VISHAY INTERTECHNOLOGY INC

Previous wording

This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding of Vishay's financial condition, results of operations and cash flows by focusing on changes in certain key measures from period to period. The MD&A should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in Item 1. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our Annual Report on Form 10-K, particularly in Item 1A. "Risk Factors," filed with the Securities and Exchange Commission on February 13, 2026.

Current wording

This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding of Vishay's financial condition, results of operations and cash flows by focusing on changes in certain key measures from period to period. The MD&A should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in Item 1. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our Annual Report on Form 10-K, particularly in Item 1A. "Risk Factors," filed with the Securities and Exchange Commission (the "SEC") on February 13, 2026.

Previous wording

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. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity in an effort to ensure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

Current wording

We are focused on realizing the full value of our broad product portfolio, becoming a customer-first company, and capitalizing on the megatrends 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. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity in an effort to ensure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. Capital expenditures for the full year 2026 are now expected to be in the range of $350 million to $400 million, due to extended lead times on equipment deliveries and installation.

Previous wording

We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating income, segment operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below. Nearly all key financial metrics increased versus the prior fiscal quarter and prior year periods. Net revenues increased versus the prior fiscal quarter and the prior year periods primarily due to higher sales volume. Margins were positively impacted by higher sales volume and associated manufacturing efficiencies, which offset higher metals and materials costs. The order level remained at a high level and backlog continued to increase.

Current wording

We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating income, segment operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below. Nearly all key financial metrics increased versus the prior fiscal quarter and prior year periods. Net revenues increased versus the prior fiscal quarter and the prior year periods primarily due to higher sales volume. Margins were positively impacted by higher sales volume, associated manufacturing efficiencies, and higher average selling prices, partially offset by higher metals and materials costs. The order level remained at a high level and backlog continued to increase.

Previous wording

Net revenues for the fiscal quarter ended July 4, 2026 were $888.6 million, compared to $839.2 million and $762.3 million for the fiscal quarters ended April 4, 2026 and June 28, 2025, respectively. Net earnings for the fiscal quarter ended July 4, 2026 were $28.1 million, or $0.19 per diluted share, compared to net earnings of $7.2 million, or $0.05 per diluted share for the fiscal quarter ended April 4, 2026, and net earnings of $2.0 million, or $0.01 per diluted share for the fiscal quarter ended June 28, 2025.

Current wording

Net revenues for the fiscal quarter ended October 3, 2026 were $978.9 million, compared to $888.6 million and $790.6 million for the fiscal quarters ended July 4, 2026 and September 27, 2025, respectively. Net earnings for the fiscal quarter ended October 3, 2026 were $59.0 million, or $0.37 per diluted share, compared to net earnings of $28.1 million, or $0.19 per diluted share for the fiscal quarter ended July 4, 2026, and a net loss of $(7.9) million, or $(0.06) per share for the fiscal quarter ended September 27, 2025.

Previous wording

Net revenues for the six fiscal months ended July 4, 2026 were $1,727.8 million, compared to $1,477.5 million for the six fiscal months ended June 28, 2025. Net earnings for the six fiscal months ended July 4, 2026 were$35.3 million, or $0.25 per diluted share, compared to a net loss of$(2.1) million, or $(0.02) per share for the six fiscal months ended June 28, 2025.

Current wording

Net revenues for the nine fiscal months ended October 3, 2026 were $2,706.8 million, compared to $2,268.1 million for the nine fiscal months ended September 27, 2025. Net earnings for the nine fiscal months ended October 3, 2026 were $94.3 million, or $0.63 per diluted share, compared to a net loss of $(10.0) million, or $(0.07) per share for the nine fiscal months ended September 27, 2025.

Previous wording

Net earnings (loss) attributable to Vishay stockholders include items affecting comparability. The items affecting comparability are*(in thousands, except per share amounts)*:

Current wording

Net earnings (loss) include items affecting comparability. The items affecting comparability are*(in thousands, except per share amounts)*:

Previous wording

On July 1, 2026, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $50.00 per share for proceeds of $830.25 million, net of underwriting discounts and issuance costs. We intend to use the net proceeds from the sale of our common stock in this offering to accelerate our growth initiatives and for general corporate purposes, including to reduce borrowings under our revolving credit facility. These growth initiatives may include investments in capacity expansion, manufacturing optimization, technology innovation research and development, and other strategic priorities intended to support long-term growth. Pending these uses, we may invest the net proceeds in short-term, investment-grade instruments. We may also use a portion of the net proceeds to acquire or invest in businesses, products and/or technologies that are complementary to our own, although we have no current plans, commitments, or agreements with respect to any acquisitions. In the third fiscal quarter of 2026, we reduced the outstanding balance of the revolving credit facility to zero using the proceeds of the offering.

