What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 349 added, 494 removed, 317 unchanged (73% of the section changed)

4 unchanged sentences

discussion contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our

Annual Report on Form 10-K, particularly in Item 1A.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in

our Annual Report on Form 10-K, particularly in Item 1A.

"Risk Factors," filed with the Securities and Exchange Commission on February 16, 2024.

5 unchanged sentences

We are focused on enhancing stockholder value by growing our business and improving earnings per share.

Since 1985, we have pursued a business strategy of

growth through focused research and development and acquisitions.

Since 1985, we have pursued a business strategy

of growth through focused research and development and acquisitions.

We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure.

growth and optimize stockholder value, we plan to capitalize on the mega trends of electrification, data storage, and wireless communications by developing go-to-market strategies and investing in and expanding the thirty key product lines for growth

that we have identified, increasing our capacity internally by investing approximately $350 million in 2023 and approximately $1.2 billion over the next three years primarily for capital expansion projects outside of China and externally by

outsourcing production of commodity products to subcontractors, enhancing channel management, investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage, promoting the full breadth of our

portfolio through solution selling, and instituting a Think Customer First organizational culture.

On November 8, 2023, we and Nexperia BV announced that we have entered into an

agreement whereby we will acquire Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K.

for approximately $177 million in cash, subject to customary post-closing adjustments.

The closing of the

transaction is subject to U.K.

government review, the purchase rights of a third party, and customary closing conditions, and is expected to occur in the first quarter of 2024.

In addition to enhancing stockholder value through growing our business, in 2022, our Board of Directors adopted a Stockholder Return Policy, which calls

for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis.

See further discussion in “Stockholder Value” below.

On September 12, 2023, we issued $750 million convertible senior notes due 2030.

We used the net proceeds from the issuance of these notes to repurchase

$370.2 million principal amount of convertible senior notes due 2025, $94.2 million to enter into capped call transactions intended to mitigate the dilution risk of convertible senior notes due 2030 by synthetically increasing the conversion price of

the notes to approximately $43.98 per share, to repay amounts outstanding on our amended and restated credit facility, and for other general corporate purposes.

We recognized a loss of $18.9 million due to the early extinguishment of the repurchased

convertible senior notes due 2025.

On May 8, 2023, we amended and restated our $750 million revolving credit agreement, which replaced our credit agreement that was scheduled to mature in

The amendment and restatement extended the maturity date of the revolving credit agreement until May 8, 2028, replaced the previous total leverage ratio used for financial covenant compliance measurement with a net leverage ratio, and

replaced the LIBOR-based interest rate and related LIBOR-based mechanics applicable to U.S.

dollar borrowings under the revolving credit agreement with an interest rate based on the Secured Overnight Financing Rate ("SOFR") (including a customary

spread adjustment) and related SOFR-based mechanics.

The maturity date of the amended and restated facility will accelerate if within ninety-one days prior to the maturity of our 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.

Other terms and conditions are substantially unchanged.

Our business and operating results have been and will continue to be impacted by

worldwide economic conditions.

growth and optimize stockholder value, we plan to capitalize on the mega trends of e-mobility, sustainability, and connectivity through initiatives.

We are developing go-to-market strategies and investing in and expanding the key product lines for

growth that we have identified.

To increase our internal capacity, we plan to invest approximately $435 million in 2024, as part of our plan to invest approximately $1.4 billion in total capital expenditures for the period 2023 - 2025 and $2.6

billion in total capital expenditures for the period 2023 - 2028.

In addition, we are strategically expanding our outsourced production of commodity products to subcontractors.

At the same time, we are enhancing our channel management while

investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage.

Taken together, each of these initiatives supports our Think Customer First organizational culture.

On March 5, 2024, we completed the acquisition of Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K.

approximately $177.4 million in cash, net of cash acquired and subject to customary post-closing adjustments.

The wafer fabrication facility is located on 28 acres and is an automotive-certified, 200mm semiconductor wafer fab with capacity to

produce more than 30,000 wafers per month.

We plan to position the facility as a manufacturing excellence center and use it as the home for MaxPower to further develop and scale our SiC MOSFETs and diodes capabilities.

We expect the facility to

initially generate a net loss while we invest in new equipment and qualify new products.

In addition to enhancing stockholder value through growing our business, in 2022, our Board of Directors adopted a Stockholder

Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis.

See further discussion in “Stockholder Return Policy” below.

Our business and operating results have been and will continue to be impacted

by worldwide economic conditions.

Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets.

In this volatile economic

environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future

We will react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth.

We have significant liquidity to

withstand temporary disruptions in the economic environment.

In this volatile

economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our

future needs.

We believe we can react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth.

We believe we have

significant liquidity to withstand temporary disruptions in the economic environment.

We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating margin, end-of-period backlog,

2 unchanged sentences

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

The key financial metrics decreased in the third fiscal quarter of 2023 primarily due to the negative impacts of an on-going distributor inventory correction that

The key financial metrics decreased in the first fiscal quarter of 2024 primarily due to the negative impacts of an on-going distributor inventory correction that

resulted in lower orders.

Gross profit was negatively impacted by lower volume.

Net revenues for the fiscal quarter ended September 30, 2023

Net revenues and margins decreased versus the prior periods primarily due to lower sales volume.

Net revenues for the fiscal quarter ended March 30, 2024

were $746.3 million, compared to $785.2

million and $924.8 million for the fiscal quarters ended July 1, 2023 and October 1, 2022, respectively.

The net earnings attributable to Vishay stockholders

for the fiscal quarter ended September 30, 2023 were $65.5 million, or $0.47 per diluted share, compared to $95.0 million, or $0.68 per diluted share for the fiscal quarter

ended July 1, 2023, and $140.1

million, or $0.98 per diluted share for the fiscal quarter ended October 1, 2022.

