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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-14 · 316 added, 333 removed, 667 unchanged (49% of the section changed)

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("Vishay," "we," "us," or "our") manufactures one of the world’s largest portfolios of discrete semiconductors and passive electronic

components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical markets.

components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and healthcare markets.

We operate in six segments based on product functionality:

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.

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

To drive 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.

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.

We have 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 structure.

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 invested $320

for capital expenditures in 2024.

We remain committed to our long-term plan of increasing Vishay's capacity, to assure our customers of reliable volume as they scale.

We have and will continue to modulate the amount and timing of our capital

expenditures 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.

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

for 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.

We plan to position the facility as a

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

The facility has generated a net loss and we expect the facility to continue to generate a net loss while

we invest in new equipment and qualify new products.

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.

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.

We invested $273 million for capital expenditures in 2025, 82% of which was invested in capacity expansion projects for high growth product

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 Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled

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implemented restructuring actions in the third fiscal quarter of 2024 designed to optimize our manufacturing footprint and streamline business decision making.

We believe we have significant liquidity to withstand temporary disruptions in the economic environment.

We believe we have sufficient liquidity to withstand temporary disruptions in the economic environment.

See additional information regarding our competitive strengths and key challenges as disclosed in Part I.

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

The key financial metrics decreased in the fourth fiscal quarter of 2024

primarily due to the negative impacts of an on-going distributor inventory correction that resulted in lower orders.

Net revenues and margins decreased versus the prior year period primarily due to lower volume and decreased average

selling prices.

The key financial metrics were mostly higher versus the prior fiscal quarter and the prior year period.

Net revenues increased versus the prior fiscal quarter and

the prior year period primarily due to higher sales volume, but margins were mixed versus the prior fiscal quarter and prior year period.

Margins were negatively impacted by lower average selling prices, higher metals prices and labor

costs, and tariffs.

Net revenues for the year ended December 31, 2025

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respectively.

The net loss attributable to Vishay stockholders for the year ended December 31, 2024 was $(31.2) million, or $(0.23)

per share, compared to net earnings of $323.8 million, or $2.31 per diluted share, and $428.8 million, or $2.98 per diluted share, for the years ended December 31, 2023 and 2022, respectively.

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.

The net loss attributable to Vishay stockholders for the year ended December 31, 2025 was $(9.0) million, or $(0.07) per

share, compared to a net loss of $(31.2) million, or $(0.23) per share, and net earnings of $323.8 million, or $2.31 per diluted share, for the years ended December 31, 2024 and 2023, respectively.

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.

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.

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.

We define segment operating income as

operating income excluding selling, general, and administrative costs of our global operations, sales and marketing, information systems, finance, and administrative groups, as well as restructuring and severance costs, goodwill impairments, and

other items affecting comparability.

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.

Note 15 to our

consolidated financial statements includes the reconciliation for segment operating income.

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, free cash, and segment operating income do not have uniform definitions.

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

Management believes that

adjusted net earnings, adjusted earnings per share, and segment operating income 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.

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

Management uses segment operating income, along with

segment gross profit, to make decisions, allocate resources, and assess performance of its operating segments.

Net earnings attributable to Vishay stockholders for the years ended December 31, 2025, 2024, and 2023 include items affecting comparability.

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GAAP net earnings (loss) attributable to Vishay stockholders

Reconciling items affecting gross profit:

Impact of COVID-19 pandemic

Other reconciling items affecting operating income:

Favorable resolution of a contingency

Impairment of goodwill

Restructuring and severance costs

Impact of COVID-19 pandemic

Reconciling items affecting other income (expense):

Loss on early extinguishment of debt

Reconciling items affecting tax expense (benefit):

Effects of changes in uncertain tax positions

Effects of changes in valuation allowances

Effect of change in indefinite reversal assertion

Reconciling items affecting tax expense:

Changes in tax laws and regulations

Tax effects of pre-tax items above

Adjusted net earnings

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.

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

performance does not include these costs (in thousands) :

Years ended December 31,

Optoelectronic Components

Unallocated gross profit (loss)

Adjusted earnings (loss) per diluted share

Although the term "free cash" is not defined in GAAP, each of the elements used to calculate free cash is presented as a line item on the face of our consolidated

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Capital expenditures

Orders are lower due to a distributor inventory correction that took longer than expected and continued through 2024.

The long-term outlook for our business remains

strong, although our results are weaker than prior year results.

Our accelerated investments to expand capacity have positioned us to be able to better serve our customers and capture the early stages of upturns in end market demand.

The long-term outlook for our business remains strong.

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

transition tax of $47.0 million in 2025,

$27.7 million in 2023, and $14.8 million in 2022, respectively, and payments of foreign, withholding, and claw-back cash taxes of $15.0 million in 2024, $63.6 million in 2023, and $25.2

million in 2022 on foreign earnings of $105.0 million, $276.8 million, and $81.2 million (net of taxes) that were repatriated to the U.S.

