What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 356 added, 463 removed, 365 unchanged (69% of the section changed)

12 unchanged sentences

MOSFETs, Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors.

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.

Our goal is to enhance 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.

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 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.

developed go-to-market strategies and are investing in and expanding the key product lines for growth that we have identified.

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.

To increase our internal capacity, we had planned to invest

approximately $435 million in 2024.

The industry recovery has been slower than expected.

Accordingly, we adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024, and now expect total capital

expenditures for 2024 to be between $360 million and $390 million.

We remain committed to spending a total of $2.6 billion in total capital expenditures for the period 2023 - 2028.

We can adjust the timing of our capital expenditures and still

fulfill our customer commitments because we now have intermediate capacity due to the qualification of a foundry partner and the acquisition of the Newport wafer fab.

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

approximately $177.5 million in cash, net of cash acquired.

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.

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.

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.

We are focused on realizing the full value of our broad product portfolio, becoming a customer-first company, and capitalizing on the mega trends of

e-mobility, sustainability, and connectivity to drive top line growth, expand margins, and optimize stockholder returns.

We are using eight strategic levers to achieve these goals.

Despite the industry recovery being slower than expected, we

remain committed to our long-term plan of increasing our capacity to assure our customers of reliable volume as they scale.

While we plan to advance our capacity expansion projects, we have and will continue to modulate spending in response to

order flow and the timing of customer demand and qualification.

The decreased lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.

For 2025, we plan to spend between

$300 million to $350 million for capital expenditures, at least 70% of which will be invested in capacity expansion projects for high growth products lines, including our wafer fab expansions.

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

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

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

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

The restructuring expense recognized in the third fiscal quarter also negatively impacted operating margin.

Net revenues for the fiscal quarter ended September 28, 2024 were $735.4 million, compared to $741.2 million and $853.7 million for the fiscal quarters ended June 29, 2024 and September 30, 2023,

respectively.

The net loss attributable to Vishay stockholders for the fiscal quarter ended September 28, 2024 was $(19.3) million, or $(0.14) per share,

compared to net earnings of $23.5 million, or $0.17 per diluted share for the fiscal quarter ended June 29, 2024, and $65.5 million, or $0.47 per diluted

share for the fiscal quarter ended September 30, 2023.

Net revenues for the nine fiscal months

ended September 28, 2024 were $2,222.9

million, compared to $2,616.8 million for the nine fiscal months ended September 30, 2023.

The net earnings attributable to Vishay stockholders

for the nine fiscal months ended September 28, 2024 were $35.2 million, or $0.25 per diluted share, compared to $272.3 million, or $1.94 per diluted share for the nine fiscal months ended September 30, 2023.

We define adjusted net earnings as net earnings (loss) 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.

The key financial metrics were mixed versus the prior fiscal quarter, but mostly lower than the prior year period.

Net revenues and margins decreased versus the

prior year period primarily due to lower sales volume and decreased average selling prices, but orders increased.

Net revenues for the fiscal quarter ended March 29, 2025

were $715.2 million, compared to $714.7

million and $746.3 million for the fiscal quarters ended December 31, 2024 and March 30, 2024, respectively.

The net loss attributable

to Vishay stockholders for the fiscal quarter ended March 29, 2025 was $(4.1) million, or $(0.03) per share, compared to a net loss of $(66.3) million, or $(0.49) per share

for the fiscal quarter ended December 31, 2024, and net earnings of $30.9 million, or $0.22 per diluted share for the fiscal quarter ended March 30, 2024.

We define adjusted net earnings as net earnings (loss) 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.

2 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

GAAP net earnings (loss) attributable to Vishay stockholders

Reconciling items affecting operating income (loss):

Restructuring and severance costs

Reconciling items affecting other income (expense):

Loss on early extinguishment of debt

Reconciling items affecting tax expense (benefit):

Tax effect of pre-tax items above

Adjusted net earnings

Reconciling items affecting operating income:

Impairment of goodwill

Adjusted net earnings (loss)

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 ) .