Net revenues for the nine fiscal months

ended September 30, 2023 were $2,616.8

million, compared to $2,642.1 million for the nine fiscal months ended October 1, 2022.

The net earnings attributable to Vishay stockholders for

the nine fiscal months ended September 30, 2023 were $272.3 million, or $1.94 per diluted share, compared to $356.0 million, or $2.46 per diluted share for the nine fiscal months ended October 1, 2022.

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

management believes are not indicative of the intrinsic operating performance of our business.

We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and

The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash.

These non-GAAP measures should not be viewed as

alternatives to GAAP measures of performance or liquidity.

million and $871.0 million for the fiscal quarters ended December 31, 2023 and April 1, 2023, respectively.

The net earnings attributable to Vishay

stockholders for the fiscal quarter ended March 30, 2024 were $30.9 million, or $0.22 per diluted share, compared to $51.5 million, or $0.37 per diluted

share for the fiscal quarter ended December 31, 2023, and $111.8 million, or $0.79 per diluted share for the fiscal

quarter ended April 1, 2023.

We define adjusted net earnings as net earnings determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating

performance of our business.

We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment.

The reconciliations below include certain financial

measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash.

These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity.

Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, and free cash do not have uniform definitions.

These measures, as calculated by Vishay, may not be comparable

to similarly titled measures used by other companies.

These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies.

Management believes that adjusted net earnings and adjusted earnings per share are meaningful because they provide insight with respect to our intrinsic operating results.

Management believes

that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.

Management believes that free cash is a meaningful measure of our ability

to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.

We utilize the free cash metric in defining our Stockholder Return Policy.

The items affecting comparability are ( in thousands,

except per share amounts ):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

GAAP net earnings attributable to Vishay stockholders

Reconciling items affecting gross income:

Impact of COVID-19 pandemic

Other reconciling items affecting operating income:

Impact of COVID-19 pandemic

Reconciling items affecting other income (expense):

Loss on early extinguishment of debt

Reconciling items affecting tax expense:

Effects of changes in uncertain tax positions

Tax effects of pre-tax items above

Adjusted net earnings

Adjusted weighted average diluted shares outstanding

Adjusted earnings per diluted share

The following table

reconciles gross profit by segment to consolidated gross profit ( in thousands ) .

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

Net earnings attributable to Vishay stockholders for the fiscal quarters ended March 30, 2024, December 31, 2023, and April 1, 2023 include no items affecting comparability.

The following table reconciles gross profit by segment to consolidated gross profit ( in thousands ):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Optoelectronic Components

Unallocated gross profit (loss)

Although the term "free cash" is not defined in GAAP, each of the elements used to calculate free cash for the year-to-date period is presented as a line

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Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Net cash provided by continuing operating activities

1 unchanged sentence

Capital expenditures

Orders are lower due to a distributor inventory correction that began in the fourth fiscal quarter of 2022 and continues in 2023.

Our results for the fiscal

quarters ended September 30, 2023 and July 1, 2023 remain strong, although weaker than our October 1, 2022 results.

Our free cash results were significantly impacted by the installment payments of

transition tax of $27.7 million and $14.8 million in the second fiscal quarters of 2023 and 2022, respectively, and $25.2 million of payments of foreign, withholding, and claw-back cash taxes on foreign earnings in Israel for the net $81.2

million that was repatriated to the U.S.

in the second fiscal quarter of 2022 .

Stockholder Value

We are focused on enhancing stockholder value by growing our business and improving earnings per share.

Over the next few years, we expect to

experience higher internal growth rates than over the last decade.

This expectation is based upon accelerated electrification, such as factory automation, electrical vehicles, and 5G infrastructures.

To meet this expected increase in demand and

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

The increased capital expenditures will be primarily used to increase manufacturing capacity for the thirty

key product lines for growth that we identified.

The most significant expansion projects include building a 12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch fab, expanding our Inductors manufacturing, and expanding our GaAs

fab in Heilbronn, Germany.

Our results have been negatively impacted by the distributor inventory correction that began in the fourth fiscal quarter of 2022 and continued through the

first fiscal quarter of 2024.

Our results for the first fiscal quarter of 2024 remain strong, although weaker than our prior fiscal quarter and prior year quarter results.

Stockholder Return Policy

In 2022, our Board of Directors adopted a Stockholder Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled

3 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

April 1, 2023

Dividends paid to stockholders

Stock repurchases

During the fourth quarters of 2022 and 2021, we determined that substantially all unremitted foreign earnings in Israel and Germany, respectively,

are no longer indefinitely reinvested.

The changes in these indefinite reinvestment assertions will provide greater access to our worldwide cash balances to fund our growth plan and our Stockholder Return Policy, but also increased our

effective tax rate.

We have determined that substantially all unremitted foreign earnings in Germany and Israel are no longer indefinitely reinvested.

These indefinite

reinvestment assertions provide greater access to our worldwide cash balances to fund our growth plan and our Stockholder Return Policy, but also negatively impact our effective tax rate.

The structure of our Stockholder Return Policy enables us to allocate capital responsibly among our business, our lenders, and our stockholders.

29 unchanged sentences

Segment operating income would also exclude costs not routinely used in the management of the

segments in periods when those items are present, such as restructuring and severance costs, the direct impact of the COVID-19 pandemic, and other items affecting comparability.

Segment operating income is clearly a function of net revenues, but

also reflects our cost management programs and our ability to contain fixed costs.

segments in periods when those items are present, such as restructuring and severance costs, and other items affecting comparability.

Segment operating income is clearly a function of net revenues, but also reflects our cost management programs and

our ability to contain fixed costs.

Segment operating margin is segment operating income expressed as a percentage of net revenues.

