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VISHAY INTERTECHNOLOGY, INC.

FORM 10-Q

~~September 28, 2019~~April 4, 2020

CONTENTS

				Page Number
PART I.		FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Condensed Balance Sheets ~~(Unaudited)~~ – ~~September 28, 2019~~April 4, 2020 (Unaudited) and December 31, ~~2018~~ 2019		4

		Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended ~~September 28,~~April 4, 2020 and March 30, 2019 ~~and September 29, 2018~~		6

		Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Fiscal Quarters Ended ~~September 28,~~April 4, 2020 and March 30, 2019 ~~and September 29, 2018~~		7

		Consolidated Condensed Statements of ~~Operations~~Cash Flows (Unaudited) – ~~Nine~~ Fiscal ~~Months~~Quarters Ended ~~September 28,~~April 4, 2020 and March 30, 2019 ~~and September 29, 2018~~		8

		Consolidated Condensed Statements of ~~Comprehensive Income~~Equity (Unaudited) ~~– Nine Fiscal Months Ended September 28, 2019 and September 29, 2018~~		9

		Notes to Consolidated Condensed Financial Statements ~~of Cash Flows~~ (Unaudited) ~~– Nine Fiscal Months Ended September 28, 2019 and September 29, 2018~~		10

	Item 2.	~~Consolidated Condensed Statements~~Management’s Discussion and Analysis of ~~Equity (Unaudited)~~ Financial Condition and Results of Operations		11 30

	Item 3.	~~Notes to the Consolidated Condensed Financial Statements (Unaudited)~~ Quantitative and Qualitative Disclosures About Market Risk		12 49

	Item 2. 4.	~~Management’s Discussion~~Controls and ~~Analysis of Financial Condition and Results of Operations~~ Procedures		34 49

		~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~		55

	~~Item 4.~~	~~Controls and Procedures~~		55

PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings		56 50

	Item 1A.	Risk Factors		56 50

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		56 50

	Item 3.	Defaults Upon Senior Securities		56 50

	Item 4.	Mine Safety Disclosures		56 50

	Item 5.	Other Information		56 50

	Item 6.	Exhibits		56 51

		SIGNATURES		57 52

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VISHAY INTERTECHNOLOGY, INC.

Consolidated Condensed Balance Sheets

(In thousands)

	September 28, 2019			December 31, 2018			April 4, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	731,483		$	686,032		$	680,703		$	694,133
Short-term investments		56,043			78,286			140,725			108,822
Accounts receivable, net		335,189			397,020			325,704			328,187
Inventories:
Finished goods		129,485			138,112			122,231			122,466
Work in process		189,757			190,982			202,318			187,354
Raw materials		125,411			150,566			128,639			121,860
Total inventories		444,653			479,660			453,188			431,680

Prepaid expenses and other current assets		123,712			142,888			124,871			141,294
Total current assets		1,691,080			1,783,886			1,725,191			1,704,116

Property and equipment, at cost:
Land		74,053			87,622			74,442			75,011
Buildings and improvements		570,727			619,445			579,161			585,064
Machinery and equipment		2,551,127			2,510,001			2,591,804			2,606,355
Construction in progress		113,639			125,109			105,832			110,722
Allowance for depreciation		(2,381,868	)		(2,373,176	)		(2,426,757	)		(2,425,627	)
Property and equipment, net		927,678			969,001			924,482			951,525

Right of use assets		93,103			-			99,506			93,162

Goodwill		150,309			147,480			150,288			150,642

Other intangible assets, net		62,265			65,688			60,468			60,659

Other assets		147,751			140,143			156,569			160,671
Total assets	$	3,072,186		$	3,106,198		$	3,116,504		$	3,120,775

Continues on following page.

VISHAY INTERTECHNOLOGY, INC.

Consolidated Condensed Balance Sheets (continued)

(In thousands)

	September 28, 2019			December 31, 2018			April 4, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
Liabilities and equity
Current liabilities:
Notes payable to banks	$	7		$	18		$	199		$	2
Trade accounts payable		141,472			218,322			153,999			173,915
Payroll and related expenses		131,751			141,670			116,456			122,100
Lease liabilities		16,932			-			21,033			20,217
Other accrued expenses		164,995			229,660			174,556			186,463
Income taxes		25,945			54,436			24,030			17,731
Total current liabilities		481,102			644,106			490,273			520,428

Long-term debt less current portion		496,262			494,509			552,096			499,147
U.S. transition tax payable		140,196			154,953			140,196			140,196
Deferred income taxes		47,246			85,471			20,627			22,021
Long-term lease liabilities		80,998			-			83,440			78,511
Other liabilities		90,174			79,489			94,762			100,207
Accrued pension and other postretirement costs		248,357			260,984			265,284			272,402
Total liabilities		1,584,335			1,719,512			1,646,678			1,632,912

Redeemable convertible debentures		-			2,016			-			174

Equity:
Vishay stockholders' equity
Common stock		13,235			13,212			13,255			13,235
Class B convertible common stock		1,210			1,210			1,210			1,210
Capital in excess of par value		1,427,049			1,436,011			1,416,260			1,425,170
Retained earnings (accumulated deficit)		71,956			(61,258	)
Retained earnings								84,570			72,180
Accumulated other comprehensive income (loss)		(27,952	)		(6,791	)		(48,174	)		(26,646	)
Total Vishay stockholders' equity		1,485,498			1,382,384			1,467,121			1,485,149
Noncontrolling interests		2,353			2,286			2,705			2,540
Total equity		1,487,851			1,384,670			1,469,826			1,487,689
Total liabilities, temporary equity, and equity	$	3,072,186		$	3,106,198		$	3,116,504		$	3,120,775

See accompanying notes.

VISHAY INTERTECHNOLOGY, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)

	Fiscal quarters ended						Fiscal quarters ended
	September 28, 2019			September 29, 2018			April 4, 2020			March 30, 2019

Net revenues	$	628,329		$	780,972		$	612,841		$	745,159
Costs of products sold		478,250			544,676			465,601			534,000
Gross profit		150,079			236,296			147,240			211,159

Selling, general, and administrative expenses		91,796			98,198			99,832			103,424
Restructuring and severance costs		7,255			-
Operating income		51,028			138,098			47,408			107,735

Other income (expense):
Interest expense		(8,564	)		(10,813	)		(8,552	)		(8,392	)
Other components of net periodic pension cost		(3,348	)		(3,367	)
Loss on early extinguishment of debt								(2,920	)		(1,307	)
Other		5,066			2,890			198			1,912
Total other income (expense)		(6,846	)		(11,290	)		(11,274	)		(7,787	)

Income before taxes		44,182			126,808			36,134			99,948

Income tax expense		13,917			48,737			8,750			24,307

Net earnings		30,265			78,071			27,384			75,641

Less: net earnings attributable to noncontrolling interests		227			195			165			182

Net earnings attributable to Vishay stockholders	$	30,038		$	77,876		$	27,219		$	75,459

Basic earnings per share attributable to Vishay stockholders	$	0.21		$	0.54		$	0.19		$	0.52

Diluted earnings per share attributable to Vishay stockholders	$	0.21		$	0.51		$	0.19		$	0.52

Weighted average shares outstanding - basic		144,628			144,383			144,792			144,554

Weighted average shares outstanding - diluted		145,027			152,946			145,295			145,289

Cash dividends per share	$	0.0950		$	0.0850		$	0.0950		$	0.0850

See accompanying notes.

VISHAY INTERTECHNOLOGY, INC.

Consolidated Statements of Comprehensive Income

(Unaudited - In thousands)

	Fiscal quarters ended					Fiscal quarters ended
	September 28, 2019			September 29, 2018		April 4, 2020			March 30, 2019

Net earnings	$	30,265		$	78,071	$	27,384		$	75,641

Other comprehensive income (loss), net of tax

Pension and other post-retirement actuarial items		1,368			1,670		1,601			1,457

Foreign currency translation adjustment		(23,004	)		4,277		(23,129	)		(9,989	)

Other comprehensive income (loss)		(21,636	)		5,947		(21,528	)		(8,532	)

Comprehensive income		8,629			84,018		5,856			67,109

Less: comprehensive income attributable to noncontrolling interests		227			195		165			182

Comprehensive income attributable to Vishay stockholders	$	8,402		$	83,823	$	5,691		$	66,927

See accompanying notes.

VISHAY INTERTECHNOLOGY, INC.

~~Consolidated Condensed Statements of Operations~~

~~(Unaudited - In thousands, except per share amounts)~~

Nine fiscal months ended
September 28, 2019 September 29, 2018

Net revenues $ 2,058,728 $ 2,258,797
Costs of products sold 1,522,889 1,589,963
Gross profit 535,839 668,834

Selling, general, and administrative expenses 290,332 303,381
Restructuring and severance costs 7,255 -
Operating income 238,252 365,453

Other income (expense):
Interest expense (25,160 ) (26,862 )
Other components of net periodic pension cost (10,111 ) (10,336 )
Other 13,344 5,440
Loss on early extinguishment of debt (1,307 ) (17,309 )
Total other income (expense) (23,234 ) (49,067 )

Income before taxes 215,018 316,386

Income tax expense 64,377 72,508

Net earnings 150,641 243,878

Less: net earnings attributable to noncontrolling interests 667 539

Net earnings attributable to Vishay stockholders $ 149,974 $ 243,339

Basic earnings per share attributable to Vishay stockholders $ 1.04 $ 1.69

Diluted earnings per share attributable to Vishay stockholders $ 1.03 $ 1.55

Weighted average shares outstanding - basic 144,602 144,364

Weighted average shares outstanding - diluted 145,114 156,702

Cash dividends per share $ 0.2750 $ 0.2375

~~See accompanying notes.~~

~~VISHAY INTERTECHNOLOGY, INC.~~

~~Consolidated Statements of Comprehensive Income~~

~~(Unaudited - In thousands)~~

Nine fiscal months ended
September 28, 2019 September 29, 2018

Net earnings $ 150,641 $ 243,878

Other comprehensive income (loss), net of tax

Pension and other post-retirement actuarial items 4,448 4,852

Foreign currency translation adjustment (25,609 ) (30,236 )

Other comprehensive income (loss) (21,161 ) (25,384 )

Comprehensive income 129,480 218,494

Less: comprehensive income attributable to noncontrolling interests 667 539

Comprehensive income attributable to Vishay stockholders $ 128,813 $ 217,955

~~See accompanying notes.~~

~~VISHAY INTERTECHNOLOGY, INC.~~

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)

	Nine fiscal months ended						Three fiscal months ended
	September 28, 2019			September 29, 2018			April 4, 2020			March 30, 2019

Operating activities
Net earnings	$	150,641		$	243,878		$	27,384		$	75,641
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		122,302			121,888			41,520			40,428
(Gain) loss on disposal of property and equipment		(168	)		(2,216	)		(45	)		(173	)
Accretion of interest on convertible debt instruments		10,558			6,966			3,637			3,490
Inventory write-offs for obsolescence		19,214			17,059			5,643			6,967
Deferred income taxes		(4,481	)		(12,348	)		(3,517	)		(2,614	)
Loss on extinguishment of debt		1,307			17,309			2,920			1,307
Other		9,029			13,021			3,524			(1,744	)
Change in U.S. transition tax liability		(14,757	)		(14,400	)
Change in repatriation tax liability		(38,814	)		(156,767	)
Net change in operating assets and liabilities, net of effects of businesses acquired		(42,810	)		(125,499	)		(46,588	)		(43,784	)
Net cash provided by operating activities		212,021			108,891			34,478			79,518

Investing activities
Capital expenditures		(100,267	)		(126,391	)		(24,328	)		(36,367	)
Proceeds from sale of property and equipment		486			8,455			53			395
Purchase of businesses, net of cash received		(11,862	)		(14,880	)		-			(11,862	)
Purchase of short-term investments		(59,440	)		(172,732	)		(35,463	)		(1,920	)
Maturity of short-term investments		79,765			577,524			-			71,455
Other investing activities		4,021			(1,608	)		(1,507	)		2,893
Net cash provided by (used in) investing activities		(87,297	)		270,368			(61,245	)		24,594

Financing activities
Proceeds from long-term borrowings		-			600,000
Issuance costs		(5,394	)		(15,621	)
Repurchase of convertible debentures		(22,695	)		(584,991	)		(19,849	)		(22,695	)
Net proceeds (payments) on revolving credit lines		-			(150,000	)		54,000			-
Net changes in short-term borrowings		(12	)		-			85			-
Dividends paid to common stockholders		(36,396	)		(31,378	)		(12,592	)		(11,249	)
Dividends paid to Class B common stockholders		(3,327	)		(2,873	)		(1,149	)		(1,028	)
Distributions to noncontrolling interests		(600	)		(525	)
Cash withholding taxes paid when shares withheld for vested equity awards		(2,708	)		(2,297	)		(1,991	)		(2,659	)
Net cash used in financing activities		(71,132	)		(187,685	)
Net cash provided by (used in) financing activities								18,504			(37,631	)
Effect of exchange rate changes on cash and cash equivalents		(8,141	)		(11,501	)		(5,167	)		(3,087	)

Net increase in cash and cash equivalents		45,451			180,073
Net increase (decrease) in cash and cash equivalents								(13,430	)		63,394

Cash and cash equivalents at beginning of period		686,032			748,032			694,133			686,032
Cash and cash equivalents at end of period	$	731,483		$	928,105		$	680,703		$	749,426

See accompanying notes.

108

VISHAY INTERTECHNOLOGY, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share and per share amounts)

	Common Stock		Class B Convertible Common Stock			Capital in Excess of Par Value			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Vishay Stockholders' Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2017	$	13,188	$	1,213		$	1,752,506		$	(362,254	)	$	25,714		$	1,430,367		$	2,032		$	1,432,399
Cumulative effect of accounting change for adoption of ASU 2016-01		-		-			-			1,801			(1,801	)		-			-			-
Net earnings		-		-			-			165,463			-			165,463			344			165,807
Other comprehensive income		-		-			-			-			(31,331	)		(31,331	)		-			(31,331	)
Distributions to noncontrolling interests		-		-			-			-			-			-			(525	)		(525	)
Conversion of Class B shares (31,800 shares)		3		(3	)		-			-			-			-			-			-
Temporary equity reclassification		-		-			1,779			-			-			1,779			-			1,779
Issuance of stock and related tax withholdings for vested restricted stock units (211,328 shares)		21		-			(2,318	)		-			-			(2,297	)		-			(2,297	)
Dividends declared ($0.1525 per share)		-		-			25			(22,018	)		-			(21,993	)		-			(21,993	)
Stock compensation expense		-		-			3,261			-			-			3,261			-			3,261
Issuance of convertible notes due 2025		-		-			85,262			-			-			85,262			-			85,262
Repurchase of convertible debentures due 2040 and due 2042		-		-			(246,573	)		-			-			(246,573	)		-			(246,573	)
Balance at June 30, 2018	$	13,212	$	1,210		$	1,593,942		$	(217,008	)	$	(7,418	)	$	1,383,938		$	1,851		$	1,385,789
Net earnings		-		-			-			77,876			-			77,876			195			78,071
Other comprehensive income		-		-			-			-			5,947			5,947			-			5,947
Temporary equity reclassification		-		-			358			-			-			358			-			358
Dividends declared ($0.0850 per share)		-		-			14			(12,272	)		-			(12,258	)		-			(12,258	)
Stock compensation expense		-		-			778			-			-			778			-			778
Balance at September 29, 2018	$	13,212	$	1,210		$	1,595,092		$	(151,404	)	$	(1,471	)	$	1,456,639		$	2,046		$	1,458,685
																								Common Stock		Class B Convertible Common Stock		Capital in Excess of Par Value			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Vishay Stockholders' Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2018	$	13,212	$	1,210		$	1,436,011		$	(61,258	)	$	(6,791	)	$	1,382,384		$	2,286		$	1,384,670		$	13,212	$	1,210	$	1,436,011		$	(61,258	)	$	(6,791	)	$	1,382,384		$	2,286	$	1,384,670
Cumulative effect of accounting change for adoption of ASU 2016-02		-		-			-			23,013			-			23,013			-			23,013			-		-		-			23,013			-			23,013			-		23,013
Net earnings (loss)																									-		-		-			75,459			-			75,459			182		75,641
Other comprehensive income																									-		-		-			-			(8,532	)		(8,532	)		-		(8,532	)
Conversion of Class B shares (18 shares)																									-		-		-			-			-			-			-		-
Temporary equity reclassification																									-		-		3			-			-			3			-		3
Issuance of stock and related tax withholdings for vested restricted stock units (220,718 shares)																									22		-		(2,681	)		-			-			(2,659	)		-		(2,659	)
Dividends declared (0.085 per share)																									-		-		15			(12,292	)		-			(12,277	)		-		(12,277	)
Stock compensation expense																									-		-		3,536			-			-			3,536			-		3,536
Repurchase of convertible debentures due 2040 and due 2042																									-		-		(11,783	)		-			-			(11,783	)		-		(11,783	)
Balance at March 30, 2019																								$	13,234	$	1,210	$	1,425,101		$	24,922		$	(15,323	)	$	1,449,144		$	2,468	$	1,451,612