Adjusted earnings (loss) per diluted share

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

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Optoelectronic Components

3 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

Net cash provided by (used in) continuing operating activities

March 29, 2025

December 31, 2024

March 30, 2024

Net cash provided by continuing operating activities

Proceeds from sale of property and equipment

Capital expenditures

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

third fiscal quarter of 2024.

The long-term outlook for our business remains strong, although our results are weaker than our prior fiscal quarter and prior year results.

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

transition tax of $37.6 million and $27.7 million in the second fiscal quarters of 2024 and 2023, respectively , and $15.0 million of payments of withholding taxes on foreign earnings for the $120.0

million that was repatriated to the U.S.

in the second fiscal quarter of 2024.

For the past several quarters, orders were negatively impacted by a distributor inventory correction and channel inventory that overhung the market, but

there are indicators that the prolonged period of excess inventory digestion is ending.

The long-term outlook for our business remains strong, although our results are weaker than our prior year results.

Recent Developments

The newly announced U.S.

tariffs will impact our future results.

The tariff rates and application

are currently unsettled and any potential demand distraction is not able to be estimated at this time.

Historically, we have charged tariff adders to customers to offset increased costs.

The gross profit impact of the tariffs and tariff adders

is approximately zero, but they negatively impact gross profit margin.

The announcement of the U.S.

tariffs has resulted in significant market volatility.

A decrease in

our common stock price could impact our goodwill impairment assessment if a stock price recovery does not take place.

Stockholder Return Policy

4 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

March 30, 2024

Dividends paid to stockholders

Stock repurchases

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.

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net revenues, but also reflects our cost management programs and our ability to contain fixed costs.

Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment operating income.

Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment gross profit and

segment operating income.

Only dedicated, direct selling, general, and administrative ("SG&A") expenses of the segments are included in the calculation of segment operating income.

We do not allocate certain SG&A expenses that are managed at the regional or corporate

global level to our segments.

We do not allocate certain SG&A expenses that are managed

at the regional or corporate global level to our segments.

Accordingly, segment operating income excludes these SG&A expenses that are not directly traceable to the segments.

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, 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 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, goodwill impairment charges, 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.

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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 2023 through

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

3rd Quarter 2023

4th Quarter 2023

the first fiscal quarter of 2025 (dollars in thousands) :

1st Quarter 2024

1 unchanged sentence

3rd Quarter 2024

4th Quarter 2024

1st Quarter 2025

Gross profit margin

7 unchanged sentences

(1) Operating margin for the third fiscal quarter of 2024 includes $40.6 million of restructuring and severance expenses (see Note 2 to our consolidated condensed financial statements).

Operating margin for the

fourth fiscal quarter of 2024 includes $66.5 million of goodwill impairment charges.

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 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 third 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 increased depreciation expense.

The impact of the Newport acquisition also contributed to the decrease versus the prior year quarter.

The book-to-bill ratio in the third fiscal quarter of 2024 increased to 0.88 versus 0.86 in the second fiscal quarter of 2024.

Revenues increased slightly 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, partially offset by lower average selling prices.

The decrease versus the prior year quarter is

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

The book-to-bill ratio and backlog increased versus the prior fiscal quarter.

We continue to increase 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 average selling prices and higher fixed

Costs associated with the Newport wafer fab also contributed to the decrease versus the prior year quarter.

The book-to-bill ratio in the first fiscal quarter of 2025 increased to 1.08 versus 1.01 in the fourth fiscal quarter of 2024.

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 2023 through the third fiscal quarter of 2024 (dollars in thousands) :

3rd Quarter 2023

4th Quarter 2023

quarters beginning with the first fiscal quarter of 2024 through the first fiscal quarter of 2025 (dollars in thousands) :

1st Quarter 2024

1 unchanged sentence

3rd Quarter 2024

4th Quarter 2024

1st Quarter 2025

Book-to-bill ratio

17 unchanged sentences

Segment operating margin

Goodwill represents the excess of the cost of businesses acquired over the

fair value of the related net assets at the date of acquisition.