24 unchanged sentences

The following table

shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the third fiscal quarter of 2022 through

the third fiscal quarter of 2023 (dollars in thousands) :

3rd Quarter 2022

4th Quarter 2022

the first fiscal quarter of 2024 (dollars in thousands) :

1st Quarter 2023

1 unchanged sentence

3rd Quarter 2023

4th Quarter 2023

1st Quarter 2024

Gross profit margin

7 unchanged sentences

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

Revenues decreased versus the prior fiscal quarter and the third fiscal quarter of 2022 primarily due to lower sales volume.

The book-to-bill ratio and

backlog were negatively impacted by the distributor inventory correction that continued in the third fiscal quarter of 2023.

We continue to increase manufacturing capacity for critical product lines.

Average selling prices decreased versus the

prior fiscal quarter.

Gross profit margin decreased versus the prior fiscal quarter and the third fiscal quarter of 2022.

The decrease versus the prior fiscal quarter is

primarily due to lower sales volume and decreased average selling prices.

The decrease versus the third fiscal quarter of 2022 is primarily due to lower sales volume, cost inflation, and manufacturing inefficiencies, partially offset by higher

average selling prices and positive foreign currency impacts.

The book-to-bill ratio in the third fiscal quarter of 2023 decreased to 0.63 versus 0.69 in the second fiscal quarter of 2023.

The book-to-bill ratio continues to be negatively impacted by the distributor

inventory correction that continued in the third fiscal quarter of 2023.

Revenues decreased versus the prior fiscal quarter and the first fiscal quarter of 2023 primarily due to lower sales volume and lower average selling

The book-to-bill ratio increased slightly versus the prior fiscal quarter, but orders and backlog continued to be negatively impacted by the distributor inventory correction that continued in the first fiscal quarter of 2024.

to increase manufacturing capacity for critical product lines.

Average selling prices decreased versus the prior fiscal quarter and prior year quarter.

Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to lower sales volume, decreased average selling

prices, and the impact of the Newport acquisition.

Cost inflation also contributed to the decrease versus the prior year quarter.

The book-to-bill ratio in the first fiscal quarter of 2024 increased to 0.82 versus 0.75 in the fourth fiscal quarter of 2023.

Financial Metrics by Segment

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

quarters beginning with the third fiscal quarter of 2022 through the third fiscal quarter of 2023 (dollars in thousands) :

3rd Quarter 2022

4th Quarter 2022

quarters beginning with the first fiscal quarter of 2023 through the first fiscal quarter of 2024 (dollars in thousands) :

1st Quarter 2023

1 unchanged sentence

3rd Quarter 2023

4th Quarter 2023

1st Quarter 2024

Book-to-bill ratio

20 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Cost of products sold

6 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

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

Fiscal quarter ended September 30, 2023

Nine fiscal months ended September 30, 2023

Change in net revenues

Fiscal quarter ended

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

Changes in net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

Decrease in volume

Change in average selling prices

Decrease in average selling prices

Foreign currency effects

Despite the distributor inventory correction that we are experiencing, the long-term

prospects for our business remain favorable, and we continue to increase manufacturing capacities for critical product lines.

The decreases in net revenues are primarily sales volume-driven with increased average selling prices and positive

foreign currency impacts partially offsetting the sales volume decrease in the prior year periods.

Despite the distributor inventory correction that we continue to experience, the long-term prospects for our business remain favorable, and we continue to increase manufacturing

capacities for critical product lines.

The decrease in net revenues versus the prior fiscal quarter and prior year quarter are primarily due to decreased sales volume and average selling prices.

Gross Profit Margins

Gross profit margins for the fiscal quarter ended September 30, 2023 were 27.8%, versus 28.9% and 31.3%, for the comparable prior quarter and prior year period,

respectively.

Gross profit margins for the nine fiscal months ended September 30, 2023 were 29.6%, versus 30.7% for the comparable prior year period.

The decreases are primarily sales

volume-driven with increased average selling prices and positive foreign currency impacts partially offsetting the sales volume decrease and cost inflation in the prior year periods.

Gross profit margins for the fiscal quarter ended March 30, 2024 were 22.8%, versus 25.6% and 32.0% for the comparable prior fiscal quarter and prior year period, respectively.

profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to lower sales volume, decreased average selling prices, and the impact of the Newport acquisition.

Cost inflation also contributed to the decrease

versus the prior year quarter.

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

Direct costs of the COVID-19 pandemic are not allocated to the segments.

Net revenues, gross profit margins, and segment operating margins of the MOSFETs segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Change in average selling prices

Decrease in volume

Decrease in average selling prices

Foreign currency effects

The net revenues of the MOSFETs segment decreased slightly versus the prior fiscal quarter and decreased significantly versus the prior year

quarter, but increased significantly versus the prior year-to-date period.

The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers and customers in the Europe and Americas regions.

decrease versus the prior year quarter is primarily due to decreased sales to distribution and EMS customers, computing end market customers, and customers in all regions, particularly the Americas region.

The increase versus the prior

year-to-date period is primarily due to increased sales to automotive, power supply, and industrial end market customers and customers in the Europe and Americas regions, partially offset by decreased sales to computing and

telecommunications end market customers.

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

The decrease versus the prior fiscal quarter is primarily

due to decreased average selling prices and unfavorable product mix.

The decrease versus the prior year quarter is primarily due to lower sales volume, unfavorable product mix, higher utilities and material prices, increased depreciation, and

higher personnel costs.

Gross profit increased versus the prior year-to-date period due to higher volume, but gross profit margin decreased slightly due to increased costs.

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

The fluctuations are

primarily due to gross profit fluctuations.

Increased segment SG&A expenses as a percentage of sales also impacted all comparison periods.

Average selling prices decreased versus the prior fiscal quarter and the prior year quarter, but increased versus the prior year-to-date period.

The MOSFET segment net revenues decreased versus the prior fiscal quarter and the prior year quarter.

The decreases were primarily due to decreased

sales to distributor customers and customers in all regions.

An increase in sales to automotive end market customers partially offset the decrease versus the prior fiscal quarter.

Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter.

