;

issues installing and qualifying new equipment and ramping production;

poor production process yields and reduced quality control;

insufficient personnel with requisite expertise and experience to operate the facilities.

Our business may be adversely affected by the widespread outbreak of diseases and the mitigation efforts

by governments worldwide to control their spread.

We cannot predict when future disease outbreaks or pandemics will occur.

The potential risks and effects of future disease outbreaks and the

related economic impact that could have an adverse effect on our business include, but are not limited to:

Adverse impact on our customers and supply channels;

Decrease in sales, product demand and pricing and unfavorable economic and market conditions;

Increased costs, including higher shipping costs due to reduced shipping capacity;

Restrictions on our manufacturing, support operations or workforce, or similar limitations for our customers, vendors, and suppliers, that could limit our

ability to meet customer demand;

Potential increased credit risk if customers, distributors, and resellers are unable to pay us, or must delay paying their obligations to us;

Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures could

result in delays;

Impact on our workforce/employees due to the spread of the virus and any shelter-in-place orders;

Cybersecurity risks as a result of extended periods of remote work arrangements.

Such effects could result in us being required to record impairment charges related to our property and equipment, intangible assets, or

In the past we have grown through successful integration of acquired businesses, but this may not continue.

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Our credit facility bears interest at variable rates based on

A significant increase in LIBOR would significantly increase our interest expense.

A general increase in interest rates would be largely offset by an increase in interest income earned on our cash and short-term investment balances, which are

currently greater than our debt balances.

However, there can be no assurance that the interest rate earned on cash and short-term investments will move in tandem with the interest rate paid on our variable rate debt.

Secured Overnight Financing Rate ("SOFR") and other currency-specific reference rates.

A significant increase in such reference rates would significantly increase our interest expense.

A general increase in interest rates would be largely offset by

an increase in interest income earned on our cash and short-term investment balances, which are currently greater than our debt balances.

However, there can be no assurance that the interest rate earned on cash and short-term investments will move in

tandem with the interest rate paid on our variable rate debt.

Cyberattacks and other interruptions in our information technology systems could adversely affect our business.

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Although we have never experienced any material

interruption in our operations attributable to these factors, in spite of several Middle East crises, including wars, our financial condition and results of operations might be adversely affected if events were to occur in the Middle East that

interfered with our operations in Israel.

interruption in our operations attributable to these factors, in spite of several Middle East crises, including the current war with Hamas, our financial condition and results of operations might be adversely affected if events were to occur in the

Middle East that interfered with our operations in Israel.

Our global operations are subject to extensive anti-corruption laws and other regulations.

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subsidiaries.

We used substantially all of the amounts repatriated from 2018 to 2020 to

significantly re-shape the capital structure of the Company.

As of December 31, 2022, substantially all of our cash and cash

equivalents and short-term investments were held by subsidiaries outside of the United States.

As of December 31, 2023, 65.5% of our cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States.

Our revolving credit facility provides us with additional U.S.

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parent company, Vishay Intertechnology, Inc.

A U.S.-domiciled subsidiary is expected to be the acquiring entity of Nexperia's wafer fabrication facility and operations in Newport, South Wales, U.K.

subsidiaries have other operating cash needs.

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convertible debt instruments as more attractive means of equity participation in us.

Conversion of our outstanding 2025 Notes and 2030 Notes may

dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes.

The conversion of some or all of our outstanding 2.25% convertible senior notes due 2025 (the "2025 Notes") or our outstanding 2.25% convertible senior notes due 2030 (the "2030 Notes") may dilute the ownership

interests of our existing stockholders.

Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

We may not have the ability to raise the funds necessary to

settle conversions of our outstanding 2025 Notes and 2030 Notes in cash or to repurchase the notes upon a fundamental change or on a repurchase date, as applicable, and our current debt contains, and our future debt may contain, limitations on

our ability to pay cash upon conversion or repurchase of the 2025 Notes or 2030 Notes.

Holders of our outstanding 2025 Notes and 2030 Notes have the right to require us to repurchase all or a portion of their 2025 Notes or 2030 Notes, as the case may be, upon the occurrence of a fundamental change at

a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Notes or 2030 Notes, as the case may be, to be repurchased, plus accrued and unpaid interest, if any.