Goodwill is not amortized but rather is tested for impairment at least annually.

These tests are performed more frequently whenever events or changes in circumstances indicate that

the assets might be impaired.

We perform our annual goodwill impairment test as of the first day of the fourth fiscal quarter.

During the third fiscal quarter of 2024, we identified the decrease in our share price in combination with the

increase in the book value of our assets as a result of our acquisition and capital spending activities as potential indicators of impairment requiring an interim goodwill impairment test.

The interim goodwill impairment test was performed as of

September 28, 2024.

We performed a quantitative assessment of each of our reporting units using an equal weighting of income (discounted cash flow) and market approaches to

determine fair value.

We determined that the estimated fair value of each reporting unit exceeded its carrying value, although the MOSFETs reporting unit’s fair value exceeded its carrying value by less than 10%.

No goodwill impairment charges were

recognized, but if the MOSFETs reporting unit is not able to achieve its anticipated results and/or if its discount rate were to increase, its fair value would be adversely

affected, which may result in future impairment.

There is $76.3 million of goodwill in this reporting unit as of September 28, 2024.

acquisitions of MaxPower Semiconductor, Inc.

and the Newport wafer fab, as well as the planned capacity expansions at Itzehoe and Newport, are long-term investments which were not expected to generate significant income or cash flows in the

near-term, but should greatly enhance the long-term position of our MOSFETs business.

Such investments have significantly increased the net asset base of our MOSFETs business without a corresponding increase in current income or cash flows.

continue to be committed to these long-term projects.

certain execution risks to our strategic plan.

These execution risks, as well as the current market price of our common stock, result in the use of a relatively high discount rate in our discounted cash flow analysis.

We will continue to monitor

our reporting units and related goodwill for any possible future non-cash impairment charges.

See Note 3 to the consolidated condensed financial statements for additional information.

Results of Operations

1 unchanged sentence

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Cost of products sold

6 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

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

Fiscal quarter ended September 28, 2024

Nine fiscal months ended September 28, 2024

Change in net revenues

Fiscal quarter ended

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

Changes in net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

Decrease in volume

Change in volume

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 decrease in net revenues versus the prior fiscal quarter and prior year quarter are primarily due to decreased

sales volume and average selling prices.

There are indications that the channel inventory that has overhung the market is normalizing and the prolonged period of excess inventory digestion is ending.

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

Gross Profit Margins

Gross profit margins for the fiscal quarter ended September 28, 2024 were 20.5%, versus 22.0% and 27.8%, for the comparable prior quarter and prior year period,

Gross profit margins for the fiscal quarter ended March 29, 2025 were 19.0%, versus 19.9% and 22.8% for the comparable prior fiscal quarter and prior year period,

respectively.

Gross profit margins for the nine fiscal months ended September 28, 2024 were 21.8%, versus 29.6% for the comparable prior year period.

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

decreased average selling prices, and increased depreciation expense.

The decreases versus the prior year periods are primarily due to lower sales volume, d ecreased average selling prices,

the impact of the Newport acquisition, and cost inflation.

Gross profit margin decreased versus the prior fiscal quarter and the prior year quarter primarily due to lower average selling prices and higher fixed costs.

Costs associated with the Newport wafer fab also contributed to the

decrease versus the prior year quarter.

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

1 unchanged sentence

Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Decrease in volume

Change in volume

Decrease in average selling prices

Foreign currency effects

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

The decrease versus the prior fiscal

quarter is primarily due to decreased sales of Newport legacy products.

The decreases versus the prior year quarter and prior year-to-date periods are primarily due to decreased sales to all end market customers and customers in all

regions, partially offset by the Newport wafer fab acquisition.

