VISHAY INTERTECHNOLOGY INC 10-Q

Item 1. Financial Statements VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (Unaudited - In thousands) June 29, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 672,731 $ 972,719 Short-term investments 15,320 35,808 Accounts receivable, net 424,512 426,674 Inventories: Finished goods 172,353 167,083 Work in process 280,490 267,339 Raw materials 218,480 213,098 Total inventories 671,323 647,520 Prepaid expenses and other current assets 213,331 214,443 Total current assets 1,997,217 2,297,164 Property and equipment, at cost: Land 84,036 77,006 Buildings and improvements 752,194 719,387 Machinery and equipment 3,226,301 3,053,868 Construction in progress 283,024 290,593 Allowance for depreciation ( 2,888,004 ) ( 2,846,208 ) Property and equipment, net 1,457,551 1,294,646 Right of use assets 124,878 126,829 Deferred income taxes 135,752 137,394 Goodwill 250,580 201,416 Other intangible assets, net 86,895 72,333 Other assets 99,828 110,141 Total assets $ 4,152,701 $ 4,239,923 Continues on following page. 4 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (continued) (Unaudited - In thousands) June 29, 2024 December 31, 2023 Liabilities and equity Current liabilities: Trade accounts payable $ 198,527 $ 191,002 Payroll and related expenses 152,423 161,940 Lease liabilities 27,502 26,485 Other accrued expenses 241,961 239,350 Income taxes 49,546 73,098 Total current liabilities 669,959 691,875 Long-term debt less current portion 820,622 818,188 U.S. transition tax payable - 47,027 Deferred income taxes 108,886 95,776 Long-term lease liabilities 98,907 102,830 Other liabilities 85,306 87,918 Accrued pension and other postretirement costs 187,575 195,503 Total liabilities 1,971,255 2,039,117 Equity: Vishay stockholders' equity Common stock 13,358 13,319 Class B convertible common stock 1,210 1,210 Capital in excess of par value 1,296,721 1,291,499 Retained earnings 1,068,351 1,041,372 Treasury stock (at cost) ( 186,816 ) ( 161,656 ) Accumulated other comprehensive income (loss) ( 16,969 ) 10,337 Total Vishay stockholders' equity 2,175,855 2,196,081 Noncontrolling interests 5,591 4,725 Total equity 2,181,446 2,200,806 Total liabilities and equity $ 4,152,701 $ 4,239,923 See accompanying notes. 5 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Fiscal quarters ended June 29, 2024 July 1, 2023 Net revenues $ 741,239 $ 892,110 Costs of products sold 578,369 634,637 Gross profit 162,870 257,473 Selling, general, and administrative expenses 124,953 122,857 Operating income 37,917 134,616 Other income (expense): Interest expense ( 6,657 ) ( 6,404 ) Other 5,011 5,257 Total other income (expense) ( 1,646 ) ( 1,147 ) Income before taxes 36,271 133,469 Income tax expense 12,391 38,054 Net earnings 23,880 95,415 Less: net earnings attributable to noncontrolling interests 347 377 Net earnings attributable to Vishay stockholders $ 23,533 $ 95,038 Basic earnings per share attributable to Vishay stockholders $ 0.17 $ 0.68 Diluted earnings per share attributable to Vishay stockholders $ 0.17 $ 0.68 Weighted average shares outstanding - basic 137,326 139,764 Weighted average shares outstanding - diluted 138,084 140,478 Cash dividends per share $ 0.10 $ 0.10 See accompanying notes. 6 VISHAY INTERTECHNOLOGY, INC. Consolidated Statements of Comprehensive Income (Unaudited - In thousands) Fiscal quarters ended June 29, 2024 July 1, 2023 Net earnings $ 23,880 $ 95,415 Other comprehensive income (loss), net of tax Pension and other post-retirement actuarial items 388 148 Foreign currency translation adjustment ( 7,672 ) 3,475 Other comprehensive income (loss) ( 7,284 ) 3,623 Comprehensive income 16,596 99,038 Less: comprehensive income attributable to noncontrolling interests 347 377 Comprehensive income attributable to Vishay stockholders $ 16,249 $ 98,661 See accompanying notes. 7 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Operations (Unaudited - In thousands, except per share amounts) Six fiscal months ended June 29, 2024 July 1, 2023 Net revenues $ 1,487,518 $ 1,763,156 Costs of products sold 1,154,241 1,226,970 Gross profit 333,277 536,186 Selling, general, and administrative expenses 252,689 243,002 Operating income 80,588 293,184 Other income (expense): Interest expense ( 13,153 ) ( 11,524 ) Other 13,098 8,586 Total other income (expense) ( 55 ) ( 2,938 ) Income before taxes 80,533 290,246 Income tax expense 25,210 82,642 Net earnings 55,323 207,604 Less: net earnings attributable to noncontrolling interests 866 785 Net earnings attributable to Vishay stockholders $ 54,457 $ 206,819 Basic earnings per share attributable to Vishay stockholders $ 0.40 $ 1.48 Diluted earnings per share attributable to Vishay stockholders $ 0.39 $ 1.47 Weighted average shares outstanding - basic 137,525 140,201 Weighted average shares outstanding - diluted 138,279 140,865 Cash dividends per share $ 0.20 $ 0.20 See accompanying notes. 