The decreases are primarily due to lower average selling prices, costs

associated with Newport wafer fab acquired in March 2024, and lower sales volume.

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

The decreases are primarily due to

gross profit decreases.

Average selling prices decreased significantly versus the prior fiscal quarter and the prior year quarter.

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

We have begun building a 12-inch wafer

fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab, which we expect will increase our in-house wafer capacity by approximately 70% within 3-4 years and allow us to balance our in-house and foundry wafer supply.

We have begun building a 12-inch wafer fab in

Itzehoe, Germany adjacent to our existing 8-inch wafer fab, which we expect will increase our in-house wafer capacity by approximately 70% within 3-4 years and allow us to balance our in-house and foundry wafer supply.

We acquired leading edge silicon and silicon carbide MOSFETs products with our acquisition of MaxPower in the fourth fiscal quarter of 2022.

to use the Newport wafer fabrication facility acquired in the first fiscal quarter of 2024 as the home for MaxPower to further develop and scale our SiC MOSFETs and diodes capabilities.

Net revenues, gross profit margins, and segment operating margins of the Diodes segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

Segment operating margin

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

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

in thousands) :

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Increase in average selling prices

Decrease in volume

Decrease in average selling prices

Foreign currency effects

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

The increase versus

the prior fiscal quarter is primarily due to increased sales to automotive end market customers and customers in the Americas and Asia regions.

The decrease versus the prior year quarter is primarily due to decreased sales to customers

in all regions, particularly the Americas region, and all end market customers except for automotive end market customers.

The decrease versus the prior year quarter is partially attributable to the prior year quarter including increased

volume as operations and sales resumed following extended government-mandated shut-downs of our manufacturing facilities in the People's Republic of China.

The decrease versus the prior year-to-date period is primarily due to decreased

sales to distribution and EMS customers, power supply end market customers, and customers in the Americas and Asia regions.

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

The increase versus the prior fiscal

quarter is primarily due to higher sales volume, decreased material costs, and manufacturing efficiencies.

The decrease versus the prior year quarter is primarily due to lower sales volume, partially offset by decreased metal prices.

The decrease versus the prior year-to-date period is primarily due to lower sales volume, manufacturing inefficiencies, and higher material and labor costs, partially offset by increased average selling prices.

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

The fluctuations are primarily due to gross profit fluctuations.

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

Optoelectronic Components

Net revenues of the Diodes segment decreased versus the prior fiscal quarter and the prior year quarter.

The decreases are primarily due to decreased

sales to distribution customers and industrial and automotive end market customers in all regions.

Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter.

The increases are primarily due to lower sales volume and decreased average selling prices.

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

The decreases are primarily

due to decreased gross profit.

Average selling prices decreased versus the prior fiscal quarter and prior year quarter.

We plan to use the Newport wafer fabrication facility acquired in the first fiscal quarter of 2024 as the home for MaxPower to further develop and scale

our SiC MOSFETs and diodes capabilities.

O ptoelectronic Components

Net revenues, gross profit margins, and segment operating margins of the Optoelectronic Components segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

Segment operating margin

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

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

in thousands) :

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Change in average selling prices

Decrease in volume

Decrease in average selling prices

Foreign currency effects

Net revenues of the Optoelectronic Components segment were flat versus the prior fiscal quarter, but decreased significantly versus the prior year

Sales to EMS customers, automotive and industrial end market customers, and customers in the Europe and Americas regions increased versus the prior

fiscal quarter, but were offset by decreased sales to distribution customers and customers in the Asia region.

The decrease versus the prior year quarter is due to decreased sales to distribution customers, customers in all regions, particularly

the Americas region, and all end market customers other than automotive and telecommunications end market customers.

The decrease versus the prior year-to-date period is primarily due to decreased sales to distribution customers and customers in

all regions, partially offset by increased sales to automotive end market customers.

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

Net revenues of our Optoelectronic Components segment decreased versus the prior fiscal quarter and the prior year quarter.

The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers and industrial end market customers in all regions, particularly Asia, partially

offset by increased sales to EMS customers and automotive and consumer product end market customers.

The decrease versus the prior year quarter is due to decreased sales to all regions, distribution customers, and all end market customers.

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

The increase versus the prior fiscal

quarter is primarily due to favorable product mix, manufacturing efficiencies, and lower utility costs due to government subsidies .

The decrease versus the prior year

quarter is primarily due to lower sales volume, manufacturing inefficiencies, and higher material, subcontractor service, and utility costs.

The decrease versus the prior year-to-date period is primarily due to lower sales volume,

manufacturing inefficiencies, and higher material and labor costs, partially offset by increased average selling prices.

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

The fluctuations are primarily due to gross profit fluctuations.

Average selling prices decreased versus the prior fiscal quarter and prior year quarter, but increased versus the prior year-to-date period.

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

quarter is primarily due to the positive impact of increased inventory and accelerated depreciation costs that negatively impacted the prior fiscal quarter.

The decrease versus the prior year quarter is primarily due to lower sales volume,

decreased average selling prices, and manufacturing inefficiencies.

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

The decreases are primarily due to gross profit decreases.

Average selling prices decreased versus the prior fiscal quarter and prior year quarter.

Net revenues, gross profit margins, and segment operating margins of the Resistors segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Change in average selling prices

Decrease in volume

Decrease in average selling prices

Foreign currency effects

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

The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution and EMS customers, industrial end market customers, and customers in all regions, particularly the Americas region, partially offset by

increased sales to automotive end market customers.

The decrease versus the prior year quarter is primarily due to decreased sales to distribution customers and customers in the Americas and Asia regions, partially offset by increased sales to

military and aerospace, automotive, and industrial end market customers, and customers in the Europe region.

The increase versus the prior year-to-date period is primarily due to increased sales to military and aerospace, automotive, and

industrial end market customers and customers in the Europe region.

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

The decrease versus the prior fiscal quarter is primarily due to lower

volume, decreased average selling prices, manufacturing inefficiencies, and higher labor costs.

