UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended           July 4, 2020April 3, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-07416

Vishay Intertechnology, Inc.
(Exact name of registrant as specified in its charter)

Delaware 38-1686453
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification Number)
   
63 Lancaster Avenue
Malvern, Pennsylvania 19355-2143
 610-644-1300
(Address of Principal Executive Offices) (Registrant’s Area Code and Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:
    
 Title of each classTrading symbolName of exchange on which registered 
 Common stock, par value $0.10 per shareVSHNew York Stock Exchange LLC 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)
☒Yes  ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes  ☒ No

As of July 31, 2020April 30, 2021 the registrant had 132,560,749132,710,732 shares of its common stock and 12,097,40912,097,148 shares of its Class B common stock outstanding.























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2



VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q
July 4, 2020April 3, 2021
CONTENTS

   Page Number
PART I.
FINANCIAL INFORMATION
  
     
 
Item 1.
Financial Statements
  
     
  
Consolidated Condensed Balance Sheets – July 4, 2020April 3, 2021 (Unaudited) and December 31, 2019
2020		 
4
     
  
Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended JulyApril 3, 2021 and April 4, 2020 and June 29, 2019
 
6
     
  
Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Fiscal Quarters Ended JulyApril 3, 2021 and April 4, 2020 and June 29, 2019
 
7
     
  
Consolidated Condensed Statements of OperationsCash Flows (Unaudited) – Six Fiscal MonthsQuarters Ended JulyApril 3, 2021 and April 4, 2020 and June 29, 2019
 
8
     
  
Consolidated Condensed Statements of Comprehensive IncomeEquity (Unaudited) – Six Fiscal Months Ended July 4, 2020 and June 29, 2019
 
9
     
  
Notes to Consolidated Condensed Financial Statements of Cash Flows (Unaudited) – Six Fiscal Months Ended July 4, 2020 and June 29, 2019
 
10
     
 Item 2.
Consolidated Condensed StatementsManagement’s Discussion and Analysis of Equity (Unaudited)
Financial Condition and Results of Operations		 
11
26
     
 Item 3.
Notes to the Consolidated Condensed Financial Statements (Unaudited)
Quantitative and Qualitative Disclosures About Market Risk		 
12
45
     
 
Item 2.
4.
Management’s DiscussionControls and Analysis of Financial Condition and Results of Operations
Procedures		 
33
45
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
54
Item 4.
Controls and Procedures
54
PART II.
OTHER INFORMATION
  
     
 
Item 1.
Legal Proceedings
 
55
46
     
 
Item 1A.
Risk Factors
 
55
46
     
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
56
46
     
 
Item 3.
Defaults Upon Senior Securities
 
56
46
     
 
Item 4.
Mine Safety Disclosures
 
56
46
     
 
Item 5.
Other Information
 
56
46
     
 
Item 6.
Exhibits
 
56
46
     
  
SIGNATURES
 
57
47
3




PART I  - FINANCIAL INFORMATION

Item 1. Financial Statements

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)

 July 4, 2020  December 31, 2019  April 3, 2021  December 31, 2020 
 (Unaudited)     (Unaudited)    
Assets            
Current assets:            
Cash and cash equivalents $599,930  $694,133  $643,847  $619,874 
Short-term investments  157,246   108,822   137,348   158,476 
Accounts receivable, net  285,529   328,187   385,238   338,632 
Inventories:                
Finished goods  125,177   122,466   129,310   120,792 
Work in process  196,846   187,354   212,273   201,259 
Raw materials  127,165   121,860   132,373   126,200 
Total inventories  449,188   431,680   473,956   448,251 
                
Prepaid expenses and other current assets  131,125   141,294   140,536   132,103 
Total current assets  1,623,018   1,704,116   1,780,925   1,697,336 
                
Property and equipment, at cost:                
Land  74,985   75,011   75,339   76,231 
Buildings and improvements  596,942   585,064   629,550   641,041 
Machinery and equipment  2,623,774   2,606,355   2,705,346   2,732,771 
Construction in progress  99,932   110,722   94,981   86,520 
Allowance for depreciation  (2,474,456)  (2,425,627)  (2,587,948)  (2,593,398)
Property and equipment, net  921,177   951,525   917,268   943,165 
                
Right of use assets  103,153   93,162   98,001   102,440 
                
Goodwill  150,641   150,642   157,693   158,183 
                
Other intangible assets, net  58,583   60,659   64,123   66,795 
                
Other assets  168,274   160,671   192,552   186,554 
Total assets $3,024,846  $3,120,775  $3,210,562  $3,154,473 

Continues on following page.
4



VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)

 July 4, 2020  December 31, 2019  April 3, 2021  December 31, 2020 
 (Unaudited)     (Unaudited)    
Liabilities, temporary equity, and equity            
Current liabilities:            
Notes payable to banks $1  $2 
Trade accounts payable  148,727   173,915  $206,741  $196,203 
Payroll and related expenses  126,302   122,100   136,069   141,034 
Lease liabilities  21,443   20,217   21,275   22,074 
Other accrued expenses  166,261   186,463   197,246   182,642 
Income taxes  40,642   17,731   26,715   20,470 
Total current liabilities  503,376   520,428   588,046   562,423 
                
Long-term debt less current portion  438,494   499,147   453,213   394,886 
U.S. transition tax payable  125,438   140,196   125,438   125,438 
Deferred income taxes  4,231   22,021   1,856   1,852 
Long-term lease liabilities  85,714   78,511   82,260   86,220 
Other liabilities  98,134   100,207   103,881   104,356 
Accrued pension and other postretirement costs  270,735   272,402   287,407   300,113 
Total liabilities  1,526,122   1,632,912   1,642,101   1,575,288 
                
Redeemable convertible debentures  -   174   0   170 
                
Equity:                
Vishay stockholders' equity                
Common stock  13,256   13,235   13,271   13,256 
Class B convertible common stock  1,210   1,210   1,210   1,210 
Capital in excess of par value  1,412,775   1,425,170   1,345,284   1,409,200 
Retained earnings  95,462   72,180   217,214   138,990 
Accumulated other comprehensive income (loss)  (26,326)  (26,646)  (11,526)  13,559 
Total Vishay stockholders' equity  1,496,377   1,485,149   1,565,453   1,576,215 
Noncontrolling interests  2,347   2,540   3,008   2,800 
Total equity  1,498,724   1,487,689   1,568,461   1,579,015 
Total liabilities, temporary equity, and equity $3,024,846  $3,120,775  $3,210,562  $3,154,473 

See accompanying notes.
5



VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)

 Fiscal quarters ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
            
Net revenues $581,717  $685,240  $764,632  $612,841 
Costs of products sold  451,047   510,639   561,683   465,601 
Gross profit  130,670   174,601   202,949   147,240 
                
Selling, general, and administrative expenses  89,127   95,112   105,685   99,832 
Restructuring and severance costs  743   - 
Operating income  40,800   79,489   97,264   47,408 
                
Other income (expense):                
Interest expense  (8,430)  (8,204)  (4,376)  (8,552)
Loss on early extinguishment of debt  0   (2,920)
Other  (1,484)  (397)  (5,731)  198 
Loss on early extinguishment of debt  (1,146)  - 
Total other income (expense)  (11,060)  (8,601)  (10,107)  (11,274)
                
Income before taxes  29,740   70,888   87,157   36,134 
                
Income tax expense  4,845   26,153   15,514   8,750 
                
Net earnings  24,895   44,735   71,643   27,384 
                
Less: net earnings attributable to noncontrolling interests  242   258   208   165 
                
Net earnings attributable to Vishay stockholders $24,653  $44,477  $71,435  $27,219 
                
Basic earnings per share attributable to Vishay stockholders $0.17  $0.31  $0.49  $0.19 
                
Diluted earnings per share attributable to Vishay stockholders $0.17  $0.31  $0.49  $0.19 
                
Weighted average shares outstanding - basic  144,846   144,621   144,968   144,792 
                
Weighted average shares outstanding - diluted  145,170   145,023   145,463   145,295 
                
Cash dividends per share $0.095  $0.095  $0.095  $0.095 

See accompanying notes.
6



VISHAY INTERTECHNOLOGY, INC.
Consolidated Statements of Comprehensive Income
(Unaudited - In thousands)

 Fiscal quarters ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
            
Net earnings $24,895  $44,735  $71,643  $27,384 
                
Other comprehensive income, net of tax        
Other comprehensive income (loss), net of tax        
                
Pension and other post-retirement actuarial items  1,760   1,623   1,864   1,601 
                
Foreign currency translation adjustment  20,088   7,384   (26,949)  (23,129)
                
Other comprehensive income  21,848   9,007 
Other comprehensive income (loss)  (25,085)  (21,528)
                
Comprehensive income  46,743   53,742   46,558   5,856 
                
Less: comprehensive income attributable to noncontrolling interests  242   258   208   165 
                
Comprehensive income attributable to Vishay stockholders $46,501  $53,484  $46,350  $5,691 

See accompanying notes.
7



VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)

  Six fiscal months ended 
  July 4, 2020  June 29, 2019 
       
Net revenues $1,194,558  $1,430,399 
Costs of products sold  916,648   1,044,639 
Gross profit  277,910   385,760 
         
Selling, general, and administrative expenses  188,959   198,536 
Restructuring and severance costs  743   - 
Operating income  88,208   187,224 
         
Other income (expense):        
Interest expense  (16,982)  (16,596)
Other  (1,286)  1,515 
Loss on early extinguishment of debt  (4,066)  (1,307)
Total other income (expense)  (22,334)  (16,388)
         
Income before taxes  65,874   170,836 
         
Income tax expense  13,595   50,460 
         
Net earnings  52,279   120,376 
         
Less: net earnings attributable to noncontrolling interests  407   440 
         
Net earnings attributable to Vishay stockholders $51,872  $119,936 
         
Basic earnings per share attributable to Vishay stockholders $0.36  $0.83 
         
Diluted earnings per share attributable to Vishay stockholders $0.36  $0.83 
         
Weighted average shares outstanding - basic  144,818   144,589 
         
Weighted average shares outstanding - diluted  145,232   145,158 
         
Cash dividends per share $0.19  $0.18 

See accompanying notes.

8

VISHAY INTERTECHNOLOGY, INC.
Consolidated Statements of Comprehensive Income
(Unaudited - In thousands)

  Six fiscal months ended 
  July 4, 2020  June 29, 2019 
       
Net earnings $52,279  $120,376 
         
Other comprehensive income (loss), net of tax        
         
Pension and other  post-retirement actuarial items  3,361   3,080 
         
Foreign currency translation adjustment  (3,041)  (2,605)
         
Other comprehensive income  320   475 
         
Comprehensive income  52,599   120,851 
         
Less: comprehensive income attributable to noncontrolling interests  407   440 
         
Comprehensive income attributable to Vishay stockholders $52,192  $120,411 

See accompanying notes.
9

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)

 Six fiscal months ended  Three fiscal months ended 
 July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
            
Operating activities            
Net earnings $52,279  $120,376  $71,643  $27,384 
Adjustments to reconcile net earnings to net cash provided by operating activities:                
Depreciation and amortization  82,158   81,346   42,146   41,520 
(Gain) loss on disposal of property and equipment  (43)  (162)
Gain on disposal of property and equipment  (177)  (45)
Accretion of interest on convertible debt instruments  7,125   6,985   0   3,637 
Inventory write-offs for obsolescence  11,587   12,643   4,784   5,643 
Deferred income taxes  (4,370)  (5,601)  901   (3,517)
Loss on extinguishment of debt  4,066   1,307   0   2,920 
Other  954   4,283   5,728   3,524 
Change in U.S. transition tax liability  -   (14,757)
Change in repatriation tax liability  (16,258)  (20,479)
Net change in operating assets and liabilities, net of effects of businesses acquired  (12,589)  (50,122)
Net change in operating assets and liabilities  (67,703)  (46,588)
Net cash provided by operating activities  124,909   135,819   57,322   34,478 
                
Investing activities                
Capital expenditures  (48,832)  (70,148)  (28,527)  (24,328)
Proceeds from sale of property and equipment  230   464   200   53 
Purchase of businesses, net of cash received  -   (11,862)
Purchase of short-term investments  (157,086)  (1,970)  (12,853)  (35,463)
Maturity of short-term investments  108,044   79,694   29,519   0 
Other investing activities  (529)  2,893   347   (1,507)
Net cash used in investing activities  (98,173)  (929)  (11,314)  (61,245)
                
Financing activities                
Issuance costs  -   (5,394)
Repurchase of convertible debt instruments  (90,525)  (22,695)  (300)  (19,849)
Net proceeds (payments) on revolving credit lines  -   28,000 
Net proceeds on revolving credit lines  0   54,000 
Net changes in short-term borrowings  (113)  22   0   85 
Dividends paid to common stockholders  (25,185)  (23,822)  (12,608)  (12,592)
Dividends paid to Class B common stockholders  (2,299)  (2,178)  (1,149)  (1,149)
Distributions to noncontrolling interests  (600)  (600)
Cash withholding taxes paid when shares withheld for vested equity awards  (2,016)  (2,708)  (1,963)  (1,991)
Net cash used in financing activities  (120,738)  (29,375)
Net cash provided by (used in) financing activities  (16,020)  18,504 
Effect of exchange rate changes on cash and cash equivalents  (201)  (641)  (6,015)  (5,167)
                
Net increase (decrease) in cash and cash equivalents  (94,203)  104,874   23,973   (13,430)
                
Cash and cash equivalents at beginning of period  694,133   686,032   619,874   694,133 
Cash and cash equivalents at end of period $599,930  $790,906  $643,847  $680,703 