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

The decreases versus the prior fiscal quarter and prior year periods are primarily due to lower sales volume and decreased average selling

Costs associated with the Newport wafer fab also contributed to the decreases versus the prior period years.

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

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

The decreases are primarily due to decreased

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

An increase in sales to computing end market customers partially offset the decreases versus the prior fiscal quarter and prior

year 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 and higher

Costs associated with the Newport wafer fab also contributed to the decrease versus the prior year quarter.

Segment operating margin decreased versus the prior fiscal quarter and the prior year quarter.

The decreases are primarily due to gross

profit margin decreases.

Average selling prices decreased significantly versus the prior year periods, and to a lesser extent versus the prior fiscal quarter.

profit decreases.

Average selling prices decreased 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% by 2028 and allow us to balance our in-house and foundry wafer supply.

We are 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% by 2028 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.

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.

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.

The acquisitions of MaxPower Semiconductor, Inc.

and the Newport wafer fab, as well

as the planned capacity expansions at Itzehoe and Newport, are long-term investments which are not expected to generate significant income or cash flows in the near-term, but should greatly enhance the long-term position of our MOSFETs business.

We remain committed to these long-term projects.

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 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

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 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Increase in volume

Decrease in average selling prices

Foreign currency effects

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

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

The decreases versus the prior year periods are due to decreased sales to nearly all end market

customers and customers in all regions.

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

The decrease versus the prior fiscal quarter was primarily

due to lower average selling prices.

The decreases versus the prior year periods are primarily due to lower sales volume and lower average selling prices.

Higher labor and logistics costs also contributed to the decreases versus the prior year

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

The decreases are primarily due to gross profit

margin decreases.

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

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.

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 OEM customers, automotive end market customers, and customers in the Asia and Americas regions.

Increases in sales to distribution customers and customers in the Europe region partially offset the decrease versus the prior fiscal

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

The decreases are primarily due to lower average selling prices.

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.

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 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

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 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Decrease in average selling prices

Increase in volume

Change in average selling prices

Foreign currency effects

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

increase versus the prior fiscal quarter is due to increased sales to all end market customers and customers in all regions.

The decrease versus the prior year quarter is primarily due to decreased sales to industrial end market customers and

customers in the Europe and Americas regions.

The decreases versus the prior year-to-date period is primarily due to decreased sales to distribution customers, all end market customers, and customers in the Europe and Americas regions.

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

The decrease versus the prior fiscal quarter and the prior

year quarter are primarily due to lower average selling prices and the negative impact of inventory reduction.

The decrease versus the prior year-to-date period is primarily due to decreased sales volume, lower average selling prices, and

increased inventory obsolescence.

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

The fluctuations are primarily due to gross profit

margin decreases.

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

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

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

The increases are primarily due to increased sales to distribution customers and industrial end market customers.

Sales to customers in all regions increased versus the prior fiscal quarter

and in the Asia and Americas regions versus the prior year quarter.

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

The increases are primarily due to higher sales volume.

Higher average selling prices also contributed to the increase versus the prior fiscal quarter.

Segment operating margin increased versus the prior fiscal quarter and the prior year quarter.

The increases are primarily due to gross profit increases.

Average selling prices increased versus the prior fiscal 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 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

Prior Quarter

Prior Year Quarter

Change attributable to:

2 unchanged sentences

Foreign currency effects

Net revenues of the Resistors segment increased slightly versus the prior fiscal quarter, but decreased significantly versus the prior year

The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers mainly in Asia and automotive and military and aerospace end market customers.

The decreases versus the prior year periods

were due to decreased sales to nearly all end market customers and customers in all regions.

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 average selling prices, increased labor costs, and increased materials costs.

The decreases versus the prior year periods are primarily due to lower sales volume, lower average selling prices, increased labor costs,

increased depreciation, and increased logistics costs.

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

The decreases are primarily due to gross profit

margin decreases.