Current wording

On July 1, 2026, we completed an underwritten public offering of 17.25 million shares of our common stock at a price to the public of $50.00 per share for proceeds of $830.25 million, net of underwriting discounts and issuance costs. We intend to use the net proceeds from the sale of our common stock in this offering to accelerate our growth initiatives and for general corporate purposes. These growth initiatives may include investments in capacity expansion, manufacturing optimization, technology innovation, research and development, and other strategic priorities intended to support long-term growth. Pending these uses, we may invest the net proceeds in short-term, investment-grade instruments. We may also use a portion of the net proceeds to acquire or invest in businesses, products and/or technologies that are complementary to our own, although we have no current plans, commitments, or agreements with respect to any acquisitions. In the third fiscal quarter of 2026, we reduced the outstanding balance of the revolving credit facility to zero using a portion of the proceeds of the offering.

Previous wording

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

Current wording

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

Previous wording

In the fiscal quarter ended July 4, 2026, we received refunds of IEEPA tariffs from the U.S. government, of which $30.0 million will be passed through to customers. The tariff refunds received were recognized as a reduction of costs of products sold. Tariff refunds to be passed through to customers are recorded as a reduction of net revenues. Interest on tariff refunds was recorded as interest income and was not material.

Current wording

In the fiscal quarter ended July 4, 2026, we received refunds of IEEPA tariffs from the U.S. government, of which $30.0 million were passed through to customers in the third fiscal quarter of 2026. The tariff refunds received were recognized as a reduction of costs of products sold. Tariff refunds passed through to customers were recorded as a reduction of net revenues. Interest on tariff refunds was recorded as interest income and was not material.

Previous wording

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 may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations. For 2026, we expect to maintain our dividend and opportunistically repurchase shares in line with this policy. We did not repurchase any shares of common stock in the second fiscal quarter of 2026. We expect to be in compliance with our Stockholder Return Policy without repurchasing any common stock in 2026.

Current wording

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 may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations. For 2026, we expect to maintain our dividend and opportunistically repurchase shares in line with this policy. We did not repurchase any shares of common stock in the third fiscal quarter of 2026. We expect to be in compliance with our Stockholder Return Policy without repurchasing any common stock in 2026.

Previous wording

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the second fiscal quarter of 2025 through the second fiscal quarter of 2026(dollars in thousands):

Current wording

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the third fiscal quarter of 2025 through the third fiscal quarter of 2026(dollars in thousands):

Previous wording

(2) Gross profit margin and operating margin for the second fiscal quarter of 2026 also include $30.0 million tariff refunds received from the U.S. government, with no impact on gross profit. Operating margin for the second fiscal quarter of 2025 includes an $11.3 million gain recognized upon the favorable resolution of a contingency.

Current wording

(2) Gross profit margin and operating margin for the second fiscal quarter of 2026 also include $30.0 million tariff refunds received from the U.S. government, with no impact on gross profit.

Previous wording

Gross profit margin increased versus the prior fiscal quarter and prior year quarter. The increases are primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which offset higher metals and materials costs and unfavorable foreign exchange impacts.

Current wording

Gross profit margin increased versus the prior fiscal quarter and prior year quarter. The increases are primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which were partially offset by higher metals and materials costs.

Previous wording

The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal quarters beginning with the second fiscal quarter of 2025 through the second fiscal quarter of 2026(dollars in thousands):

Current wording

The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal quarters beginning with the third fiscal quarter of 2025 through the third fiscal quarter of 2026(dollars in thousands):

Previous wording

We continued to see improving market conditions in the second fiscal quarter of 2026, resulting in revenue growth driven primarily by higher sales volume and improved pricing conditions. This represents an improvement from most of 2025 when we experienced distribution customers digesting high channel inventories. The long-term prospects of our business remain favorable. We continue to increase manufacturing capacities for critical product lines.