The decrease versus the prior year quarter is primarily due to decreased volume, higher labor and utility costs, and manufacturing

inefficiencies, partially offset by increased average selling prices.

The decrease versus the prior year-to-date period is primarily due to higher labor and material costs and manufacturing inefficiencies, partially offset by higher sales volume

and increased average selling prices.

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

Net revenues of the Resistors segment decreased versus the prior fiscal quarter and prior year quarter.

The decrease versus the prior fiscal quarter is

primarily due to decreased sales to distribution customers, military and aerospace and industrial end market customers, and customers in the Asia region, partially offset by increased sales to EMS customers, medical end market customers, and

customers in the Americas region.

The decrease versus the prior year quarter is primarily due to decreased sales to distribution and EMS customers, industrial end market customers, and customers in all regions, particularly Asia.

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

The decrease versus the prior fiscal quarter is primarily due to

decreased sales volume.

The decrease versus the prior year quarter is primarily due to decreased sales volume and manufacturing inefficiencies.

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

The decreases are primarily due to decreased gross profit.

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

Average selling prices decreased versus the prior fiscal quarter and the prior year quarter.

We are increasing critical manufacturing capacities for certain product lines.

3 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

Changes in net revenues were attributable to the following:

December 31, 2023

April 1, 2023

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

Prior Quarter

1 unchanged sentence

Change attributable to:

Change in volume

Change in average selling prices

Increase in volume

Decrease in average selling prices

Foreign currency effects

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

versus the prior year quarter.

The increase versus the prior fiscal quarter is primarily due to increased sales to automotive and power supply end market customers and customers in the Asia region.

The increase versus the prior year quarter is

primarily due to increased sales to EMS customers, medical, automotive, and aerospace and military end market customers, and customers in the Americas region, partially offset by decreased sales to distribution customers and industrial and

telecommunications end market customers.

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

region, partially offset by decreased sales to distribution customers and industrial and telecommunications end market customers, and customers in the Asia region.

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

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

versus the prior fiscal quarter is primarily due to increased sales to EMS customers, automotive and military and aerospace end market customers and customers in the Europe and Americas regions, partially offset by decreased sales to distribution

customers, industrial end market customers, and customers in the Asia region.

The increase versus the prior year quarter is primarily due to increased sales to automotive and military and aerospace end market customers and customers in all

regions, particularly the Americas region, partially offset by decreased sales to distribution customers and industrial end market customers.

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

The decrease versus the prior fiscal

quarter is primarily due to higher labor costs and manufacturing inefficiencies.

The increase versus the prior year quarter is primarily due to higher volume and increased average selling prices, partially offset by higher labor costs and

manufacturing inefficiencies.

The increase versus the prior year-to-date period is primarily due to increased average selling prices, lower metals prices, and positive foreign currency impacts, partially offset by lower sales volume, higher

labor and materials costs, manufacturing inefficiencies, and start-up costs of a new manufacturing facility.

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

quarter is primarily due to decreased average selling prices and higher labor costs.

The increase versus the prior year quarter is primarily due to higher sales volume and manufacturing efficiencies.

The segment operating margin decreased versus the prior fiscal quarter, but was flat versus the prior year quarter.

The fluctuations are primarily due to gross profit fluctuations.

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

Cost inflation negatively impacted the segment operating

margin versus the prior year quarter.

Average selling prices decreased slightly versus the prior fiscal quarter and prior year quarter.

We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating acquisition

opportunities, particularly of specialty businesses.

We have greatly increased our manufacturing capacity for power inductors in the past year.

Net revenues, gross profit margins, and segment operating margins of the Capacitors segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 30, 2023

Nine fiscal months ended

September 30, 2023

Change in net revenues

March 30, 2024

Change in net revenues

October 1, 2022

December 31, 2023

April 1, 2023

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

Prior Year Quarter

Change attributable to:

Decrease in volume

Change in volume

Change in average selling prices

Foreign currency effects

Net revenues of the Capacitors segment decreased significantly versus the prior fiscal quarter and the prior year quarter and decreased slightly versus

the prior year-to-date period.

The decrease versus the prior fiscal quarter is primarily due to decreased sales to distribution customers and customers in the Americas and Asia regions.

The decrease versus the prior year quarter is primarily

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

The decrease versus the prior year-to-date period is primarily due to

decreased sales to distribution and EMS customers and customers in the Asia and Europe regions, mostly offset by increased sales to industrial end market customers and customers in the Europe region.

The gross profit margin decreased versus the prior fiscal quarter and the prior year quarter, but increased versus the prior year-to-date period.

The decrease versus the

prior fiscal quarter is primarily due to lower sales volume and manufacturing inefficiencies, partially offset by favorable product mix and lower metals prices.

The decrease versus the prior year quarter is primarily due to lower sales

volume, manufacturing inefficiencies, higher labor and metals costs, partially offset by increased average selling prices.

The increase versus the prior year-to-date period is primarily due to increased average selling prices, favorable product

mix, and positive foreign currency impact, partially offset by lower sales volume, manufacturing inefficiencies, higher labor and material costs, and negative impact from decreased inventory.

The segment operating margin decreased versus the prior fiscal quarter and the prior year quarter, but increased versus the prior year-to-date period.

fluctuations are primarily due to gross profit fluctuations.

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

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

The increase versus the

prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Asia region.

The decrease versus the prior year quarter is primarily due to decreased sales to distribution

customers, industrial end market customers, and customers in the Americas and Europe regions.

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

The increase versus the prior fiscal quarter is

primarily due to higher sales volume, manufacturing efficiencies, and favorable sales mix.

The decrease versus the prior year quarter is primarily due to lower sales volume, higher wage and tantalum costs, partially offset by favorable

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

The fluctuations are primarily due to gross profit fluctuations.