Balance at December 31, 2019																									13,235		1,210		1,425,170			72,180			(26,646	)		1,485,149			2,540		1,487,689
Cumulative effect of accounting change for adoption of ASU 2016-13 (see Note 1)																									-		-		-			(1,070	)		-			(1,070	)		-		(1,070	)
Net earnings		-		-			-			119,936			-			119,936			440			120,376			-		-		-			27,219			-			27,219			165		27,384
Other comprehensive income		-		-			-			-			475			475			-			475
Distributions to noncontrolling interests		-		-			-			-			-			-			(600	)		(600	)
Conversion of Class B shares (18 shares)		-		-			-			-			-			-			-			-
Other comprehensive income (loss)																									-		-		-			-			(21,528	)		(21,528	)		-		(21,528	)
Temporary equity reclassification		-		-			209			-			-			209			-			209			-		-		174			-			-			174			-		174
Issuance of stock and related tax withholdings for vested restricted stock units (230,624 shares)		23		-			(2,731	)		-			-			(2,708	)		-			(2,708	)
Dividends declared ($0.1800 per share)		-		-			32			(26,032	)		-			(26,000	)		-			(26,000	)
Issuance of stock and related tax withholdings for vested restricted stock units (199,251 shares)																									20		-		(2,011	)		-			-			(1,991	)		-		(1,991	)
Dividends declared (0.095 per share)																									-		-		18			(13,759	)		-			(13,741	)		-		(13,741	)
Stock compensation expense		-		-			4,426			-			-			4,426			-			4,426			-		-		2,998			-			-			2,998			-		2,998
Repurchase of convertible senior debentures		-		-			(11,783	)		-			-			(11,783	)		-			(11,783	)
Balance at June 29, 2019	$	13,235	$	1,210		$	1,426,164		$	55,659		$	(6,316	)	$	1,489,952		$	2,126		$	1,492,078
Net earnings		-		-			-			30,038			-			30,038			227			30,265
Other comprehensive income		-		-			-			-			(21,636	)		(21,636	)		-			(21,636	)
Dividends declared ($0.0950 per share)		-		-			18			(13,741	)		-			(13,723	)		-			(13,723	)
Stock compensation expense		-		-			867			-			-			867			-			867
Balance at September 28, 2019	$	13,235	$	1,210		$	1,427,049		$	71,956		$	(27,952	)	$	1,485,498		$	2,353		$	1,487,851
Repurchase of convertible senior debentures due 2041																									-		-		(10,089	)		-			-			(10,089	)		-		(10,089	)
Balance at April 4, 2020																								$	13,255	$	1,210	$	1,416,260		$	84,570		$	(48,174	)	$	1,467,121		$	2,705	$	1,469,826

See accompanying notes.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

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, ~~2018.~~2019. The results of operations for the fiscal quarter and ~~nine~~three fiscal months ended ~~September 28, 2019~~April 4, 2020 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 2020 ended on April 4, 2020, July 4, 2020, October 3, 2020, and December 31, 2020, respectively. The four fiscal quarters in 2019 ~~end~~ended on March 30, 2019, June 29, 2019, September 28, 2019, and December 31, 2019, respectively. ~~The four fiscal quarters in 2018 ended on March 31, 2018, June 30, 2018, September 29, 2018, and December 31, 2018, respectively.~~

Recently Adopted Accounting Guidance

In ~~February~~June 2016, the Financial Accounting Standards Board ("FASB") ~~issued Accounting Standards Update ("ASU") No. 2016-02,~~ ~~Leases (Topic 842)~~. The ASU is the result of a project between the FASB and the International Accounting Standards Board to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance in ASU No. 2016-02 and all related ASUs is codified in Accounting Standard Codification (“ASC”) Topic 842, ~~Leases~~. The Company adopted ASC Topic 842 effective January 1, 2019. Upon adoption at January 1, 2019, the Company recognized right of use assets of $91,462 and lease liabilities of $95,784 on the consolidated balance sheet. The difference between the initial right of use asset and lease liability balances recognized upon adoption of ASC Topic 842 is primarily due to accrued lease incentive balances at December 31, 2018.

On December 20, 2018, the Company received sale proceeds of $45,500 and concurrently leased-back its former manufacturing site in Santa Clara, California, under a short-term arrangement, to raze the buildings. Upon adoption of ASC Topic 842, the Company was required to reassess the accounting for these transactions. The transactions did not qualify as a completed sale and leaseback under previous GAAP. However, pursuant to ASC Topic 842’s sale and leaseback guidance, the transaction would qualify as a completed sale. The Company recognized a cumulative-effect adjustment to retained earnings (accumulated deficit) of $23,013, to recognize the sale as of the date of adoption, and derecognized the land, building, and related deferred proceeds, which had been recorded in other accrued expenses.

~~The adoption of the ASU did not have a material impact on the Company's results of operations or cash flows. See Note 3.~~

~~Recently Issued Accounting Guidance~~

~~In June 2016, the FASB~~ issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the ASU is effective January 1, 2020.

Payment terms for the Company's sales are generally less than ninety days. Substantially all of the Company's receivables are collected within twelve months of the transfer of products to the customer and the Company ~~for interim~~expects this to continue going forward. The credit loss allowance is determined through an analysis of the aging of accounts receivable and ~~annual periods beginning~~assessments of risk that are based on ~~or after~~historical trends and an evaluation of the impact of current and projected economic conditions. Receivables from customers with deteriorating financial condition and those over 180 days past due are removed from the pool and evaluated separately. The adoption of ASU 2016-13 on January 1, 2020 ~~with~~had no material impact on the ~~ability~~Company’s allowance for accounts receivable credit losses.

The Company’s cash equivalents, short-term investments, and restricted investments are accounted for as held-to-maturity debt instruments, at amortized cost. Interest income on these instruments is recorded as “Other income” on the consolidated condensed statements of operations and interest receivable is recognized as a separate asset and recorded in “Prepaid expenses and other current assets” on the consolidated condensed balance sheets. The Company has not experienced a credit loss on the principal or interest receivable of its cash equivalents, short-term investments, or restricted investments. The Company pools its cash equivalents, short-term investments, and restricted investments by credit rating of the issuing financial institution and estimates an allowance for credit losses based on the corporate bond default ratios, evaluation of the impact of current and projected economic conditions, and probability of credit loss. The Company recorded a cumulative-effect adjustment of $810 to ~~early adopt for interim and annual periods beginning on or after~~ January 1, ~~2019.~~2020 retained earnings to recognize an allowance for credit losses for these financial instruments upon the adoption of ASU 2016-13. The Company ~~is currently evaluating~~does not measure an allowance for credit losses on interest receivable. Any uncollectible interest receivable will be recognized by reversing interest income within the ~~effect~~fiscal quarter that the interest becomes uncollectible.

The Company has an immaterial amount of other short-term held-to-maturity debt instruments recorded within “Prepaid expenses and other current assets” on the consolidated condensed balance sheets. The Company analyzes these assets on a separate asset basis and estimates an allowance for credit losses based on historical credit loss rates and an evaluation of the impact of current and projected economic conditions. The Company recorded a cumulative-effect adjustment of $260 to January 1, 2020 retained earnings to recognize an allowance for credit losses for these financial instruments upon the adoption of ASU ~~on its financial assets measured at amortized cost.~~2016-13.

Reclassifications

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

1210

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 2 – ~~Revenue Recognition~~Impact of Coronavirus Outbreak

~~Sales returns~~The Company's operations have been impacted by the coronavirus ("COVID-19") outbreak. Some manufacturing facilities are or were temporarily closed and some are operating at levels less than full capacity. The Company has incurred incremental costs separable from normal operations that are directly related to the outbreak and containment efforts, primarily wages paid to manufacturing employees during government-mandated shut-downs, additional wages and hardship allowances ~~accrual activity is shown below:~~for working during lockdown periods, additional costs of cleaning and disinfecting facilities, costs of additional safety equipment for employees, and temporary housing for employees due to travel restrictions, which were partially offset by government subsidies. The net impact of the costs and subsidies are reported as cost of products sold ($3,130) and selling, general, and administrative expenses ($317) based on employee function on the consolidated condensed statement of operations.

Fiscal quarters ended Nine fiscal months ended
September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Beginning balance $ 44,382 $ 38,032 $ 42,663 $ 36,680
Sales allowances 26,403 27,986 83,517 77,539
Credits issued (34,937 ) (29,293 ) (90,269 ) (77,091 )
Foreign currency (449 ) 103 (512 ) (300 )
Ending balance $ 35,399 $ 36,828 $ 35,399 $ 36,828

The Company's insurance coverages generally exclude losses incurred due to pandemics. Any amounts that may be received will not be recognized until all contingencies are settled.

1311

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 3 – Leases

The Company leases buildings and machinery and equipment used for manufacturing and/or sales and administrative purposes. The Company is also party to various service, warehousing, and other agreements that it evaluates for potential embedded leases. ~~Substantially all of the Company’s leases are structured and classified as operating leases. As of January 1, 2019, the Company accounts for its leases in accordance with ASC Topic 842.~~

The Company leases assets in each region in which it operates. The Company’s leases are generally denominated in the currency of the leased assets' location, which may not be the functional currency of the subsidiary lessee. Accordingly, the Company remeasures its lease liability and recognizes a transactional gain/loss for leases denominated in currencies other than the functional currency of the subsidiary lessee.

The Company recognizes right of use assets and lease liabilities for leases greater than twelve months in duration based on the contract consideration for lease components through the term of the lease and the applicable discount rate. Leases with a duration less than or equal to twelve months are considered short-term leases. The Company does not recognize right of use assets or lease liabilities for short-term leases and classifies the expense as short-term lease expense. Variable lease payments based on an index or rate are included in the right of use assets and lease liabilities based on the effective rates at lease commencement. Changes in the rates or indices do not impact the right of use asset or lease liability and are recognized as a component of lease expense in the statement of operations. Variable lease payments not based on an index or rate are not included in the initial right of use asset and lease liability and are recognized when incurred as a component of lease expense in the statement of operations.

The Company has elected to not separate contract consideration for lease and non-lease components for its building leases. In addition to the noncancellable period of a lease, the Company includes periods covered by extension options it is reasonably certain to exercise, termination options that it is reasonably certain not to exercise, and extension and termination options controlled by the lessor in its determination of the lease term. The Company uses the rate implicit in the contract whenever possible when determining the applicable discount rate. When the implicit rate is not used, the Company employs a portfolio approach based on the duration of the lease. The portfolio lease rates are calculated monthly.

No individual lease is considered significant and there are no leases that have not yet commenced that are considered significant.

The net right of use assets and lease liabilities recognized on the consolidated condensed balance ~~sheet~~sheets for the Company's operating leases were as ~~of September 28, 2019 and the net right of use assets and lease liabilities recognized upon the adoption of ASC Topic 842 on January 1, 2019 are presented below:~~follows:

September 28, 2019

January 1, 2019

Right of use assets

Operating Leases

Buildings and improvements

$
88,060

$
86,058

Machinery and equipment

5,043

5,404

Total

$
93,103

$
91,462

Current lease liabilities

Operating Leases

Buildings and improvements

$
14,398

$
10,644

Machinery and equipment

2,534

3,317

Total

$
16,932

$
13,961

Long-term lease liabilities

Operating Leases

Buildings and improvements

$
78,519

$
79,000

Machinery and equipment

2,479

2,823

Total

$
80,998

$
81,823

Total lease liabilities

$
97,930

$
95,784

	April 4, 2020		December 31, 2019
Right of use assets
Operating Leases
Buildings and improvements	$	94,353	$	87,689
Machinery and equipment		5,153		5,473
Total	$	99,506	$	93,162
Current lease liabilities
Operating Leases
Buildings and improvements	$	18,324	$	17,410
Machinery and equipment		2,709		2,807
Total	$	21,033	$	20,217
Long-term lease liabilities
Operating Leases
Buildings and improvements	$	81,036	$	75,877
Machinery and equipment		2,404		2,634
Total	$	83,440	$	78,511
Total lease liabilities	$	104,473	$	98,728

1412

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

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

					Fiscal quarters ended
	Fiscal quarter ended September 28, 2019		Nine fiscal months ended September 28, 2019		April 4, 2020		March 30, 2019
Lease expense
Operating lease expense	$	5,557	$	16,720	$	5,652	$	5,536
Short-term lease expense		361		2,013		194		833
Variable lease expense		9		30		23		12
Total lease expense	$	5,927	$	18,763	$	5,869	$	6,381

The Company paid ~~$16,023~~$5,609 and $5,050 for its operating leases in the ~~nine~~three fiscal months ended ~~September 28,~~April 4, 2020 and March 30, 2019, respectively, which are included in operating cash flows on the consolidated condensed ~~statement~~statements of cash flows. The weighted-average remaining lease term for the Company's operating leases is ~~9.0~~8.8 years and the weighted-average discount rate is ~~6.1%~~5.9% as of ~~September 28, 2019.~~April 4, 2020.

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

	September 28, 2019		April 4, 2020
2019 (excluding the nine fiscal months ended September 28, 2019)	$	5,504
2020		19,629
2020 (excluding the three fiscal months ended April 4, 2020)			$	16,499
2021		16,949		19,647
2022		13,633		16,044
2023		12,463		13,699
2024				12,640
Thereafter		61,261		57,162

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.

The Company elected to use the package of practical expedients available in ASC Topic 842; and accordingly, did not reassess existing contracts for leases, the classification of existing leases, or initial direct costs for any existing leases. The Company also elected to use the practical expedient available in ASC Topic 842 for land easements.

The Company did not elect the practical expedient available in ASC Topic 842 to use hindsight in determining the lease term. Accordingly, the remaining lease term as of January 1, 2019 was used to calculate the initial right of use asset and lease liability.

1513

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 4 – ~~Acquisition~~Restructuring and Related Activities

AsIn the third fiscal quarter of 2019, the Company announced global cost reduction and management rejuvenation programs as part of its ~~growth strategy, the Company seeks~~continuous efforts to ~~expand through targeted acquisitions of other manufacturers of electronic components that have established positions in major markets, reputations for product quality~~improve efficiency and ~~reliability, and product lines with which the Company has substantial marketing and technical expertise.~~operating performance.

On January 3, 2019, the Company acquired substantially all of the assets of Bi-Metallix, Inc. ("Bi-Metallix"), a U.S.-based, privately-held provider of electron beam continuous strip welding services for $11,862.The programs are primarily designed to reduce manufacturing fixed costs and selling, general, and administrative costs company-wide, and provide management rejuvenation. The Company ~~was a major customer~~expects to incur charges of ~~Bi-Metallix, and~~approximately $25,000, primarily related to cash severance costs, to implement these programs. The Company expects these cost reductions to be fully achieved by December 2020.

The following table summarizes the ~~acquired business is being vertically integrated into the Company's Resistors & Inductors segment. Based on an estimate of their fair values, the Company allocated $2,900 of the purchase price~~activity to ~~definite-lived intangible assets. After allocating the purchase price to the assets acquired and liabilities assumed based on an estimation of their fair values at the~~ date ~~of acquisition, the Company recorded goodwill of $3,324~~ related to this ~~acquisition.~~ program:

Expense recorded in 2019	$	24,139
Cash paid		(1,330	)
Foreign currency translation		35
Balance at December 31, 2019	$	22,844
Cash paid		(3,742	)
Foreign currency translation		(307	)
Balance at April 4, 2020	$	18,795

The ~~results~~payment terms vary by country, but generally are paid in a lump sum at cessation of employment. The current portion of the liability is $15,348 and operations of this acquisition have been included in the Resistors & Inductors segment since January 3, 2019. The inclusion of this acquisition did not have a material impact on the Company's consolidated results for the fiscal quarter and nine fiscal months ended September 28, 2019. The goodwill related to this acquisition is included in ~~the Resistors & Inductors reporting unit for goodwill impairment testing.~~

Had this acquisition occurred as of the beginning of the periods presented in these consolidated condensed financial statements, the pro forma statements of operations would not be materially different thanother accrued expenses on the consolidated condensed ~~statements~~balance sheet. The non-current portion of ~~operations presented.~~

~~The remaining fluctuation~~the liability is $3,447 and is included in other liabilities on the ~~goodwill account~~consolidated condensed balance ~~is due to foreign currency translation.~~sheet.

1614

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 5 – 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 April 4, 2020 and March 30, 2019 reflect the Company’s expected tax rate on reported income from continuing operations 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.

The Company has approximately $100,000 of unremitted foreign earnings that it has deemed not permanently reinvested and thus has accrued foreign withholding and other taxes. The Company plans to repatriate these foreign earnings in the second fiscal quarter of 2020.

The Company repurchased a portion of outstanding convertible debentures in the first fiscal quarters of 2020 and 2019 (see Note 6). The Company recognized tax benefits on the pre-tax loss on early extinguishment of debt. The Company also recognized tax benefits of $1,346 and $1,312 in the first fiscal quarters of 2020 and 2019, respectively, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the extinguished debentures.

Income tax expense for the first fiscal quarter of 2019 includes tax benefits of $585 for the periodic remeasurement of the deferred tax liability recorded for the foreign taxes associated with the Company's cash repatriation program.