$37.6 million in 2024, and $27.7 million in 2023, respectively, and payments of foreign and withholding cash taxes of $9.4 million in 2025, $15.0 million in 2024, and $63.6 million in

2023 on foreign earnings of $75.0 million, $105.0 million, and $276.8 million that were repatriated to the U.S.

in 2025, 2024, and 2023, respectively.

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management team laid out a three-year plan to expand capacity to support our highest growth and highest return product lines and to position Vishay to be ready for the next phase of megatrends in e-mobility, sustainability, and connectivity.

year 2023 was generally seen as the staging year for this plan, and all elements of the plan have progressed throughout the organization.

In 2024, many of these initiatives advanced and increased manufacturing capacity was available.

early 2025, we expect to be in a better position to capture the next step in the growing demand for electrification in our key end-markets.

2023 was the staging year for this plan as all elements of the plan progressed throughout the organization.

In 2024, many of these initiatives advanced and increased manufacturing capacity began to be available.

Additional capacity became

available in 2025 and we began to benefit from the additional capacity as we are now able to satisfy quick-turn demand while maintaining competitive lead times.

In 2026, we expect to use our additional capacity to supply customers that are in

need of product due to unforeseen events or spikes in demand.

We are also in a much-improved position to participate in the EMS channel as EMS customers are frequently operating with only short-term demand visibility.

To focus this growth, we have identified product lines for growth across each reportable segment.

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Stockholder Return Policy

In 2022, our Board of Directors adopted a Stockholder Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis.

We intend to return

such amounts to stockholders directly, in the form of dividends, or indirectly, in the form of stock repurchases.

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

principal payments of long-term debt, on an annual basis.

We intend to return such amounts to stockholders directly, in the form of dividends, or indirectly, in the form of stock repurchases.

The policy sets forth our intention, but does not

obligate us to acquire any shares of common stock or declare any dividends, and the policy maybe be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations.

As a result of our negative free cash

flow for the fiscal year ended December 31, 2025 due primarily to our capacity expansion plans, we exceeded our intended return through quarterly cash dividends and opportunistic share repurchases.

We did not repurchase any shares of common

stock after the first fiscal quarter of 2025.

For 2026, we expect to maintain our dividend and opportunistically repurchase shares based on U.S.

available liquidity in line with this policy.

The following table summarizes activity pursuant to this policy (in thousands):

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Stock repurchases

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

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.

will continue to invest in growth initiatives including key product line expansions, targeted R&D, and synergistic acquisitions.

We will continue to invest in growth initiatives including key product line expansions, targeted

R&D, and synergistic acquisitions.

We have paid dividends each quarter since the first quarter of 2014, and the Stockholder Return Policy will remain in effect until such time as the

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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, the direct impact of the COVID-19 pandemic, and other items affecting comparability.

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

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

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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_______________

(1) Operating margin for the third fiscal quarter of 2024 includes $40.6 million of restructuring and severance expenses (see Note 3 to our consolidated financial statements).

Operating margin for the fourth fiscal quarter of 2024 includes $66.5

million of goodwill impairment charges (see Note 19 to our consolidated financial statements).

(1) Operating margin for the second fiscal quarter of 2025 includes an $11.3 million gain recognized upon the favorable resolution of a contingency (See Note 2 to our consolidated financial statements).

margin for the fourth fiscal quarter of 2024 includes $66.5 million of goodwill impairment charges (see Note 19 to our consolidated financial statements).

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

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

The book-to-bill ratio increased versus the prior fiscal quarter, but orders backlog were negatively impacted by the distributor inventory correction that began in 2022 and continued through 2024.

We continue to increase manufacturing capacity for

critical product lines.

Average selling prices decreased versus the fourth fiscal quarter of 2023 and prior fiscal quarter.

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

Revenues in the fourth fiscal quarter of 2025 increased versus the fourth fiscal quarter of 2024 and prior fiscal quarter primarily due to higher sales volume.

Favorable foreign currency impacts also contributed to the increase versus the fourth fiscal quarter of 2024.

The book-to-bill ratio and backlog increased significantly versus the prior fiscal quarter and the fourth fiscal quarter of 2024.

continue to increase capacity for critical product lines.

Average selling prices, including tariff adders, decreased versus the fourth fiscal quarter of 2024 and prior fiscal quarter.

Gross profit margin increased slightly versus the prior fiscal quarter, but decreased versus the fourth fiscal quarter of 2024.

The decrease versus the fourth fiscal

quarter of 2024 is primarily due to lower average selling prices, the impact of tariffs, and higher input costs.