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
  
Common Stock
  
Class B Convertible Common Stock
  
Capital in Excess of Par Value
  
Retained Earnings
  
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
 
Cumulative effect of accounting change for adoption of ASU 2016-02
  
-
   
-
   
-
   
23,013
   
-
   
23,013
   
-
   
23,013
 
Net earnings
  
-
   
-
   
-
   
75,459
   
-
   
75,459
   
182
   
75,641
 
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
  
0
   
0
   
0
   
(1,070
)
  
0
   
(1,070
)
  
0
   
(1,070
)
Net earnings (loss)
  
0
   
0
   
0
   
27,219
   
0
   
27,219
   
165
   
27,384
 
Other comprehensive income
  
-
   
-
   
-
   
-
   
(8,532
)
  
(8,532
)
  
-
   
(8,532
)
  
0
   
0
   
0
   
0
   
(21,528
)
  
(21,528
)
  
0
   
(21,528
)
Conversion of Class B shares (18 shares)
  
-
   
-
   
-
   
-
   
-
   
-
   
-
   
-
 
Conversion of Class B shares (18 shares)
  
0
   
0
   
0
   
0
   
0
   
0
   
0
   
0
 
Temporary equity reclassification
  
-
   
-
   
3
   
-
   
-
   
3
   
-
   
3
   
0
   
0
   
174
   
0
   
0
   
174
   
0
   
174
 
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
)
Issuance of stock and related tax withholdings for vested restricted stock units (199,251 shares)
  
20
   
0
   
(2,011
)
  
0
   
0
   
(1,991
)
  
0
   
(1,991
)
Dividends declared ($0.095 per share)
  
0
   
0
   
18
   
(13,759
)
  
0
   
(13,741
)
  
0
   
(13,741
)
Stock compensation expense
  
-
   
-
   
3,536
   
-
   
-
   
3,536
   
-
   
3,536
   
0
   
0
   
2,998
   
0
   
0
   
2,998
   
0
   
2,998
 
Repurchase of convertible debentures due 2040 and due 2042
  
-
   
-
   
(11,783
)
  
-
   
-
   
(11,783
)
  
-
   
(11,783
)
  
0
   
0
   
(10,089
)
  
0
   
0
   
(10,089
)
  
0
   
(10,089
)
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 April 4, 2020
 
$
13,255
  
$
1,210
  
$
1,416,260
  
$
84,570
  
$
(48,174
)
 
$
1,467,121
  
$
2,705
  
$
1,469,826
 
                                
Balance at December 31, 2020
  
13,256
   
1,210
   
1,409,200
   
138,990
   
13,559
   
1,576,215
   
2,800
   
1,579,015
 
Cumulative effect of accounting change for adoption of ASU 2020-06 (see Note 1)
  
0
   
0
   
(66,078
)
  
20,566
   
0
   
(45,512
)
  
0
   
(45,512
)
Net earnings  -   -   -   44,477   -   44,477   258   44,735   
0
   
0
   
0
   
71,435
   
0
   
71,435
   
208
   
71,643
 
Other comprehensive income
  
-
   
-
   
-
   
-
   
9,007
   
9,007
   
-
   
9,007
 
Distributions to noncontrolling interests
  
-
   
-
   
-
   
-
   
-
   
-
   
(600
)
  
(600
)
Temporary equity reclassification
  
-
   
-
   
206
   
-
   
-
   
206
   
-
   
206
 
Issuance of stock and related tax withholdings for vested restricted stock units (9,906 shares)
  
1
   
-
   
(50
)
  
-
   
-
   
(49
)
  
-
   
(49
)
Other comprehensive income (loss)
  
0
   
0
   
0
   
0
   
(25,085
)
  
(25,085
)
  
0
   
(25,085
)
Issuance of stock and related tax withholdings for vested restricted stock units (149,722 shares)
  
15
   
0
   
(1,978
)
  
0
   
0
   
(1,963
)
  
0
   
(1,963
)
Dividends declared ($0.095 per share)
  
-
   
-
   
17
   
(13,740
)
  
-
   
(13,723
)
  
-
   
(13,723
)
  
0
   
0
   
20
   
(13,777
)
  
0
   
(13,757
)
  
0
   
(13,757
)
Stock compensation expense
  
-
   
-
   
890
   
-
   
-
   
890
   
-
   
890
   
0
   
0
   
4,120
   
0
   
0
   
4,120
   
0
   
4,120
 
Balance at June 29, 2019
 
$
13,235
  
$
1,210
  
$
1,426,164
  
$
55,659
  
$
(6,316
)
 
$
1,489,952
  
$
2,126
  
$
1,492,078
 
                                
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
  
-
   
-
   
-
   
27,219
   
-
   
27,219
   
165
   
27,384
 
Other comprehensive income
  
-
   
-
   
-
   
-
   
(21,528
)
  
(21,528
)
  
-
   
(21,528
)
Temporary equity reclassification
  
-
   
-
   
174
   
-
   
-
   
174
   
-
   
174
 
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
  
-
   
-
   
2,998
   
-
   
-
   
2,998
   
-
   
2,998
 
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
 
Net earnings
  
-
   
-
   
-
   
24,653
   
-
   
24,653
   
242
   
24,895
 
Other comprehensive income
  
-
   
-
   
-
   
-
   
21,848
   
21,848
   
-
   
21,848
 
Distributions to noncontrolling interests
  
-
   
-
   
-
   
-
   
-
   
-
   
(600
)
  
(600
)
Issuance of stock and related tax withholdings for vested restricted stock units (13,141 shares)
  
1
   
-
   
(26
)
  
-
   
-
   
(25
)
  
-
   
(25
)
Dividends declared ($0.095 per share)
  
-
   
-
   
18
   
(13,761
)
  
-
   
(13,743
)
  
-
   
(13,743
)
Stock compensation expense
  
-
   
-
   
875
   
-
   
-
   
875
   
-
   
875
 
Repurchase of convertible senior notes due 2025
  
-
   
-
   
(4,352
)
  
-
   
-
   
(4,352
)
  
-
   
(4,352
)
Balance at July 4, 2020
 
$
13,256
  
$
1,210
  
$
1,412,775
  
$
95,462
  
$
(26,326
)
 
$
1,496,377
  
$
2,347
  
$
1,498,724
 
Balance at April 3, 2021
 
$
13,271
  
$
1,210
  
$
1,345,284
  
$
217,214
  
$
(11,526
)
 
$
1,565,453
  
$
3,008
  
$
1,568,461
 

See accompanying notes.

11
9

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, 2019.2020.  The results of operations for the fiscal quarter and sixthree fiscal months ended July 4, 2020April 3, 2021 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 2021 end on April 3, 2021, July 3, 2021, October 2, 2021, and December 31, 2021, respectively.  The four fiscal quarters in 2020 endended on April 4, 2020, July 4, 2020, October 3, 2020, and December 31, 2020, respectively. The four fiscal quarters in 2019 ended on March 30, 2019, June 29, 2019, September 28, 2019, and December 31, 2019, respectively.

Recently Adopted Accounting Guidance

In June 2016,August 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13,2020-06, FinancialDebt – Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrumentsand Contracts in an Entity’s Own Equity.  The ASU replacessimplifies the incurred loss impairment methodology in current GAAPaccounting for certain financial instruments with a methodology that reflects expected credit lossescharacteristics of liability and equity, including convertible debt instruments.  The ASU reduces the number of accounting models available for convertible debt instruments, requires considerationthe use of a broader rangethe if-converted method for the calculation of reasonablediluted earnings per share for convertible debt instruments, and supportable information to inform credit loss estimates.increases disclosure requirements.  The Company adopted the ASU effective January 1, 2020.

Payment terms for2021 using a modified retrospective approach.  Upon adoption, Company recorded a $66,078 decrease in additional paid in capital from the Company's sales are generally less than ninety days.  Substantially allderecognition of the Company's receivables are collected within twelve monthsbifurcated equity component of the transferconvertible debt instruments, a $59,246 increase in debt from the derecognition of productsthe discount associated with the bifurcated equity component of the convertible debt instruments and a $20,566 increase to the customer andopening balance of retained earnings, representing the Company expects thiscumulative interest expense, net of tax effects, recognized related to continue going forward.  The credit loss allowance is determined through an analysisthe amortization of the aging of accounts receivable and assessments of risk that are based on 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.bifurcated conversion option.  The adoption of the ASU 2016-13 on January 1, 2020 had 0 materialdid not have a significant impact on the 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” ondiluted sharecount due to Vishay exercising existing rights to legally amend the consolidated condensed statements of operations and interest receivable is recognized as a separate asset and recorded in “Prepaid expenses and other current assets” onindenture governing 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 January 1, 2020 retained earnings to recognize an allowance for credit losses for these financial instruments upon the adoption of ASU 2016-13.  The Company does not measure an allowance for credit losses on interest receivable.  Any uncollectible interest receivable will be recognized by reversing interest income within the 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 2016-13.convertible senior notes due 2025.  See Note 5.

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 – Impact of Coronavirus Outbreak

The Company's operations have been impacted by the coronavirus ("COVID-19") outbreak.  Some manufacturing facilities 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 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 ($923 and $4,053) and selling, general, and administrative benefits of ($747 and $430) based on employee function on the consolidated condensed statements of operations for the fiscal quarter and six fiscal months ended July 4, 2020, respectively.

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.

13
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.

The Company leases assets in each region in which it operates.  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 sheets for the Company's operating leases were as follows:

 
July 4, 2020
  
December 31, 2019
 
Right of use assets
      
Operating Leases
      
Buildings and improvements
 
$
98,048
  
$
87,689
 
Machinery and equipment
  
5,105
   
5,473
 
Total
 
$
103,153
  
$
93,162
 
Current lease liabilities
        
Operating Leases
        
Buildings and improvements
 
$
18,716
  
$
17,410
 
Machinery and equipment
  
2,727
   
2,807
 
Total
 
$
21,443
  
$
20,217
 
Long-term lease liabilities
        
Operating Leases
        
Buildings and improvements
 
$
83,372
  
$
75,877
 
Machinery and equipment
  
2,342
   
2,634
 
Total
 
$
85,714
  
$
78,511
 
Total lease liabilities
 
$
107,157
  
$
98,728
 

14
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
 
April 3, 2021
  
December 31, 2020
 
Right of use assets
      
Operating Leases
      
Buildings and improvements
 
$
92,951
  
$
97,429
 
Machinery and equipment
  
5,050
   
5,011
 
Total
 
$
98,001
  
$
102,440
 
Current lease liabilities
        
Operating Leases
        
Buildings and improvements
 
$
18,622
  
$
19,370
 
Machinery and equipment
  
2,653
   
2,704
 
Total
 
$
21,275
  
$
22,074
 
Long-term lease liabilities
        
Operating Leases
        
Buildings and improvements
 
$
79,895
  
$
83,926
 
Machinery and equipment
  
2,365
   
2,294
 
Total
 
$
82,260
  
$
86,220
 
Total lease liabilities
 
$
103,535
  
$
108,294
 

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

 
Fiscal quarters ended
  
Six fiscal months ended
  
Fiscal quarters ended
 
 
July 4, 2020
  
June 29, 2019
  
July 4, 2020
  
June 29, 2019
  
April 3, 2021
  
April 4, 2020
 
Lease expense
                  
Operating lease expense
 
$
5,760
  
$
5,627
  
$
11,412
  
$
11,163
  
$
6,152
  
$
5,652
 
Short-term lease expense
  
225
   
819
   
419
   
1,652
   
325
   
194
 
Variable lease expense
  
6
   
9
   
29
   
21
   
127
   
23
 
Total lease expense
 
$
5,991
  
$
6,455
  $11,860  $12,836  
$
6,604
  $5,869 

The Company paid $12,867$6,161 and $10,277$5,609 for its operating leases in the sixthree fiscal months ended JulyApril 3, 2021 and April 4, 2020, and June 29, 2019, respectively, which are included in operating cash flows on the consolidated condensed statements of cash flows.  The weighted-average remaining lease term for the Company's operating leases is 9.28.7 years and the weighted-average discount rate is 6.0%5.9% as of July 4, 2020.April 3, 2021.

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

 
July 4, 2020
  
April 3, 2021
 
2020 (excluding the six fiscal months ended July 4, 2020)
 
$
11,165
 
2021
  
20,498
 
2021 (excluding the three fiscal months ended April 3, 2021)
 
$
16,736
 
2022
  
16,838
   
19,360
 
2023
  
14,370
   
16,198
 
2024
  
13,218
   
14,165
 
2025
  
13,026
 
Thereafter
  
63,394
   
54,010
 

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.

1511

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Note 43 – Restructuring and Related Activities

In the third fiscal quarter of 2019, the Company announced global cost reduction and management rejuvenation programs as part of its continuous efforts to improve efficiency and operating performance.

The programs arewere primarily designed to reduce manufacturing fixed costs and selling, general, and administrative costs company-wide, and provide management rejuvenation.  These programs are fully implemented.  The Company has incurred total charges totallingof $24,882, primarily related to cash severance costs, to implement these programs.  The Company expects these cost reductions to be fully achieved by December 2020.  All participants in the program are now identified.

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

Expense recorded in 2019 $24,139  $24,139 
Cash paid  (1,330)  (1,330)
Foreign currency translation  35   35 
Balance at December 31, 2019 $22,844  $22,844 
Expense recorded in 2020  743   743 
Cash paid  (6,465)  (10,813)
Foreign currency translation  (21)  683 
Balance at July 4, 2020 $17,101 
Balance at December 31, 2020 $13,457 
Cash paid  (8,447)
Foreign currency translation  (96)
Balance at April 3, 2021 $4,914 

The payment terms vary by country, but generally are paid in a lump sum at cessation of employment.  Some payments are made over an extended period.  The current portion of the liability is $13,401$3,479 and is included in other accrued expenses on the consolidated condensed balance sheet.  The non-current portion of the liability is $3,700$1,435 and is included in other liabilities on the consolidated condensed balance sheet.
1612

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 54 – 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 JulyApril 3, 2021 and April 4, 2020 and June 29, 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.