During the fiscal quarter ended April 4, 2020, the liabilities for unrecognized tax benefits decreased by $1,264 on a net basis, primarily due to currency translation adjustments and the expiration of a statute, partially offset by interest.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 6 – Long-Term Debt

Long-term debt consists of the following:

	April 4, 2020			December 31, 2019

Credit facility	$	54,000		$	-
Convertible senior notes, due 2025		512,745			509,128
Convertible senior debentures, due 2040		127			126
Convertible senior debentures, due 2041		1,050			6,677
Deferred financing costs		(15,826	)		(16,784	)
		552,096			499,147
Less current portion		-			-
	$	552,096		$	499,147

The following table summarizes some key facts and terms regarding the outstanding convertible debt instruments as of April 4, 2020:

	Convertible Senior Notes Due 2025			Convertible Senior Debentures Due 2040			Convertible Senior Debentures Due 2041
Issuance date	June 12, 2018			November 9, 2010			May 13, 2011
Maturity date	June 15, 2025			November 15, 2040			May 15, 2041
Principal amount as of April 4, 2020	$	600,000		$	300		$	2,640
Cash coupon rate (per annum)		2.25	%		2.25	%		2.25	%
Nonconvertible debt borrowing rate at issuance (per annum)		5.50	%		8.00	%		8.375	%
Conversion rate effective March 11, 2020 (per $1 principal amount)		31.8278			80.4668			58.7205
Effective conversion price effective March 11, 2020 (per share)	$	31.42		$	12.43		$	17.03
130% of the conversion price (per share)	$	40.85		$	16.16		$	22.14
Call date		n/a		November 20, 2020			May 20, 2021

The terms of the convertible senior debentures due 2040 and due 2041 are generally congruent.

Prior to three months before the maturity date, the holders may convert their convertible senior debentures due 2040 and due 2041 only under the following circumstances: (1) during any fiscal quarter after the first full quarter subsequent to issuance, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the debentures falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; (3) Vishay calls any or all of the debentures for redemption, at any time prior to the close of business on the third scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. The convertible senior debentures due 2040 and due 2041 are not currently convertible.

Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) during any fiscal quarter after the fiscal quarter ending September 29, 2018, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the notes falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate transactions.

The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible debt instruments effective as of the ex-dividend date of each cash dividend. The conversion rate and effective conversion price for the convertible senior notes due 2025 is adjusted for quarterly cash dividends to the extent such dividends exceed $0.085 per share of common stock.

GAAP requires an issuer to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. The resulting discount on the debt is amortized as non-cash interest expense in future periods.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

The carrying values of the liability and equity components of the convertible debt instruments are reflected in the Company’s consolidated condensed balance sheets as follows:

	Principal amount of the debt instruments		Unamortized discount			Carrying value of liability component		Equity component (including temporary equity) -net carrying value
April 4, 2020
Convertible senior notes due 2025	$	600,000		(87,255	)	$	512,745	$	85,262
Convertible senior debentures due 2040 and due 2041	$	2,940		(1,763	)	$	1,177	$	1,216
Total	$	602,940	$	(89,018	)	$	513,922	$	86,478

December 31, 2019
Convertible senior notes due 2025	$	600,000		(90,872	)	$	509,128	$	85,262
Convertible senior debentures due 2040 and due 2041	$	17,190		(10,387	)	$	6,803	$	7,129
Total	$	617,190	$	(101,259	)	$	515,931	$	92,391

Interest is payable on the convertible debt instruments semi-annually at the cash coupon rate; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company’s estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, contingent interest will accrue in certain circumstances relating to the trading price of the convertible senior debentures due 2040 and due 2041 and under certain other circumstances, beginning in 2020 and 2021, respectively. The convertible senior notes due 2025 do not possess contingent interest features.

Interest expense related to the convertible debt instruments is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:

	Contractual coupon interest		Non-cash amortization of debt discount		Other non-cash interest expense			Total interest expense related to the debt instruments
April 4, 2020
Convertible senior notes due 2025	$	3,375		3,617		454		$	7,446
Convertible senior debentures	$	44		20		-		$	64
Total	$	3,419	$	3,637	$	454		$	7,510

March 30, 2019
Convertible senior notes due 2025	$	3,375		3,426		454		$	7,255
Convertible senior debentures	$	148		64		(16	)	$	196
Total	$	3,523	$	3,490	$	438		$	7,451

Other non-cash interest expense includes amortization of deferred financing costs and changes in the value of embedded derivative liabilities.

The Company used cash to repurchase $14,250 principal amount of convertible senior debentures due 2041 in the first fiscal quarter of 2020. The net carrying value of the debentures repurchased was $5,645. In accordance with the authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $19,926 was allocated between the liability ($9,837) and equity ($10,089) components of the convertible debentures, using the Company's nonconvertible debt borrowing rate at the time of the repurchase. As a result, the Company recognized a loss on extinguishment of convertible debentures of $2,920, including the write-off of unamortized debt issuance costs.

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 57 – ~~Restructuring and Related Activities~~Revenue Recognition

~~On July 29, 2019, the Company announced global cost reduction~~Sales returns and ~~management rejuvenation programs as part of its continuous efforts to improve efficiency and operating performance.~~

allowances accrual activity is shown below:

	Fiscal quarters ended
	April 4, 2020			March 30, 2019
Beginning balance	$	40,508		$	42,663
Sales allowances		22,632			28,211
Credits issued		(27,982	)		(33,062	)
Foreign currency		(346	)		(235	)
Ending balance	$	34,812		$	37,577

The programs are primarily designed to reduce manufacturing fixed costs and selling, general, and administrative costs company-wide, and provide management rejuvenation. The Company expects to incur charges of approximately $25,000, primarily related to cash severance costs, to implement these programs. The Company expects these cost reductions to be fully achieved by December 2020.

The Company incurred $7,255 of restructuring expenses, primarily severance costs, during the fiscal quarter and nine fiscal months ended September 28, 2019. Cash paid for these programs was immaterial during the fiscal quarter and nine fiscal months ended September 28, 2019. Severance benefits are generally paidSee disaggregated revenue information in a lump sum at cessation of employment. The current portion of the liability is $3,635 and is included in other accrued expenses in the accompanying consolidated condensed balance sheet. The non-current portion of the liability is $3,597 and is included in other liabilities in the accompanying consolidated condensed balance sheet.Note 11.

1718

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

~~Note 6 – 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 September 28, 2019 and September 29, 2018 reflect the Company’s expected tax rate on reported income from continuing operations 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.

The Company repatriated $115,152 and $188,742 to the United States, and paid withholding and foreign taxes of $18,335 and $38,814 in the fiscal quarter and nine fiscal months ended September 28, 2019, respectively. Substantially all of these amounts are being used to repay certain intercompany indebtedness, to pay the U.S. transition tax, and to fund capital expansion projects.

After completing these phases of cash repatriation, there is approximately $100,000 of unremitted foreign earnings remaining that the Company has deemed not permanently reinvested and thus has accrued foreign withholding and other taxes. The Company continues to evaluate the timing of the reparation of these remaining amounts, and may decide to ultimately not repatriate some of these amounts.

As part of the Company’s cash repatriation activity, the Company settled an intercompany loan in the second fiscal quarter of 2019, which previously had been accounted for at the historical foreign exchange rate (akin to an equity contribution) because the debtor entity did not have the intent or ability to repay such intercompany loan. Currency translation adjustments were recorded in accumulated other comprehensive income, and were not included in U.S. GAAP pre-tax income. The Company’s cash repatriation activity resulted in the ability to repay such intercompany loan. Upon settlement of this intercompany loan, the foreign entity realized a taxable gain. Income tax expense for the nine fiscal months ended September 28, 2019 includes tax expense of $7,554 related to this tax-basis foreign exchange gain.

The Company’s repurchase of a portion of the outstanding convertible debentures in the first fiscal quarter of 2019 (see Note 7) slightly reduced the Company’s expected 2019 tax rate. The Company recognized a tax benefit on the pre-tax loss on early extinguishment of debt. The Company also recognized a tax benefit of $1,312, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the extinguished debentures.

Income tax expense for the fiscal quarter and nine fiscal months ended September 28, 2019, includes tax expense of $2,604 and $1,971, respectively, for the periodic remeasurement of the deferred tax liability recorded for the foreign taxes associated with the Company's cash repatriation program.

During the nine fiscal months ended September 28, 2019, the liabilities for unrecognized tax benefits increased by $5,522 on a net basis, principally due to increases for tax positions taken in the current and prior periods and interest, offset by expiration of statutes and payments.

Income tax expense for the fiscal quarter and nine fiscal months ended September 29, 2018 includes additional tax expense of $13,496 and $25,496, respectively, recognized as a result of additional analysis of the impact of the Tax Cuts and Jobs Act completed throughout the first nine fiscal months of 2018.

The Company recognized a tax benefit on the pre-tax loss on early extinguishment of debt in the second fiscal quarter of 2018. The Company also recognized a tax benefit of $33,963, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the extinguished debentures.

Income tax expense for the fiscal quarter and nine fiscal months ended September 29, 2018 also included tax expense of $680 and tax benefits of $7,010, respectively, for the periodic remeasurement of the deferred tax liability recorded for the Company's cash repatriation program.

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

~~Note 7 – Long-Term Debt~~

~~Long-term debt consists of the following:~~

September 28, 2019 December 31, 2018

Credit facility $ - $ -
Convertible senior notes, due 2025 505,591 495,203
Convertible senior debentures, due 2040 146 539
Convertible senior debentures, due 2041 8,175 12,812
Convertible senior debentures, due 2042 - 923
Deferred financing costs (17,650 ) (14,968 )
496,262 494,509
Less current portion - -
$ 496,262 $ 494,509

~~Credit Facility~~

On June 5, 2019, the Company entered into a new credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., as administrative agent, and the lenders (the "New Credit Facility"), which provides an aggregate commitment of $750,000 of revolving loans available until June 5, 2024. The New Credit Facility replaces Vishay’s previous credit agreement that provided for an aggregate commitment of $640,000, and that was scheduled to mature on December 10, 2020. The New Credit Facility also provides for the ability of Vishay to request up to $300,000 of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

Borrowings under the New Credit Facility bear interest at LIBOR plus an interest margin. The applicable interest margin is based on Vishay's leverage ratio. Based on Vishay's current leverage ratio, borrowings bear interest at LIBOR plus 1.50%, the same as pursuant to the previous credit agreement. Vishay also pays a commitment fee, also based on its leverage ratio, on undrawn amounts. The undrawn commitment fee, based on Vishay's current leverage ratio, is 0.25% per annum, an improvement of 5 basis points over the previous credit agreement.

The New Credit Facility allows an unlimited amount of defined “Investments,” which include certain intercompany transactions and acquisitions, provided the Company's pro forma leverage ratio is equal to or less than 2.75 to 1.00. If the Company's pro forma leverage ratio is greater than 2.75 to 1.00, such Investments are subject to certain limitations.

The New Credit Facility also allows an unlimited amount of defined "Restricted Payments," which include cash dividends and share repurchases, provided the Company's pro forma leverage ratio is equal to or less than 2.50 to 1.00. If the Company's pro forma leverage ratio is greater than 2.50 to 1.00, the New Credit Facility allows such payments up to $100,000 per annum (subject to a cap of $300,000 for the term of the facility, with up to $25,000 of any unused amount of the $100,000 per annum base available for use in the next succeeding calendar year).

Similar to the previous credit agreement, the borrowings under the New Credit Facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries.

The New Credit Facility continues to limit or restrict the Company and its subsidiaries, from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming the Company’s pro forma leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming the Company's pro forma leverage ratio is greater than 2.50 to 1.00), and requires the Company to comply with other covenants, including the maintenance of specific financial ratios.

Similar to the previous credit agreement, the New Credit Facility also contains customary events of default, including, but not limited to, failure to pay principal or interest, failure to pay or default under other material debt, material misrepresentation or breach of warranty, violation of certain covenants, a change of control, the commencement of bankruptcy proceedings, the insolvency of Vishay or certain of its significant subsidiaries, and the rendering of a judgment in excess of $50,000 against Vishay or its subsidiaries. Upon the occurrence of an event of default under the New Credit Facility, Vishay's obligations under the credit facility may be accelerated and the lending commitments under the credit facility may be terminated.

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

~~Convertible Debt Instruments~~

~~The following table summarizes some key facts and terms regarding the outstanding convertible debt instruments as of September 28, 2019:~~

Convertible
Senior Notes
Due 2025

Convertible
Senior
Debentures
Due 2040

Convertible
Senior
Debentures
Due 2041

Issuance date June 12, 2018 November 9, 2010 May 13, 2011
Maturity date June 15, 2025 November 15, 2040 May 15, 2041
Principal amount as of September 28, 2019 $ 600,000 $ 350 $ 20,790
Cash coupon rate (per annum) 2.25 % 2.25 % 2.25 %
Nonconvertible debt borrowing rate at issuance (per annum) 5.50 % 8.00 % 8.375 %
Conversion rate effective September 11, 2019 (per $1 principal amount) 31.7924 79.6235 58.1051
Effective conversion price effective September 11, 2019 (per share) $ 31.45 $ 12.56 $ 17.21
130% of the conversion price (per share) $ 40.89 $ 16.33 $ 22.37
Call date n/a November 20, 2020 May 20, 2021

The terms of the convertible senior debentures due 2040 and due 2041 are generally congruent. The terms of the fully retired convertible senior debentures due 2042 were also generally congruent to the convertible senior debentures due 2040 and due 2041.

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

~~The carrying values of the liability and equity components of the convertible debt instruments are reflected in the Company’s consolidated condensed balance sheets as follows:~~

Principal
amount of the
debt
instruments

Unamortized
discount

Embedded
derivative

Carrying
value of
liability
component

Equity
component
(including
temporary
equity) -net
carrying value

September 28, 2019
Convertible senior notes due 2025 $ 600,000 (94,409 ) - $ 505,591 $ 85,262
Convertible senior debentures due 2040 and due 2041 $ 21,140 (12,829 ) 10 $ 8,321 $ 8,767
Total $ 621,140 $ (107,238 ) $ 10 $ 513,912 $ 94,029

December 31, 2018
Convertible senior notes due 2025 $ 600,000 (104,797 ) - $ 495,203 $ 85,262
Convertible senior debentures due 2040, due 2041, and due 2042 $ 36,556 (22,352 ) 70 $ 14,274 $ 15,092
Total $ 636,556 $ (127,149 ) $ 70 $ 509,477 $ 100,354

Interest is payable on the convertible debt instruments semi-annually at the cash coupon rate; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company’s estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, contingent interest will accrue in certain circumstances relating to the trading price of the convertible senior debentures due 2040 and due 2041 and under certain other circumstances, beginning ten years subsequent to their respective issuance. The convertible senior notes due 2025 do not possess contingent interest features.

~~Interest expense related to the convertible debt instruments is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:~~

Contractual
coupon
interest

Non-cash
amortization
of debt
discount

Non-cash
amortization
of deferred
financing
costs

Non-cash
change in
value of
derivative
liability

Total interest
expense
related to the
debt
instruments

September 28, 2019
Convertible senior notes due 2025 $ 3,375 3,520 454 - $ 7,349
Convertible senior debentures $ 118 53 2 (10 ) $ 163
Total $ 3,493 $ 3,573 $ 456 $ (10 ) $ 7,512

September 29, 2018
Convertible senior notes due 2025 $ 3,375 3,334 454 - $ 7,163
Convertible senior debentures $ 1,609 668 23 110 $ 2,410
Total $ 4,984 $ 4,002 $ 477 $ 110 $ 9,573

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

~~Interest expense related to the convertible debt instruments is reflected on the consolidated condensed statements of operations for the nine fiscal months ended:~~

Contractual
coupon
interest

Non-cash
amortization
of debt
discount

Non-cash
amortization
of deferred
financing
costs

Non-cash
change in
value of derivative
liability

Total interest
expense related to the
debt
instruments

September 28, 2019
Convertible senior notes due 2025 $ 10,125 10,388 1,362 - $ 21,875
Convertible senior debentures $ 385 170 6 (32 ) $ 529
Total $ 10,510 $ 10,558 $ 1,368 $ (32 ) $ 22,404

September 29, 2018
Convertible senior notes due 2025 $ 4,088 3,890 605 - $ 8,583
Convertible senior debentures $ 7,536 3,076 109 115 $ 10,836
Total $ 11,624 $ 6,966 $ 714 $ 115 $ 19,419

The Company used cash to repurchase $960, $12,288 and $2,168 principal amounts of convertible senior debentures due 2040, due 2041, and due 2042, respectively, in the first fiscal quarter of 2019. The net carrying value of the debentures repurchased were $396, $4,770, and $924, respectively. In accordance with the authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $22,695 was allocated between the liability ($7,311) and equity (including temporary equity, $15,384) components of the convertible debentures, using the Company's nonconvertible debt borrowing rate at the time of the repurchase. As a result, the Company recognized a loss on extinguishment of convertible debentures of $1,307, including the write-off of a portion of unamortized debt issuance costs. The convertible senior debentures due 2042 have been fully repurchased, and the trustee has confirmed that the Company has satisfied and discharged its obligations under the indenture governing the convertible senior debentures due 2042.

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

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:

	Pension and other post- retirement actuarial items			Currency translation adjustment			Total			Pension and other post- retirement actuarial items			Currency translation adjustment			Total
Balance at January 1, 2019	$	(58,291	)	$	51,500		$	(6,791	)
Balance at January 1, 2020										$	(68,020	)	$	41,374		$	(26,646	)
Other comprehensive income before reclassifications		-			(25,609	)	$	(25,609	)		-			(23,129	)	$	(23,129	)
Tax effect		-			-		$	-			-			-		$	-
Other comprehensive income before reclassifications, net of tax		-			(25,609	)	$	(25,609	)		-			(23,129	)	$	(23,129	)
Amounts reclassified out of AOCI		6,136			-		$	6,136			2,223			-		$	2,223
Tax effect		(1,688	)		-		$	(1,688	)		(622	)		-		$	(622	)
Amounts reclassified out of AOCI, net of tax		4,448			-		$	4,448			1,601			-		$	1,601
Net other comprehensive income	$	4,448		$	(25,609	)	$	(21,161	)	$	1,601		$	(23,129	)	$	(21,528	)
Balance at September 28, 2019	$	(53,843	)	$	25,891		$	(27,952	)
Balance at April 4, 2020										$	(66,419	)	$	18,245		$	(48,174	)

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.

2319

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

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 third fiscal quarters of 2019 and 2018 for the Company’s defined benefit pension plans:~~

Fiscal quarter ended
September 28, 2019

Fiscal quarter ended
September 29, 2018

U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans

Net service cost $ - $ 841 $ - $ 900
Interest cost 424 1,271 371 1,175
Expected return on plan assets - (483 ) - (463 )
Amortization of prior service cost 36 49 36 52
Amortization of losses 118 1,332 159 1,520
Curtailment and settlement losses - 499 - 441
Net periodic benefit cost $ 578 $ 3,509 $ 566 $ 3,625

The following table shows the components of the net periodic pension cost for the ~~nine~~first fiscal ~~months ended September 28,~~quarters of 2020 and 2019 ~~and September 29, 2018~~ for the Company’s defined benefit pension plans:

Nine fiscal months ended
September 28, 2019

Nine fiscal months ended
September 29, 2018

U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans

Net service cost $ - $ 2,538 $ - $ 2,775
Interest cost 1,272 3,843 1,113 3,628
Expected return on plan assets - (1,462 ) - (1,430 )
Amortization of prior service cost 108 150 108 161
Amortization of losses 354 4,035 477 4,690
Curtailment and settlement losses - 1,504 - 1,358
Net periodic benefit cost $ 1,734 $ 10,608 $ 1,698 $ 11,182

~~NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~(dollars in thousands, except per share amounts)~~

	Fiscal quarter ended April 4, 2020					Fiscal quarter ended March 30, 2019
	U.S. Plans		Non-U.S. Plans			U.S. Plans		Non-U.S. Plans

Net service cost	$	-	$	1,074		$	-	$	852
Interest cost		342		924			424		1,291
Expected return on plan assets		-		(495	)		-		(490	)
Amortization of prior service cost		36		30			36		51
Amortization of losses		298		1,592			118		1,359
Curtailment and settlement losses		-		229			-		505
Net periodic benefit cost	$	676	$	3,354		$	578	$	3,568

Other Postretirement Benefits

The following table shows the components of the net periodic benefit cost for the ~~third~~first fiscal quarters of ~~2019~~2020 and ~~2018~~2019 for the Company’s other postretirement benefit plans:

Fiscal quarter ended
September 28, 2019

Fiscal quarter ended
September 29, 2018

U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans

Service cost $ 36 $ 71 $ 35 $ 71
Interest cost 77 30 69 28
Amortization of prior service (credit) - - (37 ) -
Amortization of losses (gains) (32 ) 27 (10 ) 26
Net periodic benefit cost $ 81 $ 128 $ 57 $ 125

The following table shows the components of the net periodic pension cost for the nine fiscal months ended September 28, 2019 and September 29, 2018 for the Company’s other postretirement benefit plans:

	Nine fiscal months ended September 28, 2019					Nine fiscal months ended September 29, 2018					Fiscal quarter ended April 4, 2020				Fiscal quarter ended March 30, 2019
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans			Non-U.S. Plans

Service cost	$	106		$	215	$	103		$	219	$	28	$	69	$	35		$	72
Interest cost		232			90		205			86		59		15		77			30
Amortization of prior service (credit)		-			-		(111	)		-
Amortization of losses (gains)		(96	)		81		(29	)		80		7		31		(32	)		27
Net periodic benefit cost	$	242		$	386	$	168		$	385	$	94	$	115	$	80		$	129

2520

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 10 – Stock-Based Compensation

The Company has various stockholder-approved programs which allow for the grant of stock-based compensation to officers, employees, and non-employee directors of the Company.

The amount of compensation cost related to stock-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. The Company determines compensation cost for restricted stock units (“RSUs”) and phantom stock units based on the grant-date fair value of the underlying common stock adjusted for expected dividends paid over the required vesting period for non-participating awards. Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.

The following table summarizes stock-based compensation expense recognized:

	Fiscal quarters ended				Nine fiscal months ended				Fiscal quarters ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		April 4, 2020		March 30, 2019

Restricted stock units	$	867	$	778	$	5,116		3,825	$	2,783	$	3,359
Phantom stock units		-		-		177		214		215		177
Total	$	867	$	778	$	5,293		4,039	$	2,998	$	3,536

The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes.

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at ~~September 28, 2019~~ April 4, 2020 (amortization periods in years):

	Unrecognized Compensation Cost		Weighted Average Remaining Amortization Periods		Unrecognized Compensation Cost		Weighted Average Remaining Amortization Periods

Restricted stock units	$	3,912		0.9	$	5,041		1.0
Phantom stock units		-		0.0		-		0.0
Total	$	3,912			$	5,041

The Company currently expects all performance-based RSUs to vest and all of the associated unrecognized compensation cost for performance-based RSUs presented in the table above to be recognized.

2621

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

2007 Stock Incentive Plan

The Company’s 2007 Stock Incentive Program (the “2007 Program”), as amended and restated, permits the grant of up to 6,500,000 shares of restricted stock, unrestricted stock, RSUs, stock options, and phantom stock units, to officers, employees, and non-employee directors of the Company. Such instruments are available for grant until May 20, 2024.

Restricted Stock Units

RSU activity under the 2007 Program as of ~~September 28, 2019~~April 4, 2020 and changes during the ~~nine~~three fiscal months then ended are presented below (number of RSUs in thousands):

	Number of RSUs			Weighted Average Grant-date Fair Value per Unit		Number of RSUs			Weighted Average Grant-date Fair Value per Unit
Outstanding:
January 1, 2019		904		$	14.77
January 1, 2020							842		$	17.93
Granted		314			19.85		272			18.30
Vested*		(361	)		11.70		(293	)		15.52
Cancelled or forfeited		(15	)		17.71		-			-
Outstanding at September 28, 2019		842		$	17.93
Outstanding at April 4, 2020							821		$	18.91

Expected to vest at September 28, 2019		842
Expected to vest at April 4, 2020							808

* 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 criteria between the established target and maximum levels. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest		Not Expected to Vest		Total		Expected to Vest		Not Expected to Vest		Total
January 1, 2020		167		-		167
January 1, 2021		141		-		141		141		-		141
January 1, 2022		174		-		174		174		-		174
January 1, 2023								152		-		152

Phantom Stock Units

The 2007 Program authorizes the grant of phantom stock units to the extent provided for in the Company’s employment agreements with certain executives. Each phantom stock unit entitles the recipient to receive a share of common stock at the individual’s termination of employment or any other future date specified in the applicable employment agreement. Phantom stock units participate in dividend distribution on the same basis as the Company's common stock and Class B common stock. Dividend equivalents are issued in the form of additional units of phantom stock. The phantom stock units are fully vested at all times.

Phantom stock unit activity under the phantom stock plan as of ~~September 28, 2019~~April 4, 2020 and changes during the ~~nine~~three fiscal months then ended are presented below (number of phantom stock units in thousands):

	Number of units		Grant-date Fair Value per Unit		Number of units		Grant-date Fair Value per Unit
Outstanding:
January 1, 2019		170
January 1, 2020						183
Granted		10	$	17.72		10	$	21.49
Dividend equivalents issued		3				1
Outstanding at September 28, 2019		183
Outstanding at April 4, 2020						194

2722

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Note 11 – Segment Information

Vishay is a global manufacturer and supplier of electronic components. Vishay operates, and its chief operating decision maker makes strategic and operating decisions with regards to assessing performance and allocating resources based on, 56 reporting segments: MOSFETs, Diodes, Optoelectronic Components, Resistors, & Inductors, and Capacitors. These segments represent groupings of product lines based on their functionality:

●		Metal oxide semiconductor field-effect transistors ("MOSFETs") function as solid-state switches to control power.
●		Diodes route, regulate, and block radio frequency, analog, and power signals; protect systems from surges or electrostatic discharge damage; or provide electromagnetic interference filtering.
●		Optoelectronic components emit light, detect light, or do both.
●		Resistors ~~and inductors both impede electric current. Resistors~~ are basic components used in all forms of electronic circuitry to adjust and regulate levels of voltage and current.
●		Inductors use an internal magnetic field to change alternating current phase and resist alternating current.
●		Capacitors store energy and discharge it when needed.

The current six segment alignment reflects a change in reporting structure made during the fourth fiscal quarter of 2019. The fiscal period ended March 30, 2019 has been recast to separately present Resistors and Inductors.

Vishay's reporting segments generate substantially all of their revenue from product sales to the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. A small portion of revenues is from royalties.

The Company evaluates business segment performance on operating income, exclusive of certain items (“segment operating income”). Only dedicated, direct selling, general, and administrative expenses of the segments are included in the calculation of segment operating income. The Company’s calculation of segment operating income excludes such selling, general, and administrative costs as global operations, sales and marketing, information systems, finance and administration groups, as well as restructuring and severance costs, the impact of the COVID-19 outbreak, goodwill and long-lived asset impairment charges, and other items. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company. These items represent reconciling items between segment operating income and consolidated operating income. Business segment assets are the owned or allocated assets used by each business.

The Company also regularly evaluates gross profit by segment to assist in the analysis of consolidated gross profit. The Company considers segment operating income to be the more important metric because it more fully captures the business operations of the segments.

2823

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

The following tables set forth business segment information:

	MOSFETs		Diodes		Optoelectronic Components		Resistors & Inductors		Capacitors		Total			MOSFETs		Diodes		Optoelectronic Components		Resistors		Inductors		Capacitors		Corporate / Other*			Total
Fiscal quarter ended September 28, 2019:
Fiscal quarter ended April 4, 2020:													Fiscal quarter ended April 4, 2020:
Net revenues	$	126,747	$	123,879	$	50,702	$	228,577	$	98,424	$	628,329		$	116,893	$	115,343	$	54,179	$	159,208	$	73,785	$	93,433	$	-		$	612,841

Gross profit	$	30,491	$	21,138	$	10,883	$	65,894	$	21,673	$	150,079		$	28,152	$	19,518	$	14,585	$	44,773	$	22,987	$	20,355	$	(3,130	)	$	147,240

Segment operating income	$	21,018	$	16,420	$	6,923	$	57,697	$	16,675	$	118,733		$	18,658	$	14,422	$	10,686	$	38,885	$	20,310	$	15,070	$	(3,130	)	$	114,901

Fiscal quarter ended September 29, 2018:
Fiscal quarter ended March 30, 2019:													Fiscal quarter ended March 30, 2019:
Net revenues	$	144,260	$	186,492	$	76,443	$	257,330	$	116,447	$	780,972		$	137,341	$	167,840	$	60,562	$	188,831	$	71,640	$	118,945	$	-		$	745,159

Gross profit	$	38,991	$	54,690	$	27,653	$	88,213	$	26,749	$	236,296		$	36,059	$	43,492	$	16,017	$	62,589	$	23,280	$	29,722	$	-		$	211,159

Segment operating income	$	29,502	$	49,561	$	23,144	$	80,042	$	21,655	$	203,904		$	26,678	$	38,128	$	11,710	$	56,347	$	20,640	$	24,566	$	-		$	178,069

Nine fiscal months ended September 28, 2019:
Net revenues $ 392,930 $ 433,761 $ 171,939 $ 731,431 $ 328,667 $ 2,058,728

Gross Profit $ 98,483 $ 93,487 $ 43,131 $ 223,178 $ 77,560 $ 535,839

Segment Operating Income $ 70,237 $ 78,558 $ 30,655 $ 198,127 $ 62,402 $ 439,979

Nine fiscal months ended September 29, 2018:
Net revenues $ 408,325 $ 535,975 $ 224,110 $ 755,323 $ 335,064 $ 2,258,797

Gross Profit $ 109,440 $ 150,298 $ 81,290 $ 251,712 $ 76,094 $ 668,834

Segment Operating Income $ 80,577 $ 134,592 $ 68,103 $ 226,292 $ 60,258 $ 569,822

*Amounts reported in Corporate/Other above represent unallocated costs directly related to the COVID-19 outbreak, which are reported as costs of products sold on the consolidated condensed statement of operations.

Fiscal quarters ended Nine fiscal months ended
September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Reconciliation:
Segment Operating Income $ 118,733 $ 203,904 $ 439,979 $ 569,822
Restructuring and severance costs (7,255 ) - (7,255 ) -
Unallocated Selling, General, and Administrative Expenses (60,450 ) (65,806 ) (194,472 ) (204,369 )
Consolidated Operating Income $ 51,028 $ 138,098 $ 238,252 $ 365,453
Unallocated Other Income (Expense) (6,846 ) (11,290 ) (23,234 ) (49,067 )
Consolidated Income Before Taxes $ 44,182 $ 126,808 $ 215,018 $ 316,386

	Fiscal quarters ended
	April 4, 2020			March 30, 2019
Reconciliation:
Segment Operating Income	$	114,901		$	178,069
Impact of COVID-19 Outbreak on Selling, General, and Administrative Expenses		(317	)		-
Unallocated Selling, General, and Administrative Expenses		(67,176	)		(70,334	)
Consolidated Operating Income	$	47,408		$	107,735
Unallocated Other Income (Expense)		(11,274	)		(7,787	)
Consolidated Income Before Taxes	$	36,134		$	99,948

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(dollars in thousands, except per share amounts)

Our free cash results were significantly impacted by the payment of cash taxes related to the cash repatriated to the U.S. in the second and third fiscal quarters of 2019 of $20.5 million and $18.3 million, respectively, and $92.1 million and $64.7 million in the second and third fiscal quarters of 2018, respectively, and the installment payments of the U.S. transition tax of $14.8 million and $14.4 million in the second fiscal quarters of 2019 and 2018, respectively.

Financial Metrics

We utilize several financial metrics to evaluate the performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, operating margin, segment operating income, end-of-period backlog, and the book-to-bill ratio. We also monitor changes in inventory turnover and our or publicly available average selling prices (“ASP”).

Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but also deducts certain other period costs, particularly losses on purchase commitments and inventory write-downs. Losses on purchase commitments and inventory write-downs have the impact of reducing gross profit margin in the period of the charge, but result in improved gross profit margins in subsequent periods by reducing costs of products sold as inventory is used. Gross profit margin is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.

Operating margin is computed as gross profit less operating expenses as a percentage of net revenues. We evaluate business segment performance on segment operating margin. Only dedicated, direct selling, general, and administrative expenses of the segments are included in the calculation of segment operating income. Segment operating margin is computed as operating income less items such as restructuring and severance costs, asset write-downs, goodwill and indefinite-lived intangible asset impairments, inventory write-downs, gains or losses on purchase commitments, global operations, sales and marketing, information systems, finance and administrative groups, and other items, expressed as a percentage of net revenues. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the segment. Operating margin is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.

End-of-period backlog is one indicator of future revenues. We include in our backlog only open orders that we expect to ship in the next twelve months. If demand falls below customers’ forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, the backlog is not necessarily indicative of the results to be expected for future periods.

An important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period as compared with the product that we ship during that period. A book-to-bill ratio that is greater than one indicates that our backlog is building and that we are likely to see increasing revenues in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of declining demand and may foretell declining revenues.

We focus on our inventory turnover as a measure of how well we are managing our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each fiscal quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.

Pricing in our industry can be volatile. Using our and publicly available data, we analyze trends and changes in average selling prices to evaluate likely future pricing. ~~The erosion of~~We attempt to offset deterioration in the average selling prices of established products ~~is typical for semiconductor products. We attempt to offset this deterioration~~ with ongoing cost reduction activities and new product introductions. Our specialty passive components are more resistant to average selling price erosion. All pricing is subject to governing market conditions and is independently set by us.

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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~~first fiscal quarter of ~~2018~~2019 through the ~~third~~first fiscal quarter of ~~2019~~2020 (dollars in thousands):

	3rd Quarter 2018			4th Quarter 2018			1st Quarter 2019			2nd Quarter 2019			3rd Quarter 2019			1st Quarter 2019			2nd Quarter 2019			3rd Quarter 2019			4th Quarter 2019			1st Quarter 2020

Net revenues	$	780,972		$	775,892		$	745,159		$	685,240		$	628,329		$	745,159		$	685,240		$	628,329		$	609,577		$	612,841

Gross profit margin(1)		30.3	%		28.3	%		28.3	%		25.5	%		23.9	%		28.3	%		25.5	%		23.9	%		22.2	%		24.0	%

Operating margin(2)		17.7	%		15.4	%		14.5	%		11.6	%		8.1	%		14.5	%		11.6	%		8.1	%		4.0	%		7.7	%

End-of-period backlog	$	1,559,700		$	1,497,100		$	1,331,800		$	1,126,700		$	935,400		$	1,331,800		$	1,126,700		$	935,400		$	911,300		$	1,005,200

Book-to-bill ratio		0.95			0.94			0.79			0.69			0.72			0.79			0.69			0.72			0.94			1.17

Inventory turnover		4.4			4.5			4.3			4.3			4.1			4.3			4.3			4.1			4.3			4.2

Change in ASP vs. prior quarter		0.6	%		0.7	%		(0.4	)%		(0.9	)%		(1.1	)%		(0.4	)%		(0.9	)%		(1.1	)%		(0.8	)%		(1.1	)%

(1) Gross margin for the first fiscal quarter of 2020 includes $3.1 million of expenses directly related to the COVID-19 outbreak (see Note 2 to our consolidated condensed financial statements).