In addition, upon conversion of the 2030 Notes, we will be

required to make cash payments for each $1,000 in principal amount of 2030 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2030 Notes.

Our outstanding 2025

Notes contain similar provisions concerning the holders’ rights to require us to repurchase their 2025 Notes upon a fundamental change and to pay cash to settle conversions of their 2025 Notes.

However, we may not have enough available cash or be

able to obtain financing at the time we are required to make repurchases of the 2030 Notes or the 2025 Notes surrendered therefor or notes being converted.

In addition, our ability to repurchase the 2025 Notes or the 2030 Notes or to pay cash upon

conversions of the 2025 Notes or 2030 Notes may be limited by law, by regulatory authority or by agreements governing our existing and future indebtedness, as described below.

For example, our credit facility in effect from time to time may prohibit us from making any cash payments on the conversion or repurchase of the 2025 Notes or the 2030 Notes, as the case may be, upon a fundamental

change repurchase if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in pro forma compliance with the applicable financial

covenants under that facility.

Any new credit facility into which we may enter may have similar restrictions unless certain conditions are met.

Our failure to make cash payments upon the conversion or repurchase of the 2025 Notes or the 2030

Notes, as the case may be, as required under the terms of the applicable indenture governing such notes would permit holders of the 2025 Notes or the 2030 Notes, as the case may be, to accelerate our obligations under the 2025 Notes or the 2030

Notes, as the case may be.

Our failure to repurchase the 2025 Notes or 2030 Notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the 2025 Notes or the 2030 Notes as

required by the applicable indenture would constitute a default under such indenture.

A default under such indenture or the fundamental change itself could also lead to a default under agreements governing our existing and future indebtedness,

including our credit facility.

If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash

payments upon conversions thereof.

The conditional conversion feature of our outstanding 2025

Notes and 2030 Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2025 Notes or 2030 Notes is triggered, holders of such notes will be entitled to convert the notes at any time during specified periods at their option.

one or more holders elect to convert their notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity.

In addition, even if holders do not elect to convert their notes, we

could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Certain provisions in the indentures governing the 2025

Notes and 2030 Notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us.

Certain provisions in the 2025 Notes and 2030 Notes and the applicable indenture could make it more difficult or more expensive for a third party to acquire us.

For example, if a takeover would constitute a

fundamental change, holders of the notes will have the right to require us to repurchase their notes in cash.

In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders

who convert their notes in connection with such takeover.

In either case, and in other cases, our obligations under the notes and the applicable indenture could increase the cost of acquiring us or otherwise discourage a third party from

acquiring us or removing incumbent management, including in a transaction that holders of the notes or holders of our common stock may view as favorable.

The capped call transactions may affect the market price of

our common stock.

In connection with the pricing of, and the initial purchasers’ exercise in full of their option to purchase additional, 2030 Notes, we entered into capped call transactions with the option counterparties.

capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of any 2030 Notes and to offset any cash payments made in excess of the principal amount of converted 2030 Notes, as the case may be,

with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the capped call transactions, we expect the option counterparties or their respective affiliates to have purchased shares of our common stock and/or entered

into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2030 Notes.

In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by

entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the 2030 Notes and prior to the

maturity of the 2030 Notes (and are likely to do so on each exercise date for the capped call transactions or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early

conversion of the 2030 Notes).

This activity could cause or avoid an increase or decrease in the market price of our common stock.

In addition, if any such capped call transactions fail to become effective, the option counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which could

adversely affect the value of our common stock.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of our common stock.

In addition, we do not make

any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

We are subject to counterparty risk with respect to the

capped call transactions.

The option counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the capped call transactions.

Our exposure to the credit risk of the option

counterparties will not be secured by any collateral.

Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions.

If an option counterparty becomes subject to

insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transactions with such option counterparty.

Our exposure will depend on many factors but,

generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock.

In addition, upon a default by an option counterparty, we may suffer more dilution than we currently

anticipate with respect to our common stock.

We can provide no assurance as to the financial stability or viability of the option counterparties.

Anti-takeover defenses in our amended and restated certificate of incorporation, our amended and restated bylaws and under Delaware law may impede

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adverse effect on our future financial condition and results of operations.

UNRESOLVED STAFF COMMENTS

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-K

Item 1A. Risk Factors