Current wording

We continued to see improving market conditions in the third fiscal quarter of 2026, resulting in revenue growth driven primarily by higher sales volume and improved pricing conditions. This represents an improvement from most of 2025 when we experienced distribution customers digesting high channel inventories. The long-term prospects of our business remain favorable. We continue to increase manufacturing capacities for critical product lines.

Previous wording

Gross profit margins for the fiscal quarter ended July 4, 2026 were 23.3%, versus 21.0% and 19.5% for the comparable prior fiscal quarter and prior year quarter, respectively. Gross profit margins for the six fiscal months ended July 4, 2026 were 22.2%, versus 19.2% for the comparable prior year period. Gross profit margin increased versus the prior fiscal quarter and prior year quarter primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which offset higher metals and materials costs and unfavorable foreign exchange impacts.

Current wording

Gross profit margins for the fiscal quarter ended October 3, 2026 were 25.5%, versus 23.3% and 19.5% for the comparable prior fiscal quarter and prior year quarter, respectively. Gross profit margins for the nine fiscal months ended October 3, 2026 were 23.4%, versus 19.3% for the comparable prior year period. Gross profit margin increased versus the prior fiscal quarter and prior year quarter primarily due to higher sales volume, associated manufacturing efficiencies, and higher average selling prices, which were partially offset by higher metals and materials costs.

Previous wording

Net revenues of the MOSFETs segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market end market customers, and customers in all regions. The increases versus the prior year periods are primarily due to increased sales to OEM and distribution customers, industrial and automotive end market customers, and customers in all regions.

Current wording

Net revenues of the MOSFETs segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution and OEM customers, industrial and automotive end market customers, and customers in the Europe and Asia regions, partially offset by decreased sales to computing end market customers. The increases versus the prior year periods are primarily due to increased sales to OEM and distribution customers, industrial end market customers, and customers in all regions.

Previous wording

Segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods. The changes are primarily due to changes in gross profit.

Current wording

Segment operating margin decreased versus the prior fiscal quarter, but increased versus the prior year periods. The decrease versus the prior fiscal quarter is primarily due to uneven subsidy recognition, which offset the increased gross profit. The increases versus the prior fiscal year periods are due to increases in gross profit.

Previous wording

Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and industrial end market customers.

Current wording

Net revenues of the Diodes segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Asia and Europe regions. The increases versus the prior year periods are due to increased salesto customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and industrial end market customers.

Previous wording

Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods were primarily due to higher sales volume and higher average selling prices.

Current wording

Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods were primarily due to higher sales volume. Higher average selling prices also contributed to the increases versus the prior year periods.

Previous wording

Net revenues of the Capacitors segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Asia region. The increases versus the prior year periods are primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution end market customers, industrial and military and aerospace end market customers, and customers in the Asia and Americas regions.

Current wording

Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial and automotive end market customers, and customers in the Asia region. The increases versus the prior year periods are primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and industrial end market customers.

Previous wording

Net revenues of the Resistors segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to distribution customers, industrial end market customers, and customers in all regions.

Current wording

Net revenues of the Resistors segment increased versus the prior fiscal quarter and prior year periods. The increases versus the prior fiscal quarter and prior year periods are primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Americas and Asia regions.

Previous wording

Net revenues of the Inductors segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and customers in the Americas region. The increases versus the prior year periods are primarily due to increased sales to distribution customers, military and aerospace and healthcare end market customers, and customers in the Americas and Asia regions.

Current wording

Net revenues of the Inductors segment increased versus the prior fiscal quarter and prior year periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers, industrial and automotive end market customers, and customers in the Asia region. The increases versus the prior year periods are primarily due to increased sales to distribution customers, industrial and power supply end market customers, and customers in the Asia and Americas regions. The increase versus the prior year-to-date is slightly offset by decreased sales to automotive end market customers and customers in the Europe region.

Previous wording

Gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year periods. The decrease versus the prior fiscal quarter is primarily due to higher material and labor costs, partially offset by higher sales volume and higher average selling prices. The increases versus the prior year periods are primarily due to higher sales volume, materials price savings, lower logistics costs, and higher yield, partially offset by lower average selling prices.

