VISHAY INTERTECHNOLOGY INC

Note 1 – Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. (“Vishay” or the “Company”) have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results of operations for the fiscal quarter and six fiscal months ended June 28, 2025 are not necessarily indicative of the results to be expected for the full year.

The Company reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first fiscal quarter, which always begins on January 1, and the fourth fiscal quarter, which always ends on December 31. The four fiscal quarters in 2025 end on March 29, 2025, June 28, 2025, September 27, 2025, and December 31, 2025, respectively. The four fiscal quarters in 2024 ended on March 30, 2024, June 29, 2024, September 28, 2024, and December 31, 2024, respectively.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses for the fiscal quarter and six fiscal months ended June 28, 2025 include an $11,293 benefit recognized upon the favorable resolution of a contingency.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current financial statement presentation.

Note 2 – Restructuring and Related Activities

In September 2024, the Company announced the implementation of restructuring actions designed to optimize the Company’s manufacturing footprint and streamline business decision making.

The following table summarizes activity to date related to this program:

Severance payment terms vary by country, but are generally paid in a lump sum at cessation of employment. Some payments are made over an extended period. The current portion of the liability is $9,354 and is included in other accrued expenses in the accompanying consolidated condensed balance sheet. The non-current portion of the liability is $15,037 and is included in other liabilities in the accompanying consolidated condensed balance sheet.

Note 3 – Leases

The net right of use assets and lease liabilities recognized on the consolidated condensed balance sheets for the Company's operating leases were as follows:

Lease expense is classified in the statements of operations based on asset use. Total lease cost recognized on the consolidated condensed statements of operations is as follows:

The Company paid $14,222 and $14,801 for its operating leases in the six fiscal months ended June 28, 2025 and June 29, 2024, respectively, which are included in operating cash flows on the consolidated condensed statements of cash flows. The weighted-average remaining lease term for the Company's operating leases is 8.8 years and the weighted-average discount rate is 6.6% as of June 28, 2025.

The undiscounted future lease payments for the Company's operating lease liabilities are as follows:

The undiscounted future lease payments presented in the table above include payments through the term of the lease, which may include periods beyond the noncancellable term. The difference between the total payments above and the lease liability balance is due to the discount rate used to calculate lease liabilities.

Note 4 – Income Taxes

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended June 28, 2025 and June 29, 2024 reflect the Company’s expected tax rate on reported income before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates.

In December 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax (“Pillar Two”). Various jurisdictions around the world have passed legislation to enact Pillar Two and certain Pillar Two rules are in effect for 2025. The United States has not adopted Pillar Two. The Company does not anticipate a material increase in income tax expense for 2025 due to Pillar Two and the Company is continuing to monitor Pillar Two developments and the potential future impact on its operations and income tax expense.

On July 4, 2025, H.R. 1 (“the Act”), a tax reconciliation act, was enacted into law in the United States. Under U.S. GAAP (specifically, Accounting Standards Codification Topic 740), the effects of changes in tax rates and laws on deferred tax balances are recognized in the period in which the new legislation is enacted. Accordingly, the Company will account for the Act in the third fiscal quarter. The Company is evaluating the Act’s provisions, but is not currently able to estimate the impact of the Act on its deferred tax balances and future income tax expense. Certain provisions of the Act, particularly the international tax provisions, may have a material impact on the Company’s deferred tax balances and future income tax expense.

The Company repatriated $75,000 of accumulated earnings to the United States in the second fiscal quarter of 2025 and paid withholding taxes, in Israel, of $9,375. The withholding tax expense for the repatriation was recorded in prior years.

During the six fiscal months ended June 28, 2025, the liabilities for unrecognized tax benefits decreased $744 on a net basis, primarily due to statute expirations, settlements, and payments, partially offset by accruals for the current period.

Note 5 – Long-Term Debt

Long-term debt consists of the following:

The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2030 as of June 28, 2025:

The convertible senior notes due 2025 matured on June 15, 2025. Upon maturity, $41,911 aggregate principal amount of the convertible senior notes due 2025 were settled in cash, funded by borrowings on the revolving credit facility. No shares were issued to settle the convertible senior notes due 2025.

Deferred financing costs are recognized as non-cash interest expense. Non-cash interest expense was $1,195 and $2,418 for the fiscal quarter and six fiscal months ended June 28, 2025, respectively, and $1,213 and $2,426 for the fiscal quarter and six fiscal months ended June 29, 2024.

Note 6 – Stockholders' Equity

In 2022, the Company's Board of Directors adopted a Stockholder Return Policy that will remain in effect until such time as the Board votes to amend or rescind the policy. The Stockholder Return Policy calls for the Company to return a prescribed amount of cash flows on an annual basis. The Company intends to return such amounts directly, in the form of dividends, or indirectly, in the form of stock repurchases.

The following table summarizes activity pursuant to this policy:

The repurchased shares are being held as treasury stock. The number of shares of common stock being held as treasury stock was 10,662,155 and 9,933,595 as of June 28, 2025 and December 31, 2024, respectively.

Note 7 – Revenue Recognition

Sales returns and allowances accrual activity is shown below:

Note 8 – Accumulated Other Comprehensive Income (Loss)

The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows:

Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. See Note 9 for further information.

Note 9 – Pensions and Other Postretirement Benefits

The Company maintains various retirement benefit plans. The service cost component of net periodic pension cost is classified in costs of products sold or selling, general, and administrative expenses on the consolidated condensed statements of operations based on the respective employee's function. The other components of net periodic pension cost are classified as other expense on the consolidated condensed statements of operations.