DuringThe Company adjusted its deferred tax balances by $12,127 upon the second fiscal quarteradoption of 2020,ASU No. 2020-06 on January 1, 2021, which was included in the Company repatriated $104,091cumulative-effect adjustment recorded to the United States, and paid withholding and foreign taxes of $16,258.  Substantially all of these amounts were used to repay certain indebtedness.retained earnings.  See Note 1.

The Company repurchasedrecognized a portiontax benefit of outstanding convertible notes and debentures$4,395 due to a change in tax regulations during the fiscal quarter and six fiscal months ended July 4, 2020 (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 in the six fiscal months ended July 4, 2020, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the extinguished debentures.April 3, 2021.

During the six fiscal monthsquarter ended July 4, 2020,April 3, 2021, the liabilities for unrecognized tax benefits decreased by $3,397$1,485 on a net basis, primarily due to settlement of an audita payment and the expiration of a statute,currency translation adjustments, partially offset by accruals for current year tax positions and interest.

13
17
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Note 65 – Long-Term Debt

Long-term debt consists of the following:

 July 4, 2020  December 31, 2019  April 3, 2021  December 31, 2020 
            
Credit facility $-  $-  $0  $0 
Convertible senior notes, due 2025  451,169   509,128   465,344   406,268 
Convertible senior debentures, due 2040  128   126   0   130 
Convertible senior debentures, due 2041  1,058   6,677 
Deferred financing costs  (13,861)  (16,784)  (12,131)  (11,512)
  438,494   499,147   453,213   394,886 
Less current portion  -   -   0   0 
 $438,494  $499,147  $453,213  $394,886 

The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of April 3, 2021:

 
Convertible
Senior Notes
Due 2025
 
Issuance date June 12, 2018 
Maturity date June 15, 2025 
Principal amount as of April 3, 2021 $465,344 
Cash coupon rate (per annum)  2.25%
Nonconvertible debt borrowing rate at issuance (per annum)  5.50%
Conversion rate effective March 16, 2021 (per $1 principal amount)  31.8965 
Effective conversion price effective March 16, 2021 (per share) $31.35 
% of the conversion price (per share) $40.76 
Call date  n/a 

Effective January 1, 2021, Vishay adopted ASU No. 2020-06.  Upon adoption, Vishay derecognized the bifurcated equity component, debt discount, and deferred taxes and remeasured the deferred financing costs associated with its convertible debt instruments.  See Note 1.  The carrying value of Vishay's convertible debt instruments as of July 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 July 4, 2020 $524,230  $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 June 11, 2020 (per $1 principal amount)  31.8470   80.9286   59.0575 
Effective conversion price effective June 11, 2020 (per share) $31.40  $12.36  $16.93 
130% of the conversion price (per share) $40.82  $16.07  $22.01 
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 prioris now equal to the close of business onoutstanding principal amount and interest expense is now equal to the third scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.cash interest paid.  The convertible senior debentures due 2040 and due 2041 are not currently convertible.remeasured deferred financing costs continue to be recognized as non-cash interest expense.

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 convertible senior notes due 2025 are not currently convertible.

Upon conversion of the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock.

The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible debt instrumentssenior notes due 2025 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 issuerAs of December 31, 2020, there were $300 of convertible senior debentures due 2040 outstanding.  On January 5, 2021, Vishay gave notice to separately account for the liabilityholders of its convertible senior debentures due 2040 that Vishay would redeem the debentures on February 4, 2021.  The redemption price was paid in cash and equity componentswas equal to 100% of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate whenprincipal amount plus accrued but unpaid interest costs are recognized in subsequent periods.  The resulting discount on the debt is amortized as non-cash interest expense in future periods.

to, but excluding February 4, 2021.
1814

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


The carrying valuesvalue of the convertible senior notes due 2025 was $465,344 as of April 3, 2021.  The carrying value of the liability and equity components of the convertible debt instruments prior to the adoption of ASU No. 2020-06 are reflected in the Company’s consolidated condensed balance sheetssheet as follows:

 
Principal
amount of the
debt
instruments
  
Unamortized
discount
  
Carrying
value of
liability
component
  
Equity
component
(including
temporary
equity) -net
carrying value
  
Principal
amount of the
debt
instruments
  
Unamortized
discount
  
Carrying
value of
liability
component
  
Equity
component
(including
temporary
equity) -net
carrying value
 
July 4, 2020            
December 31, 2020            
Convertible senior notes due 2025 $524,230   (73,061) $451,169  $74,495  $465,344   (59,076) $406,268  $66,127 
Convertible senior debentures due 2040 and due 2041 $2,940   (1,754) $1,186  $1,216 
Convertible senior debentures due 2040 $300   (170) $130  $121 
Total $527,170  $(74,815) $452,355  $75,711  $465,644  $(59,246) $406,398  $66,248 
                
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,rate.  Prior to the remainingadoption of ASU 2020-06 on January 1, 2021, the debt discount is beingassociated with the convertible debt instruments was 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
  
Contractual
coupon
interest
  
Non-cash
amortization
of debt
discount
  
Other non-cash
interest expense
  
Total interest
expense
related to the
debt
instruments
 
July 4, 2020            
April 3, 2021            
Convertible senior notes due 2025 $2,618   0   433  $3,051 
                
April 4, 2020                
Convertible senior notes due 2025 $3,266   3,479   435  $7,180  $3,375   3,617   454  $7,446 
Convertible senior debentures $16   9   -  $25  $44   20   0  $64 
Total $3,282  $3,488  $435  $7,205  $3,419  $3,637  $454  $7,510 
                
June 29, 2019                
Convertible senior notes due 2025 $3,375   3,442   454  $7,271 
Convertible senior debentures $119   53   (2) $170 
Total $3,494  $3,495  $452  $7,441 

Other non-cash interest expense includes amortization of deferred financing costs.  Interest expense related to the convertible senior debentures was immaterial in 2021.

1915

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 six fiscal months ended:

 
Contractual
coupon
interest
  
Non-cash
amortization
of debt
discount
  
Other non-cash
interest expense
  
Total interest
expense related to the
debt
instruments
 
July 4, 2020            
Convertible senior notes due 2025 $6,641   7,096   889  $14,626 
Convertible senior debentures $60   29   -  $89 
Total $6,701  $7,125  $889  $14,715 
                 
June 29, 2019                
Convertible senior notes due 2025 $6,750   6,868   908  $14,526 
Convertible senior debentures $267   117   (18) $366 
Total $7,017  $6,985  $890  $14,892 

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 $75,770 principal amount of convertible senior notes due 2025 in the second fiscal quarter of 2020.  The net carrying value of the debentures repurchased was $65,056.  In accordance with the authoritative accounting guidance for convertible debt, the aggregate repurchase payment of $70,676 was allocated between the liability ($65,056) and equity ($5,620) components of the convertible notes, 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 notes of $1,146, including the write-off of unamortized debt issuance costs in the second fiscal quarter of 2020.

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.  The aggregate repurchase payment of $19,849 was allocated between the liability ($8,452) and equity ($11,397) 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 in the first fiscal quarter of 2020.

20
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 76 – Revenue Recognition

Sales returns and allowances accrual activity is shown below:

 Fiscal quarters ended  Six fiscal months ended 
  July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019 
Beginning balance $34,812  $37,577  $40,508  $42,663 
Sales allowances  19,224   28,903   41,856   57,114 
Credits issued  (14,991)  (22,270)  (42,973)  (55,332)
Foreign currency  387   172   41   (63)
Ending balance $39,432  $44,382  $39,432  $44,382 
  Fiscal quarters ended 
  April 3, 2021  April 4, 2020 
Beginning balance $39,629  $40,508 
Sales allowances  23,796   22,632 
Credits issued  (28,446)  (27,982)
Foreign currency  (530)  (346)
Ending balance $34,449  $34,812 

See disaggregated revenue information in Note 10.
21
16

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Note 87 – 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, 2020 $(68,020) $41,374  $(26,646)
Balance at January 1, 2021 $(77,075) $90,634  $13,559 
Other comprehensive income before reclassifications  -   (3,041) $(3,041)  0   (26,949) $(26,949)
Tax effect  -   -  $-   0   0  $0 
Other comprehensive income before reclassifications, net of tax  -   (3,041) $(3,041)  0   (26,949) $(26,949)
Amounts reclassified out of AOCI  4,442   -  $4,442   2,659   0  $2,659 
Tax effect  (1,081)  -  $(1,081)  (795)  0  $(795)
Amounts reclassified out of AOCI, net of tax  3,361   -  $3,361   1,864   0  $1,864 
Net other comprehensive income $3,361  $(3,041) $320  $1,864  $(26,949) $(25,085)
Balance at July 4, 2020 $(64,659) $38,333  $(26,326)
Balance at April 3, 2021 $(75,211) $63,685  $(11,526)

Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost.  See Note 98 for further information.
2217

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 98 – 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 secondfirst fiscal quarters of 20202021 and 20192020 for the Company’s defined benefit pension plans:

 
Fiscal quarter ended
July 4, 2020
  
Fiscal quarter ended
June 29, 2019
  
Fiscal quarter ended
April 3, 2021
  
Fiscal quarter ended
April 4, 2020
 
 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
 
                        
Net service cost $-  $1,071  $-  $845  $0  $1,190  $0  $1,074 
Interest cost  341   919   424   1,281   254   754   342   924 
Expected return on plan assets  -   (491)  -   (489)  0   (417)  0   (495)
Amortization of prior service cost  36   30   36   50   36   51   36   30 
Amortization of losses  297   1,588   118   1,344   447   1,884   298   1,592 
Curtailment and settlement losses  -   231   -   500   0   199   0   229 
Net periodic benefit cost $674  $3,348  $578  $3,531  $737  $3,661  $676  $3,354 


Other Postretirement Benefits

The following table shows the components of the net periodic pensionbenefit cost for the sixfirst fiscal months ended July 4,quarters of 2021 and 2020 and June 29, 2019 for the Company’s definedother postretirement benefit pension plans:

 
Six fiscal months ended
July 4, 2020
  
Six fiscal months ended
June 29, 2019
 
  U.S. Plans  
Non-U.S.
Plans
  U.S. Plans  
Non-U.S.
Plans
 
             
Net service cost $-  $2,145  $-  $1,697 
Interest cost  683   1,843   848   2,572 
Expected return on plan assets  -   (986)  -   (979)
Amortization of prior service cost  72   60   72   101 
Amortization of losses  595   3,180   236   2,703 
Curtailment and settlement losses  -   460   -   1,005 
Net periodic benefit cost $1,350  $6,702  $1,156  $7,099 
  
Fiscal quarter ended
April 3, 2021
  
Fiscal quarter ended
April 4, 2020
 
  U.S. Plans  
Non-U.S.
Plans
  U.S. Plans  
Non-U.S.
Plans
 
             
Service cost $25  $71  $28  $69 
Interest cost  41   11   59   15 
Amortization of losses (gains)  13   29   7   31 
Net periodic benefit cost $79  $111  $94  $115 

2318

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

Other Postretirement Benefits

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

  
Fiscal quarter ended
July 4, 2020
  
Fiscal quarter ended
June 29, 2019
 
  U.S. Plans  
Non-U.S.
Plans
  U.S. Plans  
Non-U.S.
Plans
 
             
Service cost $28  $68  $35  $72 
Interest cost  59   16   78   30 
Amortization of losses (gains)  6   31   (32)  27 
Net periodic benefit cost $93  $115  $81  $129 

The following table shows the components of the net periodic pension cost for the six fiscal months ended July 4, 2020 and June 29, 2019 for the Company’s other postretirement benefit plans:

 
Six fiscal months ended
July 4, 2020
  
Six fiscal months ended
June 29, 2019
 
  U.S. Plans  
Non-U.S.
Plans
  U.S. Plans  
Non-U.S.
Plans
 
             
Service cost $56  $137  $70  $144 
Interest cost  118   31   155   60 
Amortization of losses (gains)  13   62   (64)  54 
Net periodic benefit cost $187  $230  $161  $258 

24
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 109 – 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  Six fiscal months ended 
  July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019 
             
Restricted stock units $875  $890  $3,658   4,249 
Phantom stock units  -   -   215   177 
Total $875  $890  $3,873   4,426 

The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes.
  Fiscal quarters ended 
  April 3, 2021  April 4, 2020 
       
Restricted stock units $3,911  $2,783 
Phantom stock units  209   215 
Total $4,120  $2,998 

The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at July 4, 2020April 3, 2021 (amortization periods in years):

 
Unrecognized
Compensation
Cost
  
Weighted
Average
Remaining
Amortization
Periods
  
Unrecognized
Compensation
Cost
  
Weighted
Average
Remaining
Amortization
Periods
 
            
Restricted stock units $4,162   0.9  $5,885   1.1 
Phantom stock units  -   n/a   0   n/a 
Total $4,162      $5,885     

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.

2519

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 July 4, 2020April 3, 2021 and changes during the sixthree 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, 2020  842  $17.93 
January 1, 2021  793  $18.90 
Granted  272   18.30   319   22.07 
Vested*  (308)  15.70   (235)  18.79 
Cancelled or forfeited  (13)  19.06   0   0 
Outstanding at July 4, 2020  793  $18.90 
Outstanding at April 3, 2021  877  $20.08 
                
Expected to vest at July 4, 2020  793     
Expected to vest at April 3, 2021  877     

* 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, 2021  141   -   141 
January 1, 2022  174   -   174   174   0   174 
January 1, 2023  152   -   152   152   0   152 
January 1, 2024  165   0   165 

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 July 4, 2020April 3, 2021 and changes during the sixthree 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, 2020  183    
January 1, 2021  198    
Granted  10  $21.49   10  $20.89 
Dividend equivalents issued  2       1     
Outstanding at July 4, 2020  195     
Outstanding at April 3, 2021  209     

2620

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 1110 – 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, 6 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 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 periods ended June 29, 2019 have 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 direct 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.