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

Selling, General, and Administrative Expenses

Selling, general, and administrative (“SG&A”) expenses are summarized as follows (dollars in thousands):

Selling, general, and administrative expenses are summarized as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

April 1, 2023

Total SG&A expenses

as a percentage of revenues

SG&A expenses increased versus the prior year periods as expected.

The increases are due to general inflation and higher compensation costs, including

the implementation of the 2023 Long-Term Incentive Plan in the second fiscal quarter of 2023.

The sequential increase in SG&A expenses is primarily attributable to uneven attribution of stock-based compensation expense and cost inflation.

SG&A expenses increased versus the prior year quarter due to higher stock-based compensation expense and general cost inflation.

Other Income (Expense)

Interest expense for the fiscal quarter ended September 30, 2023 increased $0.7 million versus the fiscal quarter ended July 1, 2023 and increased $3.0 million versus the fiscal

quarter ended October 1, 2022.

Interest expense for the nine fiscal months ended September 30, 2023 increased by $6.0 million versus the nine fiscal months ended October 1, 2022.

The increases are due to higher interest rates and higher average balances outstanding on the revolving credit facility prior to

September 2023 when it was paid down to $0.

Interest expense for the fiscal quarter ended March 30, 2024 was flat versus the fiscal quarter ended December 31, 2023 and increased by $1.4 million versus the fiscal quarter ended April 1, 2023.

The increase versus the prior year fiscal quarter is due to the issuance of the convertible senior notes due 2030 in the third fiscal quarter of 2023.

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

Fiscal quarters ended

September 30, 2023

October 1, 2022

March 30, 2024

December 31, 2023

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Other components of other periodic pension cost

Investment income (expense)

Fiscal quarters ended

September 30, 2023

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Investment income (expense)

Nine fiscal months ended

September 30, 2023

October 1, 2022

March 30, 2024

April 1, 2023

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Other components of other periodic pension cost

Investment income (expense)

For the fiscal quarter ended September 30, 2023, our effective tax rate was 31.7%, as

compared to 28.5% and 22.4%

for the fiscal quarters ended July 1, 2023 and October 1, 2022, respectively.

For the nine fiscal months ended September 30, 2023, our effective tax rate was 29.3%,

as compared to 23.2% for the nine

fiscal months ended October 1, 2022.

For the fiscal quarter ended March 30, 2024,

our effective tax rate was 29.0%, as compared to 35.6% and 28.4% for the fiscal quarters ended December 31, 2023 and April 1, 2023, respectively.

that our effective tax rate will be higher than the U.S.

statutory rate, excluding unusual transactions.

During the nine fiscal months ended September 30, 2023, the liabilities for unrecognized tax benefits decreased by $4.5 million on a net basis, primarily

due to decreases for settlements, partially offset by increases for current accruals and interest.

During the three fiscal months ended March 30, 2024, the liabilities

for unrecognized tax benefits did not materially change.

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

Accordingly, the consolidated income tax rate

is a composite rate reflecting our earnings and the applicable tax rates in the various locations where we operate.

Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to

countries where we can take advantage of lower labor costs and available tax and other government-sponsored incentives.

Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various

locations where we operate.

Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to countries where we can take advantage of lower labor costs and available tax and other

government-sponsored incentives.

Additional information about income taxes is included in Note 4 to our consolidated condensed financial statements.

Financial Condition, Liquidity, and Capital Resources

Our financial condition as of September 30, 2023 continued to be strong.

Our financial condition as of March 30, 2024 continued to be strong.

Cash and short-term investments

1 unchanged sentence

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

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

available to fund our acquisition strategy, fund our Stockholder Return Policy, and to reduce debt levels.

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

See "Overview" above for "free cash" definition and reconciliation to GAAP.

Cash flows provided by operating activities were $359.4 million for

the nine fiscal months ended September 30, 2023, as compared to cash flows provided by operations of $317.8 million for the nine fiscal months ended October 1, 2022.

Cash flows provided by operating activities were $80.2 million

for the three fiscal months ended March 30, 2024, as compared to cash flows provided by operations of $129.9 million for the three fiscal months ended April 1, 2023.

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle.

The following table presents the components of our

cash conversion cycle:

cash conversion cycle during the five fiscal quarters beginning with the first fiscal quarter of 2023 through the first fiscal quarter of 2024:

Fiscal quarters ended

September 30, 2023

October 1, 2022

1st Quarter 2023

2nd Quarter 2023

3rd Quarter 2023

4th Quarter 2023

1st Quarter 2024

Days sales outstanding ("DSO") (a)

Days inventory outstanding ("DIO") (b)

Days inventory outstanding (b)

Days payable outstanding ("DPO") (c)

9 unchanged sentences

by dividing the average accounts payable by the average cost of goods sold per day for the respective fiscal quarter.

Cash paid for property and equipment for the nine

fiscal months ended September 30, 2023 was $184.1 million, as compared to $172.2 million for the nine fiscal months ended October 1, 2022.

To be well positioned to service our customers and to fully participate in growing markets, we intend to increase our capital expenditures for expansion in the mid-term.

We expect to invest approximately $350 million in 2023 and approximately $1.2

billion over the next three years primarily for capital expansion projects outside of China.

Free cash flow for the nine fiscal months ended September 30, 2023 increased versus the nine fiscal months ended October 1, 2022 primarily due to a smaller increase in working capital.

We expect our

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

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

environment worsens.

Cash paid for property and equipment for the three

fiscal months ended March 30, 2024 was $53.1

million, as compared to $45.6 million for the three fiscal months ended April 1, 2023.

To be well positioned to service our customers and to

fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term.

To increase our internal capacity, we plan to invest approximately $435 million in 2024,

as part of our plan to invest approximately $1.4 billion in total capital expenditures for the period 2023 to 2025 and $2.6 billion for the period 2023 to 2028.

Free cash flow for the three fiscal months ended March 30, 2024 decreased versus the three fiscal months ended April 1, 2023 primarily due to decreased net earnings.