The book-to-bill ratio in the fourth fiscal quarter of 2025 increased to 1.20 versus 0.97 in the third fiscal quarter of 2025.

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It also includes certain businesses that possess technologies which the Company expects to further develop and

commercialize, such as MaxPower Semiconductor, Inc., acquired in 2022;

businesses with well-developed technologies that the Company expects to grow using its manufacturing capabilities, capacity, and economies of scale to expand production and sell

to its global customer base, such as Ametherm, Inc., acquired in 2024;

and key niche suppliers to vertically integrate our supply chain, such as Birkelbach Kondensatortechnik GmbH ("Birkelbach"), acquired in 2024, and Centerline Technologies, LLC,

commercialize, businesses with well-developed technologies that the Company expects to grow using its manufacturing capabilities, capacity, and economies of scale to expand production and sell to its global customer base, such as Ametherm, Inc.,

acquired in 2024;

To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”).

For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for the trailing four fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been

acquired by Vishay at the beginning of the trailing four fiscal quarters.

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

for 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.

We plan to position the

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

The facility is currently generating a net loss and we expect the facility to continue to

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

and key niche suppliers to vertically integrate our supply chain, such as Birkelbach Kondensatortechnik GmbH, acquired in 2024.

To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our

post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”).

For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for the trailing

four fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the trailing four fiscal quarters.

In 2024, we acquired Nexperia's wafer fabrication facility and operations located in

Newport, South Wales, U.K.

for 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.

We plan to use the Newport wafer fabrication facility to further develop and scale our SiC MOSFETs and diodes capabilities.

The facility is a long-term investment which was not expected to generate income or cash flows in

2024 and 2025 while we invested in new equipment and qualified new products, but should enhance the long-term position of our MOSFETs business.

We expect the facility to start generating profit in 2026.

There is no assurance that we will be able to identify and acquire suitable acquisition candidates at price levels and on terms and conditions we consider acceptable.

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depreciation and other costs to our MOSFETs segment.

The facility is generating a loss and we expect it to continue to generate a loss while we invest in new equipment and qualify new products.

Also beginning in 2023, we began making significant

investments in capital expenditures primarily for capital expansion projects primarily outside of China, which will also increase depreciation expense.

At the same time, we are focusing on increasing our technical resources, adding additional

customer-facing engineers, and intensifying our activities in R&D.

The facility has generated losses while we invested in new equipment and qualified new products.

We expect the facility to start generating profit in 2026.

Also, beginning in 2023, we began

making significant investments in capital expenditures primarily for capital expansion projects primarily outside of China, which has and will further increase depreciation expense.

At the same time, we are focusing on increasing our technical

resources, adding additional customer-facing engineers, and intensifying our activities in R&D.

We have seen and expect to continue to see an increase in operating expenses over the next couple of years as we add engineering talents, fill gaps in our technology,

and become a preferred supplier to more customers and more broadly sell our product portfolio.

During 2023, we implemented the Vishay Intertechnology, Inc.

2023 Long-Term Incentive Plan (the "2023 Plan") to enable us to recruit and

retain highly qualified employees, directors, consultants and other service providers, provide them with an incentive for productivity, and create an opportunity for them to share in the growth and value of the Company.

The 2023 Plan is the first

broad-based stock compensation program at Vishay in over 20 years.

This program increased operating expenses by $5.1 million in 2024 versus 2023 and is expected to increase operating expenses by between $4 million and $7 million in 2025 versus

Management believes such additional non-cash costs will enhance the long-term performance of the Company by providing selected participants with an incentive to improve the growth and profitability of the Company.

In 2024, we revised our short-term incentive compensation structure to better align with our growth objectives.

The revised structure incentivizes daily behaviors and actions of our

organizational leaders to create immediate growth in line with our cross-functional business objectives.

Under the new structure, organizational leaders will be rewarded annually for meeting determined targets in revenue, operating margin, gross

For several years prior to 2023, share-based compensation expense was between $4 million and $6 million annually.

During 2023, we implemented the Vishay

Intertechnology, Inc.

2023 Long-Term Incentive Plan (the "2023 Plan") to enable us to recruit and retain highly qualified employees, directors, consultants and other service providers, provide them with an incentive for productivity, and create an

opportunity for them to share in the growth and value of the Company.

The 2023 Plan enhanced incentive compensation for our executive officers and is the first broad-based stock compensation program at Vishay in over 20 years.

compensation expense was $22.4 million in 2025 and is expected to be between approximately $27 million and $30 million in 2026.

Management believes such additional non-cash costs will enhance the long-term performance of the Company by providing

selected participants with an incentive to improve the growth and profitability of the Company.

In 2024, we revised our short-term incentive ("STI") compensation structure to better align with our growth objectives.

The revised structure incentivizes daily behaviors and actions of

our organizational leaders to create immediate growth in line with our cross-functional business objectives.