27
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  Corporate / Other*  Total 
Fiscal quarter ended July 4, 2020:
                      
Net revenues $118,944  $124,187  $49,130  $140,412  $65,185  $83,859  $-  $581,717 
                                 
Gross profit $26,978  $24,904  $11,728  $32,513  $20,252  $15,218  $(923) $130,670 
                                 
Segment operating income $17,602  $19,814  $7,948  $27,879  $17,713  $10,524  $(923) $100,557 
                                 
Fiscal quarter ended June 29, 2019:
                             
Net revenues $128,842  $142,042  $60,675  $165,359  $77,024  $111,298  $-  $685,240 
                                 
Gross profit $31,933  $28,857  $16,231  $46,877  $24,538  $26,165  $-  $174,601 
                                 
Segment operating income $22,541  $24,010  $12,022  $41,667  $21,776  $21,161  $-  $143,177 

Six fiscal months ended July 4, 2020:
                      
Net revenues $235,837  $239,530  $103,309  $299,620  $138,970  $177,292  $-  $1,194,558 
                                 
Gross Profit $55,130  $44,422  $26,313  $77,286  $43,239  $35,573  $(4,053) $277,910 
                                 
Segment Operating Income $36,260  $34,236  $18,634  $66,764  $38,023  $25,594  $(4,053) $215,458 
                                 
Six fiscal months ended June 29, 2019:
                             
Net revenues $266,183  $309,882  $121,237  $354,190  $148,664  $230,243  $-  $1,430,399 
                                 
Gross Profit $67,992  $72,349  $32,248  $109,466  $47,818  $55,887  $-  $385,760 
                                 
Segment Operating Income $49,219  $62,138  $23,732  $98,014  $42,416  $45,727  $-  $321,246 
  MOSFETs  Diodes  
Optoelectronic
Components
  Resistors  Inductors  Capacitors  Corporate / Other*  Total 
Fiscal quarter ended April 3, 2021:
                      
Net revenues $153,223  $157,178  $77,771  $186,602  $83,458  $106,400  $0  $764,632 
                                 
Gross profit $37,108  $34,416  $25,626  $53,973  $27,751  $24,075  $0  $202,949 
                                 
Segment operating income $27,207  $28,821  $21,210  $47,376  $25,290  $18,863  $0  $168,767 
                                 
Fiscal quarter ended April 4, 2020:
                             
Net revenues $116,893  $115,343  $54,179  $159,208  $73,785  $93,433  $0  $612,841 
                                 
Gross profit $28,152  $19,518  $14,585  $44,773  $22,987  $20,355  $(3,130) $147,240 
                                 
Segment operating income $18,658  $14,422  $10,686  $38,885  $20,310  $15,070  $(3,130) $114,901 

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

 Fiscal quarters ended  Six fiscal months ended 
  July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019 
Reconciliation:            
Segment Operating Income $100,557  $143,177  $215,458  $321,246 
Restructuring and Severance Costs  (743)  -   (743)  - 
Impact of COVID-19 on Selling, General, and Administrative Expenses  747   -   430   - 
Unallocated Selling, General, and Administrative Expenses  (59,761)  (63,688)  (126,937)  (134,022)
Consolidated Operating Income $40,800  $79,489  $88,208  $187,224 
Unallocated Other Income (Expense)  (11,060)  (8,601)  (22,334)  (16,388)
Consolidated Income Before Taxes $29,740  $70,888  $65,874  $170,836 

  Fiscal quarters ended 
  April 3, 2021  April 4, 2020 
Reconciliation:      
Segment Operating Income $168,767  $114,901 
Impact of COVID-19 Pandemic on Selling, General, and Administrative Expenses  0   (317)
Unallocated Selling, General, and Administrative Expenses  (71,503)  (67,176)
Consolidated Operating Income $97,264  $47,408 
Unallocated Other Income (Expense)  (10,107)  (11,274)
Consolidated Income Before Taxes $87,157  $36,134 
2821

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

The Company has a broad line of products that it sells to OEMs, EMS companies, and independent distributors.  The distribution of sales by customer type is shown below:

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
Distributors $349,562  $368,420  $655,008  $779,980  $424,125  $305,446 
OEMs  190,799   269,026   451,928   551,662   294,637   261,129 
EMS companies  41,356   47,794   87,622   98,757   45,870   46,266 
Total Revenue $581,717  $685,240  $1,194,558  $1,430,399  $764,632  $612,841 

Net revenues were attributable to customers in the following regions:

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
Asia $260,625  $246,193  $477,709  $505,919  $322,460  $217,084 
Europe  179,928   254,742   412,980   533,641   268,323   233,052 
Americas  141,164   184,305   303,869   390,839   173,849   162,705 
Total Revenue $581,717  $685,240  $1,194,558  $1,430,399  $764,632  $612,841 

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

 Fiscal quarters ended  Six fiscal months ended 
  July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019 
Industrial $226,877  $250,783  $441,988  $532,373 
Automotive  133,834   200,580   335,777   415,366 
Telecommunications  33,496   44,562   63,188   97,842 
Computing  55,719   48,244   100,942   95,752 
Consumer Products  22,571   30,486   43,124   64,535 
Power Supplies  32,176   29,474   57,370   59,601 
Military and Aerospace  41,451   47,848   85,386   95,409 
Medical  35,593   33,263   66,783   69,521 
Total revenue $581,717  $685,240   1,194,558   1,430,399 

  Fiscal quarters ended 
  April 3, 2021  April 4, 2020 
Industrial $270,801  $215,111 
Automotive  255,973   201,943 
Telecommunications  24,902   29,692 
Computing  59,899   45,223 
Consumer Products  40,795   20,553 
Power Supplies  35,246   25,194 
Military and Aerospace  41,538   43,935 
Medical  35,478   31,190 
Total revenue $764,632  $612,841 
2922

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 1211 – Earnings Per Share

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

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
                  
Numerator:                  
Net earnings attributable to Vishay stockholders $24,653  $44,477  $51,872  $119,936  $71,435  $27,219 
                        
Denominator:                        
Denominator for basic earnings per share:                        
Weighted average shares  144,651   144,441   144,624   144,409   144,760   144,599 
Outstanding phantom stock units  195   180   194   180   208   193 
Adjusted weighted average shares  144,846   144,621   144,818   144,589 
Adjusted weighted average shares - basic  144,968   144,792 
                        
Effect of dilutive securities:                        
Convertible debt instruments  5   24   50   131   9   95 
Restricted stock units  319   378   364   438   486   408 
Dilutive potential common shares  324   402   414   569   495   503 
                        
Denominator for diluted earnings per share:                        
Adjusted weighted average shares - diluted  145,170   145,023   145,232   145,158   145,463   145,295 
                        
Basic earnings per share attributable to Vishay stockholders $0.17  $0.31  $0.36  $0.83  $0.49  $0.19 
                        
Diluted earnings per share attributable to Vishay stockholders $0.17  $0.31  $0.36  $0.83  $0.49  $0.19 

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

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  April 4, 2020 
Convertible debt instruments:                  
Convertible Senior Notes, due 2025  18,321   19,055   18,704   19,053 
Convertible Senior Debentures, due 2041  155   -   122   - 
Convertible senior notes due 2025  0   19,088 
Convertible senior debentures due 2041  0   88 
Weighted average other  387   315   356   315   317   325 

The Company’s convertible debt instruments are only convertible for specified periods upon the occurrence of certain events.  The Company's convertible debt instruments are not currently convertible.  In periods that the convertible debt instruments are not convertible, the certain conditions which could trigger conversion of the debt instruments have been deemed to be non-substantive, and accordingly, the Company assumes the conversion of these instruments in its diluted earnings per share computation during periods in which they are dilutive.

At the direction of its Board of Directors, the Company intends, upon conversion, to repay the principal amounts of any of the convertible debt instruments in cash and settle any additional amounts in shares of Vishay common stock. Accordingly, the convertible instruments are included in the diluted earnings per share computation using the “treasury stock method” (similar to options and warrants) rather than the “if converted method” otherwise required for convertible debt.  Under the “treasury stock method,” Vishay calculates the number of shares issuable under the terms of the debentures based onIf the average market price of Vishay common stock during the period, and that number is included in the total diluted shares figure for the period.  If the average market price is less than $12.36, no shares are included in the diluted earnings per share computation foreffective conversion price of the convertible senior debenturesnotes due 2040, if the average market price is less than $16.93, no shares are included in the diluted earnings per share computation for the convertible senior debentures due 2041, and if the average market price is less than $31.40,2025, no shares are included in the diluted earnings per share computation for the convertible senior notes due 2025.  Upon Vishay exercising its existing right to legally amend the indenture governing the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock.  Accordingly, the notes are not anti-dilutive when the average market price of Vishay common stock is less than the effective conversion price of the convertible senior notes due 2025.

3023

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


Note 1312 – Fair Value Measurements

The fair value measurement accounting guidance establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the Company’s own assumptions.

An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There have been no changes in the classification of any financial instruments within the fair value hierarchy in the periods presented.

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

 
Total
Fair Value
  Level 1  Level 2  Level 3  
Total
Fair Value
  Level 1  Level 2  Level 3 
July 4, 2020            
April 3, 2021            
Assets:                        
Assets held in rabbi trusts $53,888  $36,822  $17,066  $-  $56,143  $31,352  $24,791  $0 
Available for sale securities $4,401   4,401   -   -  $4,641   4,641   0   0 
 $58,289  $41,223  $17,066  $-  $60,784  $35,993  $24,791  $0 
December 31, 2019                
December 31, 2020                
Assets:                                
Assets held in rabbi trusts $52,148  $34,280   17,868  $-  $57,892  $34,145   23,747  $0 
Available for sale securities $4,405   4,405   -   -  $4,917   4,917   0   0 
 $56,553  $38,685  $17,868  $-  $62,809  $39,062  $23,747  $0 

As described in Note 6, the Company allocated the aggregate repurchase payment of convertible senior debt instruments between the associated liability and equity components of the repurchased convertible senior debt instruments based on a nonrecurring fair value measurement of the convertible senior debt instruments immediately prior to the repurchase.  The nonrecurring fair value measurement is considered a Level 3 measurement.  See Note 6 for further information on the measurement and input.

The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale and company-owned life insurance assets.  The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts.  The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.
3124

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)


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

The Company enters into forward contracts with highly-rated financial institutions to mitigate the foreign currency risk associated with intercompany loans denominated in a currency other than the legal entity's functional currency.  The notional amount of the forward contracts was $100,000 as of April 3, 2021 and December 31, 2020.  The forward contracts are short-term in nature and are expected to be renewed at the Company's discretion until the intercompany loans are repaid.  We have not designated the forward contracts as hedges for accounting purposes, and as such the change in the fair value of the contracts is recognized in the consolidated condensed statement of operations as a component of other income (expense).  The Company estimates the fair value of the forward contracts based on applicable and commonly used pricing models using current market information and is considered a Level 2 measurement within the fair value hierarchy.  The value of the forward contracts was immaterial as of April 3, 2021 and December 31, 2020.  The Company does not utilize derivatives or other financial instruments for trading or other speculative purposes.

The fair value of the long-term debt, excluding the derivative liabilities and deferred financing costs, at July 4, 2020April 3, 2021 and December 31, 20192020 is approximately $497,600$517,700 and $632,200,$491,400, respectively, compared to its carrying value, excluding the derivative liabilities and deferred financing costs, of $452,355$465,344 and $515,931,$406,398, respectively.  The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered Level 2 inputs.

At July 4, 2020April 3, 2021 and December 31, 2019,2020, the Company’s short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates.  The Company's short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value.  The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity.  At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary.  NaN other-than-temporary impairments have been recognized on these securities, and there are 0 unrecognized holding gains or losses for these securities during the periods presented.  There have been 0 transfers to or from the held-to-maturity classification.  All decreases in the account balance are due to returns of principal at the securities’ maturity dates.  Interest on the securities is recognized as interest income when earned.

At July 4, 2020April 3, 2021 and December 31, 2019,2020, the Company’s cash and cash equivalents were comprised of demand deposits, time deposits with maturities of three months or less when purchased, and money market funds.  The Company estimates the fair value of its cash, cash equivalents, and short-term investments using level 2 inputs.  Based on the current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of the Company's cash, cash equivalents, and held-to-maturity short-term investments approximate the carrying amounts reported in the consolidated condensed balance sheets.

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

32
25



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding of Vishay's financial condition, results of operations and cash flows by focusing on changes in certain key measures from period to period. The MD&A should be read in conjunction with our Consolidated Condensed Financial Statements and accompanying Notes included in Item 1.  This discussion contains forward-looking statements that involve risks and uncertainties.  Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our Annual Report on Form 10-K, particularly in Item 1A. "Risk Factors," filed with the Securities and Exchange Commission on February 14, 2020.24, 2021.

Overview

Vishay Intertechnology, Inc. (“("Vishay,” “we,” “us,”" "we," "us," or “our”"our") is a global manufacturer and suppliermanufactures one of the world’s largest portfolios of discrete semiconductors and passive electronic components including power MOSFETs, power integrated circuits, transistors, diodes, optoelectronic components, resistors, capacitors, and inductors. Discrete semiconductors and passive components manufactured by Vishaythat are used in virtually all types of electronic products, including thoseessential to innovative designs in the automotive, industrial, computing, automotive, consumer, electronic products, telecommunications, power supplies, military/military, aerospace, and medical industries.markets.

We operate in six segments based on product segments:functionality: MOSFETs, Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors.  The current six segment alignment reflects a change in reporting structure made during the fourth fiscal quarter of 2019.  Results presented herein for the first through third fiscal quarters of 2019 have been recast to separately present Resistors and Inductors.