(2) Operating margin for the third and fourth fiscal quarters of 2019 includes $7.3 million and $16.9 million, respectively, of restructuring and severance expenses (see Note 4 to our consolidated condensed financial statements). Operating margin for the first fiscal quarter of 2020 also includes in total $3.4 million of expenses directly related to the COVID-19 outbreak (see Note 2 to our consolidated condensed financial statements).

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

Revenues ~~decreased~~increased versus the prior fiscal quarter, ~~and~~but decreased versus the ~~third~~first fiscal quarter of ~~2018. In periods where customers, particularly distributors, have~~2019. After a period of relatively high levels of inventory backlog is less indicative of future revenues. Distributors, particularly of semiconductor products in Asia, began to normalize their backlogs in the third fiscal quarter of 2018 and we experienced a further normalization of demand through the third fiscal quarter of 2019. Inventory in the supply chain, ~~remains~~inventory levels are now at ~~a high level, which continues to negatively impact orders.~~widely normalized levels. Strong orders, particularly from global distributor customers, and from Asia in general, increased the book-to-bill ratio and the backlog. Average selling prices ~~particularly of~~in total decreased consistent with historical performance, while the decrease for our commodity semiconductor products ~~have begun to decrease consistent with the decrease in demand.~~is accelerating.

Gross profit margin ~~decreased~~increased versus the prior fiscal quarter, ~~and~~but decreased versus the ~~third~~first fiscal quarter of ~~2018.~~2019. The ~~decreases~~fluctuations are primarily volume-driven, and include temporary manufacturing inefficiencies as we adapt manufacturing capacities. U.S. tariffs on goods imported from China also impacted the gross profit margin versus the third fiscal quarter of 2018.volume-driven.

The book-to-bill ratio in the ~~third~~first fiscal quarter of ~~2019~~2020 increased to ~~0.72~~1.17 versus ~~0.69~~0.94 in the ~~second~~fourth fiscal quarter of 2019. The book-to-bill ratios in the ~~third~~first fiscal quarter of ~~2019~~2020 for distributors and original equipment manufacturers ("OEM") were ~~0.55~~1.30 and ~~0.90,~~1.04, respectively, versus ratios of ~~0.55~~0.94 and ~~0.86,~~0.95, respectively, during the ~~second~~fourth fiscal quarter of 2019.

For the ~~fourth~~second fiscal quarter of ~~2019,~~2020, despite substantial uncertainties, we anticipate revenues between ~~$580~~$540 million and ~~$620~~$580 million and gross margins of ~~23% to 24%~~21% plus/minus 90 basis points at the exchange rates of the ~~third~~first fiscal quarter of ~~2019. We anticipate that inventory reductions, particularly by distributors, will continue to have some negative impact on our revenues in the short-term.~~2020.

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Financial Metrics by Segment

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~~first fiscal quarter of ~~2018~~2019 through the ~~third~~first fiscal quarter of ~~2019~~2020 (dollars in thousands):

	3rd Quarter 2018			4th Quarter 2018			1st Quarter 2019			2nd Quarter 2019			3rd Quarter 2019			1st Quarter 2019			2nd Quarter 2019			3rd Quarter 2019			4th Quarter 2019			1st Quarter 2020
MOSFETs
Net revenues	$	144,260		$	139,318		$	137,341		$	128,842		$	126,747		$	137,341		$	128,842		$	126,747		$	116,215		$	116,893

Book-to-bill ratio		0.88			1.08			0.84			0.54			0.54			0.84			0.54			0.54			0.94			1.12

Gross profit margin		27.0	%		26.2	%		26.3	%		24.8	%		24.1	%		26.3	%		24.8	%		24.1	%		23.7	%		24.1	%

Segment operating margin		20.5	%		18.9	%		19.4	%		17.5	%		16.6	%		19.4	%		17.5	%		16.6	%		16.1	%		16.0	%

Diodes
Net revenues	$	186,492		$	176,961		$	167,840		$	142,042		$	123,879		$	167,840		$	142,042		$	123,879		$	123,382		$	115,343

Book-to-bill ratio		0.86			0.83			0.63			0.52			0.57			0.63			0.52			0.57			0.88			1.36

Gross profit margin		29.3	%		26.2	%		25.9	%		20.3	%		17.1	%		25.9	%		20.3	%		17.1	%		16.3	%		16.9	%

Segment operating margin		26.6	%		23.3	%		22.7	%		16.9	%		13.3	%		22.7	%		16.9	%		13.3	%		12.6	%		12.5	%

Optoelectronic Components
Net revenues	$	76,443		$	65,617		$	60,562		$	60,675		$	50,702		$	60,562		$	60,675		$	50,702		$	51,047		$	54,179

Book-to-bill ratio		0.88			0.75			0.83			0.70			0.86			0.83			0.70			0.86			1.11			1.40

Gross profit margin		36.2	%		28.8	%		26.4	%		26.8	%		21.5	%		26.4	%		26.8	%		21.5	%		20.2	%		26.9	%

Segment operating margin		30.3	%		22.2	%		19.3	%		19.8	%		13.7	%		19.3	%		19.8	%		13.7	%		12.7	%		19.7	%

Resistors & Inductors
Resistors
Net revenues																$	188,831		$	165,359		$	155,119		$	147,883		$	159,208

Book-to-bill ratio																	0.89			0.81			0.82			0.95			1.05

Gross profit margin																	33.1	%		28.3	%		27.4	%		23.5	%		28.1	%

Segment operating margin																	29.8	%		25.2	%		23.8	%		19.0	%		24.4	%

Inductors
Net revenues	$	257,330		$	262,963		$	260,471		$	242,383		$	228,577		$	71,640		$	77,024		$	73,458		$	76,520		$	73,785

Book-to-bill ratio		1.02			0.94			0.92			0.88			0.86			0.97			1.01			0.95			1.05			0.98

Gross profit margin		34.3	%		32.5	%		33.0	%		29.5	%		28.8	%		32.5	%		31.9	%		31.9	%		33.5	%		31.2	%

Segment operating margin		31.1	%		29.4	%		29.6	%		26.2	%		25.2	%		28.8	%		28.3	%		28.3	%		30.3	%		27.5	%

Capacitors
Net revenues	$	116,447		$	131,033		$	118,945		$	111,298		$	98,424		$	118,945		$	111,298		$	98,424		$	94,530		$	93,433

Book-to-bill ratio		1.03			1.02			0.67			0.68			0.76			0.67			0.68			0.76			0.84			1.20

Gross profit margin		23.0	%		24.7	%		25.0	%		23.5	%		22.0	%		25.0	%		23.5	%		22.0	%		17.9	%		21.8	%

Segment operating margin		18.6	%		20.4	%		20.7	%		19.0	%		16.9	%		20.7	%		19.0	%		16.9	%		12.3	%		16.1	%

~~Acquisition Activity~~

As part of our growth strategy, we seek to expand through targeted acquisitions of other manufacturers of electronic components that have established positions in major markets, reputations for product quality and reliability, and product lines with which we have substantial marketing and technical expertise. This includes exploring opportunities to acquire targets to gain market share, penetrate different geographic markets, enhance new product development, round out our existing product lines, or grow our high margin niche market businesses. Acquisitions of passive components businesses would likely be made to strengthen and broaden our position as a specialty product supplier; acquisitions of discrete semiconductor businesses would be made to increase market share and to generate synergies. To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”). For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for Vishay’s four preceding fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the four fiscal quarter period.

On January 3, 2019, we acquired substantially all of the assets and liabilities of Bi-Metallix, Inc. ("Bi-Metallix"), a U.S.-based, privately-held provider of electron beam continuous strip welding services for $11.9 million. We were a major customer of Bi-Metallix, and the acquired business will be vertically integrated into our Resistors & Inductors segment. The results and operations of this acquisition have been included in the Resistors & Inductors segment since January 3, 2019. Bi-Metallix did not have a material impact on the Company's consolidated results for the fiscal quarter and nine fiscal months ended September 28, 2019.

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

Cost Management

We place a strong emphasis on controlling our costs, and use various measures and metrics to evaluate our cost structure.

We define variable costs as expenses that vary with respect to quantity produced. Fixed costs do not vary with respect to quantity produced over the relevant time period. Contributive margin is calculated as net revenue less variable costs. It may be expressed in dollars or as a percentage of net revenue. Management uses this measure to determine the amount of profit to be expected for any change in revenues. While these measures are typical cost accounting measures, none of these measures are recognized in accordance with GAAP. The classification of expenses as either variable or fixed is judgmental and other companies might classify such expenses differently. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies.

We closely monitor variable costs and seek to achieve the contributive margin in our business model. Over a period of many years, we have generally maintained a contributive margin of between 45% - 47% of revenues. The erosion of average selling prices, particularly of our semiconductor products, that is typical of our industry and inflation negatively impact contributive margin and drive us to continually seek ways to reduce our variable costs. Our variable cost reduction efforts include increasing the efficiency in our production facilities by expending capital for automation, reducing materials costs, materials substitution, increasing wafer size and shrinking dies to maximize efficiency in our semiconductor production processes, and other yield improvement activities.

Our cost management strategy also includes a focus on controlling fixed costs recorded as costs of products sold or selling, general, and administrative expenses and maintaining our break-even point (adjusted for acquisitions). We seek to limit increases in selling, general, and administrative expenses to the rate of inflation, excluding foreign currency exchange effects and substantially independent of sales volume changes. At constant fixed costs, we would expect each $1 million increase in revenues to increase our operating income by approximately $450,000 to $470,000. Sudden changes in the business conditions, ~~however,~~such as the current COVID-19 situation, may not allow us to quickly adapt our manufacturing capacity and cost structure.

Occasionally, our ongoing cost containment activities are not adequate and we must take actions to maintain our cost competitiveness. We incurred significant restructuring expenses in our past to reduce our cost structure. Historically, our primary cost reduction technique was through the transfer of production to the extent possible from high-labor-cost countries to lower-labor-cost countries. We believe that our manufacturing footprint is suitable to serve our customers and end markets, while maintaining lower manufacturing costs. Since 2013, our cost reduction programs have primarily focused on reducing fixed costs, including selling, general, and administrative expenses.

We continue to monitor the economic environment and its potential effects on our customers and the end markets that we ~~serve.~~serve, especially in light of the ongoing COVID-19 situation.

In the third fiscal quarter of 2019, we announced global cost reduction and management rejuvenation programs as part of our continuous efforts to improve efficiency and operating performance. We incurred restructuring expense of ~~$7.3~~$24.1 million ~~related to this program~~since the inception of the programs. We did not incur any restructuring expenses during the ~~nine~~three fiscal months ended ~~September 28, 2019.~~April 4, 2020.

The programs are primarily designed to reduce manufacturing fixed costs and selling, general, and administrative ("SG&A") costs company-wide, and provide management rejuvenation. The programs in total are expected to lower costs by approximately $15 million annually when fully implemented, of which approximately 50% is expected to be realized as reduced manufacturing fixed costs and 50% is expected to be realized as reduced SG&A expenses. We expect to incur costs (primarily cash severance expenses) of approximately $25 million related to the programs. The implementation of these programs will not impact planned research and development activities.

We ~~are~~ first ~~soliciting~~solicited volunteers to accept a voluntary separation / early retirement ~~offer.~~offer, which was generally successful. The voluntary separation benefits vary by country and job classification, but generally offer a cash loyalty bonus. ~~Additional~~A limited number of involuntary terminations ~~will likely be~~are necessary to achieve the cost reduction targets. We expect these cost reductions to be fully achieved by December 2020.

No manufacturing facility closures are currently expected pursuant to these programs. Except for these programs, we do not anticipate any other material restructuring activities ~~during the remainder of 2019 or~~in 2020. However, a continued sluggish business environment for the electronics industry, a prolonged impact of the COVID-19 outbreak, or a significant economic downturn may require us to implement additional restructuring initiatives.

In uncertain times, we focus on managing our production capacities in accordance with customer requirements, and maintain discipline in terms of our fixed costs and capital expenditures. Even as we seek to manage our costs, we remain cognizant of the future requirements of our demanding markets. We continue to pursue our growth plans through investing in capacities for strategic product lines, and through increasing our resources for R&D, technical marketing, and field application engineering; supplemented by opportunistic acquisitions of specialty businesses.

Our long-term strategy includes growth through the integration of acquired businesses, and GAAP requires plant closure and employee termination costs that we incur in connection with our acquisition activities to be recorded as expenses in our consolidated statement of operations, as such expenses are incurred. We have not incurred any material plant closure or employee termination costs related to any of the businesses acquired since 2011, but we expect to have some level of future restructuring expenses due to acquisitions.

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Foreign Currency Translation

We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. We occasionally use forward exchange contracts to economically hedge a portion of these exposures.

GAAP requires that we identify the “functional currency” of each of our subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary’s functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company’s operations generally would have the parent company’s currency as its functional currency. We have both situations among our subsidiaries.

Foreign Subsidiaries which use the Local Currency as the Functional Currency

We finance our operations in Europe and certain locations in Asia in local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of stockholders’ equity.

For those subsidiaries where the local currency is the functional currency, revenues and expenses incurred in the local currency are translated at the average exchange rate for the year. While the translation of revenues and expenses incurred in the local currency into U.S. dollars does not directly impact the statements of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies. The dollar generally was stronger during the ~~third~~first fiscal quarter ~~and first nine fiscal months~~ of ~~2019~~2020 compared to the prior fiscal quarter and prior year ~~periods,~~period, with the translation of foreign currency revenues and expenses into U.S. dollars decreasing reported revenues and expenses versus the prior fiscal quarter and prior year ~~periods.~~period.

Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency

Our operations in Israel and most significant locations in Asia are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly payroll-related, which are incurred in the local currency. The cost of products sold for the ~~third~~first fiscal quarter ~~and first nine fiscal months~~ of ~~2019~~2020 have been slightly favorably impacted compared to the prior fiscal quarter and prior year ~~periods~~period by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency.

Results of Operations

Statements of operations’ captions as a percentage of net revenues and the effective tax rates were as follows:

	Fiscal quarters ended									Nine fiscal months ended						Fiscal quarters ended
	September 28, 2019			June 29, 2019			September 29, 2018			September 28, 2019			September 29, 2018			April 4, 2020			December 31, 2019			March 30, 2019
Cost of products sold		76.1	%		74.5	%		69.7	%		74.0	%		70.4	%		76.0	%		77.8	%		71.7	%
Gross profit		23.9	%		25.5	%		30.3	%		26.0	%		29.6	%		24.0	%		22.2	%		28.3	%
Selling, general & administrative expenses		14.6	%		13.9	%		12.6	%		14.1	%		13.4	%		16.3	%		15.5	%		13.9	%
Operating income		8.1	%		11.6	%		17.7	%		11.6	%		16.2	%
Income before taxes and noncontrolling interest		7.0	%		10.3	%		16.2	%		10.4	%		14.0	%
Net earnings attributable to Vishay stockholders		4.8	%		6.5	%		10.0	%		7.3	%		10.8	%
Operating income (loss)																	7.7	%		4.0	%		14.5	%
Income (loss) before taxes and noncontrolling interest																	5.9	%		1.9	%		13.4	%
Net earnings (loss) attributable to Vishay stockholders																	4.4	%		2.3	%		10.1	%
________
Effective tax rate		31.5	%		36.9	%		38.4	%		29.9	%		22.9	%		24.2	%		-25.4	%		24.3	%

Net Revenues

Net revenues were as follows (dollars in thousands):

Fiscal quarters ended Nine fiscal months ended
September 28, 2019 June 29, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Net revenues $ 628,329 $ 685,240 $ 780,972 $ 2,058,728 $ 2,258,797

	Fiscal quarters ended
	April 4, 2020			December 31, 2019			March 30, 2019
Net revenues		$	612,841		$	609,577		$	745,159

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (56,911 ) -8.3 %
September 29, 2018 $ (152,643 ) -19.5 % $ (200,069 ) -8.9 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	3,264			0.5	%
March 30, 2019		$	(132,318	)		-17.8	%

Changes in net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to-Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-7.1%	-17.4%	-6.8%
Change in volume					1.6	%		-15.0	%
Decrease in average selling prices	-1.1%	-1.9%	-0.5%		-1.1	%		-2.9	%
Foreign currency effects	-0.2%	-1.1%	-1.9%		-0.1	%		-0.8	%
Acquisitions	0.0%	0.0%	0.2%
Other	0.1%	0.9%	0.1%		0.1	%		0.9	%
Net change	-8.3%	-19.5%	-8.9%		0.5	%		-17.8	%

We experienced a substantial, broad-based increase in demand for our products beginning in ~~the first fiscal quarter of~~ 2017 that continued through the third fiscal quarter of 2018. Demand started to decrease in the fourth fiscal quarter of 2018 and the decrease ~~has~~ accelerated through ~~the third fiscal quarter of~~ 2019 as customers, particularly distributors, ~~have significantly~~ reduced orders as they ~~decrease~~decreased their inventory. The decrease in demand resulted in decreased net revenues compared to the ~~prior~~ fiscal quarter ~~and prior year periods.~~ended March 30, 2019. Net revenues began to increase in the first fiscal quarter of 2020, but have been impacted by the COVID-19 outbreak.