Under the structure, organizational leaders are rewarded annually for meeting determined targets in revenue, operating margin, gross

margin, and variable margin.

Managers will be able to earn up to 130% of their former STI bonus targets for results which exceed expectations.

Managers are able to earn up to 130% of their former STI bonus targets for results which exceed expectations.

The better alignment of the STI program with business results creates higher volatility in costs.

industry downturn that led to results that were below expectations in 2024 led to relatively low bonus accruals and thus lower reported SG&A expenses.

Such costs are expected to be significantly higher if business results meet or exceed

expectations.

industry downturn that led to results that were below expectations in 2024 led to relatively low bonus accruals and thus lower reported SG&A expenses, while 2025 bonus accruals were higher compared to 2024.

Costs associated with the STI

program in 2026 are expected to be significantly higher if business results meet or exceed expectations.

In September 2024, we announced restructuring actions designed, in part, to optimize our manufacturing footprint and streamline business decision making.

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We continue to monitor the economic environment and its potential effects on our customers and the end markets that we serve.

We are continuing to assess our

manufacturing footprint in light of ongoing geopolitical events and cost savings opportunities.

In uncertain times, we focus on managing our production capacities in accordance with customer requirements, and maintain discipline in terms of our fixed costs and capital expenditures.

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businesses acquired since 2011, but we expect to have some level of future restructuring expenses due to acquisitions.

Goodwill represents the excess of the cost of businesses acquired over the fair value of the related net assets at the date of acquisition.

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.

When performing a quantitative assessment of our reporting units, we use an equal weighting of income (discounted cash flow) and market approaches to determine fair value.

There are 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.

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 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.

We continue to be committed to these long-term projects.

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 and 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 in the third fiscal quarter of 2024 as a result of the goodwill impairment test.

During the fourth fiscal quarter of 2024, we identified the further decrease in our share price in combination with the further increase in the book

value of our assets as a result of our capital spending activities as well as certain internal and external factors as potential indicators of impairment requiring an interim test of our MOSFETs reporting unit.

The interim goodwill impairment test

was performed as of December 31, 2024.

As a result of the assessment, we determined that the estimated fair value of the MOSFETs reporting unit was less than its carrying value.

As a result, we recorded a goodwill impairment charge of $66.5

The goodwill impairment charge is noncash in nature and does not affect our liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations.

If we are not able to achieve our anticipated results and/or if our discount rate were to increase, the fair value of our other reporting units would be

adversely affected, which may result in future impairment.

There is $179.0 million of goodwill remaining on the balance sheet as of December 31, 2024.

We will continue to monitor our reporting units and related goodwill for any possible future

noncash impairment charges.

See Notes 1 and 19 to the consolidated financial statements for additional information.

Foreign Currency Translation

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those foreign currencies.

The net change of the dollar was not material when comparing 2024 versus 2023, but the dollar was weaker during 2023

versus 2022, with the translation of foreign currency revenues and expenses into U.S.

dollars increasing reported revenues and expenses

in 2023 versus 2022.

The dollar was weaker during 2025 versus 2024, with the translation of foreign currency revenues and expenses into U.S.

dollars increasing reported revenues and expenses in 2025 versus 2024.

The net change of the

dollar was not material when comparing 2024 versus 2023.

Foreign Subsidiaries which use the U.S.

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which are incurred in the local currency.

The cost of products sold and selling, general, and administrative expense have been favorably impacted for the year ended December 31, 2024 compared to 2023 and for the year ended December 31, 2023 compared to 2022 by local currency transactions of subsidiaries which use the U.S.

dollar as their functional

See Item 7A for additional discussion of foreign currency exchange risk.

The cost of products sold and selling, general, and administrative expense have been unfavorably impacted for the year ended December 31, 2025 compared to 2024 by local currency transactions of subsidiaries which use the U.S.

dollar as their functional currency.

The costs of products sold and selling, general,

and administrative expense were favorably impacted for the year ended December 31, 2024 compared to 2023.

See Item 7A for additional discussion of foreign currency exchange risk and forward contracts used to mitigate certain foreign currency risks.

Critical Accounting Policies and Estimates

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See Notes 1 and 15 to our consolidated financial statements for further information.

We value our inventories at the lower of cost or net realizable value, with cost determined under the first-in, first-out method.

The valuation of our inventories

requires our management to make market estimates.

We value our inventories at the lower of cost or net realizable value, with cost determined using moving average and the first-in, first-out methods.

The valuation of

our inventories requires our management to make market estimates.

For work in process goods, we are required to estimate the cost to completion of the products and the prices at which we will be able to sell the products.

For finished goods, we must assess the

prices at which we believe the inventory can be sold.