Current wording

Gross profit margin increased versus the prior fiscal quarter and prior year periods. The increases are primarily due to higher sales volume, manufacturing efficiencies, and materials price savings, partially offset by lower average selling prices.

Previous wording

We are incurring additional SG&A costs associated with our strategic initiatives. The sequential decrease in SG&A expenses is primarily due to uneven attribution of stock-based compensation expense. SG&A expenses increased versus the prior year periods due to higher stock-based compensation expense, general cost inflation, and a one-time gain recognized in the prior year periods.

Current wording

We are incurring additional SG&A costs associated with our strategic initiatives. The sequential increase in SG&A expenses is primarily due to uneven subsidy recognition, increased stock-based compensation expense, and increased expected credit loss expense. SG&A expenses increased versus the prior year periods due to increased bonus compensation, increased stock-based compensation expense, general cost inflation, and a one-time gain recognized in the prior year-to-date period.

Previous wording

Interest expense for the fiscal quarter ended July 4, 2026 increased $0.3 million versus the fiscal quarter ended April 4, 2026 and decreased $(0.3) million versus the fiscal quarter ended June 28, 2025. Interest expense for the six fiscal months ended July 4, 2026 increased $0.9 million versus the six fiscal months ended June 28, 2025. The increase versus the prior year-to-date period is due to higher average outstanding balances on our revolving credit facility.

Current wording

Interest expense for the fiscal quarter ended October 3, 2026 decreased $3.7 million versus the fiscal quarter ended July 4, 2026 and decreased $2.8 million versus the fiscal quarter ended September 27, 2025. Interest expense for the nine fiscal months ended October 3, 2026 decreased $1.9 million versus the nine fiscal months ended September 27, 2025. The decreases versus the prior fiscal quarter and prior year periods were primarily due to the repayment of the outstanding balance of our revolving credit facility to zero in the third fiscal quarter of 2026 using a portion of the net proceeds from the sale of our common stock.

Previous wording

For the fiscal quarter ended July 4, 2026, our effective tax rate was 33.7%, as compared to 44.3% and 83.7% for the fiscal quarters ended April 4, 2026 and June 28, 2025, respectively. For the six fiscal months ended July 4, 2026, our effective tax rate was 36.1%, as compared to 125.9% for the six fiscal months ended June 28, 2025. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions, even at higher levels of pre-tax income.

Current wording

For the fiscal quarter ended October 3, 2026, our effective tax rate was 32.4%, as compared to 33.7% and 166.3% for the fiscal quarters ended July 4, 2026 and September 27, 2025, respectively. For the nine fiscal months ended October 3, 2026, our effective tax rate was 33.9%, as compared to 150.0% for the nine fiscal months ended September 27, 2025. The effective tax rates for the prior year periods include the impact of $13.7 million expense associated with changes in tax laws and regulations enacted in the third fiscal quarter of 2025. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions, even at higher levels of pre-tax income.

Previous wording

Our financial condition as of July 4, 2026 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.

Current wording

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.

Previous wording

Cash flows provided by operating activities were $169.0 million for the six fiscal months ended July 4, 2026, as compared to cash flows provided by operations of $7.3 million for the six fiscal months ended June 28, 2025.

Current wording

Cash flows provided by operating activities were $314.8 million for the nine fiscal months ended October 3, 2026, as compared to cash flows provided by operations of $34.9 million for the nine fiscal months ended September 27, 2025.

Previous wording

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle. The following table presents the components of our cash conversion cycle during the five fiscal quarters beginning with the second fiscal quarter of 2025 through the second fiscal quarter of 2026:

Current wording

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle. The following table presents the components of our cash conversion cycle during the five fiscal quarters beginning with the third fiscal quarter of 2025 through the third fiscal quarter of 2026:

Previous wording

Cash paid for property and equipment for the six fiscal months ended July 4, 2026 was $205.9 million, as compared to $126.2 million for the six fiscal months ended June 28, 2025. 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. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

Current wording

Cash paid for property and equipment for the nine fiscal months ended October 3, 2026 was $253.4 million, as compared to $178.5 million for the nine fiscal months ended September 27, 2025. 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. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. Capital expenditures for the full year 2026 are now expected to be in the range of $350 million to $400 million, due to extended lead times on equipment deliveries and installation.