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

Net revenues of the Resistors 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 and Europe regions.

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

OEM customers, industrial and automotive end market customers, and customers in the Europe region, partially offset by increased sales to distribution customers and customers in the Asia region.

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.

The decrease versus the prior year quarter is primarily due to lower average selling prices.

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

The changes are primarily due to fluctuations in gross profit.

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

We are increasing critical manufacturing capacities for certain product lines.

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Fiscal quarters ended

Nine fiscal months ended

September 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

3 unchanged sentences

Change in volume

Change in average selling prices

Decrease in average selling prices

Foreign currency effects

Net revenues of the Inductors segment decreased versus the prior fiscal quarter, were flat versus the prior year fiscal quarter, and increased versus

the prior year-to-date period.

The decrease versus the prior fiscal quarter was primarily due to decreased sales to distribution and OEM customers, all end market customers, and customers in the Americas and Europe regions.

The increase versus

the prior year-to-date period is primarily due to increased sales to distribution customers, automotive and medical end market customers, and customers in all regions.

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

The decreases versus the prior year

periods are primarily due to decreased average selling prices, higher logistics, materials, and labor costs, and start-up costs of a new manufacturing facility.

Segment operating margin was flat versus the prior fiscal quarter, but decreased versus the prior year periods.

The decreases are primarily due to

gross profit margin decreases.

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

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.

Net revenues of the Inductors 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 OEM customers, automotive end market customers, and customers in the Europe region, partially offset by decreased sales to EMS customers and customers in the Asia region.

versus the prior year quarter is primarily due to decreased sales to OEM customers, automotive and military and aerospace end market customers, and customers in all regions, partially offset by increased sales to medical end market customers.

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

The decreases are primarily due to lower average selling prices,

higher variable costs, and manufacturing inefficiencies.

Lower sales volume also contributed to the decrease versus the prior year quarter.

Segment operating margin decreased versus the prior fiscal quarter and 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.

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.

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 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 28, 2024

Nine fiscal months ended

September 28, 2024

Change in net revenues

March 29, 2025

Change in net revenues

June 29, 2024

September 30, 2023

December 31, 2024

March 30, 2024

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

Prior Year Quarter

Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

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

The decrease versus the prior fiscal

quarter is primarily due to decreased sales to distribution customers, industrial end market customers, and customers in the Asia and Europe regions.

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

and automotive end market customers and customers in the Europe region.

The decrease versus the prior year-to-date period is primarily due to decreased sales to distribution customers, industrial and automotive end market customers, and

customers in the Europe and Americas regions.

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

decrease versus the prior fiscal quarter is due to lower sales volume, negative product mix, and increased utilities costs, partially offset by higher average selling prices.

The increase versus the prior year quarter is due to improved

production efficiencies and lower materials costs.

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

Segment operating margin decreased versus the prior fiscal quarter and the prior year-to-date period, but was flat versus the prior year fiscal

The decreases are primarily due to gross profit margin decreases.

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

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

The decreases are primarily due to decreased

sales to military and aerospace end market customers and customers in the Americas region, partially offset by increased sales to customers in the Europe region.

Decreased sales to OEM customers also contributed to the decrease versus the prior

fiscal quarter, while increased sales to distribution customers partially offset the decrease.

Decreased sales to customers in the Asia region also contributed to the decrease versus the prior year quarter, while increased sales to industrial market

end customers partially offset the decrease.

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

The decreases are primarily due to lower average selling prices, higher fixed

costs, and negative foreign currency exchange rate fluctuations.

Segment operating margin decreased versus the prior fiscal quarter and prior year quarter.

The fluctuations are primarily due to gross profit decreases.

Average selling prices decreased versus the prior fiscal quarter and 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 28, 2024

June 29, 2024

September 30, 2023

September 28, 2024

September 30, 2023

March 29, 2025

December 31, 2024

March 30, 2024

Total SG&A expenses

as a percentage of revenues

The sequential increase in SG&A expenses is primarily attributable to higher stock-based compensation expense and higher research and development expenses, partially offset by lower bonus compensation.