Inventories are also adjusted for estimated obsolescence and written down to net realizable value based on age of the inventory and upon estimates of future demand, technology developments, and

market conditions.

For finished goods, we

must assess the prices at which we believe the inventory can be sold.

Inventories are also adjusted for estimated obsolescence and written down to net realizable value based on age of the inventory and upon estimates of future demand, technology

developments, and market conditions.

Goodwill represents the excess of the cost of businesses acquired over the fair value of the related net assets at the date of acquisition.

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certain tax examinations were concluded and certain statutes of limitations lapsed.

Our tax provision for those years includes adjustments related to the resolution of these matters.

Our tax provision for 2025 includes adjustments related to the resolution of these matters.

During 2023, we settled an examination of our U.S.

income tax returns for the periods ended December 31, 2017 through 2019.

federal income tax

returns for the periods ended December 31, 2017 through 2019.

Our federal income tax returns for the years 2022 through 2024 remain subject to examination.

The tax returns of significant non-U.S.

subsidiaries currently under

examination are located in the following jurisdictions:

Israel (2021), Germany (2017 through 2021), India (2004 through 2021), and Philippines (2017 through 2023).

The Company and its subsidiaries also file income tax returns in other taxing

jurisdictions in the U.S.

subsidiaries currently under examination

are located in the following jurisdictions:

Israel (2021), China (2022 through 2024), India (2004 through 2023), and Philippines (2020 through 2022).

The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the

and around the world, many of which are still open to examination.

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Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

Despite the 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 in 2024 is primarily due to lower sales volume and decreased average selling prices.

The decrease in net revenues in 2023 was primarily sales

volume-driven, partially offset by increased average selling prices.

For most of 2024 and 2025, we operated in a challenging environment, in part due to distribution customers digesting high

channel inventories.

The fourth quarter of 2025 saw short-term market conditions improving, and the long-term prospects for our business remain favorable.

We continue to increase manufacturing capacities for critical product lines.

The increase in

net revenues in 2025 is primarily due to higher sales volume.

The decrease in net revenues in 2024 was primarily due to lower sales volume and decreased average selling prices.

Gross Profit and Margins

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for the year ended December 31, 2024.

The decrease in gross profit margin is primarily due to lower sales volume, decreased average

selling prices, and the impact of the Newport acquisition.

The decrease in gross profit margin is primarily due to lower average selling prices and higher

metals and materials costs.

Higher labor costs and depreciation expense also negatively impacted the gross profit margin.

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

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

Net revenues of the MOSFETs segment were as follows (dollars in thousands):

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Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

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Segment operating margin

Net revenues of the MOSFETs segment decreased significantly in 2024 versus the prior year.

The decrease is primarily due to decreased sales to distribution customers

and customers in the industrial, power supply, and automotive end markets.

The gross profit margin in 2024 decreased versus the

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

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

The segment operating margin decreased versus the prior year.

The decreases are primarily due to gross profit margin decreases and

increased segment SG&A expenses associated with the Newport wafer fab.

Net revenues of the MOSFETs segment increased in 2025 versus the prior year.

The increase is primarily due to increased sales to distribution customers, computing end

market customers, and customers in the Asia region.

Gross profit margin decreased versus the prior year primarily due to decreased average selling prices, partially offset by higher sales volume.

Costs associated with

the Newport wafer fab also contributed to the decrease versus the prior year.

Segment operating margin decreased versus the prior year.

The decrease is primarily due to gross profit margin decreases and increased

segment SG&A expenses associated with the Newport wafer fab.

Average selling prices decreased versus the prior year.

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

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

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.

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 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.

Despite the goodwill impairment charge recorded in 2024, we remain committed to these long-term projects.

We plan to use the Newport wafer fabrication

facility, acquired in 2024, to further develop and scale our SiC MOSFETs and diodes capabilities.

We are also committed to building a 12-inch wafer fab in Itzehoe, Germany.

These 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.

Net revenues of the Diodes segment were as follows (dollars in thousands):

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Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

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Segment operating margin

Net revenues of the Diodes segment decreased significantly in 2024.

The decrease versus the prior year is due to decreased sales in all regions to distribution and EMS customers and industrial, automotive, and power supply end market customers.

Gross profit margin decreased significantly versus the prior year primarily due to lower sales volume, decreased average selling prices, and higher materials, labor,

and fixed costs.

Segment operating margin decreased significantly versus the prior year primarily due to decreased gross profit and increased SG&A costs.

Net revenues of the Diodes segment increased in 2025 versus the prior year.

The increase versus the prior year is primarily due to increased sales to distribution

customers, industrial and power supply end market customers, and customer in the Europe region.

Gross profit margin decreased versus the prior year primarily due to decreased average selling prices, partially offset by higher sales volume.

Segment operating margin decreased versus the prior year primarily due to decreased gross profit.

