VISHAY INTERTECHNOLOGY INC
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
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FY2024 · Filed Feb 14, 2025
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Item 8. Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Vishay Intertechnology, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vishay Intertechnology, Inc. (the Company) as of December 31,2024 and 2023, the related consolidated statements ofoperations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31,2024, and the related notes (collectively referred to as the“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31,2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 14, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosure to which they relate.
| Sales Returns and Allowances Accruals | ||
| Description of the Matter | At December 31, 2024, the Company’s liability for sales returns and allowances was $43.4 million. As discussed in Note 1 of the consolidated financial statements, the Company recognizes the estimated variable consideration to be received from contracts with customers as revenue and recognizes a related accrued liability for estimated future credits that will be issued to its customers, primarily distributors, for product returns, scrap allowance, “stock, ship and debit”, and price protection programs with those customers. Auditing management’s sales returns and allowances accruals specifically related to the scrap allowance and “stock, ship and debit” programs was especially challenging because of the judgement used by management to determine the amount of future credits that will be issued to customers for sales that were recognized during the period. Estimating the scrap allowance and “stock, ship and debit” accrual involves the application of models which require management to make certain assumptions including historical customer credit rates. | |
|---|---|---|
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s sales returns and allowances review process for the scrap allowance and “stock, ship and debit” programs, including testing controls over management’s review of the reserve calculation and the underlying assumptions used to develop the estimates. To test the estimated sales returns and allowances accruals for the scrap allowance and “stock, ship and debit” programs, we performed audit procedures that included, among others, assessing methodologies and testing the assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analyses. We inspected contracts with customers in evaluating whether the assumptions used by management agreed with the terms and conditions of the contracts. In addition, we compared the assumptions used by management to actual historical credit experience. We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the accruals that would result from changes in the assumptions. | |
| Goodwill Impairment | ||
| Description of the Matter | At December 31, 2024, the Company’s goodwill balance was $179.0 million. As discussed in Note 1 and Note 19 of the consolidated financial statements, the Company’s goodwill is tested for impairment at least annually, or whenever events or circumstances indicate that the value of goodwill may be impaired. If goodwill is determined to be impaired, an impairment loss is measured at the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. During the fourth quarter of 2024, the Company identified impairment indicators related to goodwill within the MOSFETs reporting unit. The Company performed a quantitative assessment of the reporting unit to determine its fair value. Based on the Company’s evaluation, the estimated fair value of the reporting unit was determined to be less than its carrying value. As a result, a non-cash goodwill impairment charge of $66.5 million was recognized. Auditing the Company’s goodwill impairment assessment for the MOSFETs reporting unit was complex and highly judgmental due to the significant judgments and estimation required by management in determining the fair value of the reporting unit, which is based on assumptions about future market or economic conditions and company-specific qualitative factors whose outcome is uncertain and will therefore be subject to change over time. In particular, the fair value estimate of the reporting unit involves the use of significant unobservable inputs and is sensitive to changes in significant assumptions, such as the discount rate, revenue growth rate, and earnings before interest, taxes, depreciation and amortization ("EBITDA"). | |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's goodwill impairment review and testing process over the MOSFETs reporting unit. For example, we tested controls over management’s review of the valuation model, the significant assumptions described above, and the completeness and accuracy of the data used in the valuation. To test the estimated fair value for the MOSFETs reporting unit, we performed audit procedures that included, among others, assessing the methodologies used to develop the estimated fair values, testing the significant assumptions discussed above, and evaluating the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to historical results and current industry trends. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. We also involved valuation specialists to assist in our evaluation of the overall methodologies and the discount rate used in the fair value estimate. | |
/s/Ernst & Young LLP
We have served as the Company's auditor since 1968.
Philadelphia, Pennsylvania
February 14, 2025
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