Gross Profit ~~and~~ Margins

Gross profit margins for the fiscal quarter ended ~~September 28, 2019~~April 4, 2020 were ~~23.9%~~24.0%, versus ~~25.5%~~22.2% and ~~30.3%,~~28.3% for the comparable prior fiscal quarter and prior year period, respectively. ~~Gross profit margins for~~The increase versus the ~~nine~~prior fiscal ~~months ended September 28, 2019 were 26.0%, versus 29.6% for the comparable prior year period. The decreases are~~quarter is primarily due to increased volume, manufacturing efficiencies, and changes in tariffs. The decrease versus the ~~decreases in~~prior year quarter is primarily due to decreased sales volume and ~~the impacts of U.S. tariffs on goods imported from China.~~average selling prices. We were able to offset the negative impacts of inflation and average selling price decline ~~by cost reductions~~ and ~~innovation. Contributive margin was also negatively impacted by costs to adapt direct labor and near-term foundry capacities in the second and third fiscal quarters of 2019.~~maintain our contributive margin.

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Segments

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

MOSFETs

Net revenues and gross profit margin of the MOSFETs segment were as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	126,747			$	128,842			$	144,260			$	392,930			$	408,325			$	116,893			$	116,215			$	137,341
Gross profit margin			24.1	%			24.8	%			27.0	%			25.1	%			26.8	%			24.1	%			23.7	%			26.3	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (2,095 ) -1.6 %
September 29, 2018 $ (17,513 ) -12.1 % $ (15,395 ) -3.8 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	678			0.6	%
March 30, 2019		$	(20,448	)		-14.9	%

Changes in MOSFETs segment net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-0.1%	-8.4%	-0.7%
Change in volume					0.9	%		-9.8	%
Decrease in average selling prices	-1.5%	-3.9%	-2.4%		-0.2	%		-5.8	%
Foreign currency effects	-0.2%	-0.6%	-1.0%		-0.1	%		-0.4	%
Other	0.2%	0.8%	0.3%		0.0	%		1.1	%
Net change	-1.6%	-12.1%	-3.8%		0.6	%		-14.9	%

~~Net revenues of the~~The MOSFETs segment ~~decreased~~net revenues increased slightly versus the prior fiscal quarter, but decreased significantly versus the prior year ~~quarter, and moderately~~quarter. The slight increase versus the prior ~~year-to-date period.~~fiscal quarter was the net result from significant increases in the Asia and Americas regions, partially offset by a significant decrease in the Europe region primarily due to a singularity of a last-time-buy in the prior fiscal quarter. The decrease versus the prior ~~year-to-date period~~year quarter was primarily due to distributor inventory reductions and the temporary closure of our main manufacturing facility in China due to the COVID-19 outbreak. The decrease was partially offset by ~~the~~ significant ~~increase~~growth in ~~the first fiscal quarter versus the prior year. The increase~~revenues from automotive customers as well as with our IC product business particularly in ~~net revenues versus the prior fiscal quarter~~Europe and the prior year periods from European and American end customers were offset by the significant decrease from distributor customers in all regions. The decreases in our biggest market, Asian distributors, were partially offset by significant increases in our integrated circuits products.Asia.

Gross profit margin ~~decreased~~increased versus the prior fiscal quarter, ~~and~~but decreased versus the prior year ~~periods.~~quarter. The ~~decrease~~increase versus the prior fiscal quarter is ~~primarily~~ due to ~~lower average selling prices.~~cost reduction measures. The decrease versus the prior year quarter is primarily due to lower ~~volume and lower average selling prices. The decrease versus the prior year-to-date period is primarily due to lower~~ average selling prices ~~the impact of U.S. tariffs on goods imported from China,~~ and ~~costs associated with near-term foundry capacity adaptations, which were~~significantly lower volume, partially offset by ~~positive foreign currency impacts and an increase in inventory.~~cost reduction measures.

~~The ongoing reduced demand from some end markets continues to increase the pressure on pricing.~~ We experienced a slight decrease in average selling prices versus the prior fiscal ~~quarter and prior year-to-date period and a moderate decrease~~quarter. The reduced customer demand versus the prior year ~~quarter.~~quarter significantly increased pricing pressure and resulted in a significant decrease in average selling prices.

We continue to invest to expand mid- and long-term manufacturing capacity for strategic product ~~lines at our internal fab and at third-party foundries.~~lines.

4438

Diodes

Net revenues and gross profit ~~margin~~margins of the Diodes segment were as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	123,879			$	142,042			$	186,492			$	433,761			$	535,975			$	115,343			$	123,382			$	167,840
Gross profit margin			17.1	%			20.3	%			29.3	%			21.6	%			28.0	%			16.9	%			16.3	%			25.9	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (18,163 ) -12.8 %
September 29, 2018 $ (62,613 ) -33.6 % $ (102,214 ) -19.1 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	(8,039	)		-6.5	%
March 30, 2019		$	(52,497	)		-31.3	%

Changes in Diodes segment net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to-Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-10.5%	-31.2%	-17.7%		-4.2	%		-28.1	%
Decrease in average selling prices	-2.6%	-3.9%	-0.4%		-2.5	%		-5.6	%
Foreign currency effects	-0.2%	-0.7%	-1.3%		-0.1	%		-0.5	%
Other	0.5%	2.2%	0.3%		0.3	%		2.9	%
Net change	-12.8%	-33.6%	-19.1%		-6.5	%		-31.3	%

Net revenues of ~~our~~the Diodes segment ~~declined significantly versus the prior fiscal quarter and prior year periods. Net revenues~~ decreased significantly ~~in all regions and sales channels versus the prior fiscal quarter and prior year periods. The decrease was most significant with our distribution customers in Asia.~~

~~Gross profit margin decreased versus the prior fiscal quarter and prior year periods. The decreases~~ versus the prior fiscal quarter and the prior year quarter. Inventory reductions by distributors continue to burden our business. The first fiscal quarter ~~are primarily~~of 2020 was also impacted by the temporary closure of our main manufacturing facility in China due to the ~~significant decrease in volume and lower average selling prices.~~ COVID-19 outbreak. The decrease versus the prior ~~year-to-date period is~~fiscal quarter was primarily due to decreased revenue from distribution customers, partially offset by significant growth with end customers in the ~~significant~~Americas and Europe regions. The decrease versus the prior year quarter was in ~~volume~~all regions and sales channels, particularly distributor customers.

Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter. The increase versus the prior fiscal quarter was primarily due to a change in the impact of U.S. tariffs on goods imported from China. ~~Our cost reduction efforts offset~~Gross profit margin decreased versus the ~~impact from cost inflation~~prior year quarter due to decreased sales volume and ~~the costs associated with the adaptation of direct labor to the~~ lower ~~sales volume.~~average selling prices.

~~The ongoing low level of demand increased the pressure on~~Average selling ~~prices. We experienced a slight decrease in average selling~~ prices decreased moderately versus the prior fiscal quarter and ~~prior year-to-date period and a moderate decrease~~significantly versus the prior year quarter. Unfavorable product mix contributed to the decreases in average selling prices.

4539

~~Optoelectronic~~Optoelectronic Components

Net revenues and gross profit ~~margin~~margins of the Optoelectronic Components segment were as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	50,702			$	60,675			$	76,443			$	171,939			$	224,110			$	54,179			$	51,047			$	60,562
Gross profit margin			21.5	%			26.8	%			36.2	%			25.1	%			36.3	%			26.9	%			20.2	%			26.4	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (9,973 ) -16.4 %
September 29, 2018 $ (25,741 ) -33.7 % $ (52,171 ) -23.3 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	3,132			6.1	%
March 30, 2019		$	(6,383	)		-10.5	%

Changes in Optoelectronic Components segment net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to-Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-13.5%	-29.5%	-19.4%
Change in volume					5.6	%		-7.9	%
Decrease in average selling prices	-2.7%	-6.0%	-3.5%		-0.8	%		-2.2	%
Foreign currency effects	-0.3%	-1.0%	-1.9%		-0.2	%		-1.2	%
Other	0.1%	2.8%	1.5%		1.5	%		0.8	%
Net change	-16.4%	-33.7%	-23.3%		6.1	%		-10.5	%

Net revenues of our Optoelectronic Components segment ~~decreased~~increased significantly versus the prior fiscal quarter, ~~and~~but decreased significantly versus the prior year ~~periods.~~quarter. The ~~decreases were~~increase versus the prior fiscal quarter is primarily due to significant growth in the Americas and Europe regions, particularly with distributor customers. The increase was partially offset by significant decrease in revenues from the Asia region. The decrease versus the prior year quarter was in all regions and sales channels, particularly ~~distributor customers.~~in the Americas and Asia regions.

The gross profit margin ~~decreased~~increased versus the prior fiscal quarter and the prior year ~~periods.~~quarter. The ~~decreases are~~increase versus the prior fiscal quarter is primarily due to ~~decreased~~increased sales volume, which led to manufacturing efficiencies, and an increase in inventory, partially offset by lower average selling prices and cost ~~inflation,~~inflation. The increase versus the prior year quarter is primarily due to cost reductions, partially offset by lower average selling prices and ~~higher inventory obsolescence.~~cost inflation.

~~The pricing pressure for our established Optoelectronic Components products has increased as demand remains low.~~

~~The Optoelectronic Components segment has been particularly affected by high inventories at distribution~~Average selling prices decreased slightly versus the prior fiscal quarter and the resulting lower order rate, an unfavorable product mix, and a general weakness in one of its main product lines. We expect the business to return to historical levels of profitability after this normalization phase.prior year quarter.

4640

Resistors ~~& Inductors~~

Net revenues and gross profit ~~margin~~margins of the Resistors ~~& Inductors~~ segment were as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	228,577			$	242,383			$	257,330			$	731,431			$	755,323			$	159,208			$	147,883			$	188,831
Gross profit margin			28.8	%			29.5	%			34.3	%			30.5	%			33.3	%			28.1	%			23.5	%			33.1	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (13,806 ) -5.7 %
September 29, 2018 $ (28,753 ) -11.2 % $ (23,892 ) -3.2 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	11,325			7.7	%
March 30, 2019		$	(29,623	)		-15.7	%

Changes in Resistors ~~& Inductors~~ segment net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to-Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-5.7%	-8.7%	-1.5%
Change in volume					8.9	%		-12.0	%
Decrease in average selling prices	-0.3%	-0.5%	-0.1%		-0.6	%		-1.0	%
Foreign currency effects	-0.3%	-1.4%	-2.3%		-0.3	%		-1.2	%
Acquisitions	0.0%	0.0%	0.5%
Other	0.6%	-0.6%	0.2%		-0.3	%		-1.5	%
Net change	-5.7%	-11.2%	-3.2%		7.7	%		-15.7	%

Net revenues of the Resistors ~~& Inductors~~ segment ~~decreased~~increased significantly versus the prior fiscal quarter, ~~and~~but decreased significantly versus the prior year ~~quarter, and moderately~~period. The increase versus the prior ~~year-to-date period.~~fiscal quarter is primarily attributable to the Europe and Americas regions and distributor, industrial, and automotive customers. The decrease versus the prior ~~year-to-date period was partially offset by the significant increase in net revenues in the first fiscal~~year quarter ~~of 2019 versus the prior year. Net revenues decreased for~~is due to all regions and primarily distributor and industrial customers.

The gross profit margin increased versus the prior fiscal quarter, ~~and prior year quarter, except for the Asia region, which increased~~but decreased versus the prior ~~fiscal quarter.~~year period. The ~~decrease in net revenues~~increase versus the prior fiscal quarter is primarily due to ~~distribution customers~~increased sales volume and ~~the military and aerospace end market.~~manufacturing efficiencies, partially offset by lower average selling prices. The decrease ~~in net revenues~~ versus the prior year quarter is ~~primarily~~ due to ~~distribution customers~~decreased sales volume, decreased average selling prices, labor and ~~the industrial end market.~~materials cost increases, and negative impact of exchange rates.

~~The gross profit margin~~Average selling prices decreased slightly versus the prior fiscal quarter and ~~the~~ prior year periods. The decrease versus the prior fiscal quarter is primarily due to lower volume and a reduction in inventory, which was partially offset by our cost reduction efforts. The decrease versus the prior year periods is primarily due to lower volume, inefficiencies caused by lower volume, increased labor costs, negative foreign currency impacts and a reduction in inventory.quarter.

Due to the strong business environment throughout 2018, average selling prices increased through the first nine fiscal months of 2018 before starting to decrease consistent with our historical experience in the fourth fiscal quarter of 2018. This resulted in average selling prices that were slightly lower versus the prior fiscal quarter and the prior year periods.

~~Capacitors~~Inductors

Net revenues and gross profit ~~margin~~margins of the ~~Capacitors~~Inductors segment were as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	98,424			$	111,298			$	116,447			$	328,667			$	335,064			$	73,785			$	76,520			$	71,640
Gross profit margin			22.0	%			23.5	%			23.0	%			23.6	%			22.7	%			31.2	%			33.5	%			32.5	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

Fiscal quarter ended
September 28, 2019

Nine fiscal months ended
September 28, 2019

Change in net
revenues
% change
Change in net
revenues
% change
June 29, 2019 $ (12,874 ) -11.6 %
September 29, 2018 $ (18,023 ) -15.5 % $ (6,397 ) -1.9 %

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	(2,735	)		-3.6	%
March 30, 2019		$	2,145			3.0	%

Changes in Inductors segment net revenues were attributable to the following:

	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Change in volume		-0.9	%		6.5	%
Decrease in average selling prices		-2.6	%		-2.7	%
Foreign currency effects		0.0	%		-0.6	%
Other		-0.1	%		-0.2	%
Net change		-3.6	%		3.0	%

Net revenues of the Inductors segment decreased versus the prior fiscal quarter, but increased versus the prior year quarter. The decrease versus the prior fiscal quarter is primarily due to the Asia region and distributor and automotive customers. The increase versus the prior year quarter is primarily due to the Americas and Asia regions and medical and military and aerospace customers.

The gross profit margin decreased versus the prior fiscal quarter and the prior year quarter. The decrease versus the prior fiscal quarter is primarily due to decreased volume and average selling prices. The decrease versus the prior year quarter is primarily due to decreased average selling prices and inventory obsolescence.

Average selling prices decreased slightly versus the prior fiscal quarter and prior year quarter.

We expect long-term growth in this segment, and are positioned to capitalize on future market upturns.

Capacitors

Net revenues and gross profit margins of the Capacitors segment were as follows (dollars in thousands):

	Fiscal quarters ended
	April 4, 2020				December 31, 2019				March 30, 2019
Net revenues		$	93,433			$	94,530			$	118,945
Gross profit margin			21.8	%			17.9	%			25.0	%

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands):

	Fiscal quarter ended April 4, 2020
	Change in net revenues				% change
December 31, 2019		$	(1,097	)		-1.2	%
March 30, 2019		$	(25,512	)		-21.4	%

Changes in Capacitors segment net revenues were attributable to the following:

	vs. Prior Quarter	vs. Prior Year Quarter	vs. Prior Year-to-Date	vs. Prior Quarter			vs. Prior Year Quarter
Change attributable to:
Decrease in volume	-12.0%	-16.1%	-1.1%		-0.5	%		-21.1	%
Increase in average selling prices	0.6%	2.8%	2.3%
Change in average selling prices					-0.6	%		0.8	%
Foreign currency effects	-0.4%	-1.6%	-2.8%		-0.2	%		-1.1	%
Other	0.2%	-0.6%	-0.3%		0.1	%		0.0	%
Net change	-11.6%	-15.5%	-1.9%		-1.2	%		-21.4	%

Net revenues of the Capacitors segment decreased ~~significantly~~slightly versus the prior fiscal quarter and significantly versus the prior year ~~quarter and decreased slightly versus the prior year-to-date period.~~quarter. Net revenues decreased versus the prior fiscal quarter primarily in the Asia region, which was partially offset by increases in the Americas and ~~prior year periods in all~~Europe regions ~~except for Americas, which~~and increased ~~versus the prior year-to-date period.~~revenues from automotive customers. The decrease in net revenues versus the prior ~~fiscal~~year quarter ~~and prior year periods~~ is ~~primarily~~ due to ~~distribution~~all regions and primarily distributor and industrial customers.

The gross profit margin ~~decreased~~increased versus the prior fiscal quarter, ~~and prior year quarter,~~ but ~~increased~~decreased versus the prior ~~year-to-date period.~~year quarter. The increase versus the prior fiscal quarter is primarily due to a more profitable product mix and manufacturing efficiencies. The decrease versus the prior ~~fiscal quarter and prior~~ year ~~fiscal~~ quarter is primarily due to lower sales volume and increased metal and labor costs, partially offset by higher average selling prices and our cost reduction efforts. The increase versus the prior year-to-date period is primarily due to higher average selling prices and more profitable product mix.volume.

~~Average~~Despite the significantly lower sales volume, average selling prices increased slightly versus the prior ~~fiscal~~year quarter ~~and~~primarily due to increased prices for certain materials that were passed through to our customers. Average selling prices decreased slightly versus the prior ~~year periods.~~fiscal quarter.