Average selling prices decreased versus the prior year.

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Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

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Segment operating margin

Net revenues of the Optoelectronic Components segment decreased versus the prior year.

The decrease was primarily due to decreased sales to distribution customers and

customers in the industrial and automotive end markets.

Sales significantly decreased in the Europe and Americas regions, partially offset by an increase in sales in the Asia region.

The gross profit margin decreased versus the prior year.

The decrease is primarily due to lower sales volume, higher materials prices, and inventory obsolescence.

The segment operating margin decreased primarily due to the decrease in gross profit.

Net revenues of the Optoelectronic Components segment increased in 2025 versus the prior year.

The increase is primarily due to increased sales to distribution

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

Gross profit margin increased versus the prior year.

The increase is primarily due to increased sales volume, lower fixed and variable costs, and less inventory

obsolescence.

Segment operating margin increased primarily due to the increase in gross profit.

Average selling prices decreased versus the prior year.

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Change attributable to:

Decrease in volume

Change in average selling prices

Change in volume

Decrease in average selling prices

Foreign currency effects

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Segment operating margin

Net revenues of the Resistors segment decreased significantly versus the prior year.

The decrease was primarily due to decreased sales to distribution customers and

customers in the industrial and automotive end markets.

Sales decreased in the Europe and Americas regions, partially offset by an increase in sales in the Asia region.

The gross profit margin decreased versus the prior year.

The decrease is due to lower sales volume, decreased average selling prices, and higher labor and materials

costs, partially offset by a favorable product mix and decreased utilities costs.

Net revenues of the Resistors segment increased in 2025 versus the prior year.

The increase is primarily due to increased sales to distribution customers, industrial

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

Gross profit margin decreased versus the prior year.

The decrease is due to decreased average selling prices and higher materials costs, partially offset by higher

sales volume.

Segment operating margin decreased versus the prior year.

The decrease is primarily due to decreased gross profit.

The decrease is primarily due to decreased gross profit and increased SG&A costs.

Average selling prices decreased versus the prior year.

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Segment operating margin

Net revenues of the Inductors segment increased slightly versus the prior year.

The increase is primarily due to increased sales to EMS customers, medical, and military

and aerospace end market customers, and customers in the Americas and Asia regions, partially offset by decreased sales to industrial and automotive end market customers and customers in the Europe region.

The gross profit margin decreased versus the prior year.

The decrease is primarily due to lower average selling prices and higher logistics and labor costs.

Net revenues of the Inductors segment increased slightly in 2025 versus the prior year.

The increase is primarily due to increased sales to distribution customers,

industrial and healthcare end market customers, and customers in the Asia region, partially offset by decreased sales to military and aerospace end market customers.

Gross profit margin decreased versus the prior year.

The decrease is primarily due to higher variable costs.

Segment operating margin decreased versus the prior year.

The decrease is primarily due to decreased gross profit.

Average selling prices decreased versus the prior year.

Average selling prices increased versus the prior year.

We expect long-term growth in this

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Change attributable to:

Decrease in volume

Change in volume

Change in average selling prices

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Segment operating margin

Net revenues of the Capacitors segment decreased versus the prior year.

The decrease is primarily due to decreased sales to distribution customers, customers in the

industrial and automotive end markets, and customers in the Americas and Europe regions, partially offset by increased sales to customers in the Asia region.

The gross profit margin decreased slightly versus the prior year.

The decrease is due to lower sales volume, decreased average selling prices, higher labor and tantalum

costs, partially offset by a favorable product mix, and decreased utilities costs.

Net revenues of the Capacitors segment increased significantly in 2025 versus the prior year.

The increase is primarily due to increased sales to distribution

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

Gross profit margin decreased versus the prior year.

The decrease is primarily due to higher material and fixed costs, partially offset by higher sales volume and

increased average selling prices.

Segment operating margin decreased versus the prior year.

The decrease is primarily due to decreased gross profit.

Average selling prices have decreased slightly versus the prior year.

Average selling prices have increased slightly versus the prior year.

A large portion of expected growth of our Capacitors segment is in high voltage high power film capacitors used for smart-grid infrastructure projects.

Accordingly, we

acquired Birkelbach, which is being vertically integrated, to ensure we have adequate metalized film material required to fulfill this growing demand.

Selling, General, and Administrative Expenses

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as a percentage of sales

SG&A expenses for the year ended December 31, 2024

increased versus the year ended December 31, 2023 due to higher stock-based compensation and general cost inflation, partially offset by

lower bonus compensation.

In September 2024, we announced restructuring actions designed, in part, to streamline business decision making.

The actions are expected to generate annualized cost savings of approximately $12

million of selling, general and administration expenses, when the actions are fully implemented by the end of 2026.

However, we are also incurring additional SG&A costs associated with our strategic initiatives.