We are focused on enhancing stockholder value by growing our business and improving earnings per share.  Since 1985, we have pursued a business strategy of growth through focused research and development and acquisitions.  We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while at the same time maintaining a prudent capital structure. To foster intensified internal growth, we have increased our worldwide R&D and engineering technical staff; we are expanding critical manufacturing capacities; we are increasing our technical field sales force in Asia to increase our market access to the industrial segment and increase the design-in of our products in local markets; and we are directing increased funding and focus on developing products to capitalize on the connectivity, mobility, and sustainability growth drivers of our business.  In addition to our growth plan, we also have opportunistically repurchased our stock and, as further described below, reduced dilution risks by repurchasing a portionall of our convertible senior debentures.  Over the next few years, we expect to experience higher growth rates than over the last decade. This expectation is based upon accelerated electrification, such as factory automation, electrical vehicles, and 5G infrastructure.

In 2014, our Board of Directors instituted a quarterly dividend payment program and declared the first cash dividend in the history of Vishay.  We have paid dividends each quarter since the first fiscal quarter of 2014, and further increased thecurrently pay quarterly cash dividend todividends of $0.095 per share in the second fiscal quartershare.  We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of 2019.Directors.

On May 20, 2020, our Board of Directors authorized a program to repurchase up to $200 million of the outstanding convertible senior notes due 2025 in open market repurchases or through privately negotiated transactions.  Such transactions provide us more flexibility to adjust our debt levels if necessary.  We have repurchased $75.8$134.7 million principal amount of convertible senior notes inpursuant to this program.  On February 4, 2021, we redeemed the second fiscal quarter of 2020.  We also continue to repurchaseremaining convertible senior debentures in 2020, further reducing the principal amount of outstanding convertible senior debentures to $2.9 million.debentures.

Our business and operating results have been and will continue to be impacted by worldwide economic conditions.  Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets.  The worldwide economy and, specifically, our business have beenwere impacted by the outbreak of the coronavirus ("COVID-19")., particularly in 2020.  The outbreak haspandemic significantly impacted the global market, including our customers, suppliers, and shipping partners, which has impacted our net revenues.  In 2020, wWe havee also incurred incremental costs separable from normal operations that are directly attributable to the outbreakpandemic and containment efforts, primarily salaries and wages for employees impacted by quarantines and additional safety measures, including masks and temperature scanners, which were partially offset by government subsidies.  The net impactDirectly attributable costs of the costspandemic are no longer incremental and subsidieshave become part of normal operations.  Accordingly, in 2021, they are classified as cost of products sold ($0.9 million and $4.1 million) and selling, general, and administrative expenses (benefits) ($(0.7) million and $(0.4) million) based on employee function on the consolidated condensed statements of operations for the fiscal quarter and six fiscal months ended July 4, 2020, respectively.considered in our normal operating costs.  We exclude from the amounts reported aboveexcluded indirect financial changes from the outbreak of COVID-19 such as general macroeconomic effects and higher shipping costs due to reduced shipping capacity.capacity from the COVID-19 amounts reported.

We believe the economic impact of the COVID-19 outbreakpandemic on Vishay will be temporary.  We have significant liquidity to withstand the temporary disruptions in the economic environment.  However, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs.  We will react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build.  In the third fiscal quarterbuild in periods of 2019, we announceddecline and maximize opportunities in periods of growth.  The global cost reduction and management rejuvenation programs that we began as part of our continuous efforts to improve efficiency and operating performance which we expect toin 2019 have been fully implement by the end of 2020.  All participants in the program are now identified.implemented.

We utilize several financial metrics, including net revenues, gross profit margin, segment operating income, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business.  See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below.  The outbreak of COVID-19 haspandemic impacted almost all key financial metrics.metrics in 2020.  We experienced a substantial decreasebroad recovery in orders and sales beginning in the secondthird fiscal quarter of 2020 duethat continued to plant closures of our customers andaccelerate in the global economic slowdown caused by the COVID-19 outbreak.  This decreasefirst fiscal quarter.  The increases in orders negativelyand sales positively impacted almost all key financial metrics.
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Net revenues for the fiscal quarter ended July 4, 2020April 3, 2021 were $581.7$764.6 million, compared to $612.8$667.2 million and $685.2$612.8 million for the fiscal quarters ended December 31, 2020 and April 4, 2020, and June 29, 2019, respectively.  The net earnings attributable to Vishay stockholders for the fiscal quarter ended July 4, 2020April 3, 2021 were $24.7$71.4 million, or $0.17$0.49 per diluted share, compared to $37.6 million, or $0.26 per diluted share for the fiscal quarter ended December 31, 2020, and $27.2 million, or $0.19 per diluted share for the fiscal quarter ended April 4, 2020, and $44.5 million, or $0.31 per diluted share for the fiscal quarter ended June 29, 2019.2020.

Net revenues for the six fiscal months ended July 4, 2020 were $1,194.6 million, compared to $1,430.4 million for the six fiscal months ended June 29, 2019.  The net earnings attributable to Vishay stockholders for the six fiscal months ended July 4, 2020 were $51.9 million, or $0.36 per diluted share, compared to $119.9 million, or $0.83 per diluted share for the six fiscal months ended June 29, 2019.
26



We define adjusted net earnings as net earnings determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating performance of our business.  We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment.  The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash.  These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity.  Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, and free cash do not have uniform definitions.  These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that adjusted net earnings and adjusted earnings per share are meaningful because they provide insight with respect to our intrinsic operating results.  Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.

Net earnings attributable to Vishay stockholders for the fiscal quarters ended April 3, 2021, December 31, 2020, and April 4, 2020 include items affecting comparability.  The items affecting comparability are (in thousands, except per share amounts):

 Fiscal quarters ended  Six fiscal months ended 
  July 4, 2020  April 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019 
                
GAAP net earnings attributable to Vishay stockholders $24,653  $27,219  $44,477  $51,872  $119,936 
                     
Reconciling items affecting gross income:                    
Impact of COVID-19 outbreak  923   3,130   -   4,053   - 
                     
Other reconciling items affecting operating income:                    
Restructuring and severance costs  743   -   -   743   - 
Impact of COVID-19 outbreak  (747)  317   -   (430)  - 
                     
Reconciling items affecting other income (expense):                    
Loss on early extinguishment of debt  1,146   2,920   -   4,066   1,307 
                     
Reconciling items affecting tax expense:                    
Effects of tax-basis foreign exchange gain $-  $-  $7,554  $-  $7,554 
Effects of cash repatriation program  (190)  -   (48)  (190)  (633)
Change in deferred taxes due to early extinguishment of debt  -   (1,346)  -   (1,346)  (1,312)
Tax effects of pre-tax items above  (589)  (1,482)  -   (2,071)  (290)
                     
Adjusted net earnings $25,939  $30,758  $51,983  $56,697  $126,562 
                     
Adjusted weighted average diluted shares outstanding  145,170   145,295   145,023   145,232   145,158 
                     
Adjusted earnings per diluted share $0.18  $0.21  $0.36  $0.39  $0.87 

34

 Fiscal quarters ended 
  April 3, 2021  December 31, 2020  April 4, 2020 
          
GAAP net earnings attributable to Vishay stockholders $71,435  $37,567  $27,219 
             
Reconciling items affecting gross income:            
Impact of COVID-19 pandemic $-  $268  $3,130 
             
Other reconciling items affecting operating income:            
Impact of COVID-19 pandemic $-  $(580) $317 
             
Reconciling items affecting other income (expense):            
Loss on early extinguishment of debt $-  $553  $2,920 
             
Reconciling items affecting tax expense:            
Change in tax regulation $(4,395) $-  $- 
Change in deferred taxes due to early extinguishment of debt  -   (217)  (1,346)
Effects of changes in uncertain tax positions  -   3,751   - 
Tax effects of pre-tax items above  -   (12)  (1,482)
             
Adjusted net earnings $67,040  $41,330  $30,758 
             
Adjusted weighted average diluted shares outstanding  145,463   145,251   145,295 
             
Adjusted earnings per diluted share $0.46  $0.28  $0.21 

Although the term "free cash" is not defined in GAAP, each of the elements used to calculate free cash for the year-to-date period is presented as a line item on the face of our consolidated condensed statement of cash flows prepared in accordance with GAAP and the quarterly amounts are derived from the year-to-date GAAP statements as of the beginning and end of the respective quarter.

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  April 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  December 31, 2020  April 4, 2020 
Net cash provided by continuing operating activities $90,431  $34,478  $56,301  $124,909  $135,819  $57,322  $125,699  $34,478 
Proceeds from sale of property and equipment  177   53   69   230   464   200   110   53 
Less: Capital expenditures  (24,504)  (24,328)  (33,781)  (48,832)  (70,148)  (28,527)  (52,798)  (24,328)
Free cash $66,104  $10,203  $22,589  $76,307  $66,135  $28,995  $73,011  $10,203 

Our results for the fiscal quarters ended July 4, 2020April 3, 2021 and April 4,December 31, 2020 represent the negative impactcontinuation of the COVID-19 outbreak.  Our results for the fiscal quarter June 29, 2019 represent the effects of the normalization of demandsharp and broad recovery that we began to experience in the fourththird fiscal quarter of 2018 and accelerated through2020.  Our results for the fiscal quarter ended April 4, 2020 represent the beginning of an expected recovery from the normalization of demand experienced in 2019, as supply, in general, caught up with demand, and customers, particularly distributors, significantly reduced their orders as they decreased their inventory.which was negatively impacted by the beginning of the COVID-19 pandemic.  Our percentage of euro-based sales approximates our percentage of euro-based expenses so the foreign currency impact on revenues was substantially offset by the impact on expenses.  Our pre-tax results were consistent with expectations based on our business model.

27
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 fiscal quarters of 2020 and 2019 of $16.3 million and $20.5 million, respectively, and the installment payment of the U.S. transition tax of $14.8 million in the second fiscal quarter of 2019.  The 2020 installment payment of the U.S. transition tax was paid in July 2020, as permitted by the special payment relief granted by the Internal Revenue Service to all businesses in response to the COVID-19 outbreak.
35


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.  We attempt to offset deterioration in the average selling prices of established products 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.
3628



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 secondfirst fiscal quarter of 20192020 through the secondfirst fiscal quarter of 20202021 (dollars in thousands):

 2nd Quarter 2019  3rd Quarter 2019  4th Quarter 2019  1st Quarter 2020  2nd Quarter 2020  1st Quarter 2020  2nd Quarter 2020  3rd Quarter 2020  4th Quarter 2020  1st Quarter 2021 
                              
Net revenues $685,240  $628,329  $609,577  $612,841  $581,717  $612,841  $581,717  $640,160  $667,180  $764,632 
                                        
Gross profit margin(1)
  25.5%  23.9%  22.2%  24.0%  22.5%  24.0%  22.5%  23.7%  22.8%  26.5%
                                        
Operating margin(2)
  11.6%  8.1%  4.0%  7.7%  7.0%  7.7%  7.0%  9.6%  9.0%  12.7%
                                        
End-of-period backlog $1,126,700  $935,400  $911,300  $1,005,200  $914,300  $1,005,200  $914,300  $927,900  $1,239,800  $1,731,200 
                                        
Book-to-bill ratio  0.69   0.72   0.94   1.17   0.82   1.17   0.82   0.99   1.44   1.67 
                                        
Inventory turnover  4.3   4.1   4.3   4.2   3.9   4.2   3.9   4.4   4.6   4.8 
                                        
Change in ASP vs. prior quarter  (0.9)%  (1.1)%  (0.8)%  (1.1)%  0.1%  (1.1)%  0.1%  (1.1)%  (0.3)%  (0.5)%

(1) Gross margin for the first, second, third, and secondfourth fiscal quarters of 2020 includes $3.1 million, $0.9 million, $0.2 million, and $0.9$0.3 million, respectively, of expenses directly related to the COVID-19 outbreak (see Note 2 to our consolidated condensed financial statements).pandemic.
(2) Operating margin for the third and fourth fiscal quarters of 2019 and second fiscal quarter of 2020 includes $7.3 million, $16.9 million, and $0.7 million respectively, of restructuring and severance expenses (see Note 43 to our consolidated condensed financial statements).  Operating margin for the first, second, third, and secondfourth fiscal quarters of 2020 also includes in total $3.4 million, $0.2 million, $(0.2) million, and $0.2$(0.3) million, respectively, of expenses (benefits) directly related to the COVID-19 outbreak (see Note 2 to our consolidated condensed financial statements).pandemic.

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

Revenues decreasedincreased versus the prior fiscal quarter and the secondfirst fiscal quarter of 2019.  Revenues2020.  The recovery in demand that began in the third fiscal quarter of 2020 accelerated further in the first fiscal quarter of 2021.  Quarterly orders and backlog reached all-time highs.  The high order level and rapid increase in our manufacturing capacities substantially increased revenues.  The increased orders were impacted by plant closures of our customers and the global economic slowdown caused by the COVID-19 outbreak.  The decreased orders decreasedsignificantly increased the book-to-bill ratio and the backlog.  Despite theDistributor inventory levels continued to decrease in revenues and orders, there is low pressurethe first fiscal quarter of 2021.  Pressure on average selling prices.prices has decreased during the broad recovery and is currently continuing to decrease.

Gross profit margin decreasedincreased versus the prior fiscal quarter and prior year periods.the first fiscal quarter of 2020.  The decreasesincreases are primarily volume-driven.due to increased volume and manufacturing efficiencies.

The book-to-bill ratio in the secondfirst fiscal quarter of 2020 decreased2021 increased to 0.821.67 versus 1.171.44 in the firstfourth fiscal quarter of 2020.  The book-to-bill ratios in the secondfirst fiscal quarter of 20202021 for distributors and original equipment manufacturers ("OEM") were 0.751.89 and 0.93,1.41, respectively, versus ratios of 1.301.89 and 1.04,0.96, respectively, during the firstfourth fiscal quarter of 2020.

For the thirdsecond fiscal quarter of 2020,2021, we anticipate revenues between $580$790 million and $620$830 million at a gross margin of 22.8%27.3% plus/minus 7060 basis points, assuming a USD/EUR exchange rate of 0.87.points.
3729



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 secondfirst fiscal quarter of 20192020 through the secondfirst fiscal quarter of 20202021 (dollars in thousands):

 2nd Quarter 2019  3rd Quarter 2019  4th Quarter 2019  1st Quarter 2020  2nd Quarter 2020  1st Quarter 2020  2nd Quarter 2020  3rd Quarter 2020  4th Quarter 2020  1st Quarter 2021 
MOSFETs                              
Net revenues $128,842  $126,747  $116,215  $116,893  $118,944  $116,893  $118,944  $133,976  $131,567  $153,223 
                                        
Book-to-bill ratio  0.54   0.54   0.94   1.12   0.97   1.12   0.97   0.93   1.64   1.97 
                                        
Gross profit margin  24.8%  24.1%  23.7%  24.1%  22.7%  24.1%  22.7%  22.1%  22.4%  24.2%
                                        
Segment operating margin  17.5%  16.6%  16.1%  16.0%  14.8%  16.0%  14.8%  15.0%  15.3%  17.8%
                                        
Diodes                                        
Net revenues $142,042  $123,879  $123,382  $115,343  $124,187  $115,343  $124,187  $123,744  $139,274  $157,178 
                                        
Book-to-bill ratio  0.52   0.57   0.88   1.36   0.61   1.36   0.61   1.05   1.65   1.85 
                                        
Gross profit margin  20.3%  17.1%  16.3%  16.9%  20.1%  16.9%  20.1%  16.8%  17.8%  21.9%
                                        
Segment operating margin  16.9%  13.3%  12.6%  12.5%  16.0%  12.5%  16.0%  12.8%  14.1%  18.3%
                                        
Optoelectronic Components                                        
Net revenues $60,675  $50,702  $51,047  $54,179  $49,130  $54,179  $49,130  $64,955  $68,352  $77,771 
                                        
Book-to-bill ratio  0.70   0.86   1.11   1.40   0.96   1.40   0.96   0.97   1.46   1.66 
                                        
Gross profit margin  26.8%  21.5%  20.2%  26.9%  23.9%  26.9%  23.9%  32.8%  27.7%  33.0%
                                        
Segment operating margin  19.8%  13.7%  12.7%  19.7%  16.2%  19.7%  16.2%  26.5%  21.3%  27.3%
                                        
Resistors                                        
Net revenues $165,359  $155,119  $147,883  $159,208  $140,412  $159,208  $140,412  $145,362  $161,201  $186,602 
                                        
Book-to-bill ratio  0.81   0.82   0.95   1.05   0.73   1.05   0.73   1.06   1.24   1.50 
                                        
Gross profit margin  28.3%  27.4%  23.5%  28.1%  23.2%  28.1%  23.2%  24.2%  25.3%  28.9%
                                        
Segment operating margin  25.2%  23.8%  19.0%  24.4%  19.9%  24.4%  19.9%  20.7%  21.0%  25.4%
                                        
Inductors                                        
Net revenues $77,024  $73,458  $76,520  $73,785  $65,185  $73,785  $65,185  $79,399  $75,260  $83,458 
                                        
Book-to-bill ratio  1.01   0.95   1.05   0.98   0.96   0.98   0.96   0.96   1.03   1.13 
                                        
Gross profit margin  31.9%  31.9%  33.5%  31.2%  31.1%  31.2%  31.1%  33.5%  30.1%  33.3%
                                        
Segment operating margin  28.3%  28.3%  30.3%  27.5%  27.2%  27.5%  27.2%  30.4%  27.0%  30.3%
                                        
Capacitors                                        
Net revenues $111,298  $98,424  $94,530  $93,433  $83,859  $93,433  $83,859  $92,724  $91,526  $106,400 
                                        
Book-to-bill ratio  0.68   0.76   0.84   1.20   0.90   1.20   0.90   0.95   1.54   1.73 
                                        
Gross profit margin  23.5%  22.0%  17.9%  21.8%  18.1%  21.8%  18.1%  19.8%  17.5%  22.6%
                                        
Segment operating margin  19.0%  16.9%  12.3%  16.1%  12.5%  16.1%  12.5%  14.8%  12.5%  17.7%

3830



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, such as the current COVID-19 situation,however, 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, 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 $24.9 million since the inception of the programs.  We incurred $0.7 million of restructuring expenses during the six fiscal months ended July 4, 2020.serve.

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.  The implementation of these programs will not impact planned research and development activities.  All individuals have been identified and such expected costs have been accrued.

We first solicited volunteers to accept a voluntary separation / early retirement offer, which was generally successful.  The voluntary separation benefits vary by country and job classification, but generally offer a cash loyalty bonus.  A limited number of involuntary terminations were necessary to achieve the cost reduction targets. All participants in the program are now identified.  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 in 2020.2021.  However, a continued sluggishworsening business environment for the electronics industry, a prolonged impact of the COVID-19 outbreak,pandemic, 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.
3931



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 slightly strongerweaker during the secondfirst fiscal quarter and first six fiscal months of 2020 compared to the prior fiscal quarter and prior year periods,quarter, with the translation of foreign currency revenues and expenses into U.S. dollars  slightly decreasingincreasing reported revenues and expenses versus the prior fiscal quarter and prior year periods.quarter.

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 secondfirst fiscal quarter and first six fiscal months of 20202021 have been slightly favorablyunfavorably impacted compared to the prior fiscal quarter and prior year periodsquarter by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency.
4032



Results of Operations

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

 Fiscal quarters ended  Six fiscal months ended  Fiscal quarters ended 
 July 4, 2020  April 4, 2020  June 29, 2019  July 4, 2020  June 29, 2019  April 3, 2021  December 31, 2020  April 4, 2020 
Cost of products sold  77.5%  76.0%  74.5%  76.7%  73.0%  73.5%  77.2%  76.0%
Gross profit  22.5%  24.0%  25.5%  23.3%  27.0%  26.5%  22.8%  24.0%
Selling, general & administrative expenses  15.3%  16.3%  13.9%  15.8%  13.9%  13.8%  13.8%  16.3%
Operating income  7.0%  7.7%  11.6%  7.4%  13.1%  12.7%  9.0%  7.7%
Income before taxes and noncontrolling interest  5.1%  5.9%  10.3%  5.5%  11.9%  11.4%  7.0%  5.9%
Net earnings attributable to Vishay stockholders  4.2%  4.4%  6.5%  4.3%  8.4%  9.3%  5.6%  4.4%
________                                
Effective tax rate  16.3%  24.2%  36.9%  20.6%  29.5%  17.8%  19.0%  24.2%

Net Revenues

Net revenues were as follows (dollars in thousands):

 Fiscal quarters ended Six fiscal months ended 
 July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 
Net revenues $581,717  $612,841  $685,240  $1,194,558  $1,430,399 
 Fiscal quarters ended 
 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $764,632  $667,180  $612,841 

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 Fiscal quarter ended April 3, 2021 
Change in net
revenues
  % change 
Change in net
revenues
  % change Change in net revenues % change 
December 31, 2020 $97,452   14.6%
April 4, 2020 $(31,124)  -5.1%       $151,791   24.8%
June 29, 2019 $(103,523)  -15.1% $(235,841)  -16.5%

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  -5.2%  -12.7%  -13.9%
Change in average selling prices  0.1%  -2.7%  -2.8%
Increase in volume  14.7%  21.8%
Decrease in average selling prices  -0.5%  -1.4%
Foreign currency effects  0.0%  -0.5%  -0.7%  0.5%  3.4%
Acquisition  0.0%  1.0%
Other  0.0%  0.8%  0.9%  -0.1%  0.0%
Net change  -5.1%  -15.1%  -16.5%  14.6%  24.8%

Net revenuesDemand for the fiscal quarter and six fiscal months ended July 4, 2020 have beenour products began to be negatively impacted by the COVID-19 outbreak.pandemic in the first fiscal quarter of 2020. We experienced a significant decrease in demand in the second fiscal quarter of 2020 followed by a broad recovery beginning in the third fiscal quarter of 2020 that accelerated through the first fiscal quarter of 2021.  The impact of COVID-19increasing demand resulted in 2020 and the declining order rates experienced through 2019 result in decreasedincreased net revenues compared to the prior fiscal quarter and six fiscal months ended June 29, 2019.prior year quarter.

Gross Profit and Margins

Gross profit margins for the fiscal quarter ended July 4, 2020April 3, 2021 were 22.5%26.5%, versus 24.0%22.8% and 25.5%,24.0% for the comparable prior fiscal quarter and prior year period, respectively.  Gross profit margins for the six fiscal months ended July 4, 2020 were 23.3%, versus 27.0% for the comparable prior year period.  The decreaseincreases versus the prior fiscal quarter and the prior year periods isquarter are primarily due to decreased salesincreased volume.  We were able to offset the negative impacts of inflation and average selling price decline and maintain our contributive margin.
4133



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 Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $118,944  $116,893  $128,842  $235,837  $266,183  $153,223  $131,567  $116,893 
Gross profit margin  22.7%  24.1%  24.8%  23.4%  25.5%  24.2%  22.4%  24.1%

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 
Fiscal quarter ended
April 3, 2021
 
Change in net
revenues
  % change 
Change in net
revenues
  % change Change in net revenues % change 
December 31, 2020 $21,656   16.5%
April 4, 2020 $2,051   1.8%       $36,330   31.1%
June 29, 2019 $(9,898)  -7.7% $(30,346)  -11.4%

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:               
Change in volume  3.0%  -1.6%  -5.8%
Increase in volume  18.7%  37.0%
Decrease in average selling prices  -1.3%  -6.0%  -5.9%  -1.4%  -4.5%
Foreign currency effects  0.0%  -0.3%  -0.4%  0.2%  1.8%
Other  0.1%  0.2%  0.7%  -1.0%  -3.2%
Net change  1.8%  -7.7%  -11.4%  16.5%  31.1%

The MOSFETsMOSFET segment net revenues increased slightlysignificantly versus the prior fiscal quarter but decreased significantlyand prior year quarter.  Net revenues increased for customers in all regions.  The increase versus the prior year periods.  The slight increase versus the prior fiscal quarter was partially due to increased sales to distributor customers and the net result from a significant increase in revenues from distribution customers, which was almost fully offset by a significant decrease in revenues from automotive customers in the Europe and Americas regions.  The increased revenue from distribution customers is partially attributable to the re-openingtemporary closure of our main manufacturing facility in China after its temporary closure induring the priorfirst fiscal quarter of 2020 due to the COVID-19 outbreak.  The decrease versus thepandemic that impacted prior year periods was experienced in all regions and sales channels with the exception of customers of our IC products in Asia, which increased significantly.results.

Gross profit margin decreasedincreased versus the prior fiscal quarter and the prior year periods.quarter.  The decreaseincrease versus the prior fiscal quarter is primarily due to higher sales volume and cost reduction measures, partially offset by lower average selling prices, cost inflation, and lower production levels, partially offset by cost reduction measures.the negative impact of an inventory reduction.  The decreaseincrease versus the prior year periodsquarter is primarily due to lowerhigher sales volume, andalmost completely offset by lower average selling prices, partially offset byhigher metals prices, cost reduction measures.inflation, and the negative impact of an inventory reduction.

We experienced a slight decrease in averageAverage selling prices decreased slightly versus the prior fiscal quarter.  The reduced customer demandquarter and moderately versus the prior year periods increased pricing pressure and resulted in significant decreases in average selling prices.quarter.

We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines.

42
34



Diodes

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $124,187  $115,343  $142,042  $239,530  $309,882  $157,178  $139,274  $115,343 
Gross profit margin  20.1%  16.9%  20.3%  18.5%  23.3%  21.9%  17.8%  16.9%

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 
Fiscal quarter ended
April 3, 2021
 
Change in net
revenues
  % change 
Change in net
revenues
  % change Change in net revenues % change 
December 31, 2020 $17,904   12.9%
April 4, 2020 $8,844   7.7%       $41,835   36.3%
June 29, 2019 $(17,855)  -12.6% $(70,352)  -22.7%

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:               
Change in volume  6.5%  -8.9%  -19.3%
Change in average selling prices  0.9%  -3.9%  -4.7%
Increase in volume  13.0%  33.2%
Decrease in average selling prices  -0.4%  -0.7%
Foreign currency effects  -0.1%  -0.4%  -0.5%  0.4%  3.3%
Other  0.4%  0.6%  1.8%  -0.1%  0.5%
Net change  7.7%  -12.6%  -22.7%  12.9%  36.3%

Net revenues of the Diodes segment increased significantly versus the prior fiscal quarter but decreased significantly versus theand prior year periods.quarter.  Net revenues increased for customers in all regions.  The increase versus the prior fiscal quarter was the net result from a significant increaseprimarily due to increased sales to distributor customers in revenue from distribution customers, partially offset by a significant decrease in revenue from the Europe and Americas regions.  The increased revenue from distribution customers is partially attributable to the re-opening of our main manufacturing facility in China after its temporary closure in the prior fiscal quarter due to the COVID-19 outbreak.  The decreaseincrease versus the prior year quarter was the net result from a significant decrease in  revenues from all endpartially due to increased sales to distributor customers except distribution customers in the Asia and Europe regions, which increased significantly.  The more significant decrease versuscompared to the prior year-to-date period was experienced in all regions and sales channels.year quarter when distributor customers decreased inventory due to the COVID-19 pandemic.

Gross profit margin increased versus the prior fiscal quarter but decreased versusand the prior year periods.quarter.  The increase versus the prior fiscal quarter was primarily due to increased sales volume, highercost reduction measures, and the positive impact of an inventory increase, partially offset by cost inflation and lower average selling prices, and a change in the impact of U.S. tariffs on goods imported from China.prices.  The decreaseincrease versus the prior year quarter wasis primarily due to increased sales volume, cost reduction measures, and the net result frompositive impact of an inventory increase, partially offset by cost inflation, higher metals prices, and lower average selling prices, decreased sales volume, and cost inflation, almost fully offset by lower U.S. tariffs duties and cost reduction measures.  The decrease versus the prior year-to-date period was the net result from decreased sales volume, lower average selling prices, and cost inflation, partially offset by lower U.S. tariffs duties and cost reduction measures.prices.

Average selling prices increaseddecreased slightly versus the prior fiscal quarter and decreased moderately versus the prior year periods.  A more favorable product mix versus the unfavorable product mix in the prior fiscal quarter partially due to the COVID-19 supply situation contributed to the increase in average selling prices versus the prior fiscal quarter.

4335



OptoelectronicOptoelectronic Components

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 
��April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $49,130  $54,179  $60,675  $103,309  $121,237  $77,771  $68,352  $54,179 
Gross profit margin  23.9%  26.9%  26.8%  25.5%  26.6%  33.0%  27.7%  26.9%

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 
Fiscal quarter ended
April 3, 2021
 
Change in net
revenues
  % change 
Change in net
revenues
  % change Change in net revenues % change 
December 31, 2020 $9,419   13.8%
April 4, 2020 $(5,049)  -9.3%       $23,592   43.5%
June 29, 2019 $(11,545)  -19.0% $(17,928)  -14.8%

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  -9.2%  -17.3%  -12.6%
Increase in volume  14.6%  38.4%
Decrease in average selling prices  -0.3%  -2.1%  -2.2%  -1.3%  -0.2%
Foreign currency effects  0.2%  -0.3%  -0.7%  0.4%  4.6%
Other  0.0%  0.7%  0.7%  0.1%  0.7%
Net change  -9.3%  -19.0%  -14.8%  13.8%  43.5%

Net revenues of our Optoelectronic Components segment decreasedincreased significantly versus the prior fiscal quarter and the prior year periods.  The second fiscal quarter of 2020 was significantly impacted by government regulations in the Philippines and Malaysia due to the COVID-19 outbreak, which temporarily caused significant capacity loss of our main manufacturing facilities in these countries.  This resulted in significant revenue decreasesquarter.  Net revenues increased for customers in all regions and sales channels with the exception of Asian distributors, which increased significantly.regions.  Sales to distributor customers continues to increase.

Gross profit margin decreasedincreased versus the prior fiscal quarter and prior year quarter.  The increase versus the prior fiscal quarter is primarily due to increased sales volume, greater efficiencies, and the positive impact of an inventory increase.  The increase versus the prior year periods.  The decreases were the net result from decreasedquarter is primarily due to increased sales volume lower average selling prices, and cost inflation,reduction measures, partially offset by cost reduction measuresinflation and an increase in inventory.higher metals prices.

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

4436



Resistors

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $140,412  $159,208  $165,359  $299,620  $354,190  $186,602  $161,201  $159,208 
Gross profit margin  23.2%  28.1%  28.3%  25.8%  30.9%  28.9%  25.3%  28.1%

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 
Fiscal quarter ended
April 3, 2021
 
Change in net revenues % change Change in net revenues % change Change in net revenues % change 
December 31, 2020 $25,401   15.8%
April 4, 2020 $(18,796)  -11.8%       $27,394   17.2%
June 29, 2019 $(24,947)  -15.1% $(54,570)  -15.4%

Changes in Resistors 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:               
Change in volume  -14.8%  -15.9%  -13.8%
Increase in volume  15.4%  9.9%
Decrease in average selling prices  0.0%  -2.1%  -1.5%  -0.4%  -1.3%
Foreign currency effects  0.0%  -0.7%  -1.0%  0.8%  4.6%
Acquisition  0.0%  3.7%
Other  3.0%  3.6%  0.9%  0.0%  0.3%
Net change  -11.8%  -15.1%  -15.4%  15.8%  17.2%

Net revenues of the Resistors segment decreasedincreased significantly versus the prior fiscal quarter and prior year periods.quarter.  The decrease versus the prior fiscal quarter and prior year periods is primarily attributable to the Europe and Americas regions and industrial and automotive customers.  Distributor customers also contributed to the decrease versus the prior year periods.

The gross profit margin decreased versus the prior fiscal quarter and the prior year periods.  The decreaseincrease versus the prior fiscal quarter is primarily due to decreasedincreased sales volume, higher shipping costs,to distributor customers and inventory reductions.industrial end market customers in all regions, particularly Europe and Asia.  The decreaseincrease versus the prior year periodsperiod is primarily due to decreasedincreased sales volume, decreased average selling prices, laborto distributor customers and materials cost increases, and negative impact of exchange rates.  Fixed cost reductions partially offset the decreasesautomotive end market customers, particularly in Asia.

The gross profit margin increased versus the prior fiscal quarter and prior year periods.quarter.  The increase versus the prior fiscal quarter is primarily due to increased sales volume, greater efficiencies, and the positive impact of an inventory increase, partially offset by higher metals prices.  The increase versus the prior year quarter is due to increased sales volume, greater efficiencies, and positive exchange rate impact, partially offset by decreased average selling prices and higher fixed costs.

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

We are increasing critical manufacturing capacities for certain product lines.

4537



Inductors

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $65,185  $73,785  $77,024  $138,970  $148,664  $83,458  $75,260  $73,785 
Gross profit margin  31.1%  31.2%  31.9%  31.1%  32.2%  33.3%  30.1%  31.2%

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

Fiscal quarters ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 Fiscal quarter ended April 3, 2021 
Change in net revenues % change Change in net revenues % change Change in net revenues % change 
December 31, 2020 $8,198   10.9%
April 4, 2020 $(8,600)  -11.7%       $9,673   13.1%
June 29, 2019 $(11,839)  -15.4% $(9,694)  -6.5%

Changes in 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  -12.5%  -14.9%  -4.7%
Increase in volume  9.9%  14.6%
Change in average selling prices  1.2%  -0.5%  -1.7%  0.7%  -2.4%
Foreign currency effects  0.0%  -0.1%  -0.3%  0.1%  1.5%
Other  -0.4%  0.1%  0.2%  0.2%  -0.6%
Net change  -11.7%  -15.4%  -6.5%  10.9%  13.1%

Net revenues of the Inductors segment decreasedincreased significantly versus the prior fiscal quarter and prior year periods.quarter.  The decreaseincrease versus the prior fiscal quarter and prior year periods is primarily due to increased sales to distributor customers and medical and automotive end market customers, particularly in the Europe and Americas regionsregion.  The increase versus the prior year quarter is primarily due to increased sales to distributor customers and automotive and medical customers.industrial end market customers, particularly in Asia.

The gross profit margin decreasedincreased versus the prior fiscal quarter and the prior year periods.quarter.  The decreasesincreases versus the prior fiscal quarter and prior year quarter are primarily due to lowerhigher sales volume, improved efficiencies, and variable cost reductions.  Lower average selling prices and higher metals prices partially offset by cost savings.the increase versus the prior year quarter.

Average selling prices increased versus the prior fiscal quarter, but decreased versus the prior year periods.quarter.

We expect long-term growth in this segment, and are positionedaccelerating capacity expansion to capitalize on future market upturns.
4638



Capacitors

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Net revenues $83,859  $93,433  $111,298  $177,292  $230,243  $106,400  $91,526  $93,433 
Gross profit margin  18.1%  21.8%  23.5%  20.1%  24.3%  22.6%  17.5%  21.8%

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

Fiscal quarter ended
July 4, 2020
 
Six fiscal months ended
July 4, 2020
 Fiscal quarter ended April 3, 2021 
Change in net
revenues
  % change 
Change in net
revenues
  % change Change in net revenues % change 
December 31, 2020 $14,874   16.3%
April 4, 2020 $(9,574)  -10.2%       $12,967   13.9%
June 29, 2019 $(27,439)  -24.7% $(52,951)  -23.0%

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  -10.6%  -24.8%  -22.9%
Increase in average selling prices  0.1%  0.8%  1.0%
Increase in volume  14.7%  6.8%
Change in average selling prices  0.0%  1.7%
Foreign currency effects  -0.2%  -0.6%  -0.9%  0.8%  4.4%
Other  0.5%  -0.1%  -0.2%  0.8%  1.0%
Net change  -10.2%  -24.7%  -23.0%  16.3%  13.9%

Net revenues of the Capacitors segment decreasedincreased significantly versus the prior fiscal quarter and prior year periods.quarter.  Net revenues decreasedincreased versus the prior fiscal quarter primarily in the Europe and Americas regionsdue to increased sales to distributor customers and industrial and automotive customers.  The decreaseend market customers, particularly in netEurope.  Net revenues increased versus the prior year periods isquarter primarily due to all regionsincreased sales to distributor customers in Europe and primarily distributor, automotive, and industrial customers.Asia.

The gross profit margin decreasedincreased versus the prior fiscal quarter and the prior year periods.  quarter.  The decreases areincrease versus the prior fiscal quarter is primarily due to lowerhigher sales volume, partially offset by cost savingsmanufacturing efficiencies, and increased selling prices.  Higher shipping costs also contributed to the decreasepositive impact of  an inventory increase.  The increase versus the prior year periods.quarter is primarily due to higher sales volume, manufacturing efficiencies, and increased average selling prices, partially offset by the negative impact of product mix and increased metals prices.

DespiteAverage selling prices were consistent with the significantly lower sales volume, average selling pricesprior fiscal quarter and increased slightly versus the prior fiscalyear quarter and prior year periods primarily due to increased prices for certain materials that were passed through to our customers.

39
47


Selling, General, and Administrative Expenses

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

Fiscal quarters ended Six fiscal months ended Fiscal quarters ended 
July 4, 2020 April 4, 2020 June 29, 2019 July 4, 2020 June 29, 2019 April 3, 2021 December 31, 2020 April 4, 2020 
Total SG&A expenses $89,127  $99,832  $95,112  $188,959  $198,536  $105,685  $92,272  $99,832 
as a percentage of revenues  15.3%  16.3%  13.9%  15.8%  13.9%  13.8%  13.8%  16.3%

The sequential increase in SG&A expenses is primarily attributable to uneven attribution of stock compensation expense and increased incentive compensation accruals.  SG&A expenses increased versus the prior year quarter due to increased incentive compensation accruals and foreign exchange rates.  SG&A expenses for the fiscal quarters ended July 4,December 31, 2020 and April 4, 2020 include $(0.7)$(0.6) million and $0.3 million, respectively, of incremental net costs (benefits) separable from normal operations directly attributable to the COVID-19 outbreak.  SG&A expenses decreased versus the prior fiscal quarter primarily due to reduced incentive compensation, COVID-19 subsidies received, and reduced travel and other discretionary spending due to the COVID-19 outbreak.pandemic.

Other Income (Expense)

Interest expense for the fiscal quarter ended July 4,April 3, 2021 decreased $2.8 million versus the fiscal quarter ended December 31, 2020 and decreased $0.1by $4.2 million versus the fiscal quarter ended April 4, 2020, but increased $0.2 million versus the fiscal quarter ended June 29, 2019.  Interest expense for the six fiscal months ended July 4, 2020 increased by $0.4 million versus the six fiscal months ended June 29, 2019.2020.  The decrease versus the fiscal quarter ended April 4, 2020 isdecreases are primarily due to the lower interest rate environment due toelimination of non-cash debt discount amortization upon the COVID-19 outbreakadoption of ASU No. 2020-06 effective January 1, 2021 and repurchases of convertible senior notes.  The increase versusnotes in the prior year periods are primarily duesecond and third fiscal quarters of 2020.  See Note 1 to borrowings on the revolving credit facility, partially offset by reduced interest expense on the convertible senior debentures as a result of  repurchases in 2019 and 2020.consolidated condensed financial statements.

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    
 July 4, 2020  June 29, 2019  Change  April 3, 2021  December 31, 2020  Change 
Foreign exchange gain (loss) $(1,183) $(481) $(702) $(611) $(2,437) $1,826 
Interest income  956   2,147   (1,191)  287   385   (98)
Other components of net periodic pension expense  (3,063)  (3,367)  304 
Other components of other periodic pension cost  (3,302)  (4,215)  913 
Investment income (expense)  1,806   1,399   407   (2,121)  701   (2,822)
Other  -   (95)  95   16   (4)  20 
 $(1,484) $(397) $(1,087) $(5,731) $(5,570) $(161)

  Fiscal quarters ended    
  July 4, 2020  April 4, 2020  Change 
Foreign exchange gain (loss) $(1,183) $1,864  $(3,047)
Interest income  956   1,854   (898)
Other components of net periodic pension expense  (3,063)  (3,068)  5 
Investment income (expense)  1,806   (437)  2,243 
Other  -   (15)  15 
  $(1,484) $198  $(1,682)

 Six fiscal months ended     Fiscal quarters ended    
 July 4, 2020  June 29, 2019  Change  April 3, 2021  April 4, 2020  Change 
Foreign exchange gain (loss) $681  $(951) $1,632  $(611) $1,864  $(2,475)
Interest income  2,810   4,346   (1,536)  287   1,854   (1,567)
Other components of net periodic pension expense  (6,131)  (6,763)  632 
Other components of other periodic pension cost  (3,302)  (3,068)  (234)
Investment income (expense)  1,369   4,989   (3,620)  (2,121)  (437)  (1,684)
Other  (15)  (106)  91   16   (15)  31 
 $(1,286) $1,515  $(2,801) $(5,731) $198  $(5,929)

4840



Income Taxes

For the fiscal quarter ended July 4, 2020,April 3, 2021, our effective tax rate was 16.3%17.8%, as compared to 24.2%19.0% and 36.9%24.2% for the fiscal quarters ended December 31, 2020 and April 4, 2020, and June 29, 2019, respectively.  For the six fiscal months ended July 4, 2020, our effective tax rate was 20.6%, as compared to 29.5% for the six fiscal months ended June 29, 2019.  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 fiscal quarter presented. 
DuringThese items were $(4.4) million (tax benefit) in the second fiscal quarter ofended April 3, 2021, $3.5 million in the fiscal quarter ended December 31, 2020, we repatriated $104.1and $(1.3) million (tax benefit) in the fiscal quarter ended April 4, 2020. 

The effective tax rate for the fiscal quarter ended April 3, 2021 was impacted by $4.4 million tax benefit recognized due to the United States, and paid withholding and foreign taxes of $16.3 million.a change in tax regulations.

The effective tax rates for the six fiscal monthsquarters ended JulyDecember 31, 2020 and April 4, 2020 and June 29, 2019 were impacted by the effect of the repurchase of convertible senior debentures.  We recognized tax benefits of $0.2 million and $1.3 million in both the six fiscal monthsquarters ended JulyDecember 31, 2020, and April 4, 2020, and June 29, 2019,respectively, resulting from the extinguishments, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the convertible debentures. 

The effective tax rate for the fiscal quarter ended December 31, 2020 was also impacted by $3.8 million of net tax expense for changes in uncertain tax positions.

During the sixthree fiscal months ended July 4, 2020,April 3, 2021, the liabilities for unrecognized tax benefits decreased by $3.4$1.5 million on a net basis, primarily due to  settlement of an audita payment and the expiration of a statute,currency translation adjustments, partially offset by accruals for current year tax positions and 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 54 to our consolidated condensed financial statements.

4941



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 1819 years, and cash flows from operations in excess of $100 million in each of the last 2526 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 2324 years, and "free cash" in excess of $80 million in each of the last 1819 years. In this volatile economic environment, we continue to focus on the generation of free cash, including an emphasis on cost controls.

During the second fiscal quarter of 2020, we repatriated $104.1 million to the United States, and paid cash taxes of $16.3 million related to the repatriations.  During 2019, we repatriated $188.7 million to the United States, and paid cash taxes of $38.8 million related to the repatriations.  The payments of these cash taxes were recorded as operating cash flows 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 six fiscal months ended July 4, 2020 and the year ended December 31, 2019.  We expect our business to continue to be a reliable generator of free cash, partially offset by such tax payments.cash.  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.  We generated cash flows from operations of $57.3 million and "free cash" of $29.0 million in the fiscal quarter ended April 3, 2021.

The $104.1 million repatriation inCOVID-19 pandemic and the second fiscal quarter of 2020 completesmitigation efforts by governments to control its spread has not had a significant impact on our financial condition, liquidity, or capital resources.

We completed our cash repatriation program that we initiated in response to the TCJA.U.S. Tax Cuts and Jobs Act ("TCJA") in 2020.  We continue to evaluate the TCJA's provisions and may further adjust our financial and capital structure and business practices accordingly.

We maintain a revolving credit facility, which provides an aggregate commitment of $750 million of revolving loans available until June 5, 2024.  The maximum amount available on the revolving credit facility is restricted by the financial covenants described below.  The 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 July 4,December 31, 2020, we had no amounts outstanding on our revolving credit facility.  We had no amounts outstanding at December 31, 2019.April 3, 2021.  We borrowed $191 million and repaid $182$191 million on the revolving credit facility during the sixthree fiscal months ended July 4, 2020.April 3, 2021.  The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $35.5$87.3 million and the highest amount outstanding on our revolving credit facility at a fiscal month end was $61$135 million during the sixthree fiscal months ended July 4, 2020.April 3, 2021.

The revolving credit facility limits or restricts us from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming our pro forma 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 July 4, 2020.April 3, 2021.  Our interest coverage ratio and leverage ratio were 13.3719.51 to 1 and 1.491.12 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 onfull amount of the revolving credit facility is approximately $622 million.useable.

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.
5042



The 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.

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 allows such payments up to $100 million per annum (subject to a cap of $300 million for the term of the facility, with up to $25 million of any unused amount of the $100 million per annum base available for use in the next succeeding calendar year).

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 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 itsour leverage ratio, on undrawn amounts.   The undrawn commitment fee, based on Vishay'sour current leverage ratio, is 0.25% per annum.  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.  

During the second fiscal quarter of 2020, we repurchased $75.8 million principal amount of convertible senior notes due 2025 for $70.7 million.  During the first fiscal quarter of 2020,2021, we repurchased $14.3redeemed the remaining $0.3 million principal amount of convertible senior debentures due 2041 for $19.8$0.3 million.  We initially borrowed from our revolving credit facility to fund the repurchases, and then repaid all such amounts upon the completion of the cash repatriation plan.  Such transactions provide us more flexibility to adjust our debt levels if necessary.have no remaining convertible senior debentures.

As of July 4, 2020,April 3, 2021, 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, at least initially, to fund any future repurchases of convertible debt instruments, 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 debenturesdebt 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 2025 and our revolving credit facility expires 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.  AtPursuant to the direction of our Board of Directors,indenture governing the convertible senior notes due 2025 and the amendments thereto incorporated in the Supplemental Indenture dated December 23, 2020, we intend, upon conversion, to repaywill cash-settle the principal amount of the any convertible debt instruments in cash$1,000 per note and settle any additional amounts in shares of our common stock.  We intend to finance the principal amount of any converted debenturesnotes using borrowings under our credit facility.  No conversions have occurred to date. 
5143



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.location.  The average interest rate on our short-term investments was 0.26%0.1% due to the negative interest rate environment in Europe and the low interest rate environment in Europe and the U.S.  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 July 4, 2020April 3, 2021 is lower than normal due to the recently completed cash repatriation activity.

The following table summarizes the components of net cash and short-term investments (debt) at July 4, 2020April 3, 2021 and December 31, 20192020 (in thousands):

 July 4, 2020  December 31, 2019  April 3, 2021  December 31, 2020 
            
Credit facility $-  $-  $-  $- 
Convertible senior notes, due 2025*  451,169   509,128   465,344   406,268 
Convertible senior debentures, due 2040*  128   126   -   130 
Convertible senior debentures, due 2041*  1,058   6,677 
Deferred financing costs  (13,861)  (16,784)  (12,131)  (11,512)
Total debt  438,494   499,147   453,213   394,886 
                
Cash and cash equivalents  599,930   694,133   643,847   619,874 
Short-term investments  157,246   108,822   137,348   158,476 
                
Net cash and short-term investments (debt) $318,682  $303,808  $327,982  $383,464 

*Represents the carrying amount of the convertible instruments, which is comprisedwas significantly impacted by the adoption of ASU No. 2020-06.  See Notes 1 and 5 to the principal amount of the instruments, net of the unamortized discount and the associated embedded derivative liability, when applicable.consolidated condensed financial statements.

"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 July 4, 2020April 3, 2021 continued to be strong, with ano change to the current ratio (current assets to current liabilities) of 3.23.0 to 1 as compared to 3.3 to 1 as offrom December 31, 2019.2020.  The decrease is primarily due to the decreaseincreases in cashaccounts receivable and inventory were offset by increases in trade accounts receivable.payable and accrued expenses.  Our ratio of total debt to Vishay stockholders' equity was 0.29 to 1 at July 4, 2020,April 3, 2021, as compared to 0.340.25 to 1 at December 31, 2019.2020.  The decreaseincrease in the ratio is primarily due to repurchasesthe increase in the carrying value of convertibleour long-term debt instruments.upon the adoption of ASU No. 2020-06.  See Notes 1 and 5 to the consolidated condensed financial statements.

Cash flows provided by operating activities were $124.9$57.3 million for the sixthree fiscal months ended July 4, 2020,April 3, 2021, as compared to cash flows provided by operations of $135.8$34.5 million for the sixthree fiscal months ended June 29, 2019.April 4, 2020.

Cash paid for property and equipment for the sixthree fiscal months ended July 4, 2020April 3, 2021 was $48.8$28.5 million, as compared to $70.1$24.3 million for the sixthree fiscal months ended June 29, 2019. WeApril 4, 2020.  To be well positioned to service our customers and to fully participate in growing markets, we intend to increase our capital expenditures for expansion in the mid-term.  For the year 2021, we expect capital spending ofto invest approximately $110$225 million in 2020, in accordance with requirements of our markets.capital expenditures.

Cash paid for dividends to our common and Class B common stockholders totalled $27.5$13.8 million and $26.0$13.7 million for the sixthree fiscal months ended JulyApril 3, 2021 and April 4, 2020, and June 29, 2019, respectively.  We expect dividend payments in 20202021 to total approximately $55.0 million.  However, any future dividend declaration and payment remains subject to authorization by our Board of Directors.
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44

Contractual Commitments and Off-Balance Sheet Arrangements

Our Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 14, 2020, includes a table of contractual commitments.  Except as described below, there were no material changes to these commitments during the six fiscal months ended July 4, 2020.

The following tables disclose material changes in contractual commitments during the six fiscal months ended July 4, 2020.  The tables represent our long-term debt obligations and expected cash requirements for interest as of July 4, 2020 and December 31, 2019, reflecting the repurchase of convertible senior notes due 2025 and convertible senior debentures due 2041.

As of July 4, 2020 (in thousands):

 
    
Payments due by period
 
 
 
Total
  
2020
   
2021 - 2022
   
2023 - 2024
  
2025 and beyond
 
 
                 
Long-term debt (1)
  
527,170
   
-
   
-
   
-
   
527,170
 
Interest payments on long-term debt (2)
  
67,232
   
6,868
   
27,473
   
26,405
   
6,486
 
 
                    
(1) Excludes unamortized debt discount associated with our convertible senior notes due 2025 and our convertible senior debentures due 2040 and due 2041.
 
(2) Excludes the non-cash interest expense related to the amortization of the discount associated with our convertible senior notes due 2025 and our convertible senior debentures due 2040 and due 2041.
 

As of December 31, 2019 (in thousands):

 
    
Payments due by period
 
 
 
Total
  
2020
   
2021 - 2022
   
2023 - 2024
  
2025 and beyond
 
 
                 
Long-term debt (1)
  
617,190
   
-
   
-
   
-
   
617,190
 
Interest payments on long-term debt (2)
  
90,260
   
15,762
   
31,524
   
30,456
   
12,518
 
 
                    
(1) Excludes unamortized debt discount associated with our convertible senior notes due 2025 and our convertible senior debentures due 2040 and due 2041.
 
(2) Excludes the non-cash interest expense related to the amortization of the discount associated with our convertible senior notes due 2025 and our convertible senior debentures due 2040 and due 2041.
 

We do not participate in nor have we created any off-balance sheet variable interest entities or other off-balance sheet financing.

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 April 4, 2020 $13,741 March
Three fiscal months ended July 4, 2020  13,743 June
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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; 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 20192020 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, 2019,2020, filed with the SEC on February 14, 2020,24, 2021, describes our exposure to market risks.  There have been no material changes to our market risks since December 31, 2019.2020.

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.
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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, 2019,2020, filed with the SEC on February 14, 2020 and Item 1 of Part II of our Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2020, filed with the SEC on May 12, 2020 describe24, 2021 describes certain of our legal proceedings.  There have been no material developments to the legal proceedings previously disclosed.

Item 1A.
Risk Factors

Except as described below, thereThere 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, 2019,2020, filed with the SEC on February 14, 2020.24, 2021.

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;
•Impact on our workforce/employees due to the ease with which the virus spreads and the current shelter-in-place orders; and
•Cybersecurity risks as a result of extended periods of remote work arrangements.

Such effects could result in us being required to record impairment charges related to our property and equipment, intangible assets, or goodwill.
55


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

Not applicable.

Item 3.
Defaults Upon Senior Securities

Not applicable.

Item 4.
Mine Safety Disclosures

Not applicable.

Item 5.
Other Information

Not applicable.

Item 6.
Exhibits

10.1
Amendment to Employment Agreement, dated February 23, 2021, between Vishay Israel Ltd. (a wholly owned subsidiary of Vishay Intertechnology, Inc.) and Marc Zandman.
10.2
Second Amendment to Employment Agreement, dated February 23, 2021, between Vishay Europe GmbH (an indirect wholly owned subsidiary of Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and Lori Lipcaman.
10.3
Fourth Amendment to the Terms and Conditions of Johan Vandoorn Employment Agreement, dated February 23, 2021.
10.4
First Amendment to Employment Agreement, dated February 23, 2021, between Vishay Americas, Inc. (a wholly owned subsidiary of Vishay Intertechnology, Inc.) Vishay Intertechnology, Inc., and David Valletta.
10.5
First Amendment to Employment Agreement, dated February 23, 2021, between Vishay Singapore Pte. Ltd. (an indirect wholly owned subsidiary of Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and Clarence Tse.
10.6
Second Amendment to Employment Agreement, dated February 23, 2021, between Vishay Dale Electronics, LLC (a wholly owned subsidiary of Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and Joel Smejkal dated May 20, 2020.Smejkal.
10.210.7
First Amendment to Employment Agreement, dated February 23, 2021, between Vishay Israel Ltd. (a wholly owned subsidiary of Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and Jeffrey Webster dated May 20, 2020.Webster.
10.310.8
First Amendment to Employment Agreement, dated February 23, 2021, between Vishay Electronic GmbH (an indirect wholly owned subsidiary of Vishay Intertechnology, Inc.), Vishay Intertechnology, Inc., and Andreas Randebrock dated May 20, 2020.Randebrock.
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.
101Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended July 4, 2020,April 3, 2021, furnished in iXBRL (Inline eXtensible Business Reporting Language)).
104Cover Page Interactive Data File (formatted as Inline eXtensible Business Reporting Language and contained in Exhibit 101)
____________
5646



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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)

Date:  AugustMay 4, 20202021

5747