8 VISHAY INTERTECHNOLOGY, INC. Consolidated Statements of Comprehensive Income (Unaudited - In thousands) Six fiscal months ended June 29, 2024 July 1, 2023 Net earnings $ 55,323 $ 207,604 Other comprehensive income (loss), net of tax Pension and other post-retirement actuarial items ( 1,808 ) 284 Foreign currency translation adjustment ( 25,498 ) 23,198 Other comprehensive income (loss) ( 27,306 ) 23,482 Comprehensive income 28,017 231,086 Less: comprehensive income attributable to noncontrolling interests 866 785 Comprehensive income attributable to Vishay stockholders $ 27,151 $ 230,301 See accompanying notes. 9 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Six fiscal months ended June 29, 2024 July 1, 2023 Operating activities Net earnings $ 55,323 $ 207,604 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 101,677 87,694 Gain on disposal of property and equipment ( 1,091 ) ( 495 ) Inventory write-offs for obsolescence 19,051 18,023 Deferred income taxes 5,589 16,166 Stock compensation expense 9,293 6,082 Other ( 632 ) ( 811 ) Change in U.S. transition tax liability ( 37,622 ) ( 27,670 ) Change in repatriation tax liability ( 15,000 ) - Net change in operating assets and liabilities ( 81,107 ) ( 69,461 ) Net cash provided by operating activities 55,481 237,132 Investing activities Capital expenditures ( 115,648 ) ( 117,250 ) Proceeds from sale of property and equipment 1,265 1,013 Purchase of businesses, net of cash acquired ( 200,185 ) ( 5,003 ) Purchase of short-term investments ( 59,638 ) ( 41 ) Maturity of short-term investments 80,110 293,282 Other investing activities ( 1,220 ) ( 892 ) Net cash provided by (used in) investing activities ( 295,316 ) 171,109 Financing activities Net proceeds on revolving credit facility - 143,000 Debt issuance costs - ( 6,120 ) Dividends paid to common stockholders ( 25,033 ) ( 25,538 ) Dividends paid to Class B common stockholders ( 2,419 ) ( 2,419 ) Repurchase of common stock held in treasury ( 25,160 ) ( 40,399 ) Distributions to noncontrolling interests - ( 867 ) Cash withholding taxes paid when shares withheld for vested equity awards ( 4,058 ) ( 3,653 ) Net cash provided by (used in) financing activities ( 56,670 ) 64,004 Effect of exchange rate changes on cash and cash equivalents ( 3,483 ) 6,350 Net increase (decrease) in cash and cash equivalents ( 299,988 ) 478,595 Cash and cash equivalents at beginning of period 972,719 610,825 Cash and cash equivalents at end of period $ 672,731 $ 1,089,420 See accompanying notes. 10 VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Statements of Equity (Unaudited - In thousands, except share and per share amounts) Common Stock Class B Convertible Common Stock Capital in Excess of Par Value Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Vishay Stockholders' Equity Noncontrolling Interests Total Equity Balance at December 31, 2022 $ 13,291 $ 1,210 $ 1,352,321 $ 773,228 $ ( 82,972 ) $ ( 10,827 ) $ 2,046,251 $ 3,899 $ 2,050,150 Net earnings - - - 111,781 - - 111,781 408 112,189 Other comprehensive income (loss) - - - - - 19,859 19,859 - 19,859 Issuance of stock and related tax withholdings for vested restricted stock units ( 254,513 shares) 25 - ( 3,678 ) - - - ( 3,653 ) - ( 3,653 ) Dividends declared ($ 0.10 per share) - - 14 ( 14,034 ) - - ( 14,020 ) - ( 14,020 ) Stock compensation expense - - 2,965 - - - 2,965 - 2,965 Repurchase of common stock held in treasury ( 916,221 shares) - - - - ( 20,173 ) - ( 20,173 ) - ( 20,173 ) Balance at April 1, 2023 $ 13,316 $ 1,210 $ 1,351,622 $ 870,975 $ ( 103,145 ) $ 9,032 $ 2,143,010 $ 4,307 $ 2,147,317 Net earnings - - - 95,038 - - 95,038 377 95,415 Other comprehensive income (loss) - - - - - 3,623 3,623 - 3,623 Distributions to noncontrolling interests - - - - - - - ( 867 ) ( 867 ) Dividends declared ($ 0.10 per share) - - 14 ( 13,951 ) - - ( 13,937 ) - ( 13,937 ) Stock compensation expense - - 3,117 - - - 3,117 - 3,117 Repurchase of common stock held in treasury ( 847,202 shares) - - - - ( 20,226 ) - ( 20,226 ) - ( 20,226 ) Balance at July 1, 2023 $ 13,316 $ 1,210 $ 1,354,753 $ 952,062 $ ( 123,371 ) $ 12,655 $ 2,210,625 $ 3,817 $ 2,214,442 Balance at December 31, 2023 $ 13,319 $ 1,210 $ 1,291,499 $ 1,041,372 $ ( 161,656 ) $ 10,337 $ 2,196,081 $ 4,725 $ 2,200,806 Net earnings - - - 30,924 - - 30,924 519 31,443 Other comprehensive income (loss) - - - - - ( 20,022 ) ( 20,022 ) - ( 20,022 ) Issuance