SG&A expenses

increased versus the prior year periods due to higher stock-based compensation expense and general cost inflation.

On September 24, 2024, we announced a restructuring program designed, in part, to streamline business decision making.

The programs are expected to generate annualized cost savings of approximately $12 million of selling,

general and administration expenses, when the programs are fully implemented by the end of 2026.

We expect SG&A expenses for the fourth fiscal quarter of 2024 to be approximately $126 million, reflecting SG&A cost savings realized from the

program so far.

The sequential increase in SG&A expenses is primarily attributable to increased incentive compensation accruals.

Other Income (Expense)

Interest expense for the fiscal quarter ended September 28, 2024 decreased $0.1 million versus the fiscal quarter ended June 29, 2024 and decreased $0.6 million versus the fiscal

quarter ended September 30, 2023.

Interest expense for the nine fiscal months ended September 28, 2024 increased by $1.1 million versus the nine fiscal

months ended September 30, 2023.

The decrease versus the prior year fiscal quarter is due to lower average outstanding balances on the

revolving credit facility.

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

Interest expense for the fiscal quarter ended March 29, 2025 increased by $1.1 million versus the fiscal quarter ended December 31, 2024 and increased by $2.3 million versus the fiscal quarter ended March 30, 2024.

The increases versus the prior fiscal quarter and the prior year quarter are due to higher outstanding balances on our revolving credit facility.

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

Fiscal quarters ended

September 28, 2024

September 30, 2023

Foreign exchange gain (loss)

March 29, 2025

December 31, 2024

Foreign exchange gain

Interest income

Other components of net periodic pension expense

Other components of other periodic pension cost

Investment income (expense)

Fiscal quarters ended

September 28, 2024

June 29, 2024

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Investment income (expense)

Nine fiscal months ended

September 28, 2024

September 30, 2023

Foreign exchange gain (loss)

March 29, 2025

March 30, 2024

Foreign exchange gain

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 28, 2024, our effective tax rate was 21.1%, as

compared to 34.2% and 31.7%

for the fiscal quarters ended June 29, 2024 and September 30, 2023, respectively.

For the nine fiscal months ended September 28, 2024, our effective tax rate was 35.7%,

as compared to 29.3% for the nine

fiscal months ended September 30, 2023.

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

statutory rate, excluding unusual transactions.

During the nine fiscal months ended September 28, 2024, the liabilities for unrecognized tax benefits decreased $0.2 million on a net basis, primarily

due to statute expirations, partially offset by accruals for the current period.

For the fiscal quarter ended March 29, 2025,

our effective tax rate was 3.2%, as compared to (12.3)% and 29.0% for the fiscal quarters ended December 31, 2024 and March 30, 2024,

respectively.

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

statutory rate, excluding unusual transactions, at higher levels of pre-tax income.

During the three fiscal months ended March 29, 2025, the liabilities for unrecognized

tax benefits decreased by $1.0 million on a net basis, primarily due to the settlement of tax audits, partially offset by accruals for the current period.

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 28, 2024 continued to be strong.

We have historically been a

strong generator of operating cash flows.

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, fund our Stockholder

Return Policy, and to reduce debt levels.

Our financial condition as of March 29, 2025 continued to be strong.

We have historically been a strong

generator of operating cash flows.

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

1 unchanged sentence

Cash flows provided by operating activities were $16.1 million

for the nine fiscal months ended September 28, 2024, as compared to cash flows provided by operations of $359.4 million for the nine fiscal months ended September 30, 2023.

for the three fiscal months ended March 29, 2025, as compared to cash flows provided by operations of $80.2 million for the three fiscal months ended March 30, 2024.