We are incurring additional SG&A costs associated with our strategic initiatives.

See "Cost Management" above.

SG&A expenses for the year ended December 31, 2025 increased versus the year ended December 31, 2024

due to higher stock-based compensation, general cost inflation, and foreign currency impacts.

SG&A expenses in 2025 include an $11.3 million gain recognized upon the favorable resolution of a contingency.

Other Income (Expense)

2025 Compared to 2024

Interest expense for the year ended December 31, 2024 increased by $2.3 million versus the year ended December

The increase is primarily due to the issuance of the

convertible senior notes due 2030 in the third fiscal quarter of 2023.

Interest expense for the year ended December 31, 2025 increased by $11.2 million versus the year ended

December 31, 2024.

The increase is primarily due to higher average outstanding balances on our revolving credit facility.

The following table analyzes the components of the line “Other” on the consolidated statements of operations (in thousands):

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Other components of net periodic pension expense

Investment income

Investment income (loss)

2024 Compared to 2023

Interest expense for the year ended December 31, 2024 increased by $ 2.3 million versus the year ended December 31, 2023.

The increase is primarily due to higher interest

rates and higher average balances outstanding on the revolving credit facility in 2023 prior to September 2023 when it was paid down to $0.

The increase is primarily due to the issuance of

the convertible senior notes due 2030 in the third fiscal quarter of 2023.

The following table analyzes the components of the line “Other” on the consolidated statements of operations (in thousands):

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transactions.

Our GAAP effective tax rate for the year ended December 31, 2024 is not meaningful at the low levels of pre-tax loss.

Our GAAP effective tax rates for the years ended December 31, 2025 and 2024 are not meaningful at the low levels of pre-tax loss.

Our current effective tax rate is not indicative of expected future tax rates due to relatively small

items having a disproportionate impact on the current effective tax rate.

When pre-tax earnings increase, we expect that our effective tax rate will be higher than the U.S.

statutory rate, excluding unusual transactions.

On July 4, 2025, H.R.

1 (the "Act"), a tax reconciliation act, was enacted into law in the United States.

The Act did not change the U.S.

federal tax rate and most

of the provisions of the Act are effective for tax years beginning after December 31, 2025.

We have recorded no change to the deferred U.S.

taxes directly related to the Act.

The Act allows the deduction in tax year 2025, or in tax years 2025 and

2026, of some previously capitalized research and development costs.

We anticipate that these additional tax deductions may preclude the utilization of a U.S.

foreign tax credit ("FTC") that is due to expire in 2028.

As an indirect result of this

change in tax law, we have recorded a valuation allowance of $9.4 million on the deferred tax asset related to this FTC.

The Act made significant change of foreign GILTI income, now called net CFC tested income.

We anticipate that these changes

will negatively impact our effective tax rate in the future.

In the third fiscal quarter of 2025, the Federal Republic of Germany enacted tax legislation decreasing the federal tax rate beginning in 2028 by 1% per year for five

We have recorded deferred tax expense of $4.2 million to reduce the carrying amount of deferred tax assets in Germany based on these new rates.

There were no unusual tax transactions that impacted the effective tax rate for the years ended December 31, 2024 and December 31, 2023.

The effective tax rate for the year ended December 31, 2022 was impacted by $5.9 million of tax benefits recognized for changes in uncertain tax positions following the resolution of a tax audit, $59.6 million of tax

expense recognized upon the change in indefinite reversal assertion on earnings in Germany, and $33.7 million of tax benefits recognized upon the release of a valuation allowance.

We made the determination during the fourth fiscal quarter of 2022 that substantially all unremitted earnings in Germany were no longer indefinitely reinvested.

recorded additional tax expense during the fourth fiscal quarter of 2022 to accrue the $59.6 million of withholding taxes necessary to distribute these approximately $360.0 million of accumulated earnings to the United States.

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 5 to our consolidated financial statements.

Financial Condition, Liquidity, and Capital Resources

Our financial condition as of December 31, 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 December 31, 2025 is adequate to meet our capital expenditure and other

growth plans.

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.

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

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Cash flows provided by operating activities were $184.3 million for the year ended December 31, 2025, as compared to

cash flows provided by operations of $365.7 million for the year ended December 31, 2023.

cash flows provided by operating activities of $173.7 million for the year ended December 31, 2024.

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

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the respective fiscal quarter.

The cash conversion cycle improved to 125 days in the fourth fiscal quarter of 2025, reflecting our sale of $62.2 million trade receivables and disciplined working capital management.

Cash paid for property and equipment for the year ended December 31, 2025 was $273.3 million, as compared to $320.1 million for the year ended December 31, 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 the 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, 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 year ended December 31, 2024 decreased versus the year ended December 31, 2023 primarily due to decreased net earnings.