Defined Benefit Pension Plans

The following table shows the components of the net periodic pension cost for the second fiscal quarters of 2025 and 2024 for the Company’s defined benefit pension plans:

The following table shows the components of the net periodic pension cost for the six fiscal months ended June 28, 2025 and June 29, 2024 for the Company’s defined benefit pension plans:

Other Postretirement Benefits

The following table shows the components of the net periodic benefit cost for the second fiscal quarters of 2025 and 2024 for the Company’s other postretirement benefit plans:

The following table shows the components of the net periodic pension cost for the six fiscal months ended June 28, 2025 and June 29, 2024 for the Company’s other postretirement benefit plans:

Note 10 – Stock-Based Compensation

The following table summarizes stock-based compensation expense recognized:

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at June 28, 2025(amortization periods in years):

Restricted Stock Units

RSU activity under the Company's stock incentive programs as of June 28, 2025 and changes during the six fiscal months then ended are presented below(number of RSUs in thousands):

*Employees in certain countries are granted equity-linked awards that will be settled in cash and are accounted for as liability awards. The liability awards are not material. The number of RSUs granted excludes these awards.

**The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.

The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance and market criteria between the established target and maximum levels. RSUs with performance-based and market-based vesting criteria are expected to vest as follows(number of RSUs in thousands):

Phantom Stock Units

Phantom stock unit activity as of June 28, 2025 and changes during the six fiscal months then ended are presented below(number of phantom stock units in thousands):

Note 11 – Segment Information

The following tables set forth business segment information:

The Company has a broad line of products that it sells to original equipment manufacturers ("OEMs"), electronic manufacturing services ("EMS") companies, and independent distributors. The distribution of sales by channel is shown below:

Net revenues were attributable to customers in the following regions:

The Company generates substantially all of its revenue from product sales to end customers in the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. Sales by end market are presented below:

Note 12 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share attributable to Vishay stockholders(shares in thousands):

Diluted earnings (loss) per share for the periods presented do not reflect the following weighted average potential common shares that would have an antidilutive effect or have unsatisfied performance conditions(in thousands):

If the average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2030, no shares are included in the diluted earnings per share computation for the convertible senior notes due 2030. Pursuant to theindenture governing the convertible senior notes due 2030, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in cash and/or common stock.

In connection with the issuance of the convertible senior notes due 2030, the Company entered into capped call transactions, which were not included in the calculation of diluted earnings per share as their effect would have been anti-dilutive. The capped calls are intended to reduce the potential dilution to the Company's common stockin the event that at the time of conversion of the convertible senior notes due 2030 the Company's common stock price exceeds the conversion price of the convertible senior notes due 2030.

Note 13 – Fair Value Measurements

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis:

There have been no changes in the classification of any financial instruments within the fair value hierarchy in the periods presented.

The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The Company holds investments in debt securities that are intended to fund a portion of its pension and other postretirement benefit obligations outside of the United States. The investments are valued based on quoted market prices on the last business day of the period. The fair value measurement of the investments is considered a Level 1 measurement within the fair value hierarchy.

The Company may be required to make certain contingent consideration payments related to acquisitions. The fair value of these contingent payments is determined by estimating the net present value of the expected cash flows based on the probability of expected payments. The fair value measurement of the contingent consideration payments is considered a Level 3 measurement within the fair value hierarchy.

The fair value of the long-term debt, excluding the derivative liabilities and deferred financing costs, at June 28, 2025 and December 31, 2024 is approximately $865,500 and $850,600, respectively, compared to its carrying value, excluding the deferred financing costs, of $935,000 and $927,911, respectively. The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered Level 2 inputs.

At June 28, 2025 and December 31, 2024, the Company’s short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates. The Company's short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value. The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity. At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary. No other-than-temporary impairments have been recognized on these securities, and there areno unrecognized holding gains or losses for these securities during the periods presented. There have beenno transfers to or from the held-to-maturity classification. All decreases in the account balance are due to returns of principal at the securities’ maturity dates. Interest on the securities is recognized as interest income when earned.

At June 28, 2025 and December 31, 2024, the Company’s cash and cash equivalents were comprised of demand deposits, time deposits with maturities of three months or less when purchased, and money market funds. The Company estimates the fair value of its cash, cash equivalents, and short-term investments using Level 2 inputs. Based on the current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of the Company's cash, cash equivalents, and held-to-maturity short-term investments approximate the carrying amounts reported in the consolidated condensed balance sheets.

In the second fiscal quarter of 2025, the Company entered into a forward contract with a highly-rated financial institution to mitigate the foreign currency risk associated with an intercompany loan denominated in a currency other than the legal entity's functional currency. The notional amount of the forward contract was $25,000 as of June 28, 2025. We have not designated the forward contract as a hedge for accounting purposes, and as such the change in the fair value of the contract is recognized in the consolidated condensed statements of operations as a component of other income (expense). The Company estimates the fair value of the forward contract based on applicable and commonly used pricing models using current market information and is considered a Level 2 measurement within the fair value hierarchy. Due to the timing of the forward contract, the value of the forward contract was immaterial as of June 28, 2025. The Company does not utilize derivatives or other financial instruments for trading or other speculative purposes.

The Company’s financial instruments also include accounts receivable and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values.