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 during the five fiscal quarters beginning with the third fiscal quarter of 2023 through the third fiscal quarter of 2024:

cash conversion cycle during the five fiscal quarters beginning with the first fiscal quarter of 2024 through the first fiscal quarter of 2025:

Fiscal quarters ended

3rd Quarter 2023

4th Quarter 2023

1st Quarter 2024

1 unchanged sentence

3rd Quarter 2024

4th Quarter 2024

1st Quarter 2025

Days sales outstanding ("DSO") (a)

11 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 28, 2024 was $175.2 million, as compared to $184.1 million for the nine fiscal months ended September 30, 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 had planned to invest approximately $435 million in 2024.

The industry recovery has been slower than expected.

Accordingly, we adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024, and now expect

total capital expenditures for 2024 to be between $360 million and $390 million.

We remain committed to spending a total of $2.6 billion in total capital expenditures for the period 2023 - 2028.

Free cash flow for the nine fiscal months ended September 28, 2024 decreased versus the nine fiscal months ended September 30, 2023 primarily due to decreased net earnings and withholding taxes paid

for the repatriation of cash to the U.S.

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

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 29, 2025 was $61.6

million, as compared to $53.1 million for the three fiscal months ended March 30, 2024.

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.

We remain committed to our long-term plan of increasing Vishay's capacity, to assure our

customers of reliable volume as they scale.

While we plan to advance our capacity expansion projects, we have and will continue to modulate spending in response to order flow and the timing of customer demand and qualifications.

The decreased

lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.

For 2025, we plan to spend between $300 million to $350 million for capital expenditures, at least 70% of which will

be invested in capacity expansion projects for high growth product lines, including our wafer fab expansions.

Free cash flow for the three fiscal months ended March 29, 2025 decreased versus the three fiscal months ended March 30, 2024 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.

“Stockholder Return Policy” above for additional information.

The following table summarizes the components of net cash and short-term investments (debt) at September 28, 2024 and December 31, 2023 (in thousands) :

September 28, 2024

The following table summarizes the components of net cash and short-term investments (debt) at March 29, 2025 and December 31, 2024 (in thousands) :

March 29, 2025

December 31, 2024

12 unchanged sentences

We invest a portion of our excess cash in highly liquid, high-quality instruments with maturities greater than 90 days, but less than 1 year, which we

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).

classify as short-term investments on our consolidated condensed 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).

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

7 unchanged sentences

The capital allocated to our business is further allocated between our subsidiaries to meet local operating cash needs, to fund capital expenditures as part of our growth plan, and to meet corporate funding needs while also aiming to minimize our

During the second fiscal quarter of 2024, we repatriated $120 million of accumulated earnings to the United States and paid withholding taxes in Israel

of $15 million.

As of September 28, 2024, $24.8 million of our cash and cash equivalents and short-term investments were held by our U.S.

As of March 29, 2025, $12.7 million of our cash and cash equivalents and short-term investments were held by our U.S.

subsidiaries.

Based on expected cash payments pursuant to our Stockholder Return Policy and funding of the

Newport expansion, we expect to be in a net borrowing position in the U.S.

before year-end 2024.

As of September, 2024, we have approximately $513 million of German and Israeli earnings that are deemed not indefinitely reinvested.

expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $76 million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings.

As of March 29,

2025, we are in a net borrowing position in the U.S.

and we expect to continue to be at least throughout 2025, primarily due to Newport expansion funding requirements.

As of March 29, 2025, we have approximately $535.8 million of German and

Israeli earnings that are deemed not indefinitely reinvested.

Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $79.8 million, which has been

accrued, but will only be paid upon repatriation of the unremitted earnings.

Repatriating these unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense.

We also have amounts of unremitted foreign earnings held by subsidiaries in countries other than Israel and Germany,

which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable to foreign jurisdictions that would be incurred to repatriate these amounts.

Certain of these

subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash.