Previous wording

Free cash flow for the six fiscal months ended July 4, 2026 increased versus the six fiscal months ended June 28, 2025. Free cash flow for the six fiscal months ended July 4, 2026 was positively impacted by increased net earnings, as well as tariff refunds received from the U.S. government and additional net cash inflows related to our account receivable securitization programs. We expect that 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.

Current wording

Free cash flow for the nine fiscal months ended October 3, 2026 increased versus the nine fiscal months ended September 27, 2025. Free cash flow for the nine fiscal months ended October 3, 2026 was positively impacted by increased net earnings and additional net cash inflows related to our account receivable securitization program. During the fourth fiscal quarter, we plan to significantly reduce our accounts receivable securitization program, which will result in negative free cash flow in the quarter. In the near-term, we expect that free cash flow will also continue to be 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.

Previous wording

We invest a portion of our excess cash in highly liquid, high-quality instruments with maturities greater than 90 days, but less than 1 year, which we classify as short-term investments on our consolidated condensed balance sheets. As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation of net cash and short-term investments (debt). Following the completion of our public offering on July 1, 2026, we have increased excess cash available to invest in such instruments.

Current wording

We invest a portion of our excess cash in highly liquid, high-quality instruments with maturities greater than 90 days, but less than 1 year, which we classify as short-term investments on our consolidated condensed balance sheets. As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation of net cash and short-term investments (debt). Following the completion of our public offering on July 1, 2026, we have increased excess cash available to invest in such instruments, although most of our cash remains invested in instruments with maturities less than 90 days for greater short-term flexibility and due to the current interest rate environment.

Previous wording

As of July 4, 2026, $804.9 million of our cash and cash equivalents and short-term investments were held by our U.S. subsidiaries. The cash generated from the public offering of our common stock completed on July 1, 2026, was held in the U.S. as of July 4, 2026, and will be deployed to execute our global strategic priorities. As of July 4, 2026, we have approximately $560.4 million of earnings that are deemed not indefinitely reinvested, primarily in Germany and Israel. Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $80.8 million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings. Repatriating these unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense. We also have amounts of unremitted foreign earnings, which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable to foreign jurisdictions that would be incurred to repatriate these amounts. Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash. Due to the uncertainties associated with the ability, timing, and method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings is not practicable, but could be significant. Our undrawn credit facility provides us with adequate operating liquidity in the United States.

Current wording

As of October 3, 2026, $494.1 million of our cash and cash equivalents and short-term investments were held by our U.S. subsidiaries. A portion of the cash generated from the public offering of our common stock completed on July 1, 2026, was held in the U.S. as of October 3, 2026, and will be deployed to execute our global strategic priorities. As of October 3, 2026, we have approximately $535.2 million of earnings that are deemed not indefinitely reinvested, primarily in Germany and Israel. Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $79.3 million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings. Repatriating these unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense. We also have amounts of unremitted foreign earnings, which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable to foreign jurisdictions that would be incurred to repatriate these amounts. Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash. Due to the uncertainties associated with the ability, timing, and method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings is not practicable, but could be significant. Our undrawn credit facility provides us with adequate operating liquidity in the United States.

Previous wording

The credit facility limits or restricts us from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50 to 1.00).

Current wording

The credit facility limits or restricts us from, among other things, incurring indebtedness, incurring liens on assets, making investments and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50 to 1.00).

Previous wording

We were in compliance with all financial covenants under the credit facility at July 4, 2026. Our interest coverage ratio and net leverage ratio were 10.70 to 1 and 2.10 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections. The usable capacity on the credit facility is approximately $423 million as of July 4, 2026.

Current wording

We were in compliance with all financial covenants under the credit facility at October 3, 2026. Our interest coverage ratio and net leverage ratio were 14.12 to 1 and 1.21 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections. The full capacity of the credit facility is available to be used as of October 3, 2026.

Previous wording

Borrowings under the credit facility bear interest at variable reference rates plus an interest margin. The applicable interest margin is based on our total leverage ratio. We also pay a commitment fee, also based on our total leverage ratio, on undrawn amounts. U.S. dollar borrowings under the credit facility are based on SOFR (including a customary spread adjustment). Borrowings in foreign currencies bear interest at currency-specific reference rates plus an interest margin. Based on our current total leverage ratio of 2.77 to 1, any new U.S. dollar borrowings will bear interest at SOFR plus 2.10% (including the applicable credit spread), and the undrawn commitment fee is 0.35% per annum.

Current wording

Borrowings under the credit facility bear interest at variable reference rates plus an interest margin. The applicable interest margin is based on our total leverage ratio. We also pay a commitment fee, also based on our total leverage ratio, on undrawn amounts. U.S. dollar borrowings under the credit facility are based on SOFR (including a customary spread adjustment). Borrowings in foreign currencies bear interest at currency-specific reference rates plus an interest margin. Based on our current total leverage ratio of 1.76 to 1, any new U.S. dollar borrowings will bear interest at SOFR plus 1.85% (including the applicable credit spread), and the undrawn commitment fee is 0.30% per annum.

Previous wording

We had $219 million outstanding on our revolving credit facility at December 31, 2025 and $238 million outstanding at July 4, 2026. We borrowed $384 million and repaid $365 million on the revolving credit facility during the six fiscal months ended July 4, 2026. The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $273 million and the highest amount outstanding at a fiscal month end was $319 million during the six fiscal months ended July 4, 2026. In the third fiscal quarter of 2026, we used a portion of the net proceeds from the public offering of our common stock completed on July 1, 2026, to fully repay the outstanding balance on our revolving credit facility. We expect, at least initially, to fund certain future obligations required to be paid by the U.S. parent company by borrowing under our credit facility. We also expect to continue to use the credit facility from time-to-time to meet certain short-term financing needs. Additional acquisition activity, convertible debt repurchases, or conversion of our convertible debt instruments, may require additional borrowing under our credit facility or may otherwise require us to incur additional debt. No principal payments on our debt are due until 2028.

Current wording

We had $219 million outstanding on our revolving credit facility at December 31, 2025 and no amount outstanding at October 3, 2026. We borrowed $384 million and repaid $603 million on the revolving credit facility during the nine fiscal months ended October 3, 2026. The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $182 million and the highest amount outstanding at a fiscal month end was $319 million during the nine fiscal months ended October 3, 2026. In the third fiscal quarter of 2026, we used a portion of the net proceeds from the public offering of our common stock completed on July 1, 2026, to fully repay the outstanding balance on our revolving credit facility. We expect, at least initially, to fund certain future obligations required to be paid by the U.S. parent company by borrowing under our credit facility. We also expect to continue to use the credit facility from time-to-time to meet certain short-term financing needs. Additional acquisition activity, convertible debt repurchases, or conversion of our convertible debt instruments, may require additional borrowing under our credit facility or may otherwise require us to incur additional debt. No principal payments on our debt are due until 2028.

Previous wording

The 2030 Notes were not convertible during the second fiscal quarter of 2026. The 2030 Notes became eligible for conversion at the option of the holders beginning on July 6, 2026 and will remain eligible for conversion throughout the third fiscal quarter of 2026. Pursuant to the indenture governing the 2030 Notes, we will satisfy our conversion obligations by paying $1,000 cash per $1,000 principal amount of converted notes and settle any additional amounts due in cash and/or common stock, at our election. We have the ability to finance a certain amount of any converted 2030 Notes with borrowings from our long-term revolving credit facility. The principal amount of 2030 Notes and associated deferred financing costs are classified as current liabilities on the consolidated condensed balance sheet.

Current wording

The 2030 Notes were convertible in the third fiscal quarter of 2026 based on the July 4, 2026 evaluation of the conversion criteria as the sales price of our common stock exceeded 130% of the conversion price for the applicable period. Based on the October 3, 2026 evaluation of the conversion criteria, the 2030 Notes are no longer convertible. Pursuant to the indenture governing the 2030 Notes, we will satisfy our conversion obligations by paying $1,000 cash per $1,000 principal amount of converted notes and settle any additional amounts due in cash and/or common stock, at our election. In the third fiscal quarter of 2026, a holder of the 2030 Notes converted seven notes. The conversion will be settled in the fourth fiscal quarter of 2026. The principal, $7 thousand, will be paid in cash and any additional amounts owed paid in common stock. We have the ability to finance a certain amount of any converted 2030 Notes with borrowings from our long-term revolving credit facility.