We expect that free cash flow will

be negatively impacted by the expected high level of capital expenditures for expansion in 2023 - 2025 after which we expect to generate increasingly higher levels of free cash.

There is no assurance, however, that we will be able to continue to

generate cash flows from operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.

In 2022, our 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.

See “Stockholder

Value” above for additional information.

The following table summarizes the components of net cash and short-term investments (debt) at September 30, 2023 and December 31, 2022 (in thousands) :

September 30, 2023

“Stockholder Return Policy” above for additional information.

The following table summarizes the components of net cash and short-term investments (debt) at March 30, 2024 and December 31, 2023 (in thousands) :

March 30, 2024

December 31, 2023

13 unchanged sentences

classify as short-term investments on our consolidated balance sheets.

As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation of

net cash and short-term investments (debt).

As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation

of net cash and short-term investments (debt).

The interest rates on our short-term investments vary by location.

1 unchanged sentence

consolidated condensed statements of cash flows.

We aligned the maturity dates of our cash equivalents and short-terms investments in preparation of a planned cash repatriation that resulted in a decrease in our short-term investment balance.

As of September 30, 2023, 94% of our cash

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

As of March 30, 2024, 89% of our cash and

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

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

company, Vishay Intertechnology, Inc.

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

subsidiaries also have cash operating needs.

The distribution of earnings from Israel and Germany to the United States will be used, in part, to fund our Stockholder Return Policy.

We expect that cash

on-hand and cash flows from operations will be sufficient to meet our longer-term financing needs related to normal operating requirements, regular dividend payments, share repurchases pursuant to our Stockholder Return Policy, and our research and

development and capital expenditure plans.

Our substantially undrawn credit facility provides us with significant operating liquidity in the United States.

On May 8, 2023, we amended and restated our $750 million revolving credit agreement, which replaced our credit agreement that was scheduled to mature in

The amendment and restatement extended the maturity date of the revolving credit agreement until May 8, 2028.

The maximum amount available on the revolving credit facility is restricted by the financial covenants described below.

The credit facility also provides

us the ability to request up to $300 million of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or

incremental equivalent debt.

We had $42 million outstanding on our revolving credit facility at December 31, 2022 and no amount outstanding at September 30, 2023.

We borrowed $501

million and repaid $543 million on the revolving credit facility during the nine fiscal months ended September 30, 2023.

The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $124.4 million and the

highest amount outstanding on our revolving credit facility at a fiscal month end was $185 million during the nine fiscal months ended September 30, 2023.

We used $185 million of the net proceeds from the convertible senior notes due 2030 to repay

amounts outstanding on the revolving credit facility in the third fiscal quarter of 2023.

The amendment and restatement of the facility replaced the leverage ratio used for compliance measurement with a net leverage ratio, reducing the measure

of outstanding debt by up to $250 million of unrestricted cash.

Measurements prior to the amendment and restatement were based on a total leverage ratio.

Pursuant to the amended and restated credit facility, the financial maintenance covenants include (a) an interest coverage ratio of not less than 2.00 to

and (b) a net leverage ratio of not more than 3.25 to 1 (and a pro forma ratio of 3.00 to 1 on the date of incurrence of additional debt).

The computation of these ratios is prescribed in Article VI of the Credit Agreement between Vishay

Intertechnology, Inc.

distribution of earnings from Israel and Germany to the United States was used to fund the Nexperia transaction and will also be used to fund our Stockholder Return Policy.

We expect that cash on-hand and cash flows from operations will be

sufficient to meet our longer-term financing needs related to normal operating requirements, regular dividend payments, share repurchases pursuant to our Stockholder Return Policy, and our research and development and capital expenditure plans.

substantially undrawn credit facility provides us with significant operating liquidity in the United States.

We maintain a $750 million revolving credit agreement that matures on May 8, 2028.

The maximum amount available on the revolving credit facility is

restricted by the financial covenants described below.

The credit facility also provides us the ability to request up to $300 million of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of

additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

We had no amount outstanding on our revolving credit facility at December 31, 2023 and March 30, 2024.

We expect to use the revolving credit facility

from time-to-time to meet short-term financing needs.

Pursuant to the credit facility, the financial maintenance covenants include (a) an interest coverage ratio of not less than 2.00 to 1;

and (b) a net

leverage ratio of not more than 3.25 to 1 (and a pro forma ratio of 3.00 to 1 on the date of incurrence of additional debt).

Net leverage ratio reduces the measure of outstanding debt by up to $250 million of unrestricted cash.

The computation of

these ratios is prescribed in Article VI of the Credit Agreement between Vishay Intertechnology, Inc.

and JPMorgan Chase Bank, N.A., which was filed with the SEC as Exhibit 10.1 to our current report on Form 8-K filed May 8, 2023.

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

investments and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50

We were in compliance with all financial covenants under the credit facility at September 30, 2023.

Our interest coverage ratio and net leverage ratio

were 20.55 to 1 and 0.80 to 1, respectively.

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

and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50 to 1.00).

We were in compliance with all financial covenants under the credit facility at March 30, 2024.

Our interest coverage ratio and net leverage ratio were

11.78 to 1 and 0.99 to 1, respectively.

We expect to continue to be in compliance with these covenants based on current projections.

3 unchanged sentences

credit facility is accelerated.

The maturity date of the amended and restated credit facility will accelerate if within ninety-one days prior to the maturity of our 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.

The repurchase of $370.2 million principal amount of convertible senior notes due 2025 in the third fiscal quarter of 2023 reduces the risk that the

maturity date of the amended and restated credit facility will accelerate.

Prior to the amendment and restatement, borrowings under the credit facility bore interest at LIBOR plus an interest margin.

The applicable interest

margin is based on our total leverage ratio.