of stock and related tax withholdings for vested restricted stock units ( 371,055 shares) 38 - ( 4,091 ) - - - ( 4,053 ) - ( 4,053 ) Dividends declared ($ 0.10 per share) - - 13 ( 13,765 ) - - ( 13,752 ) - ( 13,752 ) Stock compensation expense - - 5,344 - - - 5,344 - 5,344 Repurchase of common stock held in treasury ( 565,420 shares) - - - - ( 12,538 ) - ( 12,538 ) - ( 12,538 ) Balance at March 30, 2024 $ 13,357 $ 1,210 $ 1,292,765 $ 1,058,531 $ ( 174,194 ) $ ( 9,685 ) $ 2,181,984 $ 5,244 $ 2,187,228 Net earnings - - - 23,533 - - 23,533 347 23,880 Other comprehensive income (loss) - - - - - ( 7,284 ) ( 7,284 ) - ( 7,284 ) Issuance of stock and related tax withholdings for vested restricted stock units and phantom stock units ( 19,809 shares) 1 - ( 6 ) - - - ( 5 ) - ( 5 ) Dividends declared ($ 0.10 per share) - - 13 ( 13,713 ) - - ( 13,700 ) - ( 13,700 ) Stock compensation expense - - 3,949 - - - 3,949 - 3,949 Repurchase of common stock held in treasury ( 554,587 shares) - - - - ( 12,622 ) - ( 12,622 ) - ( 12,622 ) Balance at June 29, 2024 $ 13,358 $ 1,210 $ 1,296,721 $ 1,068,351 $ ( 186,816 ) $ ( 16,969 ) $ 2,175,855 $ 5,591 $ 2,181,446 See accompanying notes. 11 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 1 – Basis of Presentation The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. (“Vishay” or the “Company”) have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the fiscal quarter and six fiscal months ended June 29, 2024 are not necessarily indicative of the results to be expected for the full year. The Company reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first fiscal quarter, which always begins on January 1, and the fourth fiscal quarter, which always ends on December 31. The four fiscal quarters in 2024 end on March 30, 2024, June 29, 2024, September 28, 2024, and December 31, 2024, respectively. The four fiscal quarters in 2023 ended on April 1, 2023, July 1, 2023, September 30, 2023, and December 31, 2023, respectively. Reclassifications Certain prior period amounts have been reclassified to conform to the current financial statement presentation. Note 2 – Acquisition Activities As part of its growth strategy, the Company seeks to expand through targeted acquisitions of other manufacturers of electronic components. These acquisition targets include businesses that have established positions in major markets, reputations for product quality and reliability, and product lines with which the Company has substantial marketing and technical expertise. It also includes certain businesses that possess technologies which the Company expects to further develop and commercialize. Newport wafer fab On March 5, 2024 , the Company acquired Nexperia’s wafer fabrication facility and operations located in Newport, South Wales, U.K. for $ 177,457 in cash, net of cash acquired. The transaction included contingent payments of up to $ 15,000 , held in escrow pending receipt of an export license. 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. See Note 13 for further discussion on the fair value measurement of the contingent consideration liability. The transaction was funded by Vishay with cash on-hand. To effect the transaction, Vishay acquired a 100 % interest in the legal entity Neptune 6 Limited , and its wholly-owned operating subsidiary, Nexperia Newport Limited, which owns and operates the Newport facility. Neptune 6 Limited was renamed "Vishay UK Holdings Limited," and Nexperia Newport Limited was renamed "Vishay Newport Limited." Based on an estimate of fair values, the Company allocated the purchase price of the acquisition as follows: Net working deficit (excluding cash and cash equivalents) $ ( 339 ) Property and equipment 153,597 Customer relationships 4,000 Other, net 1,315 Deferred taxes, net ( 18,908 ) Total identified assets and liabilities 139,665 Purchase price, net of cash acquired 177,457 Goodwill $ 37,792 The acquired assets and liabilities are included in the MOSFETs segment. The weighted average useful lives for customer relationships is 3 years. The goodwill associated with this transaction is not deductible for income tax purposes. The preliminary purchase price allocation is pending finalization of appraisals for property and equipment and intangible assets. There can be no assurance that the estimated amounts recorded represent the final purchase price allocation. 