Due to the uncertainties associated with the ability, timing, and method to repatriate these unremitted earnings and other complexities

associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings is not practicable, but could be significant.

Our substantially undrawn credit facility provides

us with adequate operating liquidity in the United States.

We also have amounts of unremitted

foreign earnings held by subsidiaries in countries other than Israel and Germany, which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable to foreign jurisdictions

that would be incurred to repatriate these amounts.

Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash.

Due to the uncertainties associated with the ability, timing, and

method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings is not practicable, but

could be significant.

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

Upon successful completion of our growth plan, we expect to generate increasingly higher levels of free cash that will be sufficient to meet our

7 unchanged sentences

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.

Pursuant to the credit facility, the financial maintenance covenants include (a) an interest coverage ratio of not less than 3.25 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 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).

On August 15, 2024, we entered into an amendment to the credit facility that redefines the Interest Coverage Ratio to remove Capital Expenditures from

the calculation, increases the minimum Interest Coverage Ratio to 3.25 to 1.00, increases the threshold of Indebtedness of Foreign Subsidiaries to the greater of $300 million and 15% of Consolidated Tangible Net Worth as of the last day of the

fiscal quarter for which financial statements are delivered, and increases the threshold of Investments of Subsidiaries that are not Loan Parties to $300 million.

Other significant terms and conditions of the credit facility have not been modified.

We were in compliance with all financial covenants under the credit facility at September 28, 2024.

Our interest coverage ratio and net leverage ratio

were 19.99 to 1 and 1.40 to 1, respectively.

We were in compliance with all financial covenants under the credit facility at March 29, 2025.

Our interest coverage ratio and net leverage ratio were

12.96 to 1 and 2.47 to 1, respectively.

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

Based on our current EBITDA and outstanding revolver balance, the usable capacity on the credit facility is

approximately $248 million.

If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and any amounts then

outstanding pursuant to the credit facility could become immediately payable.

Additionally, our convertible senior notes due 2025 and due 2030 have cross-default provisions that could accelerate repayment in the event the indebtedness under the

credit facility is accelerated.

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.

Subsequent to

the end of the third fiscal quarter of 2024, we repurchased an additional $40.7 million principal amount of convertible senior notes due 2025.

The repurchase was funded with a draw on our revolving credit facility.

Additionally, our convertible senior notes due 2030 have cross-default provisions that could accelerate repayment in the event the indebtedness under the credit

facility is accelerated.

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

12 unchanged sentences

and are guaranteed by certain significant subsidiaries.

We had no amount outstanding on our revolving credit facility at December 31, 2023 and September 28, 2024.

We borrowed and repaid $58 million on the

revolving credit facility during the nine fiscal months ended September 28, 2024.

No amounts were outstanding on our revolving credit facility at any fiscal month-end.

We expect, at least initially, to fund certain future obligations required

to be paid by the U.S.

parent company by borrowing under our credit facility.

We had $136 million outstanding on our revolving credit facility at December 31, 2024 and $218 million outstanding at March 29, 2025.

$123 million and repaid $41 million on the revolving credit facility during the three fiscal months ended March 29, 2025.

The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $187 million and the

highest amount outstanding at a fiscal month end was $218 million during the three fiscal months ended March 29, 2025.

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

parent company by

borrowing under our credit facility.

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.

No principal payments on our debt are due before 2025.

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.

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.

Except for the maturity of $41.9 million of convertible senior notes due 2025, which will be funded

by the revolving credit facility, no principal amounts of our debt are due until 2028.

The convertible senior notes due 2025 became convertible on December 15, 2024 and will remain convertible until maturity.

The convertible senior

notes 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.

We have the intent and ability to finance the principal amount of the convertible senior notes due 2025 using borrowings under our credit

facility upon maturity of the notes.

We have the intent and

ability to finance the principal amount of the convertible senior notes due 2025 using borrowings under our credit facility upon maturity of the notes.

Safe Harbor Statement

33 unchanged sentences

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