4843

Selling, General, and Administrative Expenses

Selling, general, and administrative (“SG&A”) expenses are summarized as follows (dollars in thousands):

	Fiscal quarters ended												Nine fiscal months ended								Fiscal quarters ended
	September 28, 2019				June 29, 2019				September 29, 2018				September 28, 2019				September 29, 2018				April 4, 2020				December 31, 2019				March 30, 2019
Total SG&A expenses		$	91,796			$	95,112			$	98,198			$	290,332			$	303,381			$	99,832			$	94,299			$	103,424
as a percentage of revenues			14.6	%			13.9	%			12.6	%			14.1	%			13.4	%			16.3	%			15.5	%			13.9	%

~~The overall decrease in~~ SG&A expenses ~~is primarily~~for the fiscal quarter ended April 4, 2020 include $0.3 million of incremental costs separable from normal operations directly attributable to ~~reductions~~the COVID-19 outbreak. SG&A expenses increased versus the prior fiscal quarter primarily due to incentive compensation, but were below expectations due to reduced travel and ~~favorable foreign currency exchange impacts.~~

~~Certain items included in SG&A expenses impact~~other discretionary spending due to the ~~comparability of these amounts, as summarized below~~ ~~(in thousands):~~

Fiscal quarters ended Nine fiscal months ended
September 28, 2019 June 29, 2019 September 29, 2018 September 28, 2019 September 29, 2018
Amortization of intangible assets $ 2,112 $ 2,115 $ 3,240 $ 6,366 $ 9,665
Net loss (gain) on sales of assets (6 ) 11 26 (168 ) (2,216 )

~~Certain intangible assets became fully amortized in the third fiscal quarter of 2018.~~

~~In the third fiscal quarter of 2019, we announced a restructuring program targeting SG&A expenses. See "Cost Management" above.~~

COVID-19 outbreak.

Other Income (Expense)

Interest expense for the fiscal quarter ended ~~September 28,~~April 4, 2020 was unchanged versus the fiscal quarter ended December 31, 2019 and increased ~~$0.4~~by $0.2 million versus the fiscal quarter ended June 29, 2019, but decreased $2.2 million versus September 29, 2018. Interest expense for the nine fiscal months ended September 28, 2019 decreased by $1.7 million versus the nine fiscal months ended September 29, 2018.March 30, 2019. The increase ~~versus the prior fiscal quarter~~ is primarily due to ~~higher average amounts outstanding~~borrowings on the revolving credit ~~facility. However, as a result of using cash repatriated in the third fiscal quarter of 2019 the outstanding balance of the revolving credit~~ facility, ~~was reduced to zero~~partially offset by ~~September 28, 2019. The decrease versus the prior year quarter is primarily due to~~ reduced interest expense on the convertible senior debentures as a result of ~~using cash repatriated~~repurchases in ~~2018 to repurchase convertible senior debentures. The decrease versus the prior year-to-date period is primarily attributable to reduced interest expense on the revolving credit facility~~2019 and ~~the~~2020.

We repurchased $14.3 million principal amount of convertible senior debentures asin 2020. We recognized a ~~result of using cash repatriated in 2018 to repay the balance~~$2.9 million loss on early extinguishment of the ~~credit facility in the third fiscal quarter of 2018 and to repurchase~~repurchased convertible ~~senior debentures, partially offset by the issuance of convertible senior notes due 2025 in the second fiscal quarter of 2018.~~debentures.

The following tables analyze the components of the line “Other” on the consolidated condensed statements of operations (in thousands):

	Fiscal quarters ended								Fiscal quarters ended
	September 28, 2019		September 29, 2018			Change			April 4, 2020			December 31, 2019			Change
Foreign exchange gain (loss)	$	1,113	$	(254	)	$	1,367		$	1,864		$	(1,576	)	$	3,440
Interest income		2,365		3,504			(1,139	)		1,854			1,734			120
Other components of other periodic pension cost										(3,068	)		(3,848	)		780
Investment income (expense)		1,556		(37	)		1,593			(437	)		(97	)		(340	)
Other		32		(323	)		355			(15	)		135			(150	)
	$	5,066	$	2,890		$	2,176		$	198		$	(3,652	)	$	3,850

Fiscal quarters ended
September 28, 2019 June 29, 2019 Change
Foreign exchange gain (loss) $ 1,113 $ (481 ) $ 1,594
Interest income 2,365 2,147 218
Investment income (expense) 1,556 1,399 157
Other 32 (95 ) 127
$ 5,066 $ 2,970 $ 2,096

	Nine fiscal months ended									Fiscal quarters ended
	September 28, 2019			September 29, 2018			Change			April 4, 2020			March 30, 2019			Change
Foreign exchange gain (loss)	$	162		$	(997	)	$	1,159		$	1,864		$	(470	)	$	2,334
Interest income		6,711			8,302			(1,591	)		1,854			2,199			(345	)
Other components of other periodic pension cost											(3,068	)		(3,396	)		328
Investment income (expense)		6,545			(1,491	)		8,036			(437	)		3,590			(4,027	)
Other		(74	)		(374	)		300			(15	)		(11	)		(4	)
	$	13,344		$	5,440		$	7,904		$	198		$	1,912		$	(1,714	)

5044

Income Taxes

For the fiscal quarter ended ~~September 28, 2019,~~April 4, 2020, our effective tax rate was ~~31.5%~~24.2%, as compared to ~~36.9%~~-25.4% and ~~38.4%~~24.3% for the fiscal quarters ended ~~June 29,~~December 31, 2019 and ~~September 29, 2018,~~March 30, 2019, respectively. ~~For the nine fiscal months ended September 28, 2019, our effective tax rate was 29.9%, as compared to 22.9% for the nine fiscal months ended September 29, 2018.~~ With the reduction in the U.S. statutory rate to 21% beginning January 1, 2018, we expect that our effective tax rate will now be higher than the U.S. statutory rate, excluding unusual transactions. Historically, the effective tax rates were generally less than the U.S. statutory rate primarily because of earnings in foreign jurisdictions. Discrete tax items impacted our effective tax rate for each ~~period~~fiscal quarter presented.

We recorded additional tax ~~expense~~benefits of ~~$2.0~~$0.6 million ~~during~~in the ~~nine~~first fiscal ~~months ended September 28,~~quarter 2019 due to the remeasurement of the deferred tax liability related to our cash repatriation ~~program.~~program, primarily due to foreign currency effects. These types of remeasurement adjustments will continue until the amounts are repatriated. During the second and third fiscal quarters of 2019, we repatriated $73.6 million and $115.2 million, respectively, to the United States, and paid withholding and foreign taxes of approximately $20.5 million and $18.3 million, respectively.

As part of our cash repatriation activity, we settled an intercompany loan, which previously had been accounted for at the historical foreign exchange rate (akin to an equity contribution) because the debtor entity did not have the intent or ability to repay such intercompany loan. Currency translation adjustments were recorded in accumulated other comprehensive income, and were not included in U.S. GAAP pre-tax income. Our cash repatriation activity resulted in the ability to repay such intercompany loan. Upon settlement of this intercompany loan, the foreign entity realized a taxable gain. Income tax expense for the fiscal quarter ended June 29, 2019 and nine fiscal months ended September 28, 2019 includes tax expense of $7.6 million related to this tax-basis foreign exchange gain.

The effective tax ~~rate~~rates for the ~~nine~~ fiscal ~~months~~quarters ended ~~September 28,~~April 4, 2020, December 31, 2019, ~~was~~and March 30, 2019 were also impacted by the effect of the repurchase of convertible senior ~~debentures in the first fiscal quarter of 2019.~~debentures. We recognized a tax ~~benefit~~benefits of $1.3 million, $0.3 million, and $1.3 million in the fiscal ~~quarter~~quarters ended April 4, 2020, December 31, 2019, and March 30, 2019, respectively, resulting from the extinguishments, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the ~~extinguished~~ debentures.

During the ~~nine~~three fiscal months ended ~~September 28, 2019,~~April 4, 2020, the liabilities for unrecognized tax benefits ~~increased~~decreased by ~~$5.5~~$1.3 million on a net basis, ~~principally~~primarily due to ~~increases for tax positions taken in~~currency translation adjustments and the ~~current and prior periods and interest,~~expiration of a statute, partially offset by ~~expiration of statutes and payments.~~

Income tax expense for the fiscal quarter and nine fiscal months ended September 29, 2018 includes additional tax expense of $13.5 million and $25.5 million, respectively, recognized as a result of additional analysis of the impact of the Tax Cuts and Jobs Act completed in 2018.

The Company recognized a tax benefit on the pre-tax loss on early extinguishment of debt in the second fiscal quarter of 2018. The Company also recognized a tax benefit of $34.0 million, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the extinguished debentures.

We also recorded additional tax expense of $0.7 million and tax benefits of $7.0 million during the third fiscal quarter and nine fiscal months ended September 29, 2018, respectively, due to the remeasurement of the deferred tax liability related to our cash repatriation program. We repatriated $274 million and $450 million to the U.S. pursuant to this program in the second and third fiscal quarters of 2018. As a result of this repatriation, we paid cash taxes of $92.1 million and $64.7 million in the second and third fiscal quarters of 2018, respectively.

interest.

We operate in a global environment with significant operations in various locations outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various locations where we operate. Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to countries where we can take advantage of lower labor costs and available tax and other government-sponsored incentives. Accordingly, our effective tax rate has historically been less than the U.S. statutory rate, except in years where there are material discrete items.

Additional information about income taxes is included in Note 65 to our consolidated condensed financial ~~statements included in Item 1.~~statements.

5145

Financial Condition, Liquidity, and Capital Resources

We focus on our ability to generate cash flows from operations. 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, to reduce debt levels, and to pay dividends and repurchase stock. We have generated cash flows from operations in excess of $200 million in each of the last 1718 years, and cash flows from operations in excess of $100 million in each of the last 2425 years.

Management uses a non-GAAP measure, "free cash," to evaluate our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends. See "Overview" above for "free cash" definition and reconciliation to GAAP. Vishay has generated positive "free cash" in each of the past 2223 years, and "free cash" in excess of $80 million in each of the last 1718 years. In this volatile economic environment, we continue to focus on the generation of free cash, including an emphasis on cost controls.

During ~~2018,~~2019, we repatriated ~~approximately $724 million to the United States, and paid cash taxes of $156.8 million related to the repatriations. We repatriated approximately~~ $188.7 million to the United States, and paid cash taxes of $38.8 million related to the ~~repatriations in 2019.~~repatriations. The payment of these cash taxes was recorded as an operating cash flow and any future cash taxes associated with the TCJA transition tax and related foreign taxes on repatriated cash will generally be recorded as operating cash flows. The payment of these cash taxes significantly impacted cash flows from operations and free cash for the year ended December 31, ~~2018 and nine fiscal months ended September 28,~~ 2019. We expect our business to continue to be a reliable generator of free cash, partially offset by such tax payments. There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at the same levels, or at all, going forward if the current economic environment worsens.

~~In the second fiscal quarter of 2019, we entered into~~We maintain a ~~new~~revolving credit facility, which provides an aggregate commitment of $750 million of revolving loans available until June 5, 2024. The ~~new~~maximum amount available on the revolving credit facility ~~replaces our previous credit agreement that provided for an aggregate commitment of $640 million, and that was scheduled to mature on December 10, 2020.~~is restricted by the financial covenants described below. The ~~new~~ credit facility also provides us the ability to request up to $300 million of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

At ~~September 28, 2019,~~April 4, 2020, we had $54 million outstanding on our revolving credit facility. We had no amounts outstanding ~~under~~at December 31, 2019. We borrowed $57 million and repaid $3 million on the revolving credit facility during the three fiscal months ended April 4, 2020. The average outstanding balance on our revolving credit ~~facility.~~facility calculated at fiscal month-ends was $34.3 million and the highest amount outstanding on our revolving credit facility at a fiscal month end was $54 million during the three fiscal months ended April 4, 2020.

The revolving credit facility allows an unlimited amount of defined “Investments,” which include certain intercompany transactions and acquisitions, provided our pro forma leverage ratio is equal to or less than 2.75 to 1.00. If our pro forma leverage ratio is greater than 2.75 to 1.00, such Investments are subject to certain limitations.

Borrowings under the credit facility bear interest at LIBOR plus an interest margin. The applicable interest margin is based on our leverage ratio. Based on our current leverage ratio, any new borrowings will bear interest at LIBOR plus 1.50%, the same as pursuant to the previous credit agreement. The interest rate on any borrowings increases to LIBOR plus 1.75% if our leverage ratio is between 1.50 to 1 and 2.50 to 1 and further increases to 2.00% if our leverage ratio equals or exceeds 2.50 to 1.

We also pay a commitment fee, also based on its leverage ratio, on undrawn amounts. The undrawn commitment fee, based on Vishay's current leverage ratio, is 0.25% per annum, an improvement of 5 basis points over the previous credit agreement. Such undrawn commitment fee increases to 0.30% per annum if our leverage ratio is between 1.50 to 1 and 2.50 to 1 and further increases to 0.35% per annum if our leverage ratio equals or exceeds 2.50 to 1.

The borrowings under the credit facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries.

~~The credit facility also~~ limits or restricts us from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming our pro forma 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 leverage ratio is greater than 2.50 to 1.00), and requires us to comply with other covenants, including the maintenance of specific financial ratios.

The financial maintenance covenants include (a) an interest coverage ratio of not less than 2.00 to 1; and (b) a leverage ratio of not more than 3.25 to 1 (and a pro forma ratio of 3.00 to 1 on the date of incurrence of additional debt). The computation of these ratios is prescribed in Article VI of the Credit Agreement between Vishay Intertechnology, Inc. and JPMorgan Chase Bank, N.A., which has been filed with the SEC as Exhibit 10.1 to our current report on Form 8-K filed June 5, 2019.

We were in compliance with all financial covenants under the credit facility at ~~September 28, 2019.~~April 4, 2020. Our interest coverage ratio and leverage ratio were ~~19.29~~15.44 to 1 and ~~1.16~~1.67 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections. Based on our current EBITDA and outstanding revolver balance, the usable capacity on the revolving credit facility is approximately $619 million.

If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and any amounts then outstanding pursuant to the credit facility could become immediately payable. Additionally, our convertible senior debentures due 2040 and due 2041 and our convertible senior notes due 2025 have cross-default provisions that could accelerate repayment in the event the indebtedness under the credit facility is accelerated.

~~We had no amounts outstanding on our revolving~~The credit facility ~~at December 31, 2018. We borrowed $38 million~~allows an unlimited amount of defined “Investments,” which include certain intercompany transactions and ~~repaid $38 million on~~acquisitions, provided our pro forma leverage ratio is equal to or less than 2.75 to 1.00. If our pro forma leverage ratio is greater than 2.75 to 1.00, such Investments are subject to certain limitations.

The credit facility also allows an unlimited amount of defined "Restricted Payments," which include cash dividends and share repurchases, provided our pro forma leverage ratio is equal to or less than 2.50 to 1.00. If our pro forma leverage ratio is greater than 2.50 to 1.00, the credit facility ~~during~~allows such payments up to $100 million per annum (subject to a cap of $300 million for the ~~nine fiscal months ended September 28, 2019. The average outstanding balance on our credit~~term of the facility, ~~calculated at fiscal month-ends was $8.1~~with up to $25 million ~~and~~of any unused amount of the ~~highest amount outstanding on our revolving credit facility at a fiscal month end was $28~~$100 million ~~during~~per annum base available for use in the ~~nine fiscal months ended September 28, 2019.~~next succeeding calendar year).

During 2018, we issued $600 million principal amount of 2.25% convertible senior notes due 2025 to qualified institutional investors and repatriated approximately $724 million to the United States. We used substantially all of the proceeds from the issuance and the repatriated amounts to reduce the outstanding balance ofBorrowings under the credit facility bear interest at LIBOR plus an interest margin. The applicable interest margin is based on our leverage ratio. Based on our current leverage ratio, any new borrowings will bear interest at LIBOR plus 1.75%. The interest rate on any borrowings decreases to ~~zero,~~LIBOR plus 1.50% if our leverage ratio is below 1.50 to ~~repay~~1 and increases to 2.00% if our leverage ratio equals or exceeds 2.50 to 1.

We also pay a commitment fee, also based on its leverage ratio, on undrawn amounts. The undrawn commitment fee, based on Vishay's current leverage ratio, is 0.30% per annum. Such undrawn commitment fee decreases to 0.25% per annum if our leverage ratio is below 1.50 to 1 and increases to 0.35% per annum if our leverage ratio equals or exceeds 2.50 to 1.

The borrowings under the credit facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of Vishay and certain ~~intercompany indebtedness,~~significant subsidiaries located in the United States, and ~~to fund our 2018 repurchases~~pledges of ~~convertible senior debentures.~~stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries.

During the first fiscal quarter of ~~2019,~~2020, we repurchased ~~$1.0 million, $12.3 million, and the remaining $2.2~~$14.3 million principal amount of convertible senior debentures due ~~2040, due~~ 2041 ~~and due 2042, respectively,~~ for ~~$22.7~~$19.9 million. We ~~used cash on hand, primarily repatriated cash,~~borrowed from our revolving credit facility to fund the repurchases.

During the second and third fiscal quarters of 2019, we repatriated approximately $73.6 million and $115.2 million, respectively, to the United States, and paid withholding and foreign taxes of approximately $20.5 million and $18.3 million, respectively. Substantially all of these amounts are being used to repay certain intercompany indebtedness, repay the outstanding balance on our revolving credit facility, to pay the US transition tax, and to fund capital expansion projects.

~~After completing these phases of cash repatriation, there is~~We have approximately $100 million of unremitted foreign earnings that we have deemed not permanently reinvested and thus ~~has~~have accrued foreign withholding and other taxes. We ~~continue~~plan to ~~evaluate~~repatriate the ~~timing of the reparation of these~~ remaining amounts ~~and may decide~~in the second fiscal quarter of 2020, but the current COVID-19 outbreak could cause us to ~~ultimately not repatriate some of~~defer these ~~amounts.~~

plans. We also continue to evaluate the TCJA's provisions and may further adjust our financial and capital structure and business practices accordingly.

As of ~~September 28, 2019,~~April 4, 2020, substantially all of our cash and cash equivalents and short-term investment were held in countries outside of the United States. Our substantially undrawn credit facility provides us with significant operating liquidity in the United States. We expect to fund any future repurchases of convertible debentures, as well as other obligations required to be paid by the U.S. parent company, Vishay Intertechnology, Inc., including cash dividends to stockholders, share repurchases, and principal and interest payments on our debt instruments by borrowing under our revolving credit facility. Our U.S. subsidiaries also have operating cash needs.

Management expects to use the credit facility from time-to-time to meet certain short-term financing needs. We expect that cash on-hand and cash flows from operations will be sufficient to meet our longer-term financing needs related to normal operating requirements, regular dividend payments, and our research and development and capital expenditure plans. Additional acquisition activity, share repurchases, convertible debt repurchases, or conversion of our convertible debentures 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 before the maturity of our ~~new~~ revolving credit facility in June 2024.

Prior to three months before the maturity date, our convertible senior debentures are convertible by the holders under certain circumstances. The convertible senior debentures due 2040 and due 2041 and the convertible senior notes due 2025 are not currently convertible. At the direction of our Board of Directors, we intend, upon conversion, to repay the principal amount of the any convertible debt instruments in cash and settle any additional amounts in shares of our common stock. We intend to finance the principal amount of any converted debentures using borrowings under our credit facility. No conversions have occurred to date.

5347

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 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).

The interest rates on our short-term investments vary by location, but can be up to 150 bps higher than the interest rates on our cash accounts. The average interest rate on our short-term investments was ~~0.04%~~0.65% due to the low interest rate environment in Europe. Transactions related to these investments are classified as investing activities on our consolidated condensed statements of cash flows.

The amount of short-term investments at ~~September 28, 2019~~April 4, 2020 is lower than normal due to ~~the recently~~2018 and 2019 completed cash repatriation activity.

The following table summarizes the components of net cash and short-term investments (debt) at ~~September 28, 2019~~April 4, 2020 and December 31, ~~2018~~2019 (in thousands):

	September 28, 2019			December 31, 2018			April 4, 2020			December 31, 2019

Credit facility	$	-		$	-		$	54,000		$	-
Convertible senior notes, due 2025*		505,591			495,203			512,745			509,128
Convertible senior debentures, due 2040*		146			539			127			126
Convertible senior debentures, due 2041*		8,175			12,812			1,050			6,677
Convertible senior debentures, due 2042*		-			923
Deferred financing costs		(17,650	)		(14,968	)		(15,826	)		(16,784	)
Total debt		496,262			494,509			552,096			499,147

Cash and cash equivalents		731,483			686,032			680,703			694,133
Short-term investments		56,043			78,286			140,725			108,822

Net cash and short-term investments (debt)	$	291,264		$	269,809		$	269,332		$	303,808

*Represents the carrying amount of the convertible instruments, which is comprised of the principal amount of the instruments, net of the unamortized discount and the associated embedded derivative liability, when applicable.

"Net cash and short-term investments (debt)" does not have a uniform definition and is not recognized in accordance with GAAP. This measure should not be viewed as an alternative to GAAP measures of performance or liquidity. However, management believes that an analysis of "net cash and short-term investments (debt)" assists investors in understanding aspects of our cash and debt management. The measure, as calculated by us, may not be comparable to similarly titled measures used by other companies.

Our financial condition as of ~~September 28, 2019~~April 4, 2020 continued to be strong, with a current ratio (current assets to current liabilities) of 3.5 to 1, as compared to ~~2.8~~3.3 to 1 as of December 31, ~~2018.~~2019. The increase is primarily due to the decrease in accounts payable and other accrued expenses. Our ratio of total debt to Vishay stockholders' equity was ~~0.33~~0.38 to 1 at ~~September 28, 2019,~~April 4, 2020, as compared to ~~0.36~~0.34 to 1 at December 31, ~~2018.~~2019. The ~~slight decrease~~increase in the ratio is primarily due to ~~increased retained earnings.~~borrowings on the revolving credit facility.

Cash flows provided by operating activities were ~~$212.0~~$34.5 million for the ~~nine~~three fiscal months ended ~~September 28, 2019,~~April 4, 2020, as compared to cash flows provided by operations of ~~$108.9~~$79.5 million for the ~~nine~~three fiscal months ended ~~September 29, 2018.~~March 30, 2019.

Cash paid for property and equipment for the ~~nine~~three fiscal months ended ~~September 28, 2019~~April 4, 2020 was ~~$100.3~~$24.3 million, as compared to ~~$126.4~~$36.4 million for the ~~nine~~three fiscal months ended ~~September 29, 2018.~~March 30, 2019. We expect capital spending of approximately ~~$140 million to $150~~$110 million in ~~2019, which reflects lower short-term market requirements.~~2020, in accordance with requirements of our markets.

Cash paid for dividends to our common and Class B common stockholders totalled ~~$39.7~~$13.7 million and ~~$34.3~~$12.3 million for the ~~nine~~three fiscal months ended ~~September 28,~~April 4, 2020 and March 30, 2019, ~~and September 29, 2018,~~ respectively. On May 7, 2018, our Board of Directors increased the quarterly dividend to $0.085 per share, representing a 26% increase over the previous quarterly dividend. On May 8, 2019, our Board of Directors increased the quarterly dividend to $0.095 per share, representing a 12% increase over the previous quarterly dividend. We expect dividend payments in ~~2019~~2020 to total approximately ~~$53.4~~$55.0 million. However, any future dividend declaration and payment remains subject to authorization by our Board of Directors.

5448

Contractual Commitments and Off-Balance Sheet Arrangements

Our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed on February ~~15, 2019,~~14, 2020, includes a table of contractual commitments. There were no material changes to these commitments during the ~~nine~~three fiscal months ended ~~September 28, 2019.~~April 4, 2020.

Dividends

In 2014, our Board of Directors approved the initiation of a quarterly cash dividend program. Quarterly cash dividends have been paid in each quarter since the first fiscal quarter of 2014. We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of Directors.

The following table summarizes the quarterly cash dividends declared (in thousands):

Fiscal Period Amount Month of Payment
Three fiscal months ended March 30, 2019 $ 12,277 March
Three fiscal months ended June 29, 2019 13,723 June
Three fiscal months ended September 28, 2019 13,723 September

Fiscal Period	Amount				Month of Payment
Three fiscal months ended April 4, 2020		$	13,741		March

Safe Harbor Statement

From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain “forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should,” or other similar words or expressions often identify forward-looking statements.

Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements may vary materially from those anticipated, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; delays or difficulties in implementing our cost reduction strategies; delays or difficulties in expanding our manufacturing capacities; manufacturing or supply chain interruptions or changes in customer demand because of COVID-19 or similar diseases; an inability to attract and retain highly qualified personnel; changes in foreign currency exchange rates; uncertainty related to the effects of changes in foreign currency exchange rates; competition and technological changes in our industries; difficulties in new product development; difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider acceptable, and integration and performance of acquired businesses; changes in applicable domestic and foreign tax regulations and uncertainty regarding the same; changes in U.S. and foreign trade regulations and tariffs and uncertainty regarding the same; changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Our ~~2018~~2019 Annual Report on Form 10-K listed various important factors that could cause actual results to differ materially from projected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading “Risk Factors.” You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~15, 2019,~~14, 2020, describes our exposure to market risks. There have been no material changes to our market risks since December 31, ~~2018.~~2019.

Item 4.

Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5549

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

Item 3 of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~15, 2019 and Item 1 of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 30, 2019, filed with the SEC on May 9, 2019 describe~~14, 2020 describes certain of our legal proceedings. ~~There~~Except as disclosed below, there have been no material developments to the legal proceedings previously disclosed.

Effective February 26, 2020 Holy Stone Enterprise Co., Ltd. (“Holy Stone”) entered into a settlement agreement on behalf of itself, Milestone Global Technology, Inc. and Vishay Polytech Co., Ltd. ("VPC"), formerly known as Holy Stone Polytech Co., Ltd. (the “Settlement Agreement”). VPC was acquired from Holy Stone by a Vishay subsidiary in June 2014. Under the Settlement Agreement, Holy Stone agreed to pay $28,000,000 as full settlement of the In Re Capacitors Antitrust Litigation Civil Action No. 3:14-cv-03264-JD filed in the United States District Court, Northern District of California (the “Complaint”). According to the Settlement Agreement, VPC will be dismissed from the Complaint, and along with Vishay, Vishay Israel Ltd. and others, will be released from all future claims relating to the conduct alleged in the Complaint to the extent the conduct relates to the sale or manufacturing of aluminum, tantalum or film capacitors in the United States. The purported wrongdoing attributable to VPC as described in the Complaint occurred prior to its acquisition by Vishay. VPC expressly denies any allegations included in the Complaint. The Settlement Agreement is subject to court approval and notice to the members of the plaintiff class.

Pursuant to the terms and conditions of the indemnification agreement between Vishay and Holy Stone related to Vishay’s acquisition of VPC in 2014, neither Vishay nor VPC will contribute any amount toward the settlement.

Item 1A.

Risk Factors

~~There~~Except as described below, there have been no material changes to the risk factors we previously disclosed under Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~15, 2019.~~14, 2020.

Our business may be adversely affected by the widespread outbreak of diseases, including the recent COVID-19 outbreak and the mitigation efforts by governments worldwide to control its spread.

The widespread global outbreak of COVID-19 has adversely affected our business. Impacts have included disruptions in our ability to manufacture products and disruptions in the operations of our customers and modes of shipping.While we are unable to accurately predict the full extent to which the COVID-19 outbreak and the mitigation efforts by governments to attempt to control its spread will have on our business due to numerous uncertainties, thus far the impacts have resulted in increased costs and a reduction in sales to certain regions and end-markets. We cannot predict when the impact of the COVID-19 outbreak will end or when future coronavirus outbreaks will occur.

The potential risks and effects of the COVID-19 outbreak and economic crisis, including potential global or regional recessions or depressions, that could have an adverse effect on our business include, but are not limited to:

•	Adverse impact on our customers and supply channels;
•	Decrease in sales, product demand and pricing and unfavorable economic and market conditions;
•	Increased costs, including higher shipping costs due to reduced shipping capacity;
•	Restrictions on our manufacturing, support operations or workforce, or similar limitations for our customers, vendors, and suppliers, that could limit our ability to meet customer demand;
•	Potential increased credit risk if customers, distributors, and resellers are unable to pay us, or must delay paying their obligations to us;
•	Restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures could result in delays; and
•	Impact on our workforce/employees due to the ease with which the virus spreads and the current shelter-in-place orders.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3.

Defaults Upon Senior Securities

Delaware		38-1686453
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification Number)

63 LANCASTER AVENUE ~~MALVERN,~~Malvern, Pennsylvania 19355-2143		610-644-1300
(Address of Principal Executive Offices)		(Registrant’s Area Code and Telephone Number)


Title of each class	Trading symbol	Name of exchange on which registered
Common stock, par value $0.10 per share	VSH	New York Stock Exchange LLC

	Large Accelerated Filer ☒	Accelerated filer ◻
	Non-accelerated filer ◻	Smaller reporting company ☐
	Emerging growth company ☐

	Fiscal quarters ended				Nine fiscal months ended				Fiscal quarters ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		April 4, 2020		March 30, 2019
Distributors	$	317,385	$	452,051	$	1,097,365	$	1,302,127	$	305,446	$	411,560
OEMs		263,983		276,299		815,645		803,128		261,129		282,636
EMS companies		46,961		52,622		145,718		153,542		46,266		50,963
Total Revenue	$	628,329	$	780,972	$	2,058,728	$	2,258,797	$	612,841	$	745,159

	Fiscal quarters ended				Nine fiscal months ended				Fiscal quarters ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018		April 4, 2020		March 30, 2019
Asia	$	231,999	$	315,701	$	737,918	$	904,047	$	217,084	$	259,726
Europe		231,677		269,518		765,318		809,501		233,052		278,899
Americas		164,653		195,753		555,492		545,249		162,705		206,534
Total Revenue	$	628,329	$	780,972	$	2,058,728	$	2,258,797	$	612,841	$	745,159

	Principal amount of the debt instruments		Unamortized discount			Embedded derivative		Carrying value of liability component		Equity component (including temporary equity) -net carrying value
September 28, 2019
Convertible senior notes due 2025	$	600,000		(94,409	)		-	$	505,591	$	85,262
Convertible senior debentures due 2040 and due 2041	$	21,140		(12,829	)		10	$	8,321	$	8,767
Total	$	621,140	$	(107,238	)	$	10	$	513,912	$	94,029

December 31, 2018
Convertible senior notes due 2025	$	600,000		(104,797	)		-	$	495,203	$	85,262
Convertible senior debentures due 2040, due 2041, and due 2042	$	36,556		(22,352	)		70	$	14,274	$	15,092
Total	$	636,556	$	(127,149	)	$	70	$	509,477	$	100,354

	Contractual coupon interest		Non-cash amortization of debt discount		Non-cash amortization of deferred financing costs		Non-cash change in value of derivative liability			Total interest expense related to the debt instruments
September 28, 2019
Convertible senior notes due 2025	$	3,375		3,520		454		-		$	7,349
Convertible senior debentures	$	118		53		2		(10	)	$	163
Total	$	3,493	$	3,573	$	456	$	(10	)	$	7,512

September 29, 2018
Convertible senior notes due 2025	$	3,375		3,334		454		-		$	7,163
Convertible senior debentures	$	1,609		668		23		110		$	2,410
Total	$	4,984	$	4,002	$	477	$	110		$	9,573

	Fiscal quarter ended September 28, 2019					Fiscal quarter ended September 29, 2018
	U.S. Plans		Non-U.S. Plans			U.S. Plans		Non-U.S. Plans

Net service cost	$	-	$	841		$	-	$	900
Interest cost		424		1,271			371		1,175
Expected return on plan assets		-		(483	)		-		(463	)
Amortization of prior service cost		36		49			36		52
Amortization of losses		118		1,332			159		1,520
Curtailment and settlement losses		-		499			-		441
Net periodic benefit cost	$	578	$	3,509		$	566	$	3,625

	Total Fair Value			Level 1		Level 2		Level 3
September 28, 2019
Assets:
Assets held in rabbi trusts	$	51,065		$	34,217	$	16,848	$	-
Available for sale securities	$	4,328			4,328		-		-
	$	55,393		$	38,545	$	16,848	$	-
Liabilities:
Embedded derivative - convertible debentures due 2040	$	-		$	-	$	-	$	-
Embedded derivative - convertible debentures due 2041	$	(10	)		-		-		(10	)
	$	(10	)	$	-	$	-	$	(10	)
December 31, 2018
Assets:
Assets held in rabbi trusts	$	41,770		$	26,278		15,492	$	-
Available for sale securities	$	4,309			4,309		-		-
	$	46,079		$	30,587	$	15,492	$	-
Liabilities:
Embedded derivative - convertible debentures due 2040	$	(1	)	$	-	$	-	$	(1	)
Embedded derivative - convertible debentures due 2041	$	(67	)		-		-		(67	)
Embedded derivative - convertible debentures due 2042	$	(2	)		-		-		(2	)
	$	(70	)	$	-	$	-	$	(70	)

	Fiscal quarter ended September 28, 2019							Nine fiscal months ended September 28, 2019
	Change in net revenues				% change			Change in net revenues				% change
June 29, 2019		$	(56,911	)		-8.3	%
September 29, 2018		$	(152,643	)		-19.5	%		$	(200,069	)		-8.9	%

10.1	First Amendment ~~No. 1~~ to ~~Credit~~Employment Agreement, dated asFebruary 28, 2020, between Vishay Europe GmbH (an indirect wholly owned subsidiary of ~~September 20, 2019, among~~ Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and ~~JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties thereto.~~Lori Lipcaman. Incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed February 28, 2020.
31.1	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Dr. Gerald Paul, Chief Executive Officer.
31.2	Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Lori Lipcaman, Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Dr. Gerald Paul, Chief Executive Officer.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Lori Lipcaman, Chief Financial Officer.
101	Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended ~~September 29, 2019,~~April 4, 2020, furnished in iXBRL (Inline eXtensible Business Reporting Language)).
104	Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language and contained in Exhibit 101)

	VISHAY INTERTECHNOLOGY, INC.

	/s/ Lori Lipcaman
	Lori Lipcaman
	Executive Vice President and Chief Financial Officer
	(as a duly authorized officer and principal financial and
	accounting officer)