12 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) The Company recognized $ 2,984 of acquisition costs classified as a component of selling, general, and administrative expenses. These costs were recognized in the third and fourth fiscal quarters of 2023 and first fiscal quarter of 2024. The results and operations of this acquisition have been included in the MOSFETs segment since March 5, 2024. The inclusion of this acquisition did not have material impact on the MOSFETs segment's or the Company's consolidated results. Ametherm, Inc. On June 5, 2024 , the Company acquired all of the outstanding equity interests of Ametherm, Inc. , a Carson City, Nevada-based manufacturer of inrush current limiting solutions and power thermistors, for $ 31,478 in cash, net of cash acquired. Based on a preliminary estimate of fair values, the Company allocated $ 17,000 of the purchase price to definite-lived intangible assets. After allocating the purchase price to assets acquired and liabilities assumed based on an estimation of their fair values at the date of acquisition, the Company recorded goodwill of $ 11,710 related to this acquisition. The goodwill related to this acquisition is included in the Resistors reporting unit for goodwill impairment testing. The results and operations of this acquisition have been included in the Resistors segment since June 5, 2024. MaxPower Semiconductor, Inc. In October 2022, the Company acquired all of the outstanding equity interests of MaxPower Semiconductor, Inc. , ("MaxPower"). The Company paid cash of $ 50,000 , net of cash acquired, at closing. The transaction also included possible contingent payments of up to $ 57,500 , which would be payable upon the achievement of certain technology milestones, upon favorable resolution of certain technology licensing matters with a third party, and upon the disposition of MaxPower's investment in an equity affiliate. As of June 29, 2024, the contingent payments upon favorable resolution of certain technology licensing matters with a third party and upon the disposition of MaxPower's investment in an equity affiliate have been resolved. Additionally, $ 2,500 has been paid upon the achievement of the first technology milestone. The Company's estimate of the maximum possible contingent payments remaining is now $ 15,000 . See Note 13 for further discussion on the fair value measurement of the contingent consideration liability. 13 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 3 – Leases The net right of use assets and lease liabilities recognized on the consolidated condensed balance sheets for the Company's operating leases were as follows: June 29, 2024 December 31, 2023 Right of use assets Operating Leases Buildings and improvements $ 116,371 $ 121,578 Machinery and equipment 8,507 5,251 Total $ 124,878 $ 126,829 Current lease liabilities Operating Leases Buildings and improvements $ 23,314 $ 23,647 Machinery and equipment 4,188 2,838 Total $ 27,502 $ 26,485 Long-term lease liabilities Operating Leases Buildings and improvements $ 94,654 $ 100,489 Machinery and equipment 4,253 2,341 Total $ 98,907 $ 102,830 Total lease liabilities $ 126,409 $ 129,315 Lease expense is classified in the statements of operations based on asset use. Total lease cost recognized on the consolidated condensed statements of operations is as follows: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Lease expense Operating lease expense $ 7,466 $ 6,887 $ 14,759 $ 13,768 Short-term lease expense 220 252 476 508 Variable lease expense 148 159 362 311 Total lease expense $ 7,834 $ 7,298 $ 15,597 $ 14,587 The Company paid $ 14,801 and $ 13,966 for its operating leases in the six fiscal months ended June 29, 2024 and July 1, 2023, respectively, which are included in operating cash flows on the consolidated condensed statements of cash flows. The weighted-average remaining lease term for the Company's operating leases is 8.8 years and the weighted-average discount rate is 6.5 % as of June 29, 2024. The undiscounted future lease payments for the Company's operating lease liabilities are as follows: June 29, 2024 2024 (excluding the six fiscal months ended June 29, 2024) $ 14,880 2025 26,987 2026 22,722 2027 18,448 2028 15,643 Thereafter 69,738 The undiscounted future lease payments presented in the table above include payments through the term of the lease, which may include periods beyond the noncancellable term. The difference between the total payments above and the lease liability balance is due to the discount rate used to calculate lease liabilities. 14 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 4 – Income Taxes The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended June 29, 2024 and July 1, 2023 reflect the Company’s expected tax rate on reported income before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates. In December 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax (“Pillar Two”). Various jurisdictions around the world have passed, or are in the process of passing, legislation to enact Pillar Two and certain Pillar Two rules take effect in 2024 and 2025 in those jurisdictions. The United States has not adopted Pillar Two. The Company is continuing to monitor the impacts of Pillar Two on its operations and does not anticipate a material increase in income tax expense associated with jurisdictions that have implemented an income inclusion rule. The Company is continuing to monitor and assess the impacts of Pillar Two rules set to take effect in 2025, such as the under-taxed profits rule. The Company repatriated $ 120,000 of accumulated earnings to the United States in the second fiscal quarter of 2024 and paid withholding taxes, in Israel, of $ 15,000 . The withholding tax expense for the repatriation was recorded in prior years. During the six fiscal months ended June 29, 2024, the liabilities for unrecognized tax benefits decreased $ 729 on a net basis, primarily due to statute expirations, partially offset by accruals for the current period. Note 5 – Long-Term Debt Long-term debt consists of the following: June 29, 2024 December 31, 2023 Credit facility $ - $ - Convertible senior notes, due 2025 95,102 95,102 Convertible senior notes, due 2030 750,000 750,000 Deferred financing costs ( 24,480 ) ( 26,914 ) 820,622 818,188 Less current portion - - $ 820,622 $ 818,188 The following table summarizes some key facts and terms regarding the outstanding convertible senior notes as of June 29, 2024: 2025 Notes 2030 Notes Issuance date June 12, 2018 September 12, 2023 Maturity date June 15, 2025 * September 15, 2030 Principal amount as of June 29, 2024 $ 95,102 $ 750,000 Cash coupon rate (per annum) 2.25 % 2.25 % Conversion rate (per $1 principal amount) 32.1684 33.1609 Effective conversion price (per share) $ 31.09 $ 30.16 130% of the current effective conversion price (per share) $ 40.42 $ 39.21 *As the Company has the intent and ability to refinance its convertible senior notes due 2025 (the "2025 Notes") upon maturity using its revolving credit facility, the 2025 Notes remain classified as long-term liabilities. Deferred financing costs are recognized as non-cash interest expense. Non-cash interest expense was $ 1,213 and $ 2,426 for the fiscal quarter and six fiscal months ended June 29, 2024, respectively, and $ 820 and $ 1,638 for the fiscal quarter and six fiscal months ended July 1, 2023, respectively. 15 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 6 – Stockholders' Equity In 2022, the Company's Board of Directors adopted a Stockholder Return Policy that will remain in effect until such time as the Board votes to amend or rescind the policy. The Stockholder Return Policy calls for the Company to return a prescribed amount of cash flows on an annual basis. The Company intends to return such amounts directly, in the form of dividends, or indirectly, in the form of stock repurchases. The following table summarizes activity pursuant to this policy: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Dividends paid to stockholders $ 13,700 $ 13,937 $ 27,452 $ 27,957 Stock repurchases 12,622 20,226 25,160 40,399 Total $ 26,322 $ 34,163 $ 52,612 $ 68,356 The repurchased shares are being held as treasury stock. The number of shares of common stock being held as treasury stock was 8,655,888 and 7,535,881 as of June 29, 2024 and December 31, 2023, respectively. Note 7 – Revenue Recognition Sales returns and allowances accrual activity is shown below: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Beginning balance $ 48,748 $ 38,280 $ 47,760 $ 46,979 Sales allowances 20,955 26,297 46,231 52,134 Credits issued ( 25,103 ) ( 16,853 ) ( 49,187 ) ( 50,128 ) Foreign currency ( 107 ) 1,626 ( 311 ) 365 Ending balance $ 44,493 $ 49,350 $ 44,493 $ 49,350 Note 8 – Accumulated Other Comprehensive Income (Loss) The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows: Pension and other post- retirement actuarial items Currency translation adjustment Total Balance at January 1, 2024 $ ( 14,599 ) $ 24,936 $ 10,337 Other comprehensive income (loss) before reclassifications ( 2,574 ) ( 25,498 ) $ ( 28,072 ) Tax effect - - $ - Other comprehensive income before reclassifications, net of tax ( 2,574 ) ( 25,498 ) $ ( 28,072 ) Amounts reclassified out of AOCI 967 - $ 967 Tax effect ( 201 ) - $ ( 201 ) Amounts reclassified out of AOCI, net of tax 766 - $ 766 Net other comprehensive income (loss) $ ( 1,808 ) $ ( 25,498 ) $ ( 27,306 ) Balance at June 29, 2024 $ ( 16,407 ) $ ( 562 ) $ ( 16,969 ) Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. See Note 9 for further information. 16 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 9 – Pensions and Other Postretirement Benefits The Company maintains various retirement benefit plans. The service cost component of net periodic pension cost is classified in costs of products sold or selling, general, and administrative expenses on the consolidated condensed statements of operations based on the respective employee's function. The other components of net periodic pension cost are classified as other expense on the consolidated condensed statements of operations. Defined Benefit Pension Plans The following table shows the components of the net periodic pension cost for the second fiscal quarters of 2024 and 2023 for the Company’s defined benefit pension plans: Fiscal quarter ended June 29, 2024 Fiscal quarter ended July 1, 2023 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Net service cost $ - $ 776 $ - $ 723 Interest cost 382 1,664 500 1,711 Expected return on plan assets - ( 582 ) - ( 570 ) Amortization of prior service cost 17 57 36 56 Amortization of losses (gains) ( 109 ) 453 ( 30 ) 87 Curtailment and settlement losses - 101 - 106 Net periodic benefit cost $ 290 $ 2,469 $ 506 $ 2,113 The following table shows the components of the net periodic pension cost for the six fiscal months ended June 29, 2024 and July 1, 2023 for the Company’s defined benefit pension plans: Six fiscal months ended June 29, 2024 Six fiscal months ended July 1, 2023 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Net service cost $ - $ 1,566 $ - $ 1,447 Interest cost 763 3,350 999 3,406 Expected return on plan assets - ( 1,178 ) - ( 1,140 ) Amortization of prior service cost 33 114 72 111 Amortization of losses (gains) ( 217 ) 910 ( 60 ) 173 Curtailment and settlement losses - 206 - 213 Net periodic benefit cost $ 579 $ 4,968 $ 1,011 $ 4,210 17 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Other Postretirement Benefits The following table shows the components of the net periodic benefit cost for the second fiscal quarters of 2024 and 2023 for the Company’s other postretirement benefit plans: Fiscal quarter ended June 29, 2024 Fiscal quarter ended July 1, 2023 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Service cost $ 5 $ 60 $ 6 $ 34 Interest cost 52 61 56 31 Amortization of losses (gains) ( 60 ) 20 ( 81 ) 4 Net periodic benefit cost $ ( 3 ) $ 141 $ ( 19 ) $ 69 The following table shows the components of the net periodic pension cost for the six fiscal months ended June 29, 2024 and July 1, 2023 for the Company’s other postretirement benefit plans: Six fiscal months ended June 29, 2024 Six fiscal months ended July 1, 2023 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Service cost $ 10 $ 120 $ 11 $ 68 Interest cost 105 122 112 62 Amortization of losses (gains) ( 120 ) 41 ( 161 ) 7 Net periodic benefit cost $ ( 5 ) $ 283 $ ( 38 ) $ 137 18 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 10 – Stock-Based Compensation The following table summarizes stock-based compensation expense recognized: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Restricted stock units ("RSUs") $ 3,949 $ 3,117 $ 9,175 5,975 Phantom stock units - - 118 107 Total $ 3,949 $ 3,117 $ 9,293 6,082 The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at June 29, 2024 (amortization periods in years) : Unrecognized Compensation Cost Weighted Average Remaining Amortization Periods Restricted stock units $ 38,497 2.3 Phantom stock units - n/a Total $ 38,497 19 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Restricted Stock Units RSU activity under the Company's stock incentive programs as of June 29, 2024 and changes during the six fiscal months then ended are presented below (number of RSUs in thousands) : Number of RSUs Weighted Average Grant-date Fair Value per Unit Outstanding: January 1, 2024 1,717 $ 23.03 Granted* 1,638 20.47 Vested** ( 571 ) 23.02 Cancelled or forfeited ( 44 ) 23.88 Outstanding at June 29, 2024 2,740 $ 21.49 Expected to vest at June 29, 2024 2,467 * Employees in certain countries are granted equity-linked awards that will be settled in cash and are accounted for as liability awards. The liability awards are not material. The number of RSUs granted excludes these awards. ** The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements. The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance and market criteria between the established target and maximum levels. RSUs with performance-based and market-based vesting criteria are expected to vest as follows (number of RSUs in thousands) : Vesting Date Expected to Vest Not Expected to Vest Total January 1, 2025 168 - 168 January 1, 2026 95 72 167 January 1, 2027 400 201 601 March 1, 2029 175 - 175 Phantom Stock Units Phantom stock unit activity as of June 29, 2024 and changes during the six fiscal months then ended are presented below (number of phantom stock units in thousands) : Number of units Grant-date Fair Value per Unit Outstanding: January 1, 2024 120 Granted 5 $ 23.51 Dividend equivalents issued 1 Outstanding at June 29, 2024 126 20 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 11 – Segment Information The following tables set forth business segment information: MOSFETs Diodes Optoelectronic Components Resistors Inductors Capacitors Total Fiscal quarter ended June 29, 2024 : Net revenues $ 155,053 $ 146,265 $ 53,010 $ 179,498 $ 94,061 $ 113,352 $ 741,239 Segment Operating Income $ 1,834 $ 24,414 $ 8,693 $ 32,859 $ 24,547 $ 20,966 $ 113,313 Fiscal quarter ended July 1, 2023 : Net revenues $ 207,388 $ 174,735 $ 64,449 $ 222,433 $ 89,239 $ 133,866 $ 892,110 Segment Operating Income $ 56,772 $ 35,110 $ 10,749 $ 57,363 $ 27,585 $ 28,177 $ 215,756 Six fiscal months ended June 29, 2024 : Net revenues $ 308,226 $ 295,395 $ 102,209 $ 367,694 $ 182,712 $ 231,282 $ 1,487,518 Segment Operating Income $ 9,881 $ 50,425 $ 10,186 $ 71,032 $ 47,728 $ 47,495 $ 236,747 Six fiscal months ended July 1, 2023 : Net revenues $ 405,569 $ 350,428 $ 124,852 $ 445,573 $ 169,577 $ 267,157 $ 1,763,156 Segment Operating Income $ 114,789 $ 77,796 $ 28,049 $ 124,062 $ 48,564 $ 61,173 $ 454,433 Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Reconciliation: Segment Operating Income $ 113,313 $ 215,756 $ 236,747 $ 454,433 Unallocated Selling, General, and Administrative Expenses ( 75,396 ) ( 81,140 ) ( 156,159 ) ( 161,249 ) Consolidated Operating Income $ 37,917 $ 134,616 $ 80,588 $ 293,184 Unallocated Other Income (Expense) ( 1,646 ) ( 1,147 ) ( 55 ) ( 2,938 ) Consolidated Income Before Taxes $ 36,271 $ 133,469 $ 80,533 $ 290,246 21 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) The Company has a broad line of products that it sells to original equipment manufacturers ("OEMs"), electronic manufacturing services ("EMS") companies, and independent distributors. The distribution of sales by channel is shown below: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Distributors $ 411,508 $ 487,107 $ 793,988 $ 957,895 OEMs 279,111 344,820 592,938 685,248 EMS companies 50,620 60,183 100,592 120,013 Total Revenue $ 741,239 $ 892,110 $ 1,487,518 $ 1,763,156 Net revenues were attributable to customers in the following regions: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Asia $ 283,489 $ 323,527 $ 567,496 $ 633,956 Europe 265,153 326,461 536,887 653,022 Americas 192,597 242,122 383,135 476,178 Total Revenue $ 741,239 $ 892,110 $ 1,487,518 $ 1,763,156 The Company generates substantially all of its revenue from product sales to end customers in the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. Sales by end market are presented below: Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Industrial $ 262,134 $ 327,956 $ 510,262 $ 653,916 Automotive 268,099 310,233 555,401 594,732 Military and Aerospace 80,569 68,741 163,925 130,866 Medical 39,456 40,138 73,845 82,241 Other 90,981 145,042 184,085 301,401 Total Revenue $ 741,239 $ 892,110 $ 1,487,518 $ 1,763,156 22 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 12 – Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share attributable to Vishay stockholders (shares in thousands) : Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Numerator: Net earnings attributable to Vishay stockholders $ 23,533 $ 95,038 $ 54,457 $ 206,819 Denominator: Denominator for basic earnings per share: Weighted average shares 137,201 139,627 137,400 140,062 Outstanding phantom stock units 125 137 125 139 Adjusted weighted average shares 137,326 139,764 137,525 140,201 Effect of dilutive securities: Restricted stock units 758 714 754 664 Dilutive potential common shares 758 714 754 664 Denominator for diluted earnings per share: Adjusted weighted average shares - diluted 138,084 140,478 138,279 140,865 Basic earnings per share attributable to Vishay stockholders $ 0.17 $ 0.68 $ 0.40 $ 1.48 Diluted earnings per share attributable to Vishay stockholders $ 0.17 $ 0.68 $ 0.39 $ 1.47 Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares that would have an antidilutive effect or have unsatisfied performance conditions (in thousands) : Fiscal quarters ended Six fiscal months ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Restricted stock units 381 318 254 159 If the average market price of Vishay common stock is less than the effective conversion prices of the convertible senior notes due 2025 and due 2030, respectively, no