The maturity date of the credit facility will accelerate if within ninety-one days prior to the maturity of our convertible senior notes due 2025, the outstanding principal amount of such notes exceeds a defined

liquidity measure as set forth in the credit facility.

The repurchase of $370.2 million principal amount of convertible senior notes due 2025 in 2023 reduces the risk that the maturity date of the credit facility will accelerate.

Borrowings under the credit facility bear interest at variable reference rates plus an interest margin.

The applicable interest margin is based on our

total leverage ratio.

We also pay a commitment fee, also based on our total leverage ratio, on undrawn amounts.

The amended and restated credit facility replaced the LIBOR-based interest rate and related LIBOR-based mechanics

applicable to U.S.

dollar borrowings under the revolving credit agreement with an interest rate based on SOFR (including a customary spread adjustment) and related SOFR-based mechanics.

Borrowings in foreign currency bear interest at a local

reference rate plus an interest margin.

Based on our current total leverage ratio of 1.14 to 1, any new borrowings will bear interest at SOFR plus 1.60% (including the applicable credit spread), and the undrawn commitment fee is 0.25% per annum.

dollar borrowings under the credit facility are based on SOFR (including a customary spread adjustment).

Borrowings in foreign

currencies bear interest at currency-specific reference rates plus an interest margin.

Based on our current total leverage ratio of 1.41 to 1, any new U.S.

dollar borrowings will bear interest at SOFR plus 1.60% (including the applicable credit

spread), and the undrawn commitment fee is 0.25% per annum.

The borrowings under the credit facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and

equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United

States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain subsidiaries;

United States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain subsidiaries;

and are guaranteed by certain significant subsidiaries.

We expect, at least initially, to fund certain future obligations required to be paid by the U.S.

parent company by borrowing under our revolving credit

parent company by borrowing under our credit

We also expect to continue to use the credit facility from time-to-time to meet certain short-term financing needs.

Additional acquisition activity, convertible debt repurchases, or conversion of our convertible debt instruments may require

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

Additional acquisition activity, convertible debt repurchases, or conversion of our convertible debt instruments may

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

No principal payments on our debt are due before 2025.

On September 12, 2023, we issued $750 million convertible senior notes due 2030.

We used the net proceeds from the issuance of these notes to repurchase

$370.2 million principal amount of convertible senior notes due 2025, to pay $94.2 million to enter into capped call transactions intended to mitigate the dilution risk of convertible senior notes due 2030 by synthetically increasing the conversion

price of the notes to approximately $43.98 per share, to repay amounts outstanding on our amended and restated credit facility, and for other general corporate purposes.

Prior to six months before the maturity date, our convertible senior notes due 2030 are convertible by the holders under certain circumstances.

convertible senior notes due 2030 are not convertible as of September 30, 2023 and will not be contingently convertible before the first fiscal quarter of 2024.

Pursuant to the indenture governing the convertible senior notes due 2030, we will

cash-settle the principal amount of $1,000 per note and settle any additional amounts in cash or shares of our common stock.

We intend to finance the principal amount of any converted senior notes due 2030 using borrowings under our credit facility.

The transactions effectively refinanced the majority of the convertible senior notes due 2025 for five additional years at the same coupon interest rate,

reduced future interest expense due to the paydown of the revolving credit facility, and enhanced our U.S.

liquidity position to execute our growth initiatives.

The remaining convertible senior notes due 2025 are not currently convertible.

Pursuant to the indenture governing the convertible senior notes due 2025 and

the amendments thereto incorporated in the Supplemental Indenture dated December 23, 2020, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in shares of our common stock.

We intend to finance the principal

amount of any converted notes using borrowings under our credit facility.

The convertible senior notes due 2025 and due 2030 are not currently convertible.

Pursuant to the indenture governing the convertible senior notes

due 2030, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in cash or shares of our common stock.

Pursuant to the indenture governing the convertible senior notes due 2025 and the amendments thereto

incorporated in the Supplemental Indenture dated December 23, 2020, we will cash-settle the principal amount of $1,000 per note and settle any additional amounts in shares of our common stock.

We intend to finance the principal amount of any

converted notes using borrowings under our credit facility.

No conversions have occurred to date.

2 unchanged sentences

contain “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,”

“should,” or other similar words or expressions often identify forward-looking statements.

Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should,”

or other similar words or expressions often identify forward-looking statements.

Such statements are based on current expectations only, and are subject to

6 unchanged sentences

delays or difficulties in expanding our manufacturing capacities;

manufacturing or supply chain interruptions or changes in customer demand because of COVID-19 or otherwise (including due to political, economic, and health

instability and military conflicts and hostilities);

manufacturing or supply chain interruptions or changes in customer demand (including due to political, economic, and health instability and military conflicts and

hostilities);

an inability to attract and retain highly qualified personnel;

changes in foreign currency exchange rates;

related to the effects of changes in foreign currency exchange rates;

uncertainty related to the effects of changes in

foreign currency exchange rates;

competition and technological changes in our industries;

difficulties in new product development;

difficulties in identifying suitable acquisition candidates, consummating a

transaction on terms which we consider acceptable, and integration and performance of acquired businesses;

difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider

acceptable, and integration and performance of acquired businesses;

changes in applicable domestic and foreign tax regulations and uncertainty regarding the same;

changes in U.S.

and foreign trade regulations

and tariffs and uncertainty regarding the same;

changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with the SEC,

including our annual reports on Form 10-K and our quarterly reports on Form 10-Q.

and foreign trade regulations and tariffs and uncertainty regarding the

changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with the SEC, including our annual reports on Form 10-K

and our quarterly reports on Form 10-Q.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

1 unchanged sentence

We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995.

Readers can find them in Part I, Item 1A, of that filing under the heading “Risk Factors.” You should understand that it is not

possible to predict or identify all such factors.

Readers can find them in Part I, Item 1A, of that filing under the heading “Risk Factors.” You should understand that it is not possible

to predict or identify all such factors.

Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis