Vishay Precision Group, Inc.

Vishay Precision Group, Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

Note1 – Basis of Presentation

Background

Vishay Precision Group, Inc. (“VPG” or the “Company”) is a global leader in precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement systems are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are characterized as having a very high level of precision and quality.

Interim Financial Statements

These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore donot include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States 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. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of* December 31, 2025and2024* and for each of thethree years in the period ended* December 31, 2025*, included in VPG’s Annual Report on Form10-K for the fiscal year ended* December 31, 2025*, filed with the SEC on* February**27,* 2026. The results of operations for the fiscal quarter ended* July 4, 2026* arenot necessarily indicative of the results to be expected for the full year. VPG reports interim financial information for13-week periods beginning on a Sunday and ending on a Saturday, except for thefirst quarter, which always begins on* January 1,and thefourth* quarter, which always ends on* December 31.Thefour* fiscal quarters in2026 and2025 end on the following dates:

Recent Accounting Pronouncements

In* November 2024,the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)2024-03, Income Statement - Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220*-40), Disaggregation of Income Statement Expenses. This update aims to enhance the transparency of financial reporting by requiring public business entities (PBEs) to provide disaggregated disclosure of certain income statement expense captions into specified categories in disclosures within the footnotes to the financial statements. The ASU is effective for annual fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027.*Early adoption is permitted. Adoption of this ASU should be applied on a prospective basis, although retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In* July 2025the FASB issued ASUNo.* 2025-05 – Financial Instruments – Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Topic606 – Revenue from Contracts with Customers. Under this practical expedient, entities* mayassume that current conditions as of the balance sheet date donot* change for the remaining life of the asset. The ASU is effective for financial statements issued for fiscal years beginning after* December 15, 2025.Early adoption is permitted. The Company adopted this ASU at this reporting period, and it hasno* material impact on our consolidated financial statements.

In* December 2025,the FASB issued ASU2025*-11, Interim Reporting (Topic270*): Narrow-Scope Improvements*. ASU2025-11 clarifies and improves existing interim reporting guidance by consolidating disclosure requirements within Topic270 and introducing a disclosure principle requiring entities to disclose events and changes occurring after the most recent annual reporting period that are expected to have a material effect on the entity’s financial condition or results of operations. The ASU doesnot introduce significant changes to recognition or measurement guidance. The amendments in ASU2025-11 are effective for interim reporting periods within fiscal years beginning after* December 15, 2027,with early adoption permitted. ASU2025*-11 allows for either a prospective or retrospective approach on adoption. The Company is currently evaluating the impact of ASU2025-11 on its consolidated financial statements and related disclosures

In* December 2025,the FASB issued ASU2025*-10 Accounting for Government Grants Received by Business Entities, to establish guidance on the recognition, measurement, presentation and disclosure requirements for government grants received by business entities, including guidance for grants related to an asset and grants related to income. ASU2025-10 is effective for fiscal years beginning after* December 15, 2028,*and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements and related disclosures.

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Note2 – Revenues

Revenue Recognition

The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location*(in thousands)*:

The following table disaggregates net revenue from contracts with customers by market sector*(in thousands)*.

Contract Assets & Liabilities

Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due isnot significant.

The outstanding contract assets and liability accounts were as follows*(in thousands)*:

The amount of revenue recognized during thesix fiscal months ended* July 4, 2026* that was included in the contract liability balance at* December 31, 2025* was $5.1 million.

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Note3–** Goodwill**

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of thefirst day of itsfourth quarter, and whenever events or changes in circumstances indicating that a possible impairment* may*have been incurred.

The change in the carrying amount of goodwill by reporting unit is as follows*(in thousands)*:

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Note4 – Leases

The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less thanone year toten years, seven months,eight days.

Leases recorded on the balance sheet consist of the following*(in thousands)*:

Other information related to lease term and discount rate is as follows:

The components of lease expense are as follows*(in thousands)*:

Right of use assets obtained in exchange for new operating lease liability during thesix fiscal months ended* July 4, 2026* were $1.0 million. The Company paid $2.9 million and $2.7 million for its operating leases for each of thesix fiscal months ended* July 4, 2026and June 28, 2025*, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of* July 4, 2026* are summarized as follows*(in thousands)*:

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Note5 – Income Taxes

For the fiscal quarter ended* July 4, 2026,the Company reported tax benefits, and its effective tax rate was 8% compared to the fiscal quarter ended June 28, 2025,*where the Company reported tax expenses, and its effective tax rate was 66%.

The year-over-year change in the effective tax rate was primarily driven by the valuation allowance on certain deferred tax assets and the impact of foreign currency exchange rate fluctuations on the tax provisions of our non-U.S. entities.

For thesix months ended* July 4, 2026,the Company reported tax benefits, and its effective tax rate of1%,* compared to thesix months ended* June 28, 2025,*where the Company reported income taxes at an effective tax rate of (66)%.

The change in effective tax rate in thesix months ended* July 4, 2026,compared to the corresponding period in the prior fiscal year is mainly due to fiscal year2025* second quarter profits that increased the Company’s tax expenses, in addition to the effect of foreign currency exchange rates on tax provisions in our non-US entities, and the valuation allowance on part of our deferred tax assets.

The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they* maystill be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may*take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.

Note6 – Long-Term Debt

Long-term debt consists of the following*(in thousands)*:

2024 Credit Agreement

On* August 15, 2024,the Company entered into a Fourth Amended and Restated Credit Agreement (the“2024* Credit Agreement”) among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and HSBC as joint lead arrangers and joint bookrunner, and JPMorgan Chase Bank, N.A., as agent for such lenders, pursuant to which its previously existing credit agreement, was amended and restated to, among other things, extend the maturity date from* March 20, 2025to August 15, 2029and adjust the interest rate and commitment fee. The2024* Credit Agreement provides for a multicurrency, secured credit facility (the*“2024* Revolving Facility”) in an aggregate principal amount of $75.0 million, with a sublimit of $10 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the2024 Credit Agreement, the proceeds of which* maybe used for working capital and general corporate purposes, and a portion of which were used to refinance the existing credit facility. The aggregate principal amount of the2024* Revolving Facility* maybe increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the2024* Credit Agreement. The Company* mayelect to make loans under the2024* Revolving Facility in US Dollars, Euros, Canadian Dollars, Sterling, Japanese Yen or such other freely convertible foreign currency.

Amounts borrowed under the2024 Revolving Facility accrue interest in an amount equal to a floating rate plus a specified margin. Such floating rates are (i) for loans denominated in US Dollars, at the Company’s option, either (a) the greatest of: the Agent’s prime rate, the Federal Funds rate, or a 1% floor (the “US Base Rate”), or (b) the SOFR, (ii) for loans denominated in Canadian Dollars, at the Company’s option, either (x) the greatest of: the PRIMCAN Index rate, the average30 day rate for loans accruing interest based on the Canadian Overnight Repo Rate Average (“CORRA”) (the “Canadian Base Rate”), or (y) CORRA, (iii) for loans denominated in Pounds Sterling, the Sterling Overnight Index Average (“SONIA”), (iv) for loans denominated in Euros, the Euro Interbank Offered Rate (“EURIBOR"), and (v) for loans denominated in Japanese Yen, the Tokyo Interbank Offered Rate (“TIBOR”). The specified interest margin for US Base Rate Loans and Canadian Base Rate Loans is 0.25%. Depending upon the Company’s leverage ratio, the interest rate margin for loans based on SOFR, CORRA, SONIA, EURIBOR and TIBOR ranges from 1.75% to 3.00% per annum. The Company is required to pay a quarterly fee of 0.20% per annum to 0.40% per annum on the unused portion of the2024 Revolving Facility, which is also determined based on the Company’s leverage ratio. Additional customary fees apply with respect to letters of credit.

On* July 17, 2025and June 30, 2026,the Company made a partial repayment of the outstanding balance under the2024* Credit Agreement in the amount of $11.0 million and $5.0 million, respectively, using proceeds from the sale of manufacturing facility and excess cash from operation. The repayment was made in accordance with the terms of the2024 Credit Agreement and resulted in a corresponding reduction in the outstanding balance under the2024 Revolving Facility. As of* July 4, 2026*, the outstanding balance under the2024 Revolving Facility was $16.0 million, bearing interest at variable rates based on the Credit Agreement.

The obligations of the Company under the2024 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the Company and the guarantors under the2024 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The2024 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants as of* July 4, 2026*. If the Company isnot in compliance with any of these covenant restrictions, the2024 Revolving Facility could be terminated by the lenders, and all amounts outstanding pursuant to the2024 Revolving Facility could become immediately payable.

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Note7 – Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive (loss) income net of tax, consist of the following*(in thousands)*:

Reclassifications of pension and other postretirement actuarial items out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (see Note8* - Pension and Other Postretirement Benefits*).

Note8 – Pension and Other Postretirement Benefits

Employees of VPG participate in various defined benefit pension and other postretirement benefit ("OPEB") plans. The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and OPEB plans*(in thousands)*:

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Note9–** Share-Based Compensation**

The Vishay Precision Group, Inc.2022 Stock Incentive Plan (the*"2022* plan") permits issuance of up to 608,000 shares of common stock. At* July 4, 2026*, the Company had reserved 245,629 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the2022 plan. If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others. If shares are withheld for payment of taxes, those shares donot become available for grant under the2022 plan.

On* February 26, 2026and in accordance with their respective employment agreements, VPG’sfive* executive officers were granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate grant-date fair value of $4.2 million and were comprised of 87,943 RSUs. Fifty percent of these awards will vest on* January 1, 2029,subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2029,subject to the executives' continued employment and the satisfaction of certain performance objectives relating tothree*-year cumulative “adjusted free cash flow” and "adjusted net earnings goals", each weighted equally.

On* February 26, 2026,certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain employees received awards, of which 50% are performance-based. The awards have an aggregate grant-date fair value of $0.9 million and were comprised of 19,735 RSUs. The non performance portion of these awards (fifty percent) will vest on January 1, 2029,subject to the employees' continued employment. The performance-based portion (fifty percent) of the RSUs will also vest on January 1, 2029,subject to the employees' continued employment and the satisfaction of certain performance objectives relating tothree*-year cumulative adjusted earnings and adjusted cash flow goals, each weighted equally

During thesecond quarter of2026, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Such awards were 50% are performance-based. The awards had an aggregate grant-date fair value of $0.2 million and were comprised of 3,264 RSUs. The non-performance portion of these awards will vest on* March 31and April 30, 2029,accordingly to each employee grant, subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on March 31and April 30, 2029,accordingly to each employee grant, subject to the employees' continued employment and the satisfaction of certain performance objectives relating tothree*-year cumulative earnings and cash flow goals, each weighted equally.

On* May 19, 2026,and in accordance with the Company's2026* Non-Employee Director Compensation Plan, the Board of Directors (the "Board") approved the issuance of an aggregate of 4,100 RSUs to the independent board members of the Board. The awards had an aggregate grant-date fair value of $0.4 million and will vest on or before the2027 Annual Stockholders Meeting in* May 2027,*subject to each applicable director's continued service on the Board. Vesting of equity awards is subject to acceleration under certain circumstances

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. The following table summarizes share-based compensation expense recognized*(in thousands)*:

Note10–** Segment Information**

VPG reports inthree reportable segments: Sensors segment, Weighing Solutions segment, and Measurement Systems segment. The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

The chief operating decision maker ("CODM") is our chief executive officer. The evaluation of the segments performance is based on multiple performance measures including revenues and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring severance, share-based compensation, impairment of goodwill and indefinite-lived intangible assets and amortization of intangible assets, acquisition costs, and other items is meaningful because they relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note1*)*. Reporting segment assets are the owned or allocated assets used by each segment. Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products.

VPG reports inthree reporting segments: Sensors, Weighing Solutions, and Measurement Systems. The Sensors segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

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Note10–** Segment Information (continued)**

The following table sets forth reporting segment information*(in thousands)*:

(1)Segment selling, general and administrative expenses are direct selling, general and administrative expenses, excluding restructuring, share-based compensation, research and development expenses and amortization of intangible assets attributed to the segment.

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Note10–** Segment Information (continued)**

The following table reconciles segment profit to consolidated income before taxes*(in thousands)*:

Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. The table below summarizes intersegment sales*(in thousands)*:

Note11 – Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding, adjusted to include the potentially dilutive effect of restricted stock units (see Note9*)*, and other potentially dilutive securities.

The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders*(in thousands, except earnings per share)*:

The Company’s potentially dilutive securities were excluded from the calculation of diluted loss per share for the quarter andsix fiscal months ended* July 4, 2026,as their inclusion would have had an anti-dilutive effect. The number of restricted stock units that had a potentially dilutive impact was 111 and 97 for the quarter andsix* fiscal months ended* July 4, 2026,respectively, compared to 67 for thesix* fiscal months ended* June 28, 2025.*

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Note12 – Additional Financial Statement Information

Other Expense

The caption “Other” on the consolidated condensed statements of operations consists of the following*(in thousands)*:

Foreign currency exchange gain or loss is due to volatility in the global currency markets. For thesix fiscal months ended* July 4, 2026* the foreign currency exchange loss was largely due to the fluctuation of the Israeli Shekel against the U.S. dollar. Foreign currency exchange loss for thesix fiscal months ended* June 28, 2025* was largely due to the fluctuation of the Japanese yen and the Israeli Shekel against the U.S. dollar.

Other Accrued Expenses and Other Current Liabilities

Other accrued expenses and Other current liabilities consist of the following*(in thousands)*:

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Note13 – Fair Value Measurements

ASC Topic820, Fair Value Measurements and Disclosures*,* establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value intothree broad levels. The following is a brief description of thosethree levels:

Level1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that arenot active.

Level3: Unobservable inputs that reflect the Company’s own assumptions.

An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis*(in thousands)*:

The Company maintains nonqualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and nonqualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at* July 4, 2026* and* December 31, 2025*, 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 cash and cash equivalents held in the rabbi trust is considered a Level1 measurement and the measurement of the company-owned life insurance assets is considered a Level2 measurement within the fair value hierarchy.

The fair value of the long-term debt, excluding capitalized deferred financing costs, at* July 4, 2026* and* December 31, 2025* approximates its carrying value as the revolving debt and term loans are reset monthly based on current market rates, plus a base rate as specified in the2024 Credit Agreement. The fair value measurement of long-term debt is considered a Level2 measurement. The Company’s financial instruments include cash and cash equivalents, accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated balance sheets approximate their fair values.

Note14 – Restructuring Costs

Restructuring costs primarily relate to cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities* may*differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required either to record additional expense in future periods or to reverse part of the previously recorded charges.

The Company recorded $0.8 million and $0.2 million of restructuring costs during the fiscal quarter ended* July 4, 2026and June 28, 2025*, respectively, and $1.2 million and $0.6 million of restructuring costs during thesix fiscal months ended* July 4, 2026and June 28, 2025*, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs, including the consolidation of certain manufacturing operations to improve operational efficiency and optimize the Company's manufacturing.

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The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of* July 4, 2026* and* December 31, 2025*, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets*(in thousands)*:

Note15 – Commitments and Contingencies

Tax Assessment

During thesecond quarter of2024, the Israeli Tax Authority issued a Value Added Tax (VAT) assessment to the Company, in the amount of ILS 8.4 million (approximately $2.8 million), pertaining to claims of VAT between the years2019 to2023.

On* August 6, 2025,the Company received the decision of the Israeli Tax Authority regarding the Company's appeal of the VAT assessment. The appeal was rejected, based on the same reasoning outlined in the original assessment issued to the Company. The Company deferred the assessment and with the assistance of its legal counsel appealed this decision to the court on January 18, 2026.*

The Company believes that the liability for the assessment isnot probable, and given the stage of this matter, the Company is currently unable to predict the likely outcome or estimate the potential financial impact, if any, of this matter.

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