shares are included in the diluted earnings per share computation for the convertible senior notes due 2025 and due 2030. Upon Vishay exercising its existing right to legally amend the indenture governing the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock. Pursuant to the indenture governing the convertible senior notes due 2030, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in cash and/or common stock. In connection with the issuance of the convertible senior notes due 2030, the Company entered into capped call transactions (see Note 5), which were not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive. The capped calls are intended to reduce the potential dilution to the Company's common stock in the event that at the time of conversion of the convertible senior notes due 2030 the Company's common stock price exceeds the conversion price of the convertible senior notes due 2030. 23 NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 13 – Fair Value Measurements The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis: Total Fair Value Level 1 Level 2 Level 3 June 29, 2024 Assets: Assets held in rabbi trusts $ 51,149 $ 23,289 $ 27,860 $ - Available for sale securities $ 3,996 3,996 - - $ 55,145 $ 27,285 $ 27,860 $ - Liability: Acquisitions contingent consideration $ 15,664 $ - $ - $ 15,664 December 31, 2023 Assets: Assets held in rabbi trusts $ 50,378 $ 24,343 $ 26,035 $ - Available for sale securities $ 4,115 4,115 - - $ 54,493 $ 28,458 $ 26,035 $ - Liability: MaxPower acquisition contingent consideration $ 938 $ - $ - $ 938 There have been no changes in the classification of any financial instruments within the fair value hierarchy in the periods presented. The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy. The Company holds investments in debt securities that are intended to fund a portion of its pension and other postretirement benefit obligations outside of the United States. The investments are valued based on quoted market prices on the last business day of the period. The fair value measurement of the investments is considered a Level 1 measurement within the fair value hierarchy. The Company may be required to make certain contingent payments to non-employee equity holders of MaxPower pursuant to the acquisition agreement, which will be payable upon the achievement of certain technology milestones. The Company may be required to make certain contingent payments upon the receipt of an export license pursuant to the Newport wafer fab acquisition agreement. The fair value of these contingent consideration payments is determined by estimating the net present value of the expected cash flows based on the probability of expected payments. The fair value measurement of the contingent consideration is considered a Level 3 measurement within the fair value hierarchy. The fair value of the long-term debt, excluding the derivative liabilities and deferred financing costs, at June 29, 2024 and December 31, 2023 is approximately $ 809,400 and $ 836,200 , respectively, compared to its carrying value, excluding the deferred financing costs, of $ 845,102 . The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered Level 2 inputs. At June 29, 2024 and December 31, 2023, the Company’s short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates. The Company's short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value. The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity. At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary. No other-than-temporary impairments have been recognized on these securities, and there are no unrecognized holding gains or losses for these securities during the periods presented. There have been no transfers to or from the held-to-maturity classification. All decreases in the account balance are due to returns of principal at the securities’ maturity dates. Interest on the securities is recognized as interest income when earned. At June 29, 2024 and December 31, 2023, the Company’s cash and cash equivalents were comprised of demand deposits, time deposits with maturities of three months or less when purchased, and money market funds. The Company estimates the fair value of its cash, cash equivalents, and short-term investments using Level 2 inputs. Based on the current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of the Company's cash, cash equivalents, and held-to-maturity short-term investments approximate the carrying amounts reported in the consolidated condensed balance sheets. The Company’s financial instruments also include accounts receivable and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values. 24