We expect that free cash flow will be negatively impacted by the expected high level of

capital expenditures for expansion in 2023 - 2025 after which we expect to generate increasingly higher levels of free cash.

There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our

historical levels, or at all, going forward if the economic environment worsens.

Cash paid for property and equipment for the year ended December 31, 2025 was slightly below

expectations as delivery of some equipment was delayed until the first fiscal quarter of 2026.

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 2026, we plan to spend between $400 million to $440 million, 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 years ended December 31, 2025 and December 31, 2024 were negative

primarily due to high levels of capital expenditures for expansion.

Free cash flow improved for the year ended December 31, 2025 versus the year ended December 31, 2024 primarily due to the sale of trade receivables and decreased capital

expenditures.

We expect free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion 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.

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As of December 31, 2025, we are in a net borrowing position in the

and we expect to continue to be at least through the first half of 2025 based on expected cash payments pursuant to our Stockholder Return Policy and funding of the Newport expansion.

As of December 31, 2024, we have approximately $515

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 $77 million,

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

and we expect to continue to be at least through 2026 based on expected cash payments pursuant to our Stockholder Return Policy and funding of our growth plan.

As of December 31, 2025, we have approximately $493 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 $76 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 may 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.

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.

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

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

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portion of the capital expenditures that would conserve cash for future acquisitions while enabling us to minimize tax expense.

In the fourth fiscal quarter of 2025, we entered into agreements to sell accounts receivable on a revolving basis that

provides up to approximately $150 million source of funding without impacting our credit facility compliance ratios.

We maintain a $750 million revolving credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., that matures

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subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

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

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

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greater than 2.50 to 1.00).

On August 15, 2024, we entered into an amendment to the credit facility that redefined the Interest Coverage Ratio to remove

Capital Expenditures from the calculation and increased the minimum Interest Coverage Ratio to 3.25 to 1.00, among other changes.

We were in compliance with all financial covenants under the credit facility at December 31, 2025.

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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

The repurchase of $370.2 million principal amount of convertible senior notes due 2025 in 2023 and an additional $53.2 million principal amount of our convertible senior notes due 2025 in 2024 significantly reduces the risk that the

maturity date of the credit facility will accelerate.

The 2024 repurchases were 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.

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and are guaranteed by certain significant subsidiaries.

We had no amount outstanding on our revolving credit facility at December 31, 2023 and $136 million outstanding at December 31, 2024.

We borrowed $183 million and repaid $47 million on the revolving credit facility during the fiscal

year ended December 31, 2024.

The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $34 million and the highest amount outstanding at a fiscal month end was $136 million during the fiscal year

ended December 31, 2024.

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

We had $136 million outstanding on our revolving credit facility at December 31, 2024 and $219 million outstanding at

December 31, 2025.

We borrowed $832 million and repaid $749 million on the revolving credit facility during the fiscal year ended December 31, 2025.

The average outstanding balance on our revolving credit facility calculated at fiscal

month-ends was $220 million and the highest amount outstanding at a fiscal month end was $309 million during the fiscal year ended December 31, 2025.

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

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.

Except for the maturity of $41.9 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.

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 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 amounts of our debt are due until 2028.

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.

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

No conversions have occurred to date.

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.

The convertible senior notes due 2025 matured on June 15, 2025.

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 cash-settled the $41.9 million aggregate principal amount outstanding as of June 15, 2025.

The settlement was funded using

borrowings under our credit facility.

No shares were issued to settle the convertible senior notes due 2025.

In evaluating our liquidity and capital resources, we consider our outstanding commitments.

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Estimated costs to complete MOSFETs wafer fab

TCJA transition tax

Uncertain tax positions

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Accordingly, the capitalized deferred financing costs associated with our

convertible notes are excluded from the calculation of long-term debt commitments in the table above.

The amounts due in 2025 are expected to be refinanced on a long-term basis.

long-term debt are excluded from the calculation of long-term debt commitments in the table above.

Commitments for interest payments on long-term debt are cash commitments based on the stated maturity dates of each agreement and include fees under our revolving credit

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facility are based on the rate prevailing at December 31, 2025, but actual rates are variable and are certain to change over time.

We will pay the final increment of the TCJA transition tax in 2025.

Estimated costs to complete the MOSFETs wafer fab and the Newport wafer fab include amounts that we are not contractually required to complete.

Our consolidated balance sheet at December 31, 2025

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although actual timing of payments may be sooner.

Expected pension and postretirement plan funding is based on a projected schedule of benefit payments under the plans.

Expected pension and postretirement plan funding is based on a projected schedule of benefit payments under the plans adjusted for payments from fully-funded plans.

We maintain long-term arrangements with subcontractors, suppliers, and other business partners to ensure access to external capacity and supplies for certain products.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis