THE PATH TO
GROWTH
2023 Annual Report
Dear Stockholders:
From the Chairman of the Board
In a year with rising interest rates and macro-economic headwinds in some parts of the world, VPG performed well in
fiscal 2023.
This is an exciting time for VPG, as we focus on larger, faster growing markets for our precision measurement and sensing
solutions that are being driven by key technology trends. To support our strategy to accelerate our growth, we continue to
deploy a capital allocation plan that balances internal investments to drive our organic growth, the acquisition of high-quality
businesses to VPG’s platform, and the repurchase of our common stock. In 2023, we actively repurchased our common stock,
as well as paid down our revolving credit facility to reduce our net interest expense. We believe these uses of VPG’s capital
create stockholder value as we continue to invest in ways to organically capture new market opportunities while looking to
acquire growing businesses to the VPG platform.
In addition, during the year we continued to make progress on our corporate Environmental, Social and Governance ("ESG")
roadmap, including updating and publishing our environment metrics and targets. Underpinning our ESG program is the role
VPG’s products play in so many ways to support sustainability by making the world safer, smarter, and more productive.
I want to thank all the members of the VPG family for their hard work and dedication and stockholders for their continued support.
Sincerely,
Saul V. Reibstein
Chairman of the Board
April 9, 2024
From the President and CEO
Dear Stockholders:
In fiscal 2023 VPG achieved solid results, despite a challenging macro environment mainly in the second half of the
year.
• We achieved revenue of $355.0 million and adjusted diluted net EPS of $2.17, and we improved our
adjusted gross margin to 42.4% from 41.8%.
• We generated $60.4 million in adjusted EBITDA, an adjusted EBITDA margin of 17.0%, and a record
$30.8 million of adjusted free cash flow.
• We completed infrastructure expansion projects and have accelerated our business development activities
to capture new opportunities for our precision sensing and measurement solutions.
As we continue to implement our strategy to accelerate our growth through organic and inorganic means, we are
excited about the potential opportunities ahead for VPG. As a leader in precision measurement and sensing
solutions, we play an important role in helping our customers make their processes and products safer, smarter, and
more productive.
Our strategy is based on moving beyond our legacy markets to address larger and faster growing ones being driven
by a number of key market and technology trends related to electrification, industrial automation, defense and
space investments, and ongoing digital transformation. These are providing us with opportunities in such high-
performance applications in robotics, fiber optic data center, medical, and consumer. As part of our strategy, we
are augmenting our business development and technology capabilities, while continuing our focus on operational
excellence.
As we invest in our organic growth, we also are continuing to look for attractive, high-quality businesses that meet
our stringent requirements for strategic fit, financial returns, and value creation. We believe VPG has the balance
sheet and operational platform to add growing, precision measurement and sensing businesses that will add value.
I want to thank our stockholders for their support, and express my deep appreciation to our employees, customers,
and business partners around the world for their commitment and dedication.
Sincerely,
Ziv Shoshani
President and Chief Executive Officer
April 9, 2024
Note: See our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and investor presentations on our website
for reconciliations of financial measures presented under accounting principles generally accepted in the United States of America
(“GAAP”) to non-GAAP financial measures.
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Vishay Precision Group, Inc.
Form 10-K for the year ended December 31, 2023
CONTENTS
PART I
Item 1. Business Description
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Party Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
SIGNATURES
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, 2021
Consolidated Statements of Equity for the years ended December 31, 2023, 2022, 2021
Notes to Consolidated Financial Statements
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Item 1. BUSINESS DESCRIPTION
General
PART I
Vishay Precision Group, Inc. (“VPG,” the “Company,” “we,” “us” or “our”) is a global, diversified company focused on
precision measurement and sensing technologies that help power the future by bridging the physical world with the digital one.
Many of our specialized sensors, weighing solutions, and measurement systems are “designed-in” by our customers, and
address growing applications across a diverse array of industries and markets. Our products are marketed under brand names
that we believe are characterized as having a very high level of precision and quality, and we employ an operationally
diversified structure to manage our businesses.
Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial
and non-industrial applications, precision measurement and sensing technologies help ensure and deliver required levels of
quality of mission-critical or high-value data. VPG’s products are often at the first stage of a data value chain (i.e., the process
of converting the physical world into a digital format that can be used for a specific purpose) and as such impact the
effectiveness of vast number of critical, high-value downstream processes. Over the past few years, we have seen a broadening
of precision sensing applications in both our traditional industrial markets and new markets, due to the development of higher
functionality in our customers' end products. Our precision measurement solutions are used across a wide variety of end
markets upon which we focus, including test and measurement, industrial, transportation, steel, avionics, military and space, as
well as other markets such as agriculture, consumer, and medical. The Company has a long heritage of innovation in sensor
technologies that provide accuracy, reliability and repeatability that make our customers' products safer, smarter, and more
productive. As the functionality of customers' products continues to increase, and they integrate more precision measurement
sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and
expertise.
Our History
On July 6, 2010, our company was spun off by Vishay Intertechnology, Inc. (“Vishay Intertechnology”) through a tax-free
stock dividend of VPG stock to Vishay Intertechnology’s stockholders, and we became a publicly-traded company. Vishay
Intertechnology was founded in 1962 by Dr. Felix Zandman to develop and manufacture the first generation of Bulk Metal®
foil resistors and later, foil strain gages. Shortly after its founding, Vishay Intertechnology established itself as a technical and
market leader in precision foil resistors, and foil strain gages. These innovations were the genesis of the products and
technology that provide a unique strategic competitive advantage for VPG, as these products were transitioned to VPG from
Vishay Intertechnology as part of the spin off.
In the decade prior to the spin-off, Vishay Intertechnology expanded our sensor and measurement business through
acquisitions, extending our business from its initial focus on precision foil resistors and foil strain gages to include an array of
load cell-based solutions.
Since becoming an independent company, we have made several acquisitions that have added to our strong, diverse, global
manufacturing, sales and distribution network, which includes facilities in Canada, People's Republic of China, France,
Germany, India, Israel, Japan, Sweden, Republic of China (Taiwan), the United Kingdom, and the United States.
We were incorporated in Delaware on August 28, 2009. Our principal executive offices are located at 3 Great Valley Parkway,
Suite 150, Malvern, PA 19355. Our main telephone number is 484-321-5300.
Key Business Vision and Strategies
Our vision is to be a leading provider of precision measurement and sensing technologies, which include sensors, weighing
solutions and measurement systems that deliver accuracy, reliability and repeatability that make our customers' products safer,
smarter, and more productive. VPG delivers in-depth, deep engineering expertise to the design and manufacture of non-
commodity sensors, weighing solutions and precision measurement systems that optimize and enhance our customers’ solutions
performance across a broad array of end markets.
Our strategy is to leverage our core technologies and competitive position in both existing and new markets to accelerate our
organic growth, as well as to augment that growth by acquiring complementary precision measurement and sensing businesses.
Specifically, we are focused on the following strategies:
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Operationally Diversified
Each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital
requirements, and acquisition opportunities. We use an operationally diversified strategy and structure to be close to our
customers and to leverage our high-level engineering expertise to optimize and enhance the performance of our customers'
solutions. We seek to maximize the performance and value of our businesses by leveraging our accumulated experience,
methodologies, and expertise in driving operational excellence across our functional areas, as well as in the allocation of capital
and investment.
Optimize Core Competence
The Company’s core competencies include our innovative deep technical and applications-specific expertise, our strong brands
and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and
our proven M&A strategy. We continue to optimize all aspects of our development, manufacturing and sales processes,
including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our
manufacturing processes.
Our Sensors segment research group developed innovations that enhance the capability and performance of our strain gages,
while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this
unique foil technology will create new markets as customers “design in” these next generation products in existing and new
applications. Our development engineering team is also responsible for creating new processes to further automate
manufacturing, and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the
capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced
manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we
signed a long-term lease for a state-of-the-art facility that has been constructed in Israel. We fully transitioned to this facility in
the third quarter of fiscal 2021.
We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing
operations in countries such as India, Japan, and Israel, where we can benefit from improved efficiencies or available tax and
other government-sponsored incentives. In the past several years, we incurred restructuring expense related to closing and
downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India, which marked key
milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
Organic Growth
Our product portfolio is focused, to a significant extent, on specialty products serving niche markets. The development of
specialty products requires us to form long-term relationships with our customers. Our specialty products are usually designed,
or engineered, to meet unique specifications for OEMs. This often results in our customers creating a non-standard part number
used solely to designate our product on their bill of materials. We call this customer activity a “design win.” This activity may
create organic growth as the OEM customer begins to order increasing quantities to meet their production requirements, with
little or no opportunity to purchase a similar part from competing suppliers. The “design in” time for these initiatives is
typically 12 to 24 months.
We expect to continue to use our research and development, engineering, and product marketing resources to introduce new and
innovative specialty products. An example of our success in this regard is the recent acceptance and growth of our on-board
vehicle weighing solution incorporating microelectromechanical systems ("MEMS") technology. Our ability to react to
changing customer needs, emerging markets, and industry trends will continue to be a key to our success.
Our design, research, and product development teams, in partnership with our marketing teams, drive our efforts to bring
innovations to market. We intend to leverage our insights into customer demand to continually develop and roll out new,
innovative products within our existing lines and to modify our existing core products in ways that make them more appealing,
addressing changing customer needs and industry trends in terms of form, fit, and function.
Growth from Acquisitions
Since becoming a public company, we have acquired five businesses utilizing stringent financial, market, operational, and
valuation criteria:
•
In 2013, we completed our first acquisition as an independent public company when we acquired substantially all of
the assets of the George Kelk Corporation ("KELK"). KELK engineers, designs and manufactures highly accurate
optical and electronic roll force measurement and control equipment primarily used by metals rolling mills and mining
applications throughout the world.
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On December 30, 2015, we completed the acquisition of Stress-Tek, Inc. ("Stress-Tek") based in Kent, Washington.
Stress-Tek designs and manufactures state-of-the-art, rugged and reliable strain gage-based load cells and force
measurement systems. Stress-Tek primarily operates in North America, where their sensors and display systems are
used in a wide range of industries, predominantly in transportation and trucking, for timber, refuse, aggregate, mining,
and general trucking applications.
On April 6, 2016, we completed the acquisition of Pacific Instruments, Inc. ("Pacific Instruments") based in Concord,
California. Pacific Instruments designs and manufactures high-performance signal conditioning, data acquisition and
control systems and has extensive experience integrating these systems. Pacific Instruments sells primarily to the
aerospace, commercial aviation and defense markets in the United States.
On November 1, 2019, we completed the acquisition of New York-based Dynamic Systems Inc. ("DSI"), a provider of
specialized dynamic thermal-mechanical test and simulation systems used to develop new metal alloys and optimize
production processes. DSI is an established, high margin business, with a strong brand and has the largest installed
base of products of its type in the world, according to market estimates. DSI expands our position in the steel market
and offers opportunities for growth by leveraging our sales capabilities and market presence, and by expanding DSI’s
product line to address new opportunities.
On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a
leading manufacturer of data acquisition systems and sensors for product and safety testing. DTS's embedded data
acquisition and data logging products expands our offerings to the automotive and avionics, military, and space
markets. We believe DTS will continue to benefit from the global need for specialized safety testing that is expanding
from the automotive and avionics sectors to sports applications. As a result of our acquisition, we acquired a leased
manufacturing, engineering, sales and administrative facilities in Seal Beach, California and Novi, Michigan.
We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments.
Our acquisition strategy is focused on identifying and acquiring high-value, growing technology-driven businesses that
augment, expand and/or leverage our current offering in precision measurement and sensor markets. We expect to expand our
expertise and our acquisition focus to other precision measurement solutions, including in the fields of measurement of force,
weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we
implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
Leverage Global Brand
While our acquisitions provided us an array of strong brand names, in addition to our historical resistor and strain gage brands,
we believe the continued success of our strategy is best served by the establishment of a strong overall global brand. The
“VPG” brand leverages the strength of these historical brands under the umbrella of a unified, globally recognizable VPG
name. We continue to broaden and emphasize the VPG brand in the markets we serve under the following brands for each of
our business segments:
Measurement Systems
KELK
Dynamic Systems Inc. or Gleeble
DTS
Pacific Instruments
Sensors
VPG Foil Resistors
- VFR
- Alpha Electronics
-Powertron
- APR
Micro-Measurements
Weighing Solutions
VPG Transducers
- Celtron
- Revere
- Sensortronics
- Tedea-Huntleigh
VPG Onboard Weighing
Stress-Tek
Vulcan
BLH Nobel
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Business Segments and Products
Each of VPG's business segments maintains and deploys specific go-to-market strategies, technical expertise, capital
requirements, and acquisition opportunities, which are in line with our operationally diversified structure and strategy. VPG
reports in three product segments: Sensors, Weighing Solutions, and Measurement Systems.
Sensors
The Sensors segment is comprised of our precision resistor and strain gage businesses. Precision resistor products offer superior
precision, stability, and reliability. Our resistor portfolio encompasses a wide variety of configurations and packages designed
to meet the requirements of even the most demanding applications.
Precision resistors are the most precise and stable type of resistors currently available. Resistors are basic components used in
all forms of electronic circuitry to adjust and regulate levels of voltage and current. Our current sense resistors were developed
with a low absolute TCR and Kelvin connections to meet the demand of stable resistive products.
Our precision resistors are based on Bulk Metal Foil® technology and are used in diverse applications, which require a high
degree of precision and stability. The main market segments for our precision resistors are as follows: avionics & military,
space communications, fiber optics, industrial automation, EV battery management infrastructure, precision weighing, and test
& measurement including semiconductor test and production, among others. Foil resistors are marketed under four different
brands: VFR, Alpha Electronics, Powertron and APR. APR is our off-the-shelf commercial product line based on AEC-Q200
standardization. To complement our extensive portfolio of high-performance precision resistors, we also offer decade boxes,
standard resistors, exceptional precision thin film and power resistors including special construction configurations to meet the
requirements of high temperature applications. We have a road map of new technology products to meet the required needs of
our customers.
Our strain gage products, which include our advanced sensors, are resistive sensors that are attached to the surface of an object
to determine the surface strain caused by an applied force. Marketed under the well-known Micro-Measurements brand, our
strain gages are used for OEM and in stress analysis applications for structural testing in the aviation, military and space,
infrastructure, and construction markets, along with force measurement and weighing markets. Typical applications of strain
gages include test and measurement applications where the strength of the object is the main consideration and the object under
test is a structural component in a machine or device, such as an automobile, an aircraft, or a highway bridge. Strain gages are
also used inside precision transducers where the magnitude of an applied force is the focus of the measurement. Using strain
gages attached to metal components, a variety of physical measurements can be made including force, weight, pressure,
displacement, and acceleration. Our innovative advanced sensors product line enhances the capability and performance of our
strain gages, while simultaneously reducing their size and power consumption.
A portion of our strain gage products are sold to third parties as “standard catalog items”, while the remainder of these products
are sold as non-standard and/or custom products to third parties and to our Weighing Solutions segment. Strain gage products
are sold across several of our market sectors, with a significant portion being sold to consumer end markets.
The products in the Sensors segment are primarily based on our resistive foil technology, which continues to evolve and enables
many products in both segments to be suited for new and varied applications.
The manufacturing of the foil material is a critical and common component of the Company’s strain gage and precision foil
resistor operating segments, and as a result, we experience synergies between our precision resistor and strain gage operating
segments. The production cycles for precision resistors and strain gages are similar and many of the same raw materials are
utilized in the manufacturing processes for both operating segments. The foil resistor and strain gage products require a similar
level of labor and capital. However, the advanced sensors’ manufacturing technology offers us the capability to produce high-
quality foil strain gages in a highly automated environment, which we believe results in reduced manufacturing costs and lead
times, higher quality, and increased margins.
Weighing Solutions
The Weighing Solutions segment is comprised of our VPG Transducers, VPG Onboard Weighing, BLH Nobel, Stress-Tek and
Vulcan businesses.
VPG Transducers offers a broad line of load cells and force measurement transducers, which also known as force sensors, that
are offered as precision sensors for industrial and commercial use. Typical applications for force sensors are in construction
machinery for stability control or overload protection, agricultural equipment for precision force measurement, and medical
devices such as hospital beds and medication dosing. The heavy equipment market has begun to adopt load cell technology as
process control and equipment control features for their products. In some cases, these products use our strain gage products,
which serve as sensing elements and components within each unit. Further integration of our load cell technology is also
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offered as part of our weighing module products, which provide customers with a complete sensor assembly that may be used
within a wide variety of digital transducers.
A transducer is mounted on a structure that is subjected to weight or other forces, such as the platform of an industrial scale.
The term “load cell” is primarily used to describe transducers used in weighing applications. Strain-gage based transducers
consist of one or more strain gages bonded to a metallic structure. The change in resistance of the strain gages in response to
strain of the transducer by the applied load is detected by electronic instrumentation calculating the force detected or weight.
Transducers are manufactured with different designs and configurations depending on their application and the type of stress or
strain to be measured; for example, weight or tension. We produce both analog and digital transducers. Modules are
transducers combined with a mounting and with external features, such as instruments and cables, and are used for weighing
and control applications. We sell our load cells and modules under the overall VPG Transducers name as we continue to
transition from the previously used Celtron, Revere, Sensortronics, and Tedea-Huntleigh brands.
Approximately half of VPG Transducer load cell products are sold to third parties as “standard catalog items,” but a growing
sector of this segment’s products are sold as non-standard and/or custom products to third parties including OEM
manufacturers. Our sales teams act as direct sales channels (field application engineers or “FAEs”) utilizing the primary
customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this segment’s
products. Distributors are also used for those customers that desire standard products.
Our VPG Onboard Weighing, Stress-Tek, and Vulcan businesses specialize in high-quality, high-accuracy vehicle weighing
and over-load monitoring systems for all commercial vehicle types, including trucks, vans, specialty vehicles, and special scale
systems used for aircraft weighing and portable truck weighing. Onboard weighing systems are installed in logging and waste
handling trucks. Many of these products use solid-state sensors. VPG Onboard Weighing products, sold under the brand names
TruckWeigh, VanWeigh, and Load Pro in the United States, are used by drivers and fleet operators to monitor vehicle loads
within legally permitted limits and regulations.
The BLH Nobel business mainly provides load cells and instrumentation for weighing and force control/measurement for a
variety of uses. These include systems to control process weighing in food, chemical, and pharmaceutical plants; force
measurement systems used to control web tension in paper mills, cable tension in winch controls.
Major components that comprise our Weighing Solutions products include: load cells, electronic displays, signal processors,
MEMS sensors, cabling, system software, and communications software/hardware. The end use for the majority of these
products is the precision measurement of force, weight, pressure, torque, tilt, motion, and acceleration. FAEs are utilized as the
primary customer interface relating to initial design specifications, development of prototypes, and pricing/delivery of this
segment's products. We also use distributors and sales agents, as appropriate, to market, sell, and support certain products in
this segment.
Measurement Systems
The Measurement Systems segment includes highly specialized systems for steel production, materials development, and safety
testing. This segment is comprised of our KELK, DSI, Pacific Instruments, and our DTS businesses.
Our KELK business provides high accuracy and performance sensors and systems for the steel and aluminum industries — and
within those industries, mainly for rolling mills. KELK's products include rolling force measuring load cell systems and
pressure transmitters; web tension measurement load cells and systems; optical strip width gages; laser velocimeters for speed
and length measurements, and closed-loop crop optimization control systems for optimal strip cuts. Our products are required
to meet the most demanding requirements of the steel and aluminum industries, providing high accuracy and reliability under
the most demanding harsh conditions of rolling mills.
Our DSI business specializes in thermal-mechanical simulation systems for metallurgical research. Marketed under the name
"Gleeble®", DSI's line of physical simulation systems are used by universities, research departments, and development
departments within the steel ecosystem to accelerate the development of new metal alloys, explore new production techniques,
optimize existing processes, or simulate the conditions a material will face in the real world.
Our Pacific Instruments business offers a broad range of high performance signal conditioning, data acquisition and control
systems, many of which reach customers outside our traditional commercial customer base, such as U.S. government-related
customers.
Our DTS business provides data acquisition systems and sensors for product safety testing. As a major supplier of embedded
data acquisition and data logging capabilities for crash test dummies, DTS expands our offering in the automotive market and in
the avionics, military and space market. We believe DTS will continue to benefit from the global need for specialized safety
testing technology that is expanding from the automotive and avionics sectors to other applications such as sports safety.
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Qualifications and Specifications
Certain of our products must be qualified or approved under various military and aerospace specifications and other standards.
We have qualified certain of our foil resistor and sensor products under various military specifications approved and monitored
by the United States Defense Logistics Agency (“DLA”), under certain European military specifications, and various aerospace
standards approved by the U.S. National Aeronautics and Space Administration (“NASA”) and the European Space Agency
(“ESA”).
Qualification and specification levels are based in part upon the rate of failure of products. We must continuously perform tests
on our products, and report the results for qualified products to the qualifying organization. If a product fails to meet the
requirements for the applicable classification level, the product’s classification may be suspended or reduced to a lower level.
During the time that the classification is suspended or reduced, net revenues and earnings attributable to that product may be
adversely affected.
Certain of our load cell and instrumentation products are approved by the National Type Evaluation Program (“NTEP”) and
International Organization of Legal Metrology (“OIML”). Many of our weighing systems must also meet these standards to
make them usable for legal-for-trade weighing applications. Products and systems that are to be used in hazardous areas, where
explosive atmospheres might exist, must comply with special safety standards, such as the European Atmosphère Explosible
(“ATEX”) Standard and the U.S. Factory Mutual (“FM”) Standard. Our load cell manufacturing sites undergo periodic audits
by regulatory authorities in order to verify compliance with standard requirements and to extend product approvals.
Manufacturing Operations
Our principal manufacturing facilities are located in Israel, the United States, Canada, India, Germany, and Japan. We also have
manufacturing facilities in Sweden, the United Kingdom, the Republic of China (Taiwan), and France. Over the past several
years, we have invested substantial resources to increase capacity and to enhance automation in our plants, which we believe
will further reduce production costs.
We have quality management systems at all of our major manufacturing facilities approved under the ISO 9001 Quality
Management Systems Standard. ISO 9001 is a comprehensive set of quality program standards developed by the International
Organization for Standardization ("ISO"). The quality management system in our major foil resistors manufacturing site is
certified against Aerospace Standard AS9100.
Our DTS business unit, manufacturing data acquisition systems, data loggers and sensors for critical testing for aerospace,
military, crash safety, is certified to ISO/IEC 17025 standard. Compliance to this standard ensures that the DTS facilities
operate quality management systems, are technically competent and generate technically valid results.
To maintain our cost competitiveness, we are pursuing our strategic initiatives to shift manufacturing emphasis to more
advanced automation in higher-labor-cost regions and to relocate production to regions with skilled workforces and relatively
lower labor costs. See additional information in Item 7 “Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Cost Management” related to our restructuring efforts.
Sources of Supplies
Although most materials incorporated in our products are available from a number of sources, certain materials are available
only from a relatively limited number of suppliers. The principal materials used in our products include various metallic foil
alloys, aluminum, stainless steel, tool steel, plastics, and for a few products, gold. Some of the most highly specialized materials
for our sensors are sourced from a single vendor. We maintain a safety stock inventory of certain critical materials at our
facilities. We are taking steps to determine the use, source, and origin of any tin, tantalum, tungsten, or gold in our global
product portfolio and, if appropriate, would work with our suppliers to remediate issues and source more responsibly.
A portion of our Weighing Solutions and Measurement Systems segment products are based on strain gages produced by our
Sensors segment.
Inventory and Backlog
We manufacture both standardized products and those designed and produced to meet customer specifications. We maintain an
inventory of standardized components, and monitor the backlog of outstanding orders for our products.
We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months.
Many of our customers for strain gages, load cells, and foil resistors encounter uncertain and changing demand for their
products. They typically order products from us based on their forecasts. If the customers' business needs change, they may
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cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty.
Therefore, the backlog at any point in time is not necessarily indicative of the results to be expected for future periods.
Customers and Marketing
Our customer base is diversified in terms of industry, geographic region, and range of product needs. No single customer
comprises greater than 10% of net revenues. A portion of our products are used in the broad industrial market for wide variety
of applications in waste management, bulk hauling, logging, scales manufacturing, engineering systems, pharmaceutical, oil,
chemical, steel, paper, and food industries. In addition, we sell to an expanding array of end markets including test and
measurement, steel, medical, construction, agricultural, and consumer.
Many of our products have historically been sold by dedicated sales forces, consisting mainly of FAEs focusing on specific
market segments or specific customers. The FAEs help identify the products in our portfolio that best meet the needs of our
customers and provide technical and applications support. Their in-depth knowledge of customer needs is a key factor in new
product design and future research and development initiatives.
Competition
Our competitive success depends on our ability to maintain a competitive advantage on the basis of superior product capability
and performance, product quality, know-how, proprietary data, market knowledge, service capability and business reputation.
Price competitiveness can be an important factor, especially within our Weighing Solutions segment. Our sales and marketing
programs offer our customers a broad range of world-class precision technologies, and superior global sales and support.
Competition in the markets where we sell the bulk of our products is extremely fragmented, both geographically and by
application. To our knowledge, there are no competitors with the same product mix and proprietary technology as ours. Our
competitors range from very small, local companies to large, international companies with greater financial resources than us.
Our foil resistors and our foil strain gages are based on our proprietary technology. Competitors try to compete in this market
using different technology to offer functionally equivalent products. Examples of competition in our Sensors segment includes
KOA, Bourns, Vishay Intertechnology, TT Electronics, Susumu, Isabellenhute, Caddock and Flat Dashi for foil resistors, and
HBK, an operating company of Spectris, Tokyo Sokki Kenkyujo Co., Ltd (TML), Kyowa and Zemic for foil strain gages.
Competitors in our Weighing Solutions segment include HBK, Zemic, and Utilcell for load cell products, and Air-Weigh and
Vehicle Weighing Systems for onboard weighing products. In the Measurement Systems segment, we compete with ABB, IMS
and Fuji in the steel market and Kistler for data acquisition systems.
Research and Development
Many of our products, manufacturing techniques, and technologies have been invented, designed, and developed by our
engineers and scientists. Special proprietary resistive metal foil is the most important material in both our foil resistors and our
foil strain gages, and our research and development activities related to foil materials are an important linkage between these
two products.
We maintain strategically placed design centers for each of our business segments where proximity to customers enables us to
more easily monitor and satisfy the needs of local markets. These design centers are located in the United States, Israel, Canada,
Sweden, Japan, the United Kingdom, and Germany.
We also maintain research and development staff, and promote programs at a number of our production facilities to develop
new products and new applications of existing products, and to improve manufacturing techniques. This decentralized approach
encourages individualized product development at specific manufacturing facilities that occasionally has applications at other
facilities.
Our research and development staff and our sales force are closely linked. Our sales force is comprised of individuals with an
engineering background who can help meet the needs of our customers for technical and applications support. This in-depth
knowledge of customer needs and specifications is a key factor in future research and development initiatives.
Research and development will continue to play a key role in our efforts to introduce innovative products for new sales, and to
improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products.
We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our
manufacturing base and, ultimately, our financial performance. To that end, we expect to sustain or increase our R&D
expenditures in order to fill the product development pipeline and lay the foundation for future sales growth.
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Patents and Licenses
We have made a significant investment in securing intellectual property protection for our technology and products. We seek to
protect our technology by, among other things, filing patent applications for technology considered important to the
development of our business. Although we have numerous United States and foreign patents covering certain of our products
and manufacturing processes, no particular patent is considered individually material to our business. We also rely upon trade
secrets, unpatented know-how, and continuing technological innovation.
Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our
technology. Although we have been awarded, have filed applications for, or have obtained numerous patents in the United
States and other countries, there can be no assurance concerning the degree of protection afforded by these patents, or the
likelihood that pending patents will be issued.
We require all of our technical, research and development, sales and marketing, and management employees, and most
consultants and other advisors to execute confidentiality agreements upon the commencement of employment, or consulting
relationships with us. These agreements provide that all confidential information developed, or made known to the entity or
individual during the course of the entity’s or individual’s relationship with us, is to be kept confidential and not disclosed to
third parties except in specific circumstances. Substantially all of our technical, research and development, sales and marketing,
and management employees have entered into agreements providing for the assignment to us of rights to inventions made by
them while employed by us.
Environmental, Social and Governance
As part of our launch of a corporate Environmental, Social and Governance ("ESG") program in 2022, we completed a
materiality assessment, developed a multi-year ESG plan, and established an internal scorecard with short and long-term
objectives.
The implementation of our multi-year ESG plan continues to be on track as evidenced by our actions over the past year, which
include updating applicable governance documents to include ESG-related topics on Information Security, sharing further key
ESG performance indicators for environment, health and safety with our stockholders, key stakeholders and the general public,
adopting ESG policies on Climate Related Risk-Greenhouse Gas and a Supplier Code of Conduct and updating our Anti-
Bribery and Anti-Corruption policies. Internally, we are also capturing baseline data to identify opportunities for reducing
energy consumption that contribute to Scope 1 and Scope 2 emissions using the latest Greenhouse Gas Protocol. Our multi-
year ESG plan is reviewed yearly and remains built on four pillars: Our People, Our Environment, Our Governance and Our
Products, and continues to serve as a guiding framework that will be added to as new trends, requests from stakeholders and
internal business strategies require.
We have issued an Environmental, Health and Safety Policy that sets forth our commitment to achieving health and safety for
employees and protecting of the environment, to maintaining compliance with applicable environmental, health and safety laws,
to promoting proper management of hazardous materials, and to minimizing the hazardous materials generated in the course of
our operations. In addition, our manufacturing operations are subject to various regional, federal, state, and local laws
restricting discharge of materials into the environment. Since we are subject to Environmental, Health and Safety laws
worldwide we incur capital and operating expenditures and other costs to comply with such laws and any investigations of us
related to such laws.
Human Capital
As of December 31, 2023, we employed approximately 2,300 total employees, substantially all of which were full-time
employees. Approximately 82% of our employees were located outside the United States. Our future success is substantially
dependent on our ability to attract and retain highly qualified technical and administrative personnel. Some of our employees
outside the United States are members of trade unions.
We support worldwide employment and promotion of diversity to innovate and drive long-term value, by continuous
monitoring of compensation and benefits to assure competitiveness, while implementing a worldwide talent strategy that
includes workforce planning and succession planning.
We have had no employee strikes or work stoppages due to labor disputes and we consider our relationship with employees to
be generally good, however, no assurance can be given that labor unrest or strikes will not occur. We continue to support
employee’s rights to collective bargaining and other recognized employee interests to organize.
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Information about our Executive Officers
The following table sets forth certain information regarding our executive officers as of February 29, 2024:
Name
Ziv Shoshani
William M. Clancy
Amir Tal
Age
57
61
54
Positions
Chief Executive Officer, President, and Director
Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Accounting Officer
Ziv Shoshani is our Chief Executive Officer and President, and also serves on the Board of Directors. Mr. Shoshani was Chief
Operating Officer of Vishay Intertechnology from January 1, 2007 to November 1, 2009. During 2006, he was Deputy Chief
Operating Officer of Vishay Intertechnology. Mr. Shoshani was Executive Vice President of Vishay Intertechnology from 2000
to 2009 with various areas of responsibility, including Executive Vice President of the Capacitors and the Resistors businesses,
as well as heading the Measurements Group and Foil Divisions. Mr. Shoshani had been employed by Vishay Intertechnology
since 1995. He continues to serve on the Vishay Intertechnology board of directors. Mr. Shoshani is a nephew of Mrs. Ruta
Zandman, the widow of the late Dr. Felix Zandman, the founder of Vishay Intertechnology.
William M. Clancy is our Executive Vice President and Chief Financial Officer. Mr. Clancy was Corporate Controller of
Vishay Intertechnology from 1993 until November 1, 2009. He became a Vice President of Vishay Intertechnology in 2001 and
a Senior Vice President of Vishay Intertechnology in 2005. Mr. Clancy served as Corporate Secretary of Vishay
Intertechnology from 2006 to 2009. From June 16, 2000 until May 16, 2005 (the date Vishay Intertechnology acquired the
noncontrolling interest in Siliconix incorporated), Mr. Clancy served as the principal accounting officer of Siliconix. Mr.
Clancy had been employed by Vishay Intertechnology since 1988. Mr. Clancy is a licensed CPA in Pennsylvania.
Amir Tal is our Senior Vice President and Chief Accounting Officer. Mr. Tal was appointed by the Board of Directors to such
position effective February 5, 2020. He served as the Company’s Senior Vice President, Finance from March 2017 until
February 2020. From July 2010 to February 2017, Mr. Tal served as the Company’s Vice President Operational Controller and
Regional Controller Israel. Mr. Tal holds a bachelor’s degree in economics and business administration from the University of
Haifa and an MBA from Bar Ilan University.
Company Information and Website
We began filing annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange
Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after our spin-off from
Vishay Intertechnology on July 6, 2010. The SEC maintains an Internet website that contains reports, proxy and information
statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can obtain
any documents that we file with the SEC at www.sec.gov.
In addition, our company website can be found on the Internet at www.vpgsensors.com. The website contains information
about us and our operations. Copies of each of our filings with the SEC on Form 10-K, Form 10-Q, and Form 8-K, and all
amendments to those reports, can be viewed and downloaded free of charge as soon as reasonably practicable after the reports
and amendments are electronically filed with or furnished to the SEC. To view the reports, access http://ir.vpgsensors.com and
click on “Financials”/ “SEC Filings.”
The following corporate governance related documents are also available on our website:
•
•
•
•
•
•
•
•
•
•
•
Compensation Committee Charter
Nominating and Corporate Governance Committee Charter
Audit Committee Charter
Code of Business Conduct and Ethics
Code of Ethics Applicable to the Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer or
Controller
Corporate Governance Principles
Policy Regarding Qualifications of Directors
Anti-Bribery and Anti-Corruption Policy
Supplier Code of Conduct
Information Security Report
By-Laws of Vishay Precision Group
To view these documents, access http://ir.vpgsensors.com and click on “Sustainability-Governance” and then on “Governance”
and then on "Governance Documents."
To view our Ethics Program Reporting Procedures, access http:/www.vpgsensors.com/Ethics
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We are not incorporating by reference into this Annual Report on Form 10-K any material from our website.
Any of the above documents can also be obtained in print by any stockholder, upon written request to our Investor Relations
Department at the following address:
Corporate Investor Relations
Vishay Precision Group, Inc.
3 Great Valley Parkway, Suite 150
Malvern, PA 19355
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Item 1A. RISK FACTORS
You should carefully consider the following risks and other information in this Form 10-K in evaluating our company and
common stock. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we
currently deem immaterial, could materially and adversely affect our business, results of operations or financial condition, and
could also adversely affect the trading price of our common stock.
Risks Related to Our Business
A shortage of qualified labor could have a material adverse effect on our business and results of operations.
Labor is a significant component of operating our business. A number of factors may adversely affect the labor force available
to us or increase labor costs, including general macroeconomic conditions, high employment levels, federal unemployment
subsidies, increased wages offered by other employers, vaccine mandates and other government regulations, and our responses
thereto. Outside suppliers that we rely on have also experienced shortages of qualified labor. A prolonged shortage of qualified
labor could, among other things, decrease our ability to effectively produce and meet customer demand, and could have a
material adverse effect on our business and results of operations.
We face intense competition in our business.
We face various degrees and types of competition throughout the world in our different businesses. We are a leading supplier
of foil resistors and foil strain gages. Foil resistors and foil strain gages are also produced by competitors, principally located in
China. We believe that our products provide superior performance relative to our competitors, but that could change if our
competitors succeed in developing and introducing innovative competitive offerings. Also, our foil strain gages compete with
other types of strain gages, such as semiconductor strain gages, which we do not manufacture. We believe that other types of
strain gages are not as reliable or stable as our foil strain gages, but that could change as the technology for these other products
continues to evolve. If our competitors are able to improve the quality, performance, or pricing of their products relative to our
offerings, our results of operations could be adversely affected.
The market for transducer/load cell products is highly fragmented and very competitive. Our load cell modules and systems
face competition from numerous other load cell module and systems manufacturers. Competition for modules and systems is
most often based on customer relationships, product reliability, technical performance, and the ability to anticipate and satisfy
customer needs for specific design configurations. Many other manufacturers have more experience in particular geographic
markets and specific applications than we do, and may be better positioned to compete in these areas. We cannot assure you that
we will be able to successfully grow our business in the face of these competitive challenges.
To remain successful, we must continue to innovate, and our investments in new technologies may not prove successful.
Our future operating results depend on our ability to continually develop, introduce, and market new and innovative products,
to modify existing products, to respond to technological change, and to customize certain products to meet customer
requirements. There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the
direction of technological change, that customers may be unwilling, or unable, to adopt the new products or methods of using
them, that we will be unable to develop and market new products and applications in a timely fashion to satisfy customer
demands, or that such products will experience quality or other qualification issues with our customers as they, and we, gain
experience with qualifying them and using them. If this occurs, we could lose customers and experience adverse effects on our
financial condition and results of operations.
We may not be successful in future acquisitions or other strategic transaction endeavors, if any, which could have an adverse
effect on our business and results of operations.
Historically, we expanded our business in part by completing acquisitions, and we expect that an important element of our
business strategy will continue to be expansion through acquisition. We cannot assure that we will identify, have the financial
capabilities to execute, and/or successfully complete strategic transactions with suitable partners in the future. We also cannot
assure that any such transactions that we do complete in the future will be successful.
Such transactions involve a number of risks, including the following:
•
•
•
•
we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential
transaction, whether or not the transaction is consummated;
we may be unable to achieve the anticipated benefits from the transaction;
we may have difficulty integrating the operations, personnel and culture of an acquired business, and may have difficulty
retaining the key personnel of the acquired business;
we may have difficulty enforcing restrictive covenants against the seller of the acquired business or former employees or
other personnel of the acquired business;
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•
•
•
we may have difficulty incorporating acquired technologies or products into our existing solutions;
our ongoing business and management's attention may be disrupted or diverted by transition or integration issues, and the
complexity of managing geographically and culturally diverse locations; and
we may lose customers of those companies, or may lose our customers due to the change in control or for other reasons.
The factors noted above could have a material adverse effect on our business, results of operations, and financial condition or
cash flows, particularly in the case of a larger acquisition. From time to time, we may enter into negotiations for acquisitions or
investments that are not ultimately consummated. These negotiations could result in significant diversion of management time,
as well as out-of-pocket costs.
Future acquisitions may require us to incur or issue additional indebtedness or issue additional equity.
If we were to undertake future substantial acquisitions for cash, these acquisitions would likely need to be financed in part
through bank borrowings, or the issuance of public or private debt. This acquisition financing would likely adversely affect
certain credit metrics. Our revolving credit facilities require us to obtain the lenders’ consent for certain additional debt
financing and to comply with other covenants, including the application of specific financial ratios. We cannot assure that the
necessary acquisition financing would be available to us on acceptable terms, if and when, required. If we were to make an
acquisition with equity, the acquisition may have a dilutive effect on the interests of the holders of our common stock.
We may experience difficulties, delays, or unexpected costs in completing our cost reduction programs.
To remain competitive, particularly when business conditions are difficult, we sometimes take steps to reduce our cost structure
by restructuring our existing businesses to achieve efficiencies, eliminate redundant functions, facilities and staff positions, and
move operations, where possible, to reduce labor or other costs.
We may not realize, in full or in part, the anticipated benefits of these programs without encountering difficulties, which may
include complications in the transfer of production knowledge, loss of key employees and/or customers, and the disruption of
ongoing business. Any of these difficulties could delay and/or undermine our ability to realize the benefits of these cost
reduction programs, as well as potentially adversely affecting our customer relationships and operations.
Our business is cyclical, and in periods of increased economic strength, we may experience intense demand for our products. If
our cost reduction programs and related restructuring result in us not being able to satisfy our customer’s demand for products
during a rising economy, and our competitors sufficiently expand production, we could lose customers and/or market share.
These losses could have an adverse effect on our operations, financial condition, and results of operations.
We may encounter difficulties in the implementation or operation of new enterprise resource planning systems.
We have implemented, and continue to implement, new enterprise resource planning (“ERP”) systems in different parts of our
business. ERP systems are integral to our ability to accurately and efficiently manage our manufacturing and sales activities,
and provide critical business information to management. The implementation of an ERP system may cause us to incur
additional costs, shipment delays, and related customer dissatisfaction; expend employee (including Company management)
time and attention; and otherwise burden our internal resources. Any difficulties we encounter with the implementation or
successful operation of an ERP system could damage the effectiveness of our business processes and could adversely impact
our ability to accurately and effectively forecast and manage sales demand, manage our supply chain, and report management
information on an accurate and timely basis, any of which could have a material adverse effect on our business and results of
operations.
Our success is dependent upon our ability to protect our proprietary technology and other intellectual property.
We rely on a combination of the protections provided by applicable patent, trademark, copyright, and trade secret laws, as well
as on confidentiality procedures and other contractual arrangements, to establish and protect our rights in our technology, and
related materials and information. We enter into agreements with our customers and distributors. These agreements contain
confidentiality and non-disclosure provisions, a limited warranty covering our products, and indemnification for the customer
from infringement actions related to our products.
Despite our efforts, it may be possible for others to copy portions of our products, reverse engineer them, or obtain and use
information that we regard as proprietary, all of which could adversely affect our competitive position. Furthermore, there can
be no assurance that our competitors will not independently develop technology similar to ours. The laws of certain countries in
which we manufacture do not protect our intellectual property (“IP”) rights to the same extent as the laws of the United States.
In the Office of the United States Trade Representative (“USTR”) annual “Special 301” Report released in April 2021, the
adequacy and effectiveness of intellectual property protection in a number of foreign countries were analyzed.
A number of countries in which we manufacture or do business in are identified in the report as being on the Priority Watch
List or the Watch List. In China, for instance, the USTR is concerned about the urgent need to remediate a range of IP-related
concerns, including trade secret theft, online piracy and counterfeiting, the high-volume manufacture and export of counterfeit
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goods, technology transfer requirements imposed as a condition to access the Chinese market, the mandatory application of
adverse terms to foreign IP licensors, and IP ownership and research and development localization requirements. Structural
impediments to administrative, civil, and criminal IP enforcement are also problematic. The USTR also expressed concern that
in India there is a lack of sufficient measurable improvements to its IP framework on long-standing and new challenges that
have negatively affected U.S. right holders over the past year. Other countries in which we do business were also identified
because of problems in intellectual property enforcement. The absence of harmonized intellectual property protection laws and
effective enforcement makes it difficult to ensure consistent respect for patent, trade secret, and other intellectual property rights
on a worldwide basis. As a result, it is possible that we will not be able to enforce our rights against third parties that
misappropriate our proprietary technology in those countries.
The success of our business is highly dependent on maintenance of intellectual property rights.
The unauthorized use of our IP rights may increase the cost of protecting these rights or reduce our revenues. We seek to
protect trade secrets and our other proprietary technology, in part, by requiring each of our employees to enter into non-
disclosure and IP assignment agreements. In these agreements, the employee agrees to maintain the confidentiality of all of our
proprietary information and, subject to certain exceptions, to assign to us all rights in any proprietary information or technology
made, or contributed, by the employee during his or her employment. Generally, we do not enter into non-compete
arrangements with our employees, with the exception of certain executives, senior managers and, in some cases, one or more of
the principals of the businesses that we acquire.
All of these types of agreements may be breached or be found unenforceable (including in light of potential regulations
proposed by the United States Federal Trade Commission), and we may not have an adequate remedy for any such breach of, or
inability to enforce, these agreements. We may initiate, or be subject to, claims or litigation for infringement of proprietary
rights, or to establish the validity of our proprietary rights, which could result in significant expense to us, cause product
shipment delays, require us to enter royalty or licensing agreements, and divert the efforts of our technical and management
personnel from productive tasks, whether or not such litigation were determined in our favor.
We may be exposed to product liability claims.
While our agreements with our customers and distributors typically contain provisions designed to limit our exposure to
potential material product liability claims, including appropriate warranty, indemnification, damages waiver, and limitation of
liability provisions, it is possible that such provisions may not be effective under the laws of some jurisdictions, thus exposing
us to substantial liability. Moreover, defending a suit, regardless of its merits, could entail substantial expense, and require the
time and attention of key management personnel. If product liability claims are brought against us, the costs associated with
defending such claims may adversely affect our results of operations and future cash flows.
We must expend significant resources to obtain design wins without assurance that we will be successful.
In many cases, we must initiate communication with our customers, and convince the customer that our products and systems
will offer solutions for its business that are technically superior and more cost effective compared to their existing
arrangements. To do so, we must often expend significant financial and human resources to develop technologically compelling
products or systems with no guarantee that they will be adopted by our customers. The non-recurring engineering (“NRE”)
costs for product development in these cases could be substantial, and may adversely affect our profitability if we are unable to
recover these costs.
Also, customers will often require a lengthy period of on-site testing before committing to purchase a product or system, during
which period we will not receive material revenue from the customer. While a design win for our products and systems may
result in a long period of recurring revenue during which we hope to recover our costs, we must often internally finance our
development costs over significant time periods. If our products or systems fail to gain acceptance with our customers, we will
be forced to absorb any NRE costs, which could adversely affect our business if these costs are substantial.
The long development times for certain of our products and systems may result in unpredictable fluctuations in revenue and
results of operations.
Our Weighing Solutions products and Measurement Systems products often have long product development cycles, both to
develop the product or system and to secure customer acceptance following what may be a lengthy on-site testing period.
During product development and testing, we may incur substantial costs without corresponding revenues. If our custom product
or system is ultimately accepted by the customer, we may then begin to realize substantial revenues from our development
efforts.
In particular, our Measurement Systems business segment which produces highly specialized systems, can be priced for ten
thousand dollars to $1 million or more per unit, so that a contract to acquire one or more units can materially contribute to our
revenues during the period or periods that we are permitted to recognize the contract revenues for accounting purposes. The
nature of our measurement systems business segments, and in particular, the products and systems manufactured for the steel
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industry, may therefore result in substantial fluctuations in our operating results, including revenues and profitability, from
period to period, even though there has been no fundamental change in our business or its prospects. Further, customers may
request a delay in shipping a product they have ordered due to changes in their business needs, which may delay the revenue
recognition for the product until shipment occurs. This may make it difficult for investors to undertake period-to-period
comparisons of our performance. Also, the fluctuating nature of key components of our revenues may limit the visibility of our
management regarding performance in future periods, and make it more difficult for our management to provide guidance to
our investors.
We may not have adequate manufacturing capacity to satisfy future increases in demand for our products.
Our business is cyclical and in periods of a rising economy, we may experience intense demand for our products. During such
periods, we may have difficulty expanding our manufacturing capacity to satisfy demand. Factors which could limit such
expansion include delays in procurement of manufacturing equipment, shortages of skilled personnel, and physical constraints
on expansion at our facilities. If we are unable to meet our customers’ requirements and our competitors sufficiently expand
production, we could lose customers and/or market share. These losses could have an adverse effect on our financial condition
and results of operations. Also, capacity that we add during upturns in the business cycle may result in excess capacity during
periods when demand for our products recedes, resulting in inefficient use of capital, adversely affecting our business.
The nature of the market for our products may render them particularly susceptible to downturns in the economic environment.
Our products are designed to replace and provide superior functionality over existing product infrastructure utilized by our
customers. Often, it is only after introductory demonstrations by our sales and engineering teams that our customers come to
appreciate the advantages of our products and systems, and the long-term benefits of their adoption. An economic downturn or
extended period of economic uncertainty may make customers less receptive to adopting new technological solutions at our
suggestion - even ones with demonstrated operational and financial advantages. During these periods, customers may defer, or
even cancel, orders for products and systems for which they have previously contracted, or given indications of interest.
Also, because our business is concentrated largely in the industrial sector, we do not benefit from countervailing fluctuations in
consumer demand. As a result, our business may be more significantly affected by the consequences of a general economic
slowdown than other segments of our industry, and may also take longer to recover from the effects of a slowdown.
Our backlog is subject to customer cancellation.
Many of the orders that comprise our backlog may be canceled by our customers without penalty. Our customers, particularly
for our sensors segment products, often cancel orders when business is weak and inventories are excessive, a situation that we
have previously experienced during periods of economic slowdown. Therefore, we cannot be certain that the amount of our
backlog accurately forecasts the level of orders that will ultimately be delivered. Our results of operations could be adversely
impacted if customers cancel a material portion of orders in our backlog.
The complexity of our sophisticated measurement systems may require costly corrections if design flaws are found.
Our measurement systems combine sophisticated electronic hardware and computer software. We believe that the sophistication
of our systems contributes to their competitive advantage over similar products offered by other system integrators. We go to
substantial lengths to assure that our systems are free of design flaws when they are delivered to our customers for installation
and testing. However, due to the systems’ complexity, design flaws may occur and require correction. If the requisite
corrections are substantial, or difficult to implement due to the systems’ complexity, we may not be able to recover the costs of
correction and retesting, with the result that our profit margins on these systems could be substantially reduced, or even negated
by losses, and our results of operations could be materially and adversely affected.
Our results are sensitive to raw material availability, quality, and cost.
Although most materials incorporated in our products are available from a number of sources, certain materials are available
only from a relatively limited number of suppliers. We generally maintain a supply of strategic raw materials for continuity and
risk management. Our customers would need significant advance notification to qualify alternative materials, if we had to use
them. Alternative suppliers are available worldwide for most of our raw materials, but significant time (up to 12 months) would
be required to qualify new suppliers and establish efficient production scheduling.
Certain metals used in the manufacture of our products are traded on active markets, and can be subject to significant price
volatility and sourcing challenges.
Our results of operations may be materially and adversely affected if we have difficulty obtaining certain raw materials, if the
quality of available raw materials deteriorates, if there are significant price changes for these raw materials, or if compliance
with the laws and regulations described below proves costly and time-consuming. For periods in which the prices of these raw
materials are rising, we may be unable to pass on the increased cost to our customers, which would result in decreased margins
for the products in which they are used. For periods in which the prices are declining, we may be required to write down our
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inventory carrying cost of these raw materials, since we record our inventory at the lower of cost or market. Depending on the
extent of the difference between market price and our carrying cost, this write-down could have a material adverse effect on our
net earnings. We also may need to record losses for adverse purchase commitments for these materials in periods of declining
prices.
Pursuant to the SEC’s “conflict minerals” rules, reporting companies that determine that certain metals, dubbed “conflict
minerals” by the SEC (which include tantalum, gold, tin, and tungsten sourced from the Democratic Republic of the Congo or
adjoining countries), are necessary to the functionality or production of a product they manufacture, or contract to have
manufactured, must file a specialized disclosure form with the SEC. We use raw materials that are subject to conflict minerals
rules. The compliance with the SEC's related disclosure requirements may affect the sourcing and availability of minerals used
in the manufacture of our products. Also, because our supply chain is complex, we may face reputational challenges with our
customers and other stakeholders if we are unable to materially verify the origins of all “in scope” metals used in our products.
Our product sales may be adversely affected by changes in product classification levels under various qualification and
specification standards.
Certain of our products must be qualified or approved under various military and aerospace specifications and other standards.
We have qualified certain of our foil resistor products under various military specifications approved and monitored by the
DLA, and under certain European military specifications, and various aerospace standards approved by NASA and the ESA.
Qualification and specification levels are based in part upon product failure rate. We must continuously perform tests on our
products, and for products that are qualified, the results of these tests must be reported to the qualifying organization. Certain of
our force sensor products are approved by the NTEP and OIML. Our on-board weighing systems must meet approved standards
to make them legal-for-trade. If a product fails to meet the requirements for the applicable classification level or other
approval, the product’s classification or approval may be suspended or reduced to a lower level. During the time that the
classification is suspended or reduced to a lower level, net revenues and earnings attributable to that product may be adversely
affected.
Failure to maintain effective internal control over financial reporting could adversely affect our ability to meet our reporting
requirements.
Effective internal control over financial reporting is necessary for us to provide reasonable assurance with respect to our
financial reports, and to effectively prevent fraud. Internal control over financial reporting may not prevent or detect
misstatements because of inherent limitations, including the possibility of human error, the circumvention or overriding of
controls, or fraud. Therefore, even effective internal control over financial reporting can provide only reasonable assurance with
respect to the preparation and fair presentation of financial statements. If we cannot provide reasonable assurance with respect
to our financial reports and effectively prevent fraud, our operating results could be harmed.
We are subject to costs and liabilities related to current and future environment, health and safety laws and regulations, as well
as changes in the global climate, that could adversely affect our business.
Our manufacturing operations, products and packaging are subject to environmental laws, rules, regulations and standards.
These laws govern air emissions, wastewater discharges, the handling, disposal, and remediation of hazardous substances,
wastes, and certain chemicals used or generated in our manufacturing processes, and workplace health and safety. Compliance
with these laws, rules, regulations and standards can require significant expenditure of financial and employee resources.
In addition, changes to such laws, rules, regulations, and standards are made or proposed regularly, and some of the proposals,
if adopted, might, directly or indirectly, adversely affect the operating results of one or more of our operating segments.
Additionally, increased regulation of emissions linked to climate change, including greenhouse gas (carbon) emissions and
other climate-related regulations, could potentially increase the cost of our operations due to increased costs of compliance,
increased cost of fossil fuel-based inputs and increased cost of energy intensive raw material inputs.
Federal, state, provincial, and local laws and requirements pertaining to workplace health and safety conditions are significant
factors in our business. Changes to these laws and requirements may result in additional costs and actions across the affected
country or region. Various government agencies may promulgate new or modified legislation, and implement special emphasis
programs and enforcement actions that could impact particular Company operations.
Federal, state, provincial, foreign, and local environmental requirements relating to air, soil, and water quality, handling,
discharge, storage, and disposal of a variety of substances (including per- and polyfluoroalkyl substances, or PFAS), and
climate change are also significant factors in our business, and changes to such requirements generally result in an increase to
our costs of operations. Although we have never been involved in any environmental matter that has had a material adverse
impact on our overall operations, there can be no assurance that in connection with any past or future operation, acquisition or
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otherwise, we will not be obligated to address environmental matters that could have a material adverse impact on our business,
financial condition, and results of operations.
The failure by us to comply with applicable environmental, health and safety requirements could result in fines, penalties,
enforcement actions, third-party claims for property damage and personal injury, requirements to clean up property or to pay for
the costs of cleanup, or regulatory or judicial orders requiring corrective measures, which could have a material adverse effect
on our business, financial condition or results of operations. Additionally, such actions could negatively impact our reputation
in the impacted geographic market and more broadly.
Our credit facilities subject us to financial and operating restrictions.
We maintain a revolving credit facility with banks that we use, or may use, for working capital, acquisition financing, and other
purposes. This credit facility subjects us to certain restrictions which may affect, and in some cases significantly limit or
prohibit, among other things, our ability to:
borrow additional funds;
pay dividends or make other distributions;
repurchase our common stock;
•
•
•
• make investments, including capital expenditures;
•
•
engage in transactions with affiliates or subsidiaries; or
create liens on our assets.
Our credit facility requires us to maintain certain financial ratios. If we fail to comply with the covenant restrictions contained
in the credit facility, that failure could result in termination of the facility, and all amounts outstanding could become
immediately payable.
A significant portion of our cash and cash equivalents and short-term investments balances are held by our non-U.S.
subsidiaries.
We generate a significant amount of cash and profits from our non-U.S. subsidiaries. As of December 31, 2023, 92% of our
cash and cash equivalents and short-term investments were held by subsidiaries outside of the United States. Any repatriation
of such funds could incur local withholding tax in the source and intervening foreign jurisdictions. These amounts could also
be subject to certain U.S. state taxes.
Changes in our tax rate or exposure to additional income tax liabilities could affect our profitability. In addition, audits by tax
authorities could result in additional tax payments for prior periods.
We are subject to income taxes in the U.S. and in various foreign jurisdictions. Domestic and international tax liabilities are
subject to the allocation of income among various tax jurisdictions. Our effective tax rate can be affected by changes in the mix
of earnings in countries with differing statutory tax rates (including as a result of business acquisitions and dispositions),
changes in the valuation of deferred tax assets and liabilities, accruals related to contingent tax liabilities, the results of audits
and examinations of previously filed tax returns, and changes in tax laws.
For example, in August 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law. The IRA includes a 15%
corporate alternative minimum tax that applies to companies that have a three-year average of at least $1 billion in adjusted
profits and is effective for taxable years beginning after December 31, 2022. The IRA also includes a 1% excise tax on
repurchases of stock occurring after December 31, 2022.
Any of these factors may adversely affect our tax rate and decrease our profitability. The amount of income taxes we pay is
subject to audit by U.S. federal, state, local, and foreign tax authorities. If these tax audits result in assessments, our future
results may be unfavorably impacted.
As a global business, we have a complex tax structure, and there is a risk that the tax authorities will disagree with our transfer
pricing.
We are subject to complex transfer pricing regulations in the U.S. and foreign countries in which we operate. Transfer pricing
regulations generally require that transactions between related companies be determined comparable to transactions on an arm’s
length basis and that contemporaneous documentation be maintained to support the pricing used. Although transfer pricing
standards are generally similar in many of the countries in which we operate, there is still a relatively high degree of uncertainty
and inherent subjectivity in complying with these requirements. This topic has received additional scrutiny in recent years,
including the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting project. To the
extent that any tax authority disagrees with our transfer pricing practices, we could incur significant costs to defend our position
and could be subject to significant additional tax liabilities, interest, and penalties.
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We may not be able to realize our deferred tax assets which would adversely impact tax expense in future periods.
We regularly assess the ability to realize deferred tax assets in each jurisdiction in which we operate based on a number of
factors, including historic operating results, estimates of future earnings, the economic environment, the nature and character of
the income, and the existence of cost effective tax planning strategies. This assessment requires significant judgment. If we
determine that deferred tax assets are not “more likely than not” to be realized, we record a valuation allowance to reduce
deferred tax assets to a level that is expected to be realized. If we subsequently determine that realization becomes “more likely
than not”, a valuation allowance will be reversed. Any increase or decrease in our valuation allowances could have a
significant impact on our financial results.
We use the mark Vishay under license from Vishay Intertechnology, which could result in product and market confusion.
We use the mark Vishay as part of our name and in connection with many of our products. Our use of the Vishay mark is
governed by an agreement between us and Vishay Intertechnology, giving us a perpetual, royalty-free, worldwide license for
the use of the mark. We believe that it is important that we continue the use of the Vishay name, to a certain extent, in order to
benefit from the reputation of the Vishay brand, which was first used in connection with our foil resistors and strain gages when
Vishay Intertechnology was founded over 50 years ago.
There are risks associated with our use of the Vishay mark, however, because both we, and Vishay Intertechnology, use the
Vishay mark, confusion could arise in the market regarding the products offered by the two companies, and there could be a
misplaced perception of our continuing to be associated with Vishay Intertechnology. Also, any negative publicity associated
with one of the two companies in the future could adversely affect the public image of the other. Finally, Vishay
Intertechnology will have the right to terminate the license agreement, in certain extreme circumstances, if we are in material
and repeated breach of the terms of the agreement, which would likely have an adverse effect on us and our business.
Risks relating to our operations outside the United States
We attempt to improve profitability by operating in countries in which manufacturing efficiencies may be achieved, but the shift
of operations to these regions may entail considerable expense.
Our strategy is aimed at achieving significant production cost savings through the transfer and expansion of manufacturing
operations to and in countries in which we have existing capacity, as well as countries with lower production costs or other
benefits, such as India. During this process, we may experience under-utilization of certain plants and factories in higher-cost
regions, and capacity constraints in plants and factories located in lower-cost regions. Also, we may experience delays in the
expected transition from a higher-cost location to a lower-cost one that results in greater than expected use of the higher-cost
facility. This transitional utilization may result initially in production inefficiencies and higher costs. These costs include those
associated with compensation in connection with workforce reductions and plant closings in the higher-cost regions, start-up
expenses, manufacturing and construction delays, and increased depreciation costs in connection with the initiation or
expansion of production in lower-cost regions. In addition, as we implement transfers of certain of our operations, we may
experience strikes or other types of labor unrest as a result of layoffs or termination of our employees in higher-cost countries.
In connection with the transfer of manufacturing operations to lower-cost countries, and upgrading of existing facilities in
higher-cost countries, we are also increasing the level of automation in our plants to optimize our capital and labor resources in
production, inventory management, quality control, and warehousing. Although we have substantial experience with
automation in several of our plants in higher-cost countries, there are risks in automating plants which previously did not use a
significant amount of automation, including the possibility of inefficiencies and higher operating costs in the transition from
manual to automated operations. If the transition extends longer than anticipated, we could suffer product yield inefficiencies,
contributing to higher product costs and increasing the time it will take for us to achieve a return on our investment in the
capital equipment involved in the automation process. Furthermore, any layoffs or termination of our employees as a result of
increased automation may lead to strikes or other types of labor unrest. If we experience these types of inefficiencies, they
could have an adverse effect on our operating results, customer relationships, and financial condition.
Current and future tariffs, trade regulation or other restrictions may adversely impact our business, financial condition and
results of operations.
We have manufacturing operations in India, China, Europe, Canada, Israel and the United States, as well as in other countries.
Significant tariffs or other restrictions which are placed on Indian, Chinese, European, Canadian or Israeli imports to the United
States, or any related counter-measures which are taken by the countries involved, may materially harm our revenues and
results of operations.
Tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. Certain foreign
governments have instituted or are considering imposing trade sanctions on certain U.S. goods. We cannot predict future trade
policy or the terms of any renegotiated trade agreements and their impacts on our business. The adoption and expansion of trade
restrictions, the occurrence of a trade war, or other governmental actions related to tariffs, quotas, duties, taxes or trade
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agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, and our
suppliers, which in turn could adversely impact our business, financial condition and results of operations.
We are subject to the risks of political, economic, health, and military instability in countries outside the United States in which
we operate.
Some of our products are produced in Israel, India, China, and other countries which are particularly subject to risks of political,
economic, health and military instability. This instability could result in wars, riots, nationalization of industry, currency
fluctuations, and labor unrest or unavailability. These conditions could have an adverse impact on our ability to manufacture,
ship and operate in these regions and, depending on the extent and severity of these conditions, could result in a reduction in
customer orders and sales to certain regions and end-markets and materially and adversely affect our overall financial condition
and operating results.
We have principal manufacturing facilities and operations located in Israel. Accordingly, our business is directly influenced by
the political, economic and military conditions affecting Israel at any given time. Since the establishment of the State of
Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries, terrorist organizations
and other militant groups, including the current war between Israel and Hamas. We have never experienced any material
interruption in our operations attributable to these factors, in spite of several Middle East crises, including the current war. In
response to conflict in or around Israel, we could in the future temporarily discontinue production in Israel for the safety of our
employees. We could also face future production slowdowns or interruptions at either of our manufacturing locations in Israel
due to the impacts of conflicts, such as the war between Israel and Hamas, including personnel absences as a number of our
employees have been called to active military duty, or due to other resource constraints such as the inability to source materials
for production. The intensity and duration of Israel’s current war against Hamas are difficult to predict as are such war’s
implications on our operations and on the global economy. A change in the security and political situation in Israel and in the
economy could have a material adverse effect on our business, operating results and financial condition.
We are subject to foreign currency exchange rate risks which may impact our results of operations.
We are exposed to foreign currency exchange rate risks, particularly due to market values of transactions in currencies other
than the functional currencies of certain subsidiaries.
Our significant foreign subsidiaries are located in the United Kingdom, Canada, Germany, Israel, Japan, and India. Our
operations in Europe, Canada and certain locations in Asia primarily generate and expend cash in local currencies. Our
operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, but these subsidiaries also have
significant transactions in local currencies. Our exposure to foreign currency exchange rate risk is more pronounced in
situations such as our operations in Canada, India, Israel, and China - where costs, such as production labor costs are
predominantly paid in local currencies while the sales revenue for those products is predominantly denominated in U.S. dollars.
As of December 31, 2023, we did not have in place any arrangements to mitigate or hedge against exposures relating to
fluctuations in foreign currency exchange rate.
A change in the mix of the currencies in which we transact our business could have a material effect on results of operations.
Furthermore, the timing of cash receipts and disbursements could have a material effect on our results of operations,
particularly if there are significant changes in exchange rates in a short period of time.
Our global operations are subject to extensive anti-corruption laws and other regulations.
The U.S. Foreign Corrupt Practices Act, U.K. Bribery Act and similar foreign anti-corruption laws generally prohibit
companies and their intermediaries from making improper payments or providing anything of value to improperly influence
foreign government officials for the purpose of obtaining or retaining business, or obtaining an unfair advantage. Recent years
have seen a substantial increase in the global enforcement of anti-corruption laws. Our continued operation and expansion
outside the United States, including in developing countries, could increase the risk of such violations. Despite meaningful
measures that we undertake to facilitate lawful conduct, these measures may not always prevent reckless or criminal acts by our
employees or agents. Any such improper actions could damage our reputation and subject us to civil or criminal investigation in
the United States and in other jurisdictions, could lead to substantial civil and criminal, monetary and non-monetary penalties
and could cause us to incur significant legal and investigative fees.
Our business and results of operations may be materially adversely affected by compliance with import and export laws.
We must comply with various laws and regulations relating to the import and export of products, services and technology from
the U.S. and other countries having jurisdiction over our operations, which may affect our transactions with certain customers,
business partners and other persons. In certain circumstances, export control and economic sanctions regulations may prohibit
the export of certain products, services, and technologies and in other circumstances, we may be required to obtain an export
license before exporting a controlled item. The length of time required by the licensing processes can vary, potentially delaying
the shipment of products or performance of services and the recognition of the corresponding revenue. In addition, failure to
comply with any of these regulations could result in substantial civil and criminal, monetary and non-monetary penalties,
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disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
In 2022, we determined that certain export shipments of products from one of our subsidiaries did not comply with the filing
requirements of U.S. export administration and foreign trade regulations, and we voluntarily self-disclosed such non-
compliance to the U.S. federal government. While non-compliance with such filing requirements could result in fines and
penalties, we do not believe that the foregoing matters will have a material adverse effect on our business or results of
operations, cash flows or financial condition. Moreover, any changes in export control or sanctions regulations may further
restrict the export of our products or services, and the possibility of such changes requires constant monitoring to ensure we
remain compliant. Any restrictions on the export of our products or product lines could have a material adverse effect on our
competitive position, results of operations, cash flows or financial condition.
Risks Relating to Our Common Stock
The holders of Class B convertible common stock have effective voting control of our company.
We have two classes of common stock: common stock and Class B convertible common stock. The holders of common stock
are entitled to one vote for each share held, while the holders of Class B convertible common stock are entitled to 10 votes for
each share held. The ownership of Class B convertible common stock is highly concentrated, and holders of Class B
convertible common stock effectively can cause the election of directors and the approval or disapproval of other matters
requiring stockholder approval. Mrs. Ruta Zandman, the widow of the late founder of our technology, Dr. Felix Zandman,
controls the voting of, solely or on a shared basis with Marc Zandman (Dr. Felix Zandman's son and a member of our Board of
Directors) and Ziv Shoshani (Mrs. Ruta Zandman’s nephew and our Chief Executive Officer and a member of our Board of
Directors), approximately 76.9% of our Class B convertible common stock, representing 34.9% of the total voting power of our
capital stock as of December 31, 2023. Holders of our Class B convertible common stock may act in ways that are contrary to,
or not in the best interests of, holders of our common stock. The voting rights of the holders of our Class B convertible common
stock effectively give such holders the ability to prevent transactions that would result in a change in control of us, including
transactions in which holders of our common stock might otherwise receive a premium for their shares over the then-current
market price.
Certain provisions of our certificate of incorporation and bylaws may reduce the likelihood of any unsolicited acquisition
proposal or potential change of control that you might consider favorable.
Our bylaws contain provisions that could be considered “anti-takeover” provisions because they make it harder for a third party
to acquire us without the consent of our incumbent board of directors. Under these by-law provisions:
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•
stockholders may not change the size of the board of directors or, except in limited circumstances, fill vacancies on the
board of directors;
stockholders may not call special meetings of stockholders;
stockholders must comply with advance notice provisions for nominating directors or presenting other proposals at
stockholder meetings; and
our Board of Directors, may without stockholder approval, issue preferred shares and determine their rights and terms,
including voting rights, or adopt a stockholder rights plan.
These provisions could have the effect of discouraging an unsolicited acquisition proposal or delaying, deferring, or preventing
a change of control transaction that might involve a premium price or otherwise be considered favorable by our stockholders.
General Risk Factors
Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could adversely
affect our financial position, results of operations and cash flows.
Our financial position, results of operations and cash flows could be adversely affected by difficult conditions and significant
volatility in the capital, credit and commodities markets and in the overall worldwide economy. Recent global events have
adversely affected and are continuing to adversely affect workforces, organizations, economies, and financial markets globally,
leading to economic downturns, inflation, and increased market volatility. The ongoing wars between Israel and Hamas and
between Russia and Ukraine, escalating tensions in the South China Sea, Red Sea and Yemen, high inflation, increasing interest
rates, bank failures and associated financial instability and crises, and supply chain issues have added to global economic and
market volatility. Any uncertainty about the federal budget or the debt limit in the United States could have a negative effect on
the United States and global economy. The impact that these factors might have on us and our business is uncertain and cannot
be estimated at this time. The difficult conditions in these markets and the overall economy affect our business in a number of
ways. For example:
•
Although we believe we have sufficient liquidity to run our business, under extreme market conditions, there can be no
assurance that financing, if needed, would be available or sufficient, and, in such a case, we may not be able to
successfully obtain financing on favorable terms, or at all.
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Continuing market volatility can exert downward pressure on our stock price, which could make it more difficult or
unfavorable for us to raise additional capital in the future.
Economic conditions could result in customers in our markets experiencing financial difficulties, including limited
liquidity and their inability to obtain financing or electing to limit spending because of the economy which may result,
for example, in customers’ inability to pay us at all or on a timely basis.
We might require additional capital to support business growth and this capital might not be available.
We intend to continue to make investments to support our business growth and may require additional funds to respond to
business challenges or opportunities, including the need to develop new offerings or enhance our existing offerings, enhance
our operating infrastructure, or acquire complementary businesses and technologies. Accordingly, we may need to engage in
equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or
convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue
could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing secured by
us in the future could involve additional restrictive covenants relating to our capital raising activities and other financial and
operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities,
including potential acquisitions.
In addition, obtaining financing may be adversely affected by rising interest rates or other factors. We may not be able to
obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on
terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business
challenges could be significantly limited.
Our future success is substantially dependent on our ability to attract and retain highly qualified technical, managerial,
marketing, finance, and administrative personnel.
The competitive environment of our business requires us to attract and retain highly qualified personnel to develop
technological innovations and bring them to market on a timely basis. Our complex operations also require us to attract and
retain highly qualified administrative personnel in functions such as legal, tax, accounting, business development, financial
reporting, and treasury. The market for personnel with such qualifications is highly competitive. We have not entered into
employment or non-competition agreements with many of our key personnel.
The loss of the services of, or the failure to effectively recruit, qualified personnel, including for key executive positions, could
have a material adverse effect on our business.
We are exposed to, and may be adversely affected by, interruptions to our computer and information technology systems and
sophisticated cyber-attacks.
We rely on our information technology systems and networks in connection with many of our business activities. Some of these
networks and systems are managed by third party service providers and are not under our direct control. Our operations
routinely involve receiving, storing, processing, and transmitting sensitive information pertaining to our business, customers,
suppliers, employees, and other sensitive matters. Any cyber incidents could materially disrupt operational systems; result in
loss of trade secrets or other proprietary or competitively sensitive information; compromise personally identifiable information
regarding customers, employees or other persons; and jeopardize the security of our facilities. Because techniques used to
obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until they are launched
against a target, we may be unable to anticipate these techniques, or to implement adequate preventative measures. Information
technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both
frequency and sophistication, including as a result of ongoing military conflicts, certain U.S. foreign relations, and increased
remote work arrangements, and could create financial liability, subject us to legal or regulatory sanctions, or damage our
reputation with customers, suppliers, and other stakeholders. We continuously seek to maintain a robust program of information
security and controls, but the impact of a material information technology event could have a material adverse effect on our
competitive position, reputation, results of operations, financial condition, and cash flows.
Interruptions in our information technology systems could adversely affect our business.
We rely on the efficient and uninterrupted operation of complex information technology systems and networks to operate our
business. Any significant system or network disruption, including, but not limited to, new system implementations, computer
viruses, security breaches, facility issues or energy blackouts could have a material adverse impact on our operations and results
of operations. Such network disruption could result in a loss of the confidentiality of our intellectual property or the release of
sensitive competitive information or customer or employee personal data. Any loss of such information could harm our
competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages
caused by the disruptions or security breaches. We have implemented protective measures to prevent against and limit the
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effects of system or network disruptions, but there can be no assurance that such measures will be sufficient to prevent or limit
the damage from any future disruptions and any such disruption could have a material adverse impact on our business and
results of operations.
Third-party service providers, such as subcontractors, distributors and vendors have access to certain portions of our sensitive
data. In the event that these service providers do not properly safeguard our data that they hold, security breaches and loss of
our data could result. Any such loss of data by our third-party service providers could have a material adverse impact on our
business and results of operations.
We may use artificial intelligence in our business, and challenges with properly managing its use could adversely affect our
business.
We may incorporate artificial intelligence (“AI”) solutions into our business, processes, or products, and applications of AI may
become important in our operations over time. Our competitors or other third parties may incorporate AI into their businesses
more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our
results of operations. Additionally, if the types of information that AI applications assist in producing are or are alleged to be
deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected. The rapid
evolution of AI, including potential government regulation of AI, may require significant resources to develop, test and
maintain our implementations of AI.
Unexpected events, such as a natural disaster, could disrupt our operations and adversely affect our results of operations.
We have manufacturing and other facilities in countries around the world. Unexpected events, including fires or explosions at
facilities; natural disasters, such as flooding, hurricanes, and earthquakes; pandemics; outbreaks of disease or illness; war or
terrorist activities; civil unrest; unplanned outages; supply or labor disruptions; and failures of equipment or systems at any of
our facilities could adversely affect our results of operation. If adverse conditions were to arise with respect to any of our
facilities as a result of a natural disaster or other unexpected event, they may result in customer disruption, physical damage to
one or more key operating facilities, the temporary closure of one or more key operating facilities, the temporary disruptions of
information systems, and/or an adverse effect on our results of operations.
Our stock price could become more volatile and investments could lose value.
The market price of our common stock, and the number of shares traded each day, has experienced significant fluctuations and
may continue to fluctuate significantly. The market price for our common stock may be affected by a number of factors,
including, but not limited to:
•
•
•
•
•
•
•
•
shortfalls in our expected net revenue, earnings or key performance metrics;
changes in recommendations or estimates by securities analysts;
the announcement of new products by us or our competitors;
quarterly variations in our or our competitors’ results of operations;
a change in our dividend or stock repurchase activities;
developments in our industry or changes in the market for technology stocks;
changes in rules or regulations applicable to our business; and
other factors, including economic instability, inflation, COVID-19, labor shortages, supply chain disruptions and
changes in political or market conditions.
A significant drop in our stock price could expose us to costly and time consuming litigation, which could result in substantial
costs, and divert management’s attention and resources, resulting in an adverse effect on our business.
Also, given our market capitalization and trading volume fluctuations, it is possible that there will be less market and
institutional interest in our shares, and that we will not attract substantial coverage in the analyst community. As a result, the
trading market for our shares may be less liquid, making it more difficult for investors to dispose of their shares at favorable
prices, and investors may have less independent information and analysis available to them concerning our company.
Your percentage ownership of our common stock may be diluted in the future.
Your percentage ownership of our common stock may be diluted in the future because of equity awards that we expect will be
granted to our directors, officers, and employees. The Vishay Precision Group, Inc. 2022 Stock Incentive Program, as may be
amended from time to time, provides for the grant of equity-based awards, including restricted stock, restricted stock units,
stock options, and other equity-based awards to our directors, officers, and other employees, advisors and consultants.
- 23 -
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY
The Company’s Board of Directors (the “Board”) recognizes the critical importance of maintaining the trust and confidence of
our customers, clients, suppliers, business partners, employees and investors with respect to cybersecurity matters. The Board is
actively involved in oversight of the Company’s risk management program, and cybersecurity represents an important
component of the Company’s overall approach to enterprise risk management (“ERM”). The Company’s cybersecurity policies,
standards, processes and practices are fully integrated into the Company’s ERM program and are based on recognized
frameworks established by the National Institute of Standards and Technology. In general, the Company seeks to address
cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the confidentiality,
security and availability of the information that the Company collects and stores by identifying, preventing, assessing,
managing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Risk Management and Strategy
As one of the critical elements of the Company’s overall ERM approach, the Company’s cybersecurity program is focused on
the following key areas:
•
•
• Governance: As discussed in more detail under the heading “Corporate Governance and Oversight,” the Board’s
oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the “Audit
Committee”), which regularly interacts with and receives reports from the Company’s ERM function, the Vice
President of IT and Digital, the Company’s Chief Information Security Officer (“CISO”), and other members of
management.
Collaborative Approach: The Company has integrated cybersecurity risk management into its broader risk
management framework to promote a Company-wide culture of cybersecurity risk management. To that end, the
Company has implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating
cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt
escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such
incidents can be made by management in a timely manner.
Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s
information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-
malware functionality and access controls, which are evaluated and improved through vulnerability assessments and
cybersecurity threat intelligence.
Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident
response and recovery plans that fully address the Company’s response to a cybersecurity incident, and such plans are
tested and evaluated on a regular basis.
Third-Party Risk Management: The Company maintains a comprehensive, risk-based approach to identifying and
overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users
of the Company’s systems, as well as the systems of third parties that could adversely impact our business in the event
of a cybersecurity incident affecting those third-party systems. The Company conducts security assessments of all of
its electronic information-related third-party service providers before the Company engages them, and the Company
maintains policies and procedures to oversee and identify cybersecurity risks associated with its use of third-party
service providers.
Education and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity
threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to
communicate the Company’s evolving information security policies, standards, processes and practices.
•
•
•
The Company engages in the periodic assessment and testing of the Company’s policies, standards, processes and practices that
are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including audits,
assessments, threat modeling, penetration and vulnerability testing and other exercises focused on evaluating the effectiveness
of our cybersecurity measures and planning. The Company regularly engages third parties, including consultants and outside
monitoring agencies, to perform assessments on our cybersecurity measures, including information security maturity
assessments, audits and independent reviews of our information security control environment and operating effectiveness. The
results of such assessments, audits and reviews are reported to the Audit Committee during management’s annual update to the
Audit Committee and the Board, and the Company updates and adjusts its cybersecurity policies, standards, processes and
practices as necessary based on the information provided by these assessments, audits and reviews.
- 24 -
Management’s Role in Managing Risk
The Vice President of IT and Digital, along with the CISO, have developed a strategy and multi-year plan for cybersecurity and
regularly update it based on evolving technology trends. The Audit Committee reviews the Company’s information security
program, including cybersecurity controls, annually (and/or if and when a significant event occurs as defined by its Incident
Management policy). The Audit Committee updates the Board annually and upon request of the Board as detailed under the
Corporate Governance and Oversight Section.
Our Vice President of IT and Digital, holds a Bachelor of Science in Computer Science and brings a wealth of experience from
managing IT organizations in large, publicly traded companies, in addition to a distinguished background of service in the
Israeli army, where she was responsible for managing classified information. Our CISO has an impressive 20-plus years in the
field of cybersecurity, underpinned by a Bachelor's degree specializing in Knowledge and Information Management. Our
CISO's extensive experience includes a period of 12 years during which he was employed by the Government of Israel, where
he managed classified information systems and teams, a role that demands the highest levels of diligence and expertise in
information security.
Through third party service providers and attendance at seminars, Vice President of IT and Digital and CISO are regularly
informed about the latest developments in cybersecurity, including potential threats and innovative risk management
techniques. This ongoing knowledge acquisition enhances our processes to identify, prevent, mitigate and remediate of
cybersecurity threats and cybersecurity incidents.
Together, our Vice President of IT and Digital and CISO lead a dynamic, cross-functional team that includes relevant
stakeholders from all Company divisions. This team plays a pivotal role in raising cybersecurity awareness throughout the
Company, ensuring that every employee is informed and cautious about potential cyber threats. They are committed to keeping
our Company's management and Board regularly informed on cybersecurity matters, ensuring transparency and proactive
management of digital risks. Additionally, they actively collaborate with division managers, participating in divisional
management meetings to identify and protect sensitive information. Their involvement at this level ensures that cybersecurity is
integrated into every aspect of our operations, aligning with our broader strategic objectives.
To date, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are
not reasonably likely to materially affect the Company, including its business strategy, results of operations or financial
condition.
Corporate Governance and Oversight
The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this
domain. The Audit Committee is composed of directors who have diverse qualifications and experiences.
Significant cybersecurity matters, and strategic risk management decisions are escalated to the Audit Committee and, as
appropriate, the Board, ensuring that such bodies maintain comprehensive oversight and can provide guidance on critical
cybersecurity issues.
The Audit Committee regularly reports to the Board regarding the Audit Committee’s oversight of cybersecurity matters, such
as the periodic assessment and testing of the Company’s policies, standards, processes and practices and the risks identified in
such assessment and testing.
Item 2. PROPERTIES
As of December 31, 2023, our major facilities consisted of:
Approx. Available
Space (square feet)
Owned facilities
Leased facilities
Total facilities
United States
Other Countries
Total
226,000
73,000
299,000
471,150
272,400
743,550
697,150
345,400
1,042,550
Our leased facility in Modi'in Israel represents approximately 45% of the total leased square footage in Other Countries.
- 25 -
Our corporate headquarters are located at 3 Great Valley Parkway, Suite 150, Malvern, PA 19355.
In the opinion of management, our properties and equipment generally are in good operating condition and are adequate for our
present needs. We do not anticipate difficulty in renewing leases as they expire, or in finding alternative facilities.
Item 3. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. The
Company believes that the foregoing matters will not have a material adverse effect on the Company’s business or its financial
condition, results of operations, and cash flows.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
- 26 -
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange under the symbol VPG. The Board of Directors may only declare
dividends or other distributions with respect to the common stock or the Class B convertible common stock if it grants such
dividends or distributions in the same amount, per share, with respect to the other class of stock. Stock dividends or
distributions, on any class of stock, are payable only in shares of stock of that class. Shares of either common stock or Class B
convertible common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally.
Holders of record of our common stock totaled approximately 676 at February 29, 2024.
We have two classes of common stock: common stock and Class B convertible common stock. The holders of common stock
are entitled to one vote for each share held, while the holders of Class B convertible common stock are entitled to 10 votes for
each share held. At February 29, 2024, we had outstanding 1,022,887 shares of Class B convertible common stock, par value
$0.10 per share. Currently, the holders of VPG’s Class B convertible common stock hold approximately 45.3% of the voting
power of our Company. Mrs. Ruta Zandman, the widow of the late founder of our technology, Dr. Felix Zandman, controls the
voting of, solely or on a shared basis with Marc Zandman (Dr. Felix Zandman's son and a member of our Board of Directors)
and Ziv Shoshani (Mrs. Ruta Zandman's nephew, our Chief Executive Officer and a member of our Board of Directors),
approximately 76.9% of our Class B convertible common stock, representing 34.9% of the total voting power of our capital
stock as of December 31, 2023.
The following table provides information about repurchases of the Company's common stock during the three-month period
ended December 31, 2023
October 1, 2023 to November 1, 2023
Total Number of
Shares Purchased
37,562
November 2, 2023 to December 2, 2023
December 3, 2023 to December 31, 2023
68,073
47,572
Average Price
Paid Per Share
$
$
$
31.93
29.91
31.19
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under the
Plans (a)
37,562
68,073
47,572
442,019
373,946
326,374
153,207
Total
326,374
(a) On August 8, 2022, the Board of Directors (the “Board”) of the Company authorized the repurchase of up to 600,000
shares of the Company’s outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan was
originally set to expire on August 11, 2023, and the Board authorized purchases thereunder to be made through an issuer
repurchase plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open
market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18
under the Exchange Act. On August 8, 2023, the Company announced that its Board of Directors extended the term of the
previously approved stock repurchase plan to August 9, 2024. From August 8, 2022 to December 31, 2023, the Company had
repurchased an aggregate of 273,626 shares under the Stock Repurchase Plan.
153,207
- 27 -
Stock Performance Graph
The graph and table below compare the cumulative total stockholder return on the Company’s common stock over a five year
period, with the returns on the Russell 2000 Stock Index, and a peer group of companies selected by our management. The peer
group is made up of eight publicly held manufacturers of sensors, sensor-based equipment, and sensor-based systems.
Management believes that the product offerings of the peer group companies are more similar to our product offerings than
those of the companies contained in any published industry index. The return of each new peer issuer has been weighted
according to the respective issuer’s stock market capitalization. The graph and table assume that $100 had been invested at
December 31, 2018, and that all dividends were reinvested. The graph and table are not necessarily indicative of future
investment performance.
Vishay Precision Group, Inc.
Cumulative $
Russell 2000 Index
Peer Group
Cumulative $
Cumulative $
100.00
100.00
100.00
112.47
125.52
134.43
104.13
150.57
143.41
122.79
172.89
160.90
127.84
137.55
128.11
112.67
160.84
158.93
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
*The management selected peer group includes: CTS Corp., Luna Innovations Inc., inTEST Corporation, Kyowa, Spectris plc, TT Electronics plc, FARO
Technologies Inc., ESCO Technologies Inc.
Item 6. [Reserved]
- 28 -
Comparison of Cumulative Total ReturnAssumes Initial Investment of $100December 31, 2023Vishay Precision Group, Inc.Russell 2000 IndexPeer Group12/31/1812/31/1912/31/2012/31/2112/31/2212/31/2350.00100.00150.00200.00 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Overview
VPG is a global, diversified company focused on precision measurement and sensing technologies that help power the future by
bridging the physical world with the digital one. Many of our specialized sensors, weighing solutions, and measurement
systems are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets.
Our products are marketed under brand names that we believe are characterized as having a very high level of precision and
quality, and we employ an operationally diversified structure to manage our businesses.
Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial
and non-industrial applications, precision measurement and sensing technologies help ensure and deliver required levels of
quality of mission-critical or high-value data. VPG’s products are often at the first stage of a data value chain (i.e., the process
of converting the physical world into a digital format that can be used for a specific purpose) and as such impact the
effectiveness of vast number of critical, high-value downstream processes. Over the past few years, we have seen a broadening
of precision sensing applications in both our traditional industrial markets and new markets, due to the development of higher
functionality in our customers' end products. Our precision measurement solutions are used across a wide variety of end
markets upon which we focus, including test and measurement, industrial, transportation, steel, avionics, military and space, as
well as other markets such as agriculture, consumer, and medical. The Company has a long heritage of innovation in sensor
technologies that provide accuracy, reliability and repeatability that make our customers' products safer, smarter, and more
productive. As the functionality of customers' products continues to increase, and they integrate more precision measurement
sensors and related systems into their solutions, we believe this will offer substantial growth opportunities for our products and
expertise.
The impact of the recent Israel-Hamas war
In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on
civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located
along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths,
injuries and kidnapping of civilians and soldiers. Following the attack, Israel’s security cabinet declared war against Hamas and
a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks.
As of February 29, 2024 (the date of this filing), our operations in Israel have operated at near normal levels. The extent and
duration of the current war, as well as the possibility of further spread of the conflict to other countries in the region as well as
involving other political and military entities in the Middle East, poses risks to our operations and may lead to disruptions
which could adversely affect our business, prospects, financial condition and results of operations.
While sales to customers in Israel account for a relatively small portion of our revenues, our operations in Israel include
executive offices, which are the workplace for key executives including our chief executive officer, as well as two
manufacturing facilities located in the central part of Israel which manufacture products representing approximately 25 percent
of our total worldwide revenues. As of February 29, 2024, these facilities remain open and operational. We have implemented
a contingency plan that we believe will secure supply of materials and logistics, build safety stock of finished goods and
transfer these goods to our distribution centers outside of Israel, and we continue to take measures with regards to the safety of
our employees. We may, however, determine to temporarily discontinue production in Israel for the safety of our employees.
We could also face future production slowdowns or interruptions at either manufacturing location in Israel due to the impacts of
the war, including personnel absences as a number of our employees have been called to active military duty, or due to other
resource constraints such as the inability to source materials for production.
Overview of Financial Results
VPG reports in three product segments: Sensors segment, Weighing Solutions segment, and Measurement Systems segment.
The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions
segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The
Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials
development, and safety testing.
Net revenues for the year ended December 31, 2023 were $355.0 million compared to net revenues of $362.6 million for the
year ended December 31, 2022. Net earnings attributable to VPG stockholders for the year ended December 31, 2023 were
$25.7 million, or $1.88 per diluted share, compared to $36.1 million, or $2.63 per diluted share, for the year ended
December 31, 2022.
- 29 -
The results of operations for the years ended December 31, 2023 and 2022 include items affecting comparability as listed in the
reconciliations below. The reconciliations below include certain financial measures which are not recognized in accordance
with U.S. generally accepted accounting principles ("GAAP"), including adjusted gross profits, adjusted gross profit margin,
adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA,
and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance.
Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted
operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA do not have
uniform definitions. These measures, as calculated by VPG, may not be comparable to similarly titled measures used by other
companies. Management believes that these non-GAAP measures are useful to investors because each presents what
management views as our core operating results for the relevant period. The adjustments to the applicable GAAP measures
relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-
GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable
periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some
investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the
Company’s financial performance to that of its peer companies and competitors. Management believes that the Company’s non-
GAAP measures are regarded as supplemental to its GAAP financial results.
The items affecting comparability are (dollars in thousands, except per share amounts):
Fiscal Year Ended December 31,
2023
2022
2023
2022
2023
2022
2023
2022
Gross Profit
Operating Income
Net Earnings
Attributable to VPG
Stockholders
Diluted Earnings Per
share
As reported - GAAP
150,342
149,602
41,954
43,799
$ 25,707 $ 36,063 $
1.88 $
As reported - GAAP Margins
42.3 %
41.3 %
11.8 %
12.1 %
—
—
Acquisition purchase accounting
adjustments (a)
COVID-19 impact (c)
Start-up costs (d)
Restructuring costs
Foreign exchange (gain)/loss (e)
Less: Tax effect of reconciling items and
discrete tax items (f)
335
1,550
—
—
—
—
—
138
150
—
—
—
335
—
—
1,550
138
150
1,560
1,518
—
—
—
—
—
0.02
—
—
0.11
0.06
2.63
—
0.11
0.01
0.01
0.11
(0.26)
335
—
—
1,560
822
1,550
138
150
1,518
(3,579)
(1,245)
(44)
(0.10)
(0.01)
As Adjusted - Non GAAP
$ 150,677
$ 151,440
$ 43,849
$ 47,155
$ 29,669 $ 35,884 $
2.17 $
2.62
As Adjusted - Non GAAP Margins
42.4 %
41.8 %
12.4 %
13.0 %
Year ended
December 31, 2023
December 31, 2022
Net earnings attributable to VPG stockholders
$
25,707
$
Interest Expense
Income tax expense
Depreciation
Amortization
EBITDA
EBITDA MARGIN
Acquisition purchase accounting adjustments (a)
Restructuring costs
COVID-19 impact (b)
Start-up costs (c)
Foreign exchange (gain) loss (d)
ADJUSTED EBITDA
ADJUSTED EBITDA MARGIN
3,974
12,426
11,798
3,752
$
57,657
$
36,063
2,269
8,535
11,504
3,849
62,220
16.2 %
17.2 %
335
1,560
—
—
822
60,374
17.0 %
1,550
1,518
138
150
(3,579)
61,997
17.1 %
(a) Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of
products sold.
(b) COVID-19 impact is the net impact to the Company of costs incurred as a result of the COVID-19 pandemic, net of government subsidies received.
(c) Start-up costs in 2022 are associated with the ramp up of our new manufacturing facility in Israel.
- 30 -
(d)
Impact of foreign currency exchange rates on assets and liabilities.
Financial Metrics
We utilize several financial measures and 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, end-of-period backlog, book-to-bill ratio,
and inventory turnover.
Gross profit margin is gross profit shown as a percentage of net revenues. Gross profit is generally net revenues less costs of
products sold, but could also include certain other period costs. Gross profit margin is clearly a function of net revenues, but
also reflects our cost-cutting programs and our ability to contain fixed costs.
End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been
released by the customer for shipment 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.
Another 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 compared with the product that we ship during that period. A book-to-bill ratio that is greater than one
indicates that demand is higher than current revenues and manufacturing capacities, and it indicates that we may generate
increasing revenues in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand
compared to existing revenues and current capacities and may foretell declining sales.
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 quarter-end balance) for this same period. A higher level of
inventory turnover reflects more efficient use of our capital.
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, the end-of-period backlog, the book-to-bill ratio, and the inventory
turnover for our business as a whole during the five quarters beginning with the fourth quarter of 2022 and through the fourth
quarter of 2023 (dollars in thousands):
Net revenues
4th Quarter
2022
96,240
$
1st Quarter
2023
88,864
$
2nd Quarter
2023
90,802
$
3rd Quarter
2023
85,854
$
4th Quarter
2023
89,528
$
Gross profit margin
41.2 %
41.9 %
42.6 %
41.9 %
43.0 %
End-of-period backlog
$
151,400
$
146,800
$
139,700
$
128,800
$
117,300
Book-to-bill ratio
Inventory turnover
0.76
2.63
0.94
2.39
0.94
2.34
0.90
2.20
0.84
2.27
- 31 -
Sensors
Net revenues
Gross profit margin
End-of-period backlog
Book-to-bill ratio
Inventory turnover
Weighing Solutions
Net revenues
Gross profit margin
End-of-period backlog
Book-to-bill ratio
Inventory turnover
Measurement Systems
Net revenues
Gross profit margin
End-of-period backlog
Book-to-bill ratio
Inventory turnover
4th Quarter
2022
1st Quarter
2023
2nd Quarter
2023
3rd Quarter
2023
4th Quarter
2023
$
$
$
$
$
$
$
$
$
$
$
$
36,312
37.6 %
72,300
0.76
2.91
33,089
33.4 %
38,300
0.82
2.72
26,839
55.9 %
40,800
0.70
2.11
$
$
$
$
$
$
36,726
41.2 %
66,200
0.82
2.62
31,859
34.9 %
35,400
0.90
2.63
20,279
53.9 %
45,200
1.21
1.70
$
$
$
$
$
$
36,266
40.1 %
58,900
0.84
2.55
31,261
38.7 %
34,300
0.97
2.41
23,275
51.8 %
46,500
1.06
1.94
$
$
$
$
$
$
32,532
35.9 %
52,400
0.83
2.38
28,970
38.7 %
30,800
0.89
2.18
24,352
53.6 %
45,600
0.98
1.94
34,259
40.2 %
49,000
0.85
2.36
30,438
35.6 %
28,800
0.91
2.46
24,831
56.0 %
39,500
0.73
1.87
Net revenues for the fourth quarter of 2023 increased 4.3% from the net revenues of $85.9 million reported in the third quarter
of 2023, and decreased 7.0% from $96.2 million for the comparable prior year period.
Net revenues in the Sensors segment of $34.3 million in the fourth quarter of 2023 increased 5.3% from $32.5 million in the
third quarter of 2023, and decreased 5.7% from $36.3 million in the fourth quarter of 2022. Sequentially, the increase in
revenues primarily reflected higher precision resistor sales in the Test and Measurement market. The year-over-year decrease
in revenues was primarily attributable to lower sales of advanced sensors in our Other markets for consumer applications, and
in our Avionics, Military and Space ("AMS") market, and in our General Industrial market, which offset higher sales of
precision resistors in the Test and Measurement market.
Net revenues in the Weighing Solutions segment of $30.4 million in the fourth quarter of 2023 increased 5.1% compared to
revenues of $29.0 million in the third quarter of 2023. The sequential increase in revenues was primarily attributable to
increased revenues from OEM customers for precision agriculture and construction applications in our Other market segment
and higher revenue in our General Industrial market, partially offset by lower sales in the Transportation market. Net revenues
in the fourth quarter of 2023 decreased 8.0% compared to $33.1 million in the fourth quarter of 2022 mainly due to lower
revenues in our Industrial Weighing market and lower revenues from OEM customers for precision agriculture applications in
our Other market segment.
Net revenues in the Measurement Systems segment of $24.8 million in the fourth quarter of 2023 increased 2.0% from $24.4
million in the third quarter of 2023 and decreased 7.5% from $26.8 million in the fourth quarter of 2022. The sequential
increase in revenue was primarily attributable to higher sales of Diversified Technical Systems, Inc. ("DTS") products to the
AMS market, which was partially offset by lower sales of Dynamic Systems Inc. ("DSI") and KELK products to the Steel
market. The year-over-year decline in revenues was primarily attributable to lower sales of DSI and KELK products to the steel
market and lower sales of DTS products to the Transportation market, which was partially offset by higher sales of DTS
products to the AMS market.
The gross profit margin for the fourth quarter of 2023 increased 1.1% compared to the third quarter of 2023, and increased
1.8% from the fourth quarter of 2022.
Sequentially, gross profit margins improved in the Sensors segment, decreased in the Weighing Solutions segment, and
improved in the Measurement Systems segments. The increase in the Sensors segment gross profit margin was primarily due to
higher volume and improved manufacturing efficiencies. In the Weighing Solutions segment, gross profit margin decreased due
to a reduction in inventory and unfavorable product mix, partially offset by higher volume. In the Measurement Systems
segment, gross profit margin increased reflecting higher volume and favorable product mix.
- 32 -
Compared to the fourth quarter of 2022, gross profit margins increased in all of the reporting segments. In the Sensors
segment, the increase in gross profit margin was primarily due to favorable foreign exchange rates and improved manufacturing
efficiencies, which offset the impact of lower volume. In the Weighing Solutions segment, the increase in gross profit margin
was primarily due to increased selling prices, favorable foreign currency exchange rates, and manufacturing efficiencies,
partially offset by lower volume. In the Measurement Systems segment, gross profit margin increased reflecting higher volume
and favorable product mix.
Operationally Diversified
Each of VPG's business segments maintains and deploys distinct go-to-market strategies, technical expertise, capital
requirements, and acquisition opportunities. We use an operationally diversified strategy and structure to be close to our
customers and to leverage our high-level engineering expertise to optimize and enhance the performance of our customers'
solutions. We seek to maximize the performance and value of our businesses by leveraging our accumulated experience,
methodologies, and expertise in driving operational excellence across our functional areas, as well as in the allocation of capital
and investment.
Optimize Core Competence
The Company’s core competencies include our innovative deep technical and applications-specific expertise, our strong brands
and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and
our proven M&A strategy. We continue to optimize all aspects of our development, manufacturing and sales processes,
including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our
manufacturing processes.
Our Sensors segment research group developed innovations that enhance the capability and performance of our strain gages,
while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this
unique foil technology will create new markets as customers “design in” these next generation products in existing and new
applications. Our development engineering team is also responsible for creating new processes to further automate
manufacturing, and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the
capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced
manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we
signed a long-term lease for a state-of-the-art facility that has been constructed in Israel. We fully transitioned to this facility in
the third quarter of fiscal 2021.
Our design, research, and product development teams, in partnership with our marketing teams, drive our efforts to bring
innovations to market. We intend to leverage our insights into customer demand to continually develop and roll out new,
innovative products within our existing lines and to modify our existing core products in ways that make them more appealing,
addressing changing customer needs and industry trends in terms of form, fit, and function.
We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing
operations in countries such as India, Japan, and Israel, where we can benefit from improved efficiencies or available tax and
other government-sponsored incentives. In the past several years, we incurred restructuring expense related to closing and
downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India, which marked key
milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
Acquisition Strategy
We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments.
Our acquisition strategy is focused on identifying and acquiring high-value, growing technology-driven businesses that
augment, expand and/or leverage our current offering in precision measurement and sensor markets. We expect to expand our
expertise and our acquisition focus to other precision measurement solutions, including in the fields of measurement of force,
weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we
implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
Research and Development
Research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales
and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology
products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and
our manufacturing base in order to ultimately improve our financial performance. The amount charged to expense for research
and development aggregated $20.4 million, $19.8 million, and $17.2 million for the years ended December 31, 2023, 2022, and
2021, respectively.
- 33 -
Cost Management
To be successful, we believe we must seek new strategies for controlling operating costs. Through automation in our plants, we
believe we can optimize our capital and labor resources in production, inventory management, quality control, and
warehousing. We are in the process of moving some manufacturing to more cost effective locations. This may enable us to
become more efficient and cost competitive, and also maintain tighter controls of the operation.
Production transfers, facility consolidations, and other long-term cost-cutting measures require us to initially incur significant
severance and other exit costs. We are realizing the benefits of our restructuring through lower labor costs and other operating
expenses, and expect to continue reaping these benefits in future periods. However, these programs to improve our profitability
also involve certain risks which could materially impact our future operating results, as further detailed in Part I, Item 1A “Risk
Factors” of this Annual Report on Form 10-K.
The Company recorded restructuring costs of $1.6 million, $1.5 million, and $0.1 million during the years ended December 31,
2023, 2022, and 2021, respectively, which were comprised primarily of employee termination costs, including severance and
statutory retirement allowances.
We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations. These plans may
require us to incur restructuring and severance costs in future periods. While streamlining and reducing fixed overhead, we are
exercising caution so that we will not negatively impact our customer service or our ability to further develop products and
processes.
Foreign Currency
We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional
currencies of certain subsidiaries. U.S. GAAP requires that entities identify the “functional currency” of each of their
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 subsidiaries that fall into each of these categories.
Foreign Subsidiaries which use the Local Currency as the Functional Currency
Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash using 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 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 equity.
For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average
exchange rate for the year. While the translation of revenues and expenses into U.S. dollars does not directly impact the
consolidated statements of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues
generated and expenses incurred in those foreign currencies.
Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency
Our operations in Israel and certain locations in Asia primarily generate cash 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 related to payroll,
which are incurred in the local currency and significant lease assets and liabilities.
Effects of Foreign Exchange Rate on Operations
For the year ended December 31, 2023, exchange rate impacts decreased net revenues by $2.2 million and decrease costs of
products sold and selling, general, and administrative expenses by $9.1 million. For the year ended December 31, 2022,
exchange rate impacts decreased net revenues by $16.1 million and decreased costs of products sold and selling, general, and
administrative expenses by $13.3 million.
- 34 -
Critical Accounting Policies and Estimates
Our significant accounting policies are summarized in Note 1 to our consolidated financial statements. We identify here a
number of policies that entail significant judgments or estimates by management.
Inventories
We value our inventories at the lower of cost or market, with cost determined under the first-in, first-out method, and market
based upon net realizable value. The valuation of our inventories requires management to make costing and market estimates.
For work in process goods, we are required to estimate the cost to completion of the products and the prices at which we will be
able to sell the products. For finished goods, we must assess the prices at which we believe the inventory can be sold.
Inventories are also adjusted for estimated obsolescence and written down to net realizable value based upon estimates of future
demand, technology developments, and market conditions.
Business Combinations
The Company allocates the purchase price of an acquired company, including when applicable, the fair value of contingent
consideration between tangible and intangible assets acquired and liabilities assumed from the acquired businesses based on
estimated fair values, with any residual of the purchase price recorded as goodwill. Third party appraisal firms and other
consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed.
Different valuations approaches are used to value different types of intangible assets. The Company primarily uses the income
approach in the valuation of intangible assets. The income approach to valuation is based on the present value of future cash
flows attributable to each identifiable intangible asset. This approach to valuation requires management to make significant
estimates and assumptions including but not limited to: discount rates, future cash flows and the economic lives of trade names,
technology, and customer relationships. These estimates are based on historical experience and information obtained from the
management of the acquired companies, and are inherently uncertain.
Goodwill and Other Indefinite-lived Intangible Assets
Goodwill and indefinite-lived trademarks are tested for impairment at least annually, and whenever events or changes in
circumstances occur indicating that it is "more likely than not" impairment may have been incurred. We have the option to first
assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its
carrying value as a basis for determining if it is necessary to perform the quantitative goodwill impairment test. However, if we
conclude otherwise, then we are required to perform the quantitative impairment test by calculating the fair value of the
reporting unit and comparing it against its carrying value.
We have four reporting units to which goodwill was allocated: steel, on-board weighing, DSI, and DTS. For the steel and on-
board weighing goodwill reporting units, we performed the qualitative assessment, which included assessment of
macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and other entity
specific events which could impact the reporting unit. Based on this review, it was determined that the fair value of each of
those reporting units was in excess of its carrying value and therefore no quantitative impairment test was required.
For the DSI and DTS goodwill reporting units, the Company performed the quantitative impairment test. In estimating the fair
value of our DSI and DTS reporting units the Company used the income approach. The income approach to valuation requires
management to make significant estimates and assumptions related to future revenues, profitability, working capital
requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a
significant impact on the fair value of the reporting units. If the fair value exceeds the carrying value, no further evaluation is
required and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying value of
goodwill exceeds the reporting unit fair value.
The indefinite-lived trade names are tested for impairment either by employing the qualitative approach outlined above, or by
comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief
from royalty method. Any excess carrying value over the applicable fair value is recognized as impairment. Any impairment
would be recognized in the reporting period in which it has been identified.
Pension and Other Postretirement Benefits
Accounting for defined benefit pension and other postretirement plans involves numerous assumptions and estimates. The
discount rate at which obligations could effectively be settled and the expected long-term rate of return on plan assets are two
critical assumptions in measuring the cost and benefit obligations of our pension and other postretirement benefit plans. Other
important assumptions include the anticipated rate of future increases in compensation levels, estimated mortality, and for
- 35 -
postretirement medical plans, increases or trends in health care costs. Management reviews these assumptions at least annually.
We use independent actuaries to assist us in formulating assumptions and making estimates. These assumptions are updated
periodically to reflect the actual experience and expectations on a plan-specific basis, as appropriate.
Our defined benefit plans are concentrated in the United States, Japan and the United Kingdom. Plans in these countries
comprise approximately 87% of our retirement obligations at December 31, 2023. We utilize published long-term high-quality
bond indices to determine the discount rate at the measurement date. We utilize bond yields at various maturity dates to reflect
the timing of expected future benefit payments. We believe the discount rates selected are the rates at which these obligations
could effectively be settled.
For benefit plans which are funded, we establish strategic asset allocation percentage targets and appropriate benchmarks for
significant asset classes with the aim of achieving a prudent balance between return and risk. We set the expected long-term rate
of return based on the expected long-term average rates of return to be achieved by the underlying investment portfolios. In
establishing this rate, we consider historical and expected returns for the asset classes in which the plans are invested, advice
from pension consultants and investment advisors, and current economic and capital market conditions. The expected return on
plan assets is incorporated into the computation of pension expense. The difference between this expected return and the actual
return on plan assets is deferred.
We believe that the current assumptions used to estimate plan obligations and annual expense are appropriate in the current
economic environment. However, if economic conditions change, we may be inclined to change some of our assumptions, and
the resulting change could have a material impact on the consolidated statements of operations and on the consolidated balance
sheets.
Income Taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. Our annual effective tax rate is based
on pre-tax earnings, statutory tax rates and enacted tax laws. Significant judgments and estimates must be made in determining
our consolidated income tax expense as presented in our financial statements.
We must assess the likelihood that we will realize deferred tax assets which requires significant judgment. If we determine that
deferred tax assets are not "more likely than not" to be realized, we record a valuation allowance to reduce deferred tax assets to
a level that is expected to be realized. If we subsequently determine that realization of a deferred tax asset becomes "more
likely than not", the valuation allowance will be reversed. Any change in valuation allowances could have a significant impact
on our financial results.
The calculation of our tax liabilities involves an assessment of uncertainties in the application of complex tax laws and
regulations in multiple jurisdictions. We record a benefit from an uncertain tax position when it is "more likely than not" that a
tax return position will be sustained upon examination, including resolutions of any related appeals or litigation based on the
technical merits of the position. If the position is not "more likely than not" to be sustained, a liability for the tax return position
is established. We adjust the liability when our judgment changes as a result of the evaluation of new information. The
ultimate tax due in a jurisdiction may result in a payment that is materially different from our most recent estimate of the
liability. Further judgment is required in determining whether an uncertain tax position is effectively settled. Any change in the
analysis will impact income tax expense.
We consider the earnings of most of our non-U.S. subsidiaries to be indefinitely invested outside the United States based on our
estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our plans for
reinvestment of foreign subsidiary earnings. As of December 31, 2023, the Company had provided for a deferred tax liability of
$2.1 million of withholding tax associated with unremitted, non-permanently reinvested earnings, including planned cash
distributions of $16.6 million. Additional withholding taxes of approximately $29.2 million are estimated to be payable upon
the distribution of the remaining unremitted earnings at December 31, 2023. If we decide to distribute any portion of the
balance of our unremitted earnings to the United States from a foreign country, we would adjust our income tax provision in the
period we determine that the earnings are no longer indefinitely invested outside the United States.
Additional information about income taxes is included in Note 6 to our consolidated financial statements.
- 36 -
Results of Operations – Years Ended December 31, 2023 and 2022
Refer to Item 7, "Results of Operations - Years Ended December 2022 and 2021 in our Annual Report on Form 10-K for the
year ended December 31, 2022 for a comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
Statement of operations’ captions as a percentage of net revenues and the effective tax rates were as follows:
Costs of products sold
Gross profit
Selling, general, and administrative expenses
Operating income
Income before taxes
Net earnings
Net earnings attributable to VPG stockholders
Effective tax rate
Net Revenues
Net revenues were as follows (dollars in thousands):
Net revenues
Change versus prior year
Percentage change versus prior year
Changes in net revenues were attributable to the following:
Change attributable to:
Change in volume
Change in average selling prices
Foreign currency effects
Net change
Years ended December 31,
2023
2022
57.7 %
42.3 %
30.1 %
11.8 %
10.8 %
7.3 %
7.2 %
58.7 %
41.3 %
28.8 %
12.1 %
12.4 %
10.1 %
9.9 %
32.3 %
18.9 %
Years ended December 31,
2023
2022
$ 355,048
$
362,580
$
(7,532)
(2.1) %
2023 vs. 2022
(3.0) %
1.6 %
(0.7) %
(2.1) %
During the year ended December 31, 2023, net revenues decreased 2.1% over the prior year. Decreased volume in the Sensors
and Weighing Solutions reporting segments was partially offset by volume increase in the Measurement System reporting
segment. Volume increases in our steel and AMS end markets, were offset by lower volume across all of our other market
sectors. The overall volume decreases were partially offset by increased selling prices across all of our reporting segments.
Gross Profit Margin
Gross profit as a percentage of net revenues was as follows:
Gross profit margin
Years ended December 31,
2023
2022
42.3 %
41.3 %
The gross profit margin for the year ended December 31, 2023 increased 1.0% over the prior year. The increase in gross profit
margin was primarily due to improved gross profit margins in the Weighing Solutions and Measurement Systems reporting
segments partially offset by decreased gross profit margin in the Sensors reporting segment.
- 37 -
Segments
Analysis of revenues and gross profit margins for our reportable segments is provided below.
Sensors
Net revenues of the Sensors segment were as follows (dollars in thousands):
Net revenues
Change versus prior year
Percentage change versus prior year
Changes in Sensors segment net revenues were attributable to the following:
Change attributable to:
Change in volume
Change in average selling prices
Foreign currency effects
Net change
Years ended December 31,
2023
2022
$ 139,783
$
152,221
$
(12,438)
(8.2) %
2023 vs. 2022
(8.4) %
0.9 %
(0.7) %
(8.2) %
For the year ended December 31, 2023, net revenues decreased 8.2% as compared to the prior year, due to lower sales of
precision resistors in the Test and Measurement market, and lower sales of advanced sensors products primarily in our Other
markets (mainly for consumer applications), partially offset by increases in precision resistor sales in the AMS market.
Gross profit as a percentage of net revenues for the Sensors segment was as follows:
Gross profit margin
Years ended December 31,
2023
2022
39.4 %
40.1 %
For the year ended December 31, 2023, the gross profit margin decreased 0.7% as compared to the prior year primarily due to
volume decreases and manufacturing inefficiencies, which were partially offset by favorable foreign currency exchange rates.
Weighing Solutions
Net revenues of the Weighing Solutions segment were as follows (dollars in thousands):
Net revenues
Change versus prior year
Percentage change versus prior year
Changes in Weighing Solutions segment net revenues were attributable to the following:
Change attributable to:
Change in volume
Change in average selling prices
Foreign currency effects
Net change
Years ended December 31,
2023
2022
$ 122,528
$
125,715
$
(3,187)
(2.5) %
2023 vs. 2022
(4.7) %
2.4 %
(0.2) %
(2.5) %
For the year ended December 31, 2023, net revenues decreased 2.5% from the prior year. Increased sales of load cells in our
Other markets for precision agriculture and construction applications and transducer systems in our Industrial Weighing market,
- 38 -
were offset by lower sales of our load cell products in our Industrial weighing market. The overall volume decline was only
partially offset by higher average selling prices.
Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows:
Gross profit margin
Years ended December 31,
2023
2022
37.0 %
34.3 %
For the year ended December 31, 2023, the gross profit margin increased 2.7% as compared to the prior year. The increase in
gross profit margin was primarily due to cost reductions, manufacturing efficiencies, favorable foreign currency exchange rates,
and higher selling prices, which offset the impact of lower volume.
Measurement Systems
Net revenues of the Measurement Systems segment were as follows (dollars in thousands):
Net revenues
Change versus prior year
Percentage change versus prior year
Changes in Measurement Systems segment net revenues were attributable to the following:
Change attributable to:
Change in volume
Change in average selling prices
Foreign currency effects
Net change
Years ended December 31,
2023
2022
92,737
$
84,644
8,093
9.6 %
$
$
2023 vs. 2022
9.2 %
1.8 %
(1.4) %
9.6 %
For the year ended December 31, 2023, net revenues increased 9.6% as compared to the prior year, primarily due to increased
revenue in the Steel market and higher sales of DTS products in the AMS market.
Gross profit as a percentage of net revenues for the Measurement Systems segment was as follows:
Gross profit margin
Years ended December 31,
2023
2022
53.8 %
53.6 %
For the year ended December 31, 2023, the gross profit margin increased 0.2% from the prior year. Higher revenues coupled
with lower purchase accounting adjustments related to the DTS acquisition were partially offset by higher material costs and
higher manufacturing costs.
Selling, General, and Administrative Expenses
Selling, general, and administrative (“SG&A”) expenses were as follows (dollars in thousands):
Total SG&A expenses
as a percentage of net revenues
Years ended December 31,
2023
$ 106,828
$
2022
104,285
30.1 %
28.8 %
SG&A expenses for the year ended December 31, 2023 increased $2.5 million as compared to the prior year due to higher
personnel costs, including increases in headcount, wages and travel costs, higher IT costs and higher commissions.
- 39 -
Impairment of Goodwill and Indefinite-lived Intangible Assets
For the years ended December 31, 2023 and December 31, 2022, as a result of our annual impairment tests performed on
goodwill and indefinite-lived intangible assets there was no impairment on goodwill and indefinite-lived intangible assets.
Restructuring Costs
Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during
the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these
costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially
recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional
expense in future periods, or to reverse part of the previously recorded charges.
The Company recorded restructuring costs of $1.6 million and $1.5 million during the years ended December 31, 2023 and
2022, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and
statutory retirement allowances, and were incurred in connection with various cost reduction programs.
Acquisition Costs
There were no acquisition costs recorded in our consolidated statements of operations for the year ended December 31, 2023 or
December 31, 2022.
Other Income (Expense)
Interest Expense
The Company recorded interest expense of $4.0 million, and $2.3 million for the years ended December 31, 2023 and 2022,
respectively. Interest expense was higher in 2023 compared to 2022 mainly due to higher borrowing rates during 2023.
Other
The following table analyzes the components of the line “Other” on the consolidated statements of operations (in thousands):
Foreign exchange gain/(loss)
Interest income
Pension expense
Other
Years ended December 31,
2023
2022
Change
$
$
(822) $
1,651
(52)
(321)
456 $
3,579 $
401
(241)
(181)
(4,401)
1,250
189
(140)
3,558 $
(3,102)
Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in
foreign exchange gains / (losses) for the year ended December 31, 2023, as compared to the prior year period, is primarily due
to fluctuations in the Israeli shekel, the Canadian dollar and the British pound. The change in the dollar-shekel exchange rate
resulted in a unfavorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors
facility in Israel.
Income Taxes
Our effective tax rate for the year ended December 31, 2023 was 32.3%, as compared to 18.9% for the year ended December
31, 2022. Our effective tax rate was higher in 2023 compared to 2022 primarily due to increases in valuation allowances,
increases in reserves for uncertain tax positions and changes in our geographical mix of income.
- 40 -
We reassessed our ability to realize our U.S. deferred tax assets during 2023 and have concluded that realization of those
deferred tax assets is still not "more likely than not". Our tax rate is affected by recurring items, such as tax rates in foreign
jurisdictions as compared to the U.S. federal statutory tax rate, and the relative amount of income earned in each jurisdiction.
The tax rate is also impacted by discrete items that vary from year to year and may not be indicative of the tax rate on
continuing operations. The following items had the most significant impact on the difference between the statutory U.S. federal
income tax rate and our effective tax rate:
2023
•
•
•
•
•
6.2% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory
rate and foreign tax rates
3.3% increase related to changes in valuation allowances
2.3% increase related to residual U.S. tax on foreign earnings
1.2% increase related to changes in reserves for uncertain tax positions
1.4% decrease related to specialty tax credits, such as research credits
2022
•
•
•
•
•
2.8% increase related to the effects of foreign operations primarily related to the difference between the U.S. statutory
rate and foreign tax rates
1.5% increase related to foreign currency primarily attributable to our operations in India, Israel and Taiwan
1.4% decrease related to specialty tax credits, such as research credits
2.2% decrease related to changes in reserves for uncertain tax positions
3.6% decrease related to changes in valuation allowances
Additional information about income taxes is included in Note 6 to our consolidated financial statements.
Financial Condition, Liquidity, and Capital Resources
Refer to Item 7. “Financial Condition, Liquidity, and Capital Resources” in our Annual Report on Form 10-K for the year
ended December 31, 2022 for a comparison of the year ended December 31, 2022 to the year ended December 31, 2021.
We believe that our current cash and cash equivalents, credit facilities, and projected cash from operations will be sufficient to
meet our liquidity needs for at least the next 12 months.
On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit
Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank,
National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the
“Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a
secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $75.0 million, with a sublimit of
$10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the
Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and
general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of
$25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement
terminates on March 20, 2025.
On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the “Credit
Agreement Amendment”) amending the Third Amended and Restated Credit Agreement, dated March 20, 2020. The primary
purpose of the changes made in the Credit Agreement Amendment were to update the interest rate provisions to replace LIBOR
with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign
currency loans which took effect on June 15, 2023. Interest payable on amounts borrowed under the 2020 Revolving Facility,
taking into account the effect of the Credit Agreement Amendment, is based upon the following: (a) for revolving credit loans
denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in
foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company’s leverage
ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable SOFR rate to determine the
interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum
on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter.
Additional customary fees apply with respect to letters of credit.
- 41 -
The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and
foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the
Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate)
of the Company and such guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and
requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of
specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The
Company was in compliance with its financial maintenance covenants at December 31, 2023. If the Company is not in
compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts
outstanding pursuant to the credit facility could become immediately payable.
Our business has historically generated significant cash flow. Our cash provided by operating activities for the year ended
December 31, 2023 was $45.9 million as compared to $33.0 million for the year ended December 31, 2022. Our net cash used
in investing activities for the year ended December 31, 2023 was $15.1 million, compared to $20.8 million for the year ended
December 31, 2022. Our net cash used in financing activities for the year ended December 31, 2023 was $35.9 million, which
included a pay down on the 2020 credit facility of $29.0 million, as compared to $3.6 million for the year ended December 31,
2022.
Approximately 92% and 83% of our cash and cash equivalents balance at December 31, 2023 and 2022, respectively, was held
by our non-U.S. subsidiaries. See the following table for the percentage of cash and cash equivalents, by region, at
December 31, 2023 and December 31, 2022:
Asia
United States
Israel
Europe
United Kingdom
Canada
Total
December 31,
2023
2022
22 %
8 %
36 %
18 %
5 %
11 %
27 %
17 %
28 %
13 %
10 %
5 %
100 %
100 %
We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be
indefinitely reinvested in the foreign jurisdictions. As a result, as discussed above, a significant portion of our cash and short-
term investments are held by foreign subsidiaries. The Company will continue to evaluate its cash needs, however we currently
do not intend, nor do we foresee a need, to repatriate funds in excess of what is already planned. The Company will evaluate
the possibility of repatriating future cash provided such repatriation can be accomplished in a tax efficient manner. In addition,
we expect existing domestic cash, short-term investments, and cash flows from operations to continue to be sufficient to fund
our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and
capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.
If we should require more capital in the United States than is generated by our domestic operations, for example, to fund
significant discretionary activities, such as business acquisitions, we could elect to repatriate future earnings from foreign
jurisdictions or raise capital in the United States through debt or equity issuances. These alternatives could result in higher tax
expense, increased interest expense, or dilution of our earnings. We consider the majority of the undistributed earnings of our
foreign subsidiaries, as of December 31, 2023, to be indefinitely reinvested.
For the year ended December 31, 2023, we generated adjusted free cash flow of $30.8 million. We define “adjusted free cash
flow,” a measure which management uses to evaluate our ability to fund acquisitions, as the amount of cash provided by
operating activities ($45.9 million) in excess of our capital expenditures ($15.2 million) and net of proceeds from the sale of
assets ($0.1 million).
- 42 -
The following table summarizes the components of net cash at December 31, 2023 and at December 31, 2022 (in thousands):
Cash and cash equivalents
Third-party debt, including current and long-term
Revolving debt
Deferred financing costs
Total third-party debt
Net cash
December 31,
2023
2022
$
83,965 $
88,562
32,000
(144)
31,856
52,109 $
61,000
(201)
60,799
27,763
$
Measurements such as “adjusted free cash flow” and “net cash" do not have uniform definitions and are not recognized in
accordance with U.S. GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or
liquidity. However, management believes that “adjusted free cash flow” is a meaningful measure of our ability to fund
acquisitions, and that an analysis of “net cash” assists investors in understanding aspects of our cash and debt management.
These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.
Our financial condition as of December 31, 2023 is strong, with a current ratio (current assets to current liabilities) of 3.9 to 1.0,
as compared to a current ratio of 3.9 to 1.0 at December 31, 2022.
Cash paid for property and equipment for the year ended December 31, 2023 and December 31, 2022 was $15.2 million and
$21.3 million, respectively. Capital spending for 2023 was comprised of building projects related to capacity expansion in
Israel and Asia, and other projects related to the normal maintenance of business. Capital expenditures for 2024 are expected to
be approximately $15.0 million.
As of December 31, 2023 and 2022, we did not have any off-balance sheet arrangements.
Inflation
Normally, inflation does not have a significant impact on our operations as our products are not generally sold on long-term
contracts. Consequently, we can adjust our selling prices, to the extent permitted by competition, to reflect cost increases caused
by inflation.
Recent Accounting Pronouncements
See Note 1 to our consolidated financial statements for a discussion of recent accounting pronouncements.
Forward-Looking Statements
From time to time, information provided by us, including, but not limited to, statements in this Annual Report on Form 10-K
for the fiscal year ended December 31, 2023 or other statements made by or on our behalf, may contain or constitute "forward-
looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a
number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results,
performance, or achievements to differ materially from those anticipated.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to
materially differ include: general business and economic conditions; impact of inflation; potential issues respecting the United
States federal government debt ceiling; global labor and supply chain challenges; difficulties or delays in identifying,
negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and
expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we
serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political,
economic, and health (including pandemics) instabilities; instability caused by military hostilities in the regions or countries in
which we operate (including Israel); difficulties in implementing our cost reduction strategies, such as underutilization of
production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to
difficulties in transferring production to achieve efficiencies; compliance issues under applicable laws, such as export control
laws, including the outcome of our voluntary self-disclosure of export control non-compliance; significant developments from
the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate
the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource
- 43 -
allocations, manufacturing and supply chains; our status as a “critical”, “essential” or “life-sustaining” business in light of
COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority;
our ability to execute our new corporate strategy and business continuity, operational and budget plans; and other factors
affecting our operations, markets, products, services, and prices that are set forth in this Annual Report on Form 10-K for the
fiscal year ended December 31, 2023. We caution you not to place undue reliance on forward-looking statements, which speak
only as of the date of this report or as of the dates otherwise indicated in such forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or
otherwise.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain financial risks, including fluctuations in foreign currency exchange rates, interest rates, and
commodity prices. We manage our exposure to these market risks through internally established policies and procedures. Our
policies do not allow speculation in derivative instruments for profit or execution of derivative instrument contracts for which
there are no underlying exposures. We do not use financial instruments for trading purposes and we are not a party to any
leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and believe that we can modify or
adapt our strategies as needed.
Interest Rate Risk
We are exposed to changes in interest rates as a result of our borrowing activities and our cash balances.
The Company entered into a third amended and restated revolving credit facility on March 20, 2020. Interest payable on the
facility is based upon the Agent’s prime rate, the Federal Funds rate or SOFR, plus a spread. At December 31, 2023, the
Company had $32.0 million of borrowings outstanding under the revolving credit facility.
At December 31, 2023, we had $84.0 million of cash and cash equivalents, which accrue interest at various variable rates.
Based on the debt and cash positions at December 31, 2023 and 2022, we would expect a 50 basis point increase or decrease in
interest rates to increase or decrease our annualized net earnings by $0.2 million and $0.1 million in 2023 and 2022,
respectively.
See Note 7 to our consolidated financial statements for additional information about our long-term debt.
Foreign Exchange Risk
We are exposed to foreign currency exchange rate risks, particularly due to market values of transactions in currencies other
than the functional currencies of certain subsidiaries. Our significant foreign currency exposures are to the British pound,
Canadian dollar, Chinese renminbi, euro, Indian rupee, Israeli shekel, Japanese yen, Swedish krona, and Taiwanese dollar.
Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash in local currencies. Our
operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, but these subsidiaries also have
significant transactions in local currencies. Our exposure to foreign currency risk is mitigated to the extent that the costs
incurred and the revenues earned in a particular currency offset one another. Our exposure to foreign currency risk, with respect
to expenses, is more pronounced in Israel and India because the percentage of expenses denominated in Israeli shekels and
Indian rupee to total expenses is much greater than the percentage of sales denominated in Israeli shekels and Indian rupee to
total sales. Therefore, if the Israeli shekel and Indian rupee strengthen against all or most of our other major currencies, our
operating profit is reduced. We also have a higher percentage of British pound-denominated sales than expenses. Therefore,
when the British pound strengthens against all or most of our other major currencies, our operating profit is increased.
We have performed a sensitivity analysis as of December 31, 2023 and 2022, respectively, using a model that measures the
change in the values arising from a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S.
dollar, with all other variables held constant. The foreign currency exchange rates we used were based on market rates in effect
at December 31, 2023 and 2022, respectively. The sensitivity analysis indicated that a hypothetical 10% adverse movement in
foreign currency exchange rates would impact our net earnings by approximately $3.7 million and $3.6 million for the years
ended December 31, 2023 and December 31, 2022, respectively, although individual line items in our consolidated statements
of operations could be materially affected. For example, a 10% weakening in all foreign currencies would increase the U.S.
dollar equivalent of operating income generated in foreign currencies, which would be offset by foreign exchange losses of our
foreign subsidiaries that have significant transactions in U.S. dollars or have the U.S. dollar as their functional currency.
A change in the mix of the currencies in which we transact our business could have a material effect on the estimated impact of
the hypothetical 10% movement in the value of the U.S. dollar. Furthermore, the timing of cash receipts and disbursements
- 44 -
could result in materially different actual results versus the hypothetical 10% movement in the value of the U.S. dollar,
particularly if there are significant changes in exchange rates in a short period of time.
Commodity Price Risk
Although most materials incorporated in our products are available from a number of sources, certain materials are available
only from a relatively limited number of suppliers. Some of the most highly specialized materials for our sensors are sourced
from a single vendor. We maintain a safety stock inventory of certain critical materials at our facilities. Certain metals used in
the manufacture of our products are traded on active markets, and can be subject to significant price volatility.
Our results of operations may be materially and adversely affected if we have difficulty obtaining these raw materials, the
quality of available raw materials deteriorates, or there are significant price changes for these raw materials. For periods in
which the prices of these raw materials are rising, we may be unable to pass on the increased cost to our customers which would
result in decreased margins for the products in which they are used. For periods in which the prices are declining, we may be
required to write down our inventory carrying cost of these raw materials, since we record our inventory at the lower of cost or
market. Depending on the extent of the difference between market price and our carrying cost, this write-down could have a
material adverse effect on our net earnings. We also may need to record losses for adverse purchase commitments for these
materials in periods of declining prices.
We estimate that a 10% increase or decrease in the costs of raw materials subject to commodity price risk would decrease or
increase our net earnings by $1.2 million and $2.5 million for the years ended December 31, 2023 and December 31, 2022,
respectively, assuming that such changes in our costs have no impact on the selling prices of our products, and that we have no
pending commitments to purchase metals at fixed prices.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are included herein, commencing on page F-1 of this report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
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 annual 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.
Our management, including our CEO and CFO, believes that any disclosure controls and procedures or internal controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their
costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any
system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in
part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into
account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system,
misstatements due to error or fraud may occur and may not be prevented or detected.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
- 45 -
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management,
including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as
of December 31, 2023 based on the 2013 framework set forth in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded
that our internal control over financial reporting was effective as of December 31, 2023.
Brightman Almagor Zohar & Co., a firm in the Deloitte global network, has issued an attestation report on the effectiveness of
our internal control over financial reporting, as stated in their report which is set forth on the next page.
- 46 -
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Vishay Precision Group, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Vishay Precision Group, Inc. and subsidiaries (the “Company”)
as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our
report dated February 29, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Brightman Almagor Zohar & Co.
Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
February 29, 2024
- 47 -
Item 9B. OTHER INFORMATION
During the fiscal quarter ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of
the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule
10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as
amended).
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Certain information required under this Item with respect to our Executive Officers is contained under the heading “Information
about our Executive Officers” in Item 1 hereof. Other information required under this Item will be contained under the heading
“Nominees for Election as Directors” in our definitive proxy statement for the Company’s 2024 Annual Meeting of
Stockholders, which will be filed within 120 days of December 31, 2023, our most recent fiscal year end, and is incorporated
herein by reference.
The Company has adopted codes of conduct that constitute “codes of ethics” as that term is defined in paragraph (b) of Item
406 of Regulation S-K and that apply to the Company’s principal executive officer, principal financial officer, principal
accounting officer or controller, and to any persons performing similar functions. Such codes of conduct are posted on the
Company’s internet website, the address of which is www.vpgsensors.com.
Item 11. EXECUTIVE COMPENSATION
Information required under this Item will be contained in our definitive proxy statement for the Company’s 2024 Annual
Meeting of Stockholders, which will be filed within 120 days of December 31, 2023, our most recent fiscal year end, and is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information required under this Item will be contained in our definitive proxy statement for the Company’s 2024 Annual
Meeting of Stockholders, which will be filed within 120 days of December 31, 2023, our most recent fiscal year end, and is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information required under this Item will be contained in our definitive proxy statement for the Company’s 2024 Annual
Meeting of Stockholders, which will be filed within 120 days of December 31, 2023, our most recent fiscal year end, and is
incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required under this Item will be contained in our definitive proxy statement for the Company’s 2024 Annual
Meeting of Stockholders, which will be filed within 120 days of December 31, 2023, our most recent fiscal year end, and is
incorporated herein by reference.
- 48 -
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a) Documents Filed as part of Form 10-K
i)
Financial Statements
The Consolidated Financial Statements for the year ended December 31, 2023 are filed herewith. See index to
the Consolidated Financial Statements on page F-1 of this report.
ii)
Financial Statement Schedules
All financial statement schedules for which provision is made in the applicable accounting regulation of the
Securities and Exchange Commission are not required under the related instructions or are inapplicable and
therefore have been omitted.
iii)
Exhibits
Description
Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective June 25, 2010
(previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2010
and incorporated herein by reference).
Amendment no. 1 to Amended and Restated Certificate of Incorporation of Vishay Precision Group, Inc., effective
June 2, 2011 (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on
June 6, 2011 and incorporated herein by reference).
Third Amended and Restated Bylaws of Vishay Precision Group, Inc., adopted March 30, 2023 (previously filed
as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on March 31, 2023 and
incorporated herein by reference).
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(previously filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 11,
2020 and incorporated herein by reference).
Master Separation and Distribution Agreement, dated June 22, 2010, between Vishay Precision Group, Inc. and
Vishay Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Form 10 Registration Statement of
Vishay Precision Group, Inc., filed with the Securities and Exchange Commission on June 22, 2010 and
incorporated herein by reference).
Employee Matters Agreement, dated June 22, 2010, by and among Vishay Intertechnology, Inc. and Vishay
Precision Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the
SEC on June 23, 2010 and incorporated herein by reference).
Tax Matters Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Intertechnology,
Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7,
2010 and incorporated herein by reference).
Trademark License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay
Intertechnology, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the
SEC on July 7, 2010 and incorporated herein by reference).
Supply Agreement, dated July 6, 2010, between Vishay Advanced Technology, Ltd. and Vishay Dale Electronics,
Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7,
2010 and incorporated herein by reference).
Patent License Agreement, dated July 6, 2010, between Vishay Precision Group, Inc. and Vishay Dale
Electronics, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC
on July 7, 2010 and incorporated herein by reference).
Supply Agreement, dated July 6, 2010, between Vishay Dale Electronics, Inc. and Vishay Advanced Technology,
Ltd. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7,
2010 and incorporated herein by reference).
Supply Agreement, dated July 6, 2010, between Vishay Measurements Group, Inc. and Vishay S.A. (previously
filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and
incorporated herein by reference).
Manufacturing Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil GmbH (previously
filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and
incorporated herein by reference).
- 49 -
Exhibit
No.
3.1
3.2
3.3
4.1
10.1
10.2
10.3
10.4
10.5
10.6*
10.7*
10.8*
10.9*
Exhibit
No.
10.10
10.11*
10.12
10.13
10.14
10.15
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
10.23†
10.25†
10.26†
10.27†
10.28
Description
Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Precision Foil
GmbH (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July
7, 2010 and incorporated herein by reference).
Supply Agreement, dated July 6, 2010, between Vishay Precision Foil GmbH and Vishay S.A. (previously filed as
an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated
herein by reference).
Intellectual Property License Agreement, dated July 6, 2010, between Vishay S.A. and Vishay Measurements
Group, Inc. (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on
July 7, 2010 and incorporated herein by reference).
Lease Agreement, between Alpha Electronics Corp. and Vishay Japan Co., Ltd. (previously filed as an exhibit to
the Registrant’s Current Report on Form 8-K filed with the SEC on July 7, 2010 and incorporated herein by
reference).
Stock Purchase Agreement, dated November 1, 2019, by and among Vishay Precision Group, Inc., DSI Holdings
DE Inc., the sellers identified therein, and HCI Equity Partners III, L.P., not individually but solely in its capacity
as the representative of the Sellers (previously filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
filed with the SEC on November 4, 2019 and incorporated herein by reference).
Lease Agreement between Vishay Advanced Technologies Ltd and Mega Or Holdings Ltd, dated February 17,
2019 (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on
January 19, 2019 and incorporated herein by reference).
Form of Stock Option Award Agreement (previously filed as an exhibit to the Registrant’s Quarterly Report on
Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by reference).
Form of Restricted Stock Unit Award Agreement for Director Grants (previously filed as an exhibit to the
Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by
reference).
Form of Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit to the
Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010 and incorporated herein by
reference).
Employment Agreement, dated November 17, 2010, by and among Vishay Advanced Technology and Ziv
Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on
November 23, 2010 and incorporated herein by reference).
Employment Agreement, dated November 17, 2010, by and among Vishay Precision Group, Inc. and William M.
Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on
November 23, 2010 and incorporated herein by reference).
Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Advanced Technologies,
Ltd. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the
SEC on December 13, 2011 and incorporated herein by reference).
Amendment to Employment Agreement, dated December 8, 2011 by and among Vishay Precision Group, Inc. and
William M. Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the
SEC on December 13, 2011 and incorporated herein by reference).
Form of Performance Restricted Stock Unit Award Agreement for Employee Grants (previously filed as an exhibit
to the Registrant’s Current Report on Form 10-K filed with the SEC on March 12, 2013 and incorporated herein
by reference).
Vishay Precision Group, Inc. 2022 Stock Incentive Plan, effective May 26, 2022 (previously filed as Appendix A
to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 14, 2022 and
incorporated herein by reference).
Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Advanced Technologies,
Ltd. and Ziv Shoshani (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the
SEC on November 12, 2013 and incorporated herein by reference).
Amendment to Employment Agreement, dated November 7, 2013 by and among Vishay Precision Group, Inc. and
William Clancy (previously filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC
on November 12, 2013 and incorporated herein by reference).
Third Amended and Restated Credit Agreement, dated March 20, 2020, by and among Vishay Precision Group,
Inc., the lenders party thereto, Citizens Bank, National Association, Wells Fargo Bank, National Association, and
JPMorgan Chase Bank, National Association (previously filed as Exhibit 10.1 to the Registrant’s Current Report
on Form 8-K filed with the SEC on March 23, 2020 and incorporated herein by reference).
- 50 -
Exhibit
No.
10.29
10.30†
10.31†
Description
Amendment No. 1 to Third Amended and Restated Credit Agreement, dated May 5, 2023, by and among Vishay
Precision Group, Inc., the lenders party thereto, Citizens Bank, National Association, Wells Fargo Bank, National
Association, and JPMorgan Chase Bank, National Association (previously filed as an exhibit to the Registrant’s
Quarterly Report on Form 10-Q filed with the SEC on May 9, 2023 and incorporated herein by reference).
Form of Indemnification Agreement with directors (previously filed as an exhibit to the Registrant's Quarterly
Report on Form 10-Q filed with the SEC on May 11, 2016 and incorporated herein by reference).
Employment Agreement, dated March 15, 2020, by and between Vishay Advanced Technologies, Ltd. and Amir
Tal (previously filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May
5, 2020 and incorporated herein by reference).
10.32† Amendment to Employment Agreement, dated May 8, 2017, by and among Vishay Precision Group, Inc. and
William M. Clancy (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with
the SEC on May 9, 2017 and incorporated herein by reference).
10.33† Amendment to Employment Agreement, dated August 7, 2017, by and among Vishay Advanced Technologies,
Ltd. and Ziv Shoshani (previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed
with the SEC on August 8, 2017 and incorporated herein by reference).
10.34† Vishay Precision Group, Inc. 2017 Non-Employee Director Compensation Plan (previously filed as Exhibit 10.1
to the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 9, 2018 and incorporated herein by
reference).
10.35† Amendment to Employment Agreement,dated March 10, 2019, by and among Vishay Advanced Technologies
Ltd. and Ziv Shoshani (previously filed as Exhibit 10.45 to the Registrant's Annual Report on Form 10-K filed
with the SEC on March 14, 2019 and incorporated herein by reference).
10.36† Amendment to Employment Agreement, dated March 11, 2019, by and among Vishay Precision Group, Inc. and
William Clancy (previously filed as Exhibit 10.46 to the Registrant's Annual Report on Form 10-K filed with the
SEC on March 14, 2019 and incorporated herein by reference).
10.37†
10.38†
10.39†
10.40
10.41†
10.42†
10.43†
10.44†
21.1
23.1
31.1
31.2
Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and Ziv Shoshani
(previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May
11, 2021 and incorporated herein by reference).
Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and William M.
Clancy (previously filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on
May 11, 2021 and incorporated herein by reference).
Amendment to Employment Agreement, dated March 4, 2021, by and between the Company and Amir Tal
(previously filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May
11, 2021 and incorporated herein by reference).
Stock Purchase Agreement, dated June 1, 2021, by and among Vishay Precision Group, Inc., Diversified
Technical Systems, Inc., the sellers identified therein, the guarantors identified therein, and Timothy J. Kippen, not
individually but solely in its capacity as the representative of the Sellers and Guarantors (previously filed as
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 1, 2021 and incorporated
herein by reference).
Form of Stock Option Agreement under the Vishay Precision Group, Inc. 2022 Stock Incentive Plan (previously
filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 filed with the SEC on May 26, 2022).
Form of Restricted Stock Unit Agreement (Time-based Vesting) under the Vishay Precision Group, Inc. 2022
Stock Incentive Plan (previously filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 filed
with the SEC on May 26, 2022).
Form of Restricted Stock Unit Agreement (Performance-based Vesting) under the Vishay Precision Group, Inc.
2022 Stock Incentive Plan (previously filed as Exhibit 4.9 to the Registrant’s Registration Statement on Form S-8
filed with the SEC on May 26, 2022).
First Amendment to Vishay Precision Group, Inc. 2017 Non-Employee Director Compensation Plan (previously
filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 8, 2022
and incorporated herein by reference).
List of Subsidiaries.
Consent of Brightman Almagor Zohar & Co, a Firm in the Deloitte Global Network, relating to the Registrant’s
financial statements.
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 - Ziv Shoshani, Chief Executive Officer.
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 - William M. Clancy, Chief Financial Officer.
- 51 -
Exhibit
No.
32.1
32.2
97.1
101
104
Description
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 - Ziv Shoshani, Chief Executive Officer.
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 - William M. Clancy, Chief Financial Officer.
Vishay Precision Group, Inc. Dodd-Frank Clawback Policy, effective October 2, 2023.
Interactive Data File (Annual Report on Form 10-K, for the year ended December 31, 2023, furnished in XBRL
(eXtensible Business Reporting Language)).
Cover Page Interactive Data File formatted as Inline XBRL and contained in Exhibit 101.
* Confidential treatment has been accorded to certain portions of this Exhibit. Omitted portions have been filed separately with
the Securities and Exchange Commission.
† Denotes a management contract or compensatory plan, contract or arrangement.
Item 16. FORM 10-K SUMMARY
None.
- 52 -
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: February 29, 2024
VISHAY PRECISION GROUP, INC.
By:
/s/ Ziv Shoshani
Ziv Shoshani
President and Chief Executive Officer
POWER OF ATTORNEY
Vishay Precision Group, Inc., a Delaware corporation, and each person whose signature appears below constitutes and appoints
each of Ziv Shoshani and William M. Clancy, and either of them, such person’s true and lawful attorney-in-fact, with full
power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities,
to sign on such person’s behalf, individually and in each capacity stated below, any and all amendments to this Annual Report
on Form 10-K and other documents in connection therewith, and to file the same and all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in person, thereby ratifying and confirming all that
said attorneys-in-fact, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed by the
following persons on behalf of the Registrant in the capacities and on the date indicated below.
Signature
/s/ Ziv Shoshani
Ziv Shoshani
Title
Chief Executive Officer and Director
(Principal Executive Officer)
Date
February 29, 2024
/s/ William M. Clancy
William M. Clancy
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)
February 29, 2024
/s/ Saul V. Reibstein
Saul V. Reibstein
/s/ Marc Zandman
Marc Zandman
/s/ Timothy V. Talbert
Timothy V. Talbert
/s/ Janet Clarke
Janet Clarke
/s/ Bruce Lerner
Bruce Lerner
/s/ Wesley Cummins
Wesley Cummins
/s/ Sejal Shah Gulati
Sejal Shah Gulati
Director
Director
Director
Director
Director
Director
Director
- 53 -
February 29, 2024
February 29, 2024
February 29, 2024
February 29, 2024
February 29, 2024
February 29, 2024
February 29, 2024
[This page intentionally left blank]
Vishay Precision Group, Inc.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1197 )
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
F- 2
F- 4
F- 6
F- 7
F- 8
F- 9
F- 10
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Vishay Precision Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vishay Precision Group, Inc. and subsidiaries (the
"Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income,
equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively
referred to as the "financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in
the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in
Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 29, 2024, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Goodwill – DSI Reporting Unit — Refer to Notes 1 and 4 to the Financial Statements
Critical Audit Matter Description
The Company's quantitative goodwill impairment test involves the comparison of the fair value of each reporting unit or asset
to its carrying value.
In estimating the fair value of the DSI reporting unit, the Company used the income approach to evaluate the estimated fair
value of the reporting unit. The income approach to valuation requires management to make significant estimates and
assumptions related to future revenues, profitability, working capital requirements and selection of discount and long term
growth rates. Changes in these estimates and assumptions could have a significant impact on the fair value of the reporting unit.
The carrying value of goodwill as of December 31, 2023, for the DSI reporting unit is $16.9 million. The fair value of the DSI
reporting unit exceeds the carrying value, therefore, no impairment was recognized.
F-2
We identified goodwill for the DSI reporting unit as a critical audit matter because of the significant judgments made by
management to estimate the fair value of the reporting unit and the difference between the fair value and carrying value. This
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value
specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions
related to forecasts of future revenues, profitability, working capital requirements and selection of the discount and long term
growth rates.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future revenues, profitability, working capital requirements and selection of
discount and long term growth rates used by management to estimate the fair value of the DSI reporting unit included the
following, among others:
• We tested the effectiveness of controls over management’s impairment evaluation, including those over the
determination of the fair value of the DSI reporting unit, such as controls related to management’s forecasts of future
revenues, profitability, working capital requirements and selection of discount and long term growth rates.
• We evaluated management’s ability to accurately forecast operating performance by comparing actual results to
management’s historical forecasts.
• We evaluated the reasonableness of management’s forecasts of future revenues, profitability and working capital
requirements by comparing the forecasts to:
– Historical revenues, profitability and working capital requirements.
–
Internal communications to management and the Board of Directors.
With the assistance of our fair value specialists, we evaluated the valuation methodologies and the reasonableness of the
discount and long term growth rates, including testing the underlying source information and the mathematical accuracy of the
calculations, and developing a range of independent estimates and comparing those to the discount and long term growth rates
selected by management.
/s/ Brightman Almagor Zohar & Co.
Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
February 29, 2024
We have served as the Company’s auditor since 2019.
F-3
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets
(In thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowances for credit losses of $508 and $709, respectively
Inventories:
Raw materials
Work in process
Finished goods
Inventories
Prepaid expenses and other current assets
Total current assets
Property and equipment:
Land
Buildings and improvements
Machinery and equipment
Software
Construction in progress
Accumulated depreciation
Property and equipment, net
Goodwill
Intangible assets, net
Operating lease right-of-use assets
Other assets
Total assets
December 31,
2023
December 31,
2022
$
83,965 $
56,438
88,562
60,068
33,973
26,594
27,572
88,139
14,520
243,062
4,154
72,952
131,738
9,619
11,379
(139,206)
90,636
45,734
44,634
26,953
20,547
471,566 $
$
31,852
26,401
26,407
84,660
18,516
251,806
4,117
71,613
125,301
9,539
10,075
(133,518)
87,127
45,544
48,217
24,342
19,706
476,742
Continues on the following page
F-4
VISHAY PRECISION GROUP, INC.
Consolidated Balance Sheets (continued)
(In thousands, except share amounts)
Liabilities and equity
Current liabilities:
Trade accounts payable
Payroll and related expenses
Other accrued expenses
Income taxes
Current portion of operating lease liabilities
Total current liabilities
Long-term debt
Deferred income taxes
Operating lease liabilities
Other liabilities
Accrued pension and other postretirement costs
Total liabilities
Commitments and contingencies
Equity:
December 31,
2023
December 31,
2022
$
11,698 $
18,971
22,427
4,524
4,004
61,624
31,856
3,490
22,625
14,770
7,276
141,641
13,792
21,966
20,306
4,064
4,208
64,336
60,799
4,212
20,043
13,053
7,777
170,220
Preferred stock, par value $1.00 per share: authorized - 1,000,000 shares; none issued
—
—
Common stock, par value $0.10 per share: authorized - 25,000,000 shares;
12,405,151 shares outstanding as of December 31, 2023 and 12,546,375 shares
outstanding as of December 31, 2022
Class B convertible common stock, par value $0.10 per share: authorized - 3,000,000
shares; 1,022,887 shares outstanding as of December 31, 2023 and December 31,
2022
Treasury stock, at cost - 893,293 shares held at December 31, 2023 and 704,880
shares held at December 31, 2022
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total Vishay Precision Group, Inc. stockholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
1,330
1,325
103
103
(17,460)
202,672
182,066
(38,869)
329,842
83
329,925
471,566 $
(11,504)
201,164
156,359
(40,900)
306,547
(25)
306,522
476,742
$
See accompanying notes.
F-5
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Net revenues
Costs of products sold
Gross profit
Years ended December 31,
2022
2023
2021
$
355,048 $
204,706
150,342
362,580 $
212,978
149,602
317,919
192,777
125,142
Selling, general, and administrative expenses
106,828
104,285
—
—
1,560
41,954
(3,974)
456
(3,518)
—
—
1,518
43,799
(2,269)
3,558
1,289
95,273
1,198
1,223
76
27,372
(1,230)
(230)
(1,460)
38,436
45,088
25,912
12,426
8,535
5,469
26,010
303
25,707 $
36,553
490
20,443
222
36,063 $
20,221
1.89 $
1.88 $
2.65 $
2.63 $
1.49
1.48
13,574
13,653
13,628
13,688
13,616
13,657
Acquisition costs
Impairment of goodwill and indefinite-lived intangibles
Restructuring costs
Operating income
Other income (expense):
Interest expense
Other
Other income (expenses)
Income before taxes
Income tax expense
Net earnings
Less: net earnings attributable to noncontrolling interests
Net earnings attributable to VPG stockholders
Basic earnings per share attributable to VPG stockholders
Diluted earnings per share attributable to VPG stockholders
$
$
$
Weighted average shares outstanding - basic
Weighted average shares outstanding - diluted
See accompanying notes.
F-6
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Comprehensive Income
(In thousands)
Net earnings
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
Pension and other postretirement actuarial items
Other comprehensive income (loss), net of tax
Years ended December 31,
2022
2023
2021
$
26,010 $
36,553 $
20,443
2,227
(196)
2,031
(11,213)
5,321
(5,892)
(4,684)
2,347
(2,337)
Comprehensive income
28,041
30,661
18,106
Less: comprehensive income attributable to noncontrolling interests
303
490
222
Comprehensive income attributable to VPG stockholders
$
27,738 $
30,171 $
17,884
See accompanying notes.
F-7
VISHAY PRECISION GROUP, INC.
Consolidated Statements of Cash Flows
(In thousands)
Operating activities
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Impairment of goodwill and indefinite-lived intangibles
Depreciation and amortization
Loss (gain) on disposal of property and equipment
Gain on sale of short term investment
Reclassification of foreign currency translation adjustment related to disposal of
subsidiary
Share-based compensation expense
Inventory write-offs for obsolescence
Deferred income taxes
Foreign currency impacts and other items
Net changes in operating assets and liabilities, net of acquisition:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Trade accounts payable
Other current liabilities
Other non current assets and liabilities, net
Accrued pension and other postretirement costs, net
Net cash provided by operating activities
Investing activities
Capital expenditures
Proceeds from sale of property and equipment
Purchase of short term investment
Proceeds from sale of short term investment
Purchase of business
Net cash used in investing activities
Financing activities
Principal payments on long-term debt
Proceeds from revolving facility
Payments on revolving facility
Purchase of treasury stock
Distributions to noncontrolling interests
Payments of employee taxes on certain share-based arrangements
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of investing transactions:
Capital expenditures accrued but not yet paid
Supplemental disclosure of financing transactions:
Excise tax on net share repurchases accrued but not yet paid
See accompanying notes.
$
$
$
F-8
Years ended December 31,
2023
2022
2021
$
26,010 $
36,553 $
20,443
—
15,550
75
(14)
—
2,290
2,099
(156)
660
3,794
(4,898)
4,172
(2,658)
56
439
(1,526)
45,893
(15,154)
40
(1,000)
1,014
—
(15,100)
—
—
(29,000)
(5,915)
(195)
(825)
(35,935)
545
(4,597)
88,562
—
15,353
(117)
—
191
2,439
1,650
(2,040)
(3,915)
(4,777)
(11,943)
(2,808)
889
3,393
(1,413)
(426)
33,029
1,223
14,996
(5)
—
—
2,244
2,288
(3,256)
(1,018)
(8,038)
(8,626)
(56)
3,292
11,637
(624)
(963)
33,537
(21,288)
(17,061)
451
—
—
—
(20,837)
—
—
—
(2,739)
(457)
(435)
(3,631)
(4,334)
4,227
84,335
231
—
—
(47,216)
(64,046)
(18)
20,000
—
—
(313)
(853)
18,816
(2,410)
(14,103)
98,438
84,335
83,965 $
88,562 $
2,317 $
1,731 $
3,068
41 $
— $
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Vishay Precision Group, Inc.
Notes to Consolidated Financial Statements
Note 1 – Background and Summary of Significant Accounting Policies
Background
Vishay Precision Group, Inc. (“VPG” or the “Company”) is a global, diversified company focused on precision measurement
and sensing technologies that help power the future by bridging the physical world with the digital one. Many of our
specialized sensors, weighing solutions, and measurement systems are “designed-in” by our customers, and address growing
applications across a diverse array of industries and markets. Our products are marketed under brand names that we believe are
characterized as having a very high level of precision and quality, and we employ an operationally diversified structure to
manage our businesses.
Principles of Consolidation
The consolidated financial statements include the accounts of the individual entities in which the Company maintained a
controlling financial interest. For those subsidiaries in which the Company’s ownership is less than 100 percent, the outside
stockholders’ interests are shown as noncontrolling interests in the accompanying consolidated balance sheets. All transactions,
accounts, and profits between individual members comprising the Company have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ significantly from those estimates.
Revenue Recognition
The Company derives substantially all of its revenue from product sales. The Company recognizes the vast majority of its sales
at a point-in-time. It utilizes the core principle of recognizing revenue when the Company satisfies performance obligations as
evidenced by the transfer of control of its products to the customer.
Such revenues are derived from purchase orders and/or contracts with customers. Each contract has the promise to transfer the
control of the products, each of which is individually distinct and is considered the identified performance obligation. As part of
the decision to enter into each contract, the Company evaluates the customer’s credit risk, but its contracts do not have any
significant financing components, as payment is generally due net 30 to 60 days after delivery. In accordance with contract
terms, revenue from the Company’s product sales is recognized at the time of product shipment from its facilities or delivery to
the customer location, as determined by the agreed upon shipping terms.
Under the terms of some of its contracts, the Company may be required to perform certain installation services. These
installation services are performed at the time of product delivery or at some point thereafter. The installation services do not
significantly modify the product provided, and although the Company may be required contractually to provide these services,
the installation services could be performed by a third party or the customer. Thus, these installation services are a distinct
performance obligation. In most of the applicable contracts, this installation service element is immaterial in the context of the
agreement. When the installation services are accounted for as a separate performance obligation, the Company allocates the
transaction price to this element based on its relative standalone selling price.
Given the specialized nature of the Company's products, the Company generally does not allow product returns. Shipping and
handling costs are recorded to Costs of product sold when control of the product has transferred to the customer. The Company
offers standard product warranties. Warranty related costs continue to be recognized as expense when the products are sold.
Sales, value added taxes and other taxes collected concurrent with revenue-producing activities are excluded from revenue. See
Note 2 for further details on Revenues.
Research and Development Expenses
Research and development costs are expensed as incurred. The amount charged to expense for research and development was
$20.4 million, $19.8 million, and $17.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.
F-10
Note 1 – Background and Summary of Significant Accounting Policies (continued)
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and
tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income tax expense in the period that
includes the enactment date.
The Company records net deferred tax assets to the extent it believes such assets will "more likely than not" be realized. In
making this determination, the Company considers all positive and negative evidence, including historic earnings, projected
future income, and cost-effective tax-planning strategies. When the Company determines that its ability to realize deferred tax
assets is not "more likely than not", the Company adjusts its deferred tax asset valuation allowance, which increases income tax
expense.
The Company records uncertain tax positions on the basis of a two-step process in which the Company first determines whether
it is "more likely than not" that the tax positions will be sustained based on the technical merits of the position and then
measures those tax positions that meet the more-likely-than-not recognition threshold. The Company recognizes the largest
amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the tax authority.
The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense in the
accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability
line in the consolidated balance sheets.
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and highly liquid investments with original maturities of three months or
less when purchased. Highly liquid investments with maturities greater than three months are classified as short-term
investments. There were no investments classified as short-term investments at December 31, 2023 or 2022.
Allowance for Credit Losses
The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments.
In determining the amount of the allowance for credit losses, the Company considers historical loss data, customer specific
information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform
adjustments to historical loss data. The allowance for credit losses was $0.5 million and $0.7 million at December 31, 2023 and
2022, respectively. The credit loss was $0.2 million, $0.0 million, and $0.1 million for the years ended December 31, 2023,
2022, and 2021, respectively.
Inventories
Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market based on net realizable value.
Inventories are adjusted for estimated excess and obsolescence and written down to net realizable value based upon estimates of
future demand, technology developments, and market conditions.
Property and Equipment
Property and equipment are carried at cost and is depreciated principally by the straight-line method based upon the estimated
useful lives of the assets. Machinery and equipment are being depreciated over useful lives of seven to fifteen years. Buildings
and building improvements are being depreciated over useful lives of twenty to forty years or the lease term. Software is being
depreciated over useful lives of three to five years. Construction in progress is not depreciated until the assets are placed in
service. Depreciation expense was $11.8 million, $11.5 million, and $11.7 million for the years ended December 31, 2023,
2022, and 2021, respectively, which included software depreciation expense of $0.8 million, $0.7 million, and $0.6 million for
the years ended December 31, 2023, 2022, and 2021, respectively.
Business Combinations
The Company allocates the purchase price of an acquired company, including when applicable, the fair value of contingent
consideration between tangible and intangible assets acquired and liabilities assumed from the acquired businesses based on
estimated fair values, with any residual of the purchase price recorded as goodwill. Estimating fair values requires significant
judgments, estimates and assumptions including but not limited to: discount rates, future cash flows and the economic lives of
trade names, technology, and customer relationships. These estimates are based on historical experience and information
obtained from the management of the acquired companies, and are inherently uncertain.
F-11
Note 1 – Background and Summary of Significant Accounting Policies (continued)
Goodwill and Other Intangible Assets
Goodwill and indefinite-lived trademarks are tested for impairment at least annually, and whenever events or changes in
circumstances occur indicating that it is "more likely than not" impairment may have been incurred. The Company has the
option to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is
less than its carrying value as a basis for determining if it is necessary to perform the quantitative goodwill impairment test.
However, if the Company concludes otherwise, then it is required to perform the quantitative impairment test by calculating the
fair value of the reporting unit and comparing it against its carrying value. If the fair value exceeds the carrying value, no
further evaluation is required and no impairment loss is recognized. An impairment charge would be recognized to the extent
the carrying value of goodwill exceeds the reporting unit fair value.
The indefinite-lived trade names are tested for impairment either by employing the qualitative approach outlined above, or by
comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief
from royalty method. Any excess carrying value over the applicable fair value is recognized as impairment. Any impairment
would be recognized in the reporting period in which it has been identified.
The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth
fiscal quarter each year. As described in Note 4 to the consolidated financial statements, the 2023 and 2022 annual impairment
tests resulted in no impairment. In 2021, an impairment charge was recorded.
Definite-lived intangible assets, such as customer relationships, patents and acquired technology, non-competition agreements,
and certain trade names are amortized on a straight-line method over their estimated useful lives. Patents and acquired
technology are being amortized over useful lives of seven to twenty years. Customer relationships are being amortized over
useful lives of five to fifteen years. Trade names are being amortized over useful lives of seven to ten years. Non-competition
agreements are being amortized over periods of five to ten years. The Company continually evaluates the reasonableness of the
useful lives of these assets. Additionally, the Company reviews the carrying values of these assets for possible impairment
whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable based on
undiscounted estimated cash flows expected to result from its use and eventual disposition.
Impairment of Long-Lived Assets
The carrying value of long-lived assets held-and-used, other than goodwill and indefinite-lived intangible assets, is evaluated
when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of a long-lived
asset group is considered impaired when the total projected undiscounted cash flows from such asset group are separately
identifiable and are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying
value exceeds the fair market value of the long-lived asset group. Fair market value is determined primarily using present value
techniques based on projected cash flows from the asset group. Losses on long-lived assets held-for-sale, other than goodwill
and indefinite-lived intangible assets, are determined in a similar manner, except that fair market values are reduced for disposal
costs.
Foreign Currency Translation
The Company has significant operations outside of the United States. The Company's operations in Europe, Canada, and certain
locations in Asia primarily generate and expend cash in local currencies, and accordingly, these subsidiaries utilize the local
currency as their functional currency. The Company’s operations in Israel and certain locations in Asia primarily generate cash
in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency.
For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated balance
sheets have been translated at the rate of exchange as of the balance sheet date. Revenues and expenses are translated at the
average exchange rate for the year. Translation adjustments do not impact the consolidated statements of operations and are
reported as a separate component of accumulated other comprehensive loss within the statement of comprehensive income.
Foreign currency transaction gains and losses are included in the results of operations.
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 consolidated statements of operations.
F-12
Note 1 – Background and Summary of Significant Accounting Policies (continued)
Share-Based Compensation
Compensation costs related to share-based payments are recognized in the consolidated financial statements. The amount of
compensation cost is measured based on the grant-date fair value of the equity instruments issued. For service-based awards,
compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in
exchange for the award. The Company recognizes forfeitures as they occur. For performance based awards, the Company
recognizes compensation cost for awards that are expected to vest based on whether performance criteria are expected to be
met.
Leases
The Company determines if an arrangement is or contains a lease at inception or modification of such agreement. The
arrangement is or contains a lease if the contract conveys the right to control the use of the identified asset for a period in
exchange for consideration.
Lease right of use assets and liabilities are recognized based on the present value of future minimum lease payments over the
expected term at commencement date. As the implicit rate is not determinable in most of the Company's leases, the Company's
incremental borrowing rate is used as the basis to determine the present value of future lease payments. The expected lease
terms include options to extend or terminate. The period which is subject to an option to extend the lease is included in the lease
term if it is reasonably certain that the option will be exercised. Some of these leases contain variable payment provisions that
depend on an index or rate, initially measured using the index or rate at the lease commencement date and are therefore not
included in our future minimum lease payments. Variable payments are expensed in the periods incurred. Lease expense for
minimum lease payments is recognized on a straight-line basis over the expected lease term. The Company uses the practical
expedients to exclude from balance sheet reporting leases with initial terms of 12 months or less and to exclude non-lease
components from lease right of use assets and corresponding liabilities.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded
when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably
estimated.
Recent Accounting Pronouncements
The Company evaluates the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial
Accounting Standards Board ("FASB").
Recent accounting pronouncements not yet adopted:
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that
are regularly reviewed by the chief operating decision maker ("CODM") and included within each reported measure of segment
profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable
segment’s profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP,
the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance
and deciding how to allocate resources. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The Company is currently
evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
This ASU requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items
that meet a quantitative threshold. The amendment also includes other changes to improve the effectiveness of income tax
disclosures, including further disaggregation of income taxes paid for individually significant jurisdictions. This ASU is
effective for annual periods beginning after December 15, 2024. Adoption of this ASU should be applied on a prospective
basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated
financial statements and disclosures.
Note 2 – Revenues
The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues
generated by subsidiaries within that geographic location (in thousands):
F-13
Note 2 – Revenues (continued)
United States
United Kingdom
Other Europe
Israel
Asia
Canada
United States
United Kingdom
Other Europe
Israel
Asia
Canada
United States
United Kingdom
Other Europe
Israel
Asia
Canada
Year Ended December 31, 2023
Sensors
Weighing Solutions
Measurement
Systems
Total
$
49,998 $
55,421 $
55,703 $
3,833
32,262
17,772
35,918
—
14,980
38,649
292
13,156
30
360
5,430
—
8,861
22,383
$
$
$
$
139,783 $
122,528 $
92,737 $
Year Ended December 31, 2022
Sensors
Weighing Solutions
Measurement
Systems
Total
51,246 $
58,076 $
52,435 $
3,481
31,938
28,413
37,143
—
15,697
37,490
470
13,974
8
572
5,168
—
7,537
18,932
152,221 $
125,715 $
84,644 $
Year Ended December 31, 2021
Sensors
Weighing Solutions
Measurement
Systems
Total
39,845 $
52,542 $
40,095 $
3,083
25,859
22,391
36,683
—
16,577
39,549
994
15,719
9
752
2,503
—
7,476
13,842
$
127,861 $
125,390 $
64,668 $
The following table disaggregates net revenue by market sector (in thousands):
Years Ended December 31,
2023
2022
2021
Test & Measurement
Avionics, Military & Space
Transportation
Other Markets
Industrial Weighing
General Industrial
Steel
Contract Assets & Liabilities
$
$
73,986 $
38,270
55,060
72,372
43,898
19,917
51,545
355,048 $
78,406 $
31,399
55,892
79,750
52,109
21,179
43,845
161,122
19,173
76,341
18,064
57,935
22,413
355,048
161,757
19,750
74,596
28,883
58,654
18,940
362,580
132,482
20,412
67,911
23,385
59,878
13,851
317,919
64,124
27,303
49,562
71,577
50,626
16,771
37,956
362,580 $
317,919
Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a
payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable.
Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our
F-14
Note 2 – Revenues (continued)
performance obligations. Our payment terms vary by the type and location of the products offered. The term between
invoicing and when payment is due is not significant.
The outstanding contract assets and liability accounts were as follows (in thousands):
December 31, 2022
December 31, 2023
(Decrease) Increase
Contract Asset
Unbilled Revenue
Contract Liability
Accrued Customer Advances
$
$
$
3,990 $
2,989 $
(1,001) $
7,983
8,712
729
The amount of revenue recognized during the year ended December 31, 2023 that was included in the contract liability balance
at December 31, 2022 was $7.3 million.
Note 3 – Acquisition Activity
Diversified Technical Systems, Inc.
On June 1, 2021, VPG completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a
manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $47.2 million. The
Company used cash on hand and borrowings under its revolving credit facility to fund the purchase price under the purchase
agreement. DTS reports into the Company's Measurement Systems segment. The following table summarizes the final fair
values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands):
Working capital
Property and equipment
Deferred income tax liability
Intangible assets:
Acquired technology
Customer relationships
Trade names
Total intangible assets
Fair value of acquired identifiable assets
Purchase price
Goodwill
(a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll.
June 1, 2021
12,494
$
1,209
(6,215)
13,167
8,135
2,393
23,695
31,183
47,216
16,033
$
$
The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired.
The estimated weighted average useful lives for the acquired technology and customer relationships are 15 years. Trade names
are treated as indefinite-lived intangible assets. None of the goodwill associated with DTS is deductible for income tax
purposes. The Company recorded acquisition costs associated with this transaction of $1.2 million in the second quarter of
2021, which included legal fees, appraisal fees, investments banker fees and insurance costs.
F-15
Note 4 – Goodwill and Other Intangible Assets
The Company has four reporting units to which goodwill is allocated: steel, on-board weighing, DSI, and DTS.
For the steel and on-board weighing goodwill reporting units, the Company performed the qualitative assessment, which
included assessment of macroeconomic conditions, industry and market considerations, cost factors, overall financial
performance, and other entity specific events which could impact the reporting unit. Based on this review, it was determined
that the fair value of each of those reporting units was in excess of its carrying value and therefore no quantitative impairment
test was required.
For the DSI and DTS goodwill reporting units, the Company performed the quantitative impairment test. In estimating the fair
value of our DSI and DTS reporting units the Company used the income approach. The income approach to valuation requires
management to make significant estimates and assumptions related to future revenues, profitability, working capital
requirements and selection of discount rate and long term growth rate. Changes in these estimates and assumptions could have a
significant impact on the fair value of the reporting units.
The Company's required goodwill and indefinite-lived asset annual impairment test is completed as of the first day of the fourth
fiscal quarter each year. In 2023, the results of the quantitative impairment test for the DSI and DTS reporting units indicated
that the fair value of both reporting units exceeded their carrying values, and therefore no impairment was recognized.
Prior to 2022, the Company also had an instrumentation reporting unit. The Company's analysis in 2021 resulted in an
impairment for the instrumentation reporting unit, of $1.1 million in goodwill, which represented the remainder of the goodwill
balance, and $0.1 million in indefinite-lived intangible trade name.
The change in the carrying value of goodwill by segment is as follows (in thousands):
Balance at January 1, 2022
Adjustment to goodwill acquired
Foreign currency translation adjustment
Balance at December 31, 2022
Foreign currency translation adjustment
Total
Measurement Systems
KELK
Acquisition
DSI
Acquisition
16,910
DTS
Acquisition
$
15,903 $
$
45,830 $
6,706 $
130
(416)
45,544
190
—
(393)
6,313
175
—
(23)
16,887
15
130
—
16,033
—
Weighing
Solutions
Stress-Tek
Acquisition
6,311
—
—
6,311
—
Balance at December 31, 2023
$
45,734 $
6,488 $
16,902
$
16,033 $
6,311
F-16
Note 4 – Goodwill and Other Intangible Assets (continued)
Intangible assets were as follows (in thousands):
December 31,
2023
2022
Intangible assets subject to amortization
(Definite-lived):
Patents and acquired technology
Customer relationships
Trade names
Non-competition agreements
Accumulated amortization:
Patents and acquired technology
Customer relationships
Trade names
Non-competition agreements
Net intangible assets subject to amortization
Intangible assets not subject to amortization
(Indefinite-lived):
Trade names
$
32,752 $
33,537
1,517
9,956
77,762
(11,048)
(18,306)
(1,517)
(9,939)
(40,810)
36,952 $
32,570
33,226
1,521
10,133
77,450
(9,059)
(16,209)
(1,521)
(10,098)
(36,887)
40,563
7,682
44,634 $
7,654
48,217
$
$
Certain intangible assets are subject to foreign currency translation.
Amortization expense was $3.8 million, $3.9 million, and $3.3 million, for the years ended December 31, 2023, 2022, and
2021, respectively.
Estimated annual amortization expense for each of the next five years is as follows (in thousands):
2024
2025
2026
2027
2028
$
3,722
3,705
3,705
3,669
3,081
Note 5 – Restructuring Costs
Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during
the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these
costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially
recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional
expense in future periods or to reverse part of the previously recorded charges.
The Company recorded restructuring costs of $1.6 million, $1.5 million, and $0.1 million during the years ended December 31,
2023, 2022, and 2021, respectively. The restructuring costs were comprised primarily of employee termination costs, including
severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.
The following table summarizes the activity to date related to these programs in the accrued restructuring liability, which is
comprised of the activity associated primarily with the employee termination costs. The accrued restructuring liability balance
as of December 31, 2023 and 2022, respectively, is included in other accrued expenses in the accompanying consolidated
balance sheets (in thousands):
F-17
Note 5 – Restructuring Costs (continued)
Balance at beginning of year
Restructuring charges
Cash payments
Foreign currency translation
Balance at end of year
Note 6 – Income Taxes
December 31,
2023
2022
$
183 $
1,560
(1,496)
2
249 $
$
—
1,518
(1,338)
3
183
For financial reporting purposes, income before taxes includes the following components (in thousands):
$
$
$
Years ended December 31,
2022
2023
2021
(4,111) $
42,547
38,436 $
(4,979) $
50,067
45,088 $
(5,956)
31,868
25,912
Years ended December 31,
2022
2023
2021
517 $
162
11,903
12,582
154
(628)
318
21 $
97
10,457
10,575
(2,808)
109
659
(156)
12,426 $
(2,040)
8,535 $
$
245
38
8,442
8,725
(2,992)
(588)
324
(3,256)
5,469
Domestic
Foreign
The expense (benefit) for income taxes is comprised of (in thousands):
Current:
Federal
State and local
Foreign
Deferred:
Federal
State and local
Foreign
Total income tax expense
F-18
Note 6 – Income Taxes (continued)
A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate to the actual income tax provision
is as follows (in thousands):
Tax at statutory rate
State income taxes, net of U.S. federal tax benefit
U.S. GILTI tax, net of foreign tax credits
Effect of foreign operations
Residual U.S. tax on foreign earnings
Change in valuation allowance
Change in unrecognized tax benefits, net
Impairment of goodwill
Specialty tax credits
Statutory rate changes
Effect of foreign exchange
Other
Total income tax expense
Years ended December 31,
2022
2023
2021
$
8,072 $
(368)
72
2,378
899
1,270
476
—
(520)
56
128
(37)
12,426 $
$
9,468 $
164
8
1,246
291
(1,629)
(1,000)
—
(639)
3
667
(44)
5,441
(391)
77
2,096
(258)
(1,204)
107
237
(333)
(282)
(35)
14
8,535 $
5,469
In 2023, the Company recognized deferred tax benefits of $0.2 million on net operating loss carryforwards generated in certain
foreign jurisdictions, which is included in deferred tax expense (benefit) above.
The 2017 Tax Cuts and Jobs Act subjects a U.S. shareholder to tax on Global Intangible Low-Taxed Income (“GILTI”) earned
by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed
Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis
differences expected to reverse as GILTI in the future years or provide for tax expense related to GILTI in the year the tax is
incurred. The Company has elected to recognize tax expense related to GILTI in the year the tax is incurred.
The Company recognized approximately $22.5 million and $26.3 million of GILTI for the years ended December 31, 2023 and
2022, respectively. The U.S. tax on GILTI, net of foreign tax credits and research credits, was less than $0.1 million for each of
the years ended December 31, 2023 and 2022. Any excess foreign tax credits associated with GILTI are lost and cannot be
carried forward to future years.
Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
F-19
Note 6 – Income Taxes (continued)
Deferred tax assets:
Pension and other postretirement costs
Inventories
Net operating/capital loss and interest carryforwards
Tax credit carryforwards
Deferred compensation
Research and development costs
Other accruals and reserves
Total gross deferred tax assets
Less: valuation allowance
Deferred tax liabilities:
Tax over book depreciation
Investment in subsidiary
Intangible assets, including tax deductible goodwill
Total gross deferred tax liabilities
December 31,
2023
2022
$
1,082 $
4,102
10,800
1,390
2,845
4,707
3,709
28,635
(13,136)
15,499
(2,151)
(2,121)
(10,843)
(15,115)
1,775
4,057
9,060
2,372
2,921
2,940
2,228
25,353
(10,726)
14,627
(1,453)
(2,137)
(10,675)
(14,265)
Net deferred tax assets
$
384 $
362
In 2015, the Company established a valuation allowance with respect to substantially all of its U.S. deferred tax assets due to
uncertainty regarding the realization of these assets. Throughout 2022 and 2023, the Company reassessed its ability to realize its
U.S. and other deferred tax assets by considering both positive and negative evidence regarding realization. The most
significant negative evidence is continuing cumulative operating losses in the U.S. The impact of the acquisitions of Stress-Tek,
Pacific Instruments, DSI and DTS was also considered in determining the realization of the U.S. deferred tax assets. Other
aspects, such as operating results, additional interest expense and additional tax deductions related to the Stress-Tek acquisition,
were also considered. The Company also considered positive evidence such as tax planning strategies and the projected
benefits of our restructuring efforts. However, there was insufficient positive evidence to overcome the negative evidence.
In June 2021, the Company acquired DTS. DTS's opening balance sheet included $26.4 million of gross deferred tax liabilities,
including $2.4 million of indefinite-lived liabilities. The acquisition contributed to a $1.6 million net reduction in valuation
allowance and deferred tax benefit for the Company in 2021. In the second quarter of 2022, the Company completed the
purchase accounting for the acquisition of DTS, which resulted in a $0.3 million reduction of deferred tax assets and
corresponding increase in goodwill.
Overall, the cumulative losses and the acquisition impacts still indicate that realization of our U.S. deferred tax assets remains
uncertain such that the Company cannot conclude that it is "more likely than not" that the deferred tax assets will be
recoverable. We will continue to monitor the realization of U.S. deferred tax assets and reduce the valuation allowance if, and
when, sufficient positive evidence of realization exists. At December 31, 2023 and 2022, the valuation allowance on U.S.
deferred tax assets was approximately $10.9 million and $8.7 million, respectively. The net change in this valuation allowance
was approximately $2.3 million, of which approximately $0.5 million related to state valuation allowances.
The change in valuation allowance related to state taxes exclusive of rate changes was $0.5 million benefit and $0.4 million
expense for the years ended December 31, 2023 and 2022, respectively.
The Company also has valuation allowances of $2.2 million and $2.1 million at December 31, 2023 and 2022, respectively,
with respect to certain foreign net operating loss and capital loss carryforwards.
F-20
Note 6 – Income Taxes (continued)
Significant valuation allowances are as follows (in thousands):
Jurisdiction
U.S. federal
U.S. state (net of U.S. federal tax benefit)
Israel - capital losses
December 31,
2023
2022
$
4,402 $
6,545
1,369
2,647
6,026
1,287
The following table summarizes significant net operating losses, capital losses and credit carryforwards as of December 31,
2023 (in thousands):
Jurisdiction
U.S. federal net operating losses
U.S. federal interest expense carryover
U.S. foreign tax credit
U.S. state net operating losses
Israel capital losses
December 31,
2023
Expiring
$
3,566 No expiration
12,209 No expiration
577
2028-2032
120,710
2023-2042
5,928 No expiration
Utilization of U.S. federal net operating losses is taken into account before the GILTI deduction allowable by IRC Section 250.
Undistributed earnings of the Company’s foreign subsidiaries were approximately $277.6 million at December 31, 2023
compared to $233.2 million at December 31, 2022. As of December 31, 2023, the Company had provided for a deferred tax
liability of approximately $2.1 million of withholding tax associated with unremitted earnings, including planned cash
distributions of $16.6 million. Substantially all of the remaining undistributed earnings are considered to be indefinitely
reinvested and accordingly no provision has been made with respect to these earnings for incremental foreign income taxes,
state income taxes or foreign withholding taxes. If those earnings were distributed to the U.S., the Company could be subject to
incremental foreign income taxes, state income taxes, and withholding taxes. Determination of the amount of unrecognized
deferred tax liability is not practicable because of the uncertainty regarding the timing of any such distribution and the impact
on existing valuation allowances. In addition to the $2.1 million, additional withholding taxes of approximately $29.2 million
are estimated to be payable upon distribution of the remaining previously unremitted earnings as of December 31, 2023.
Net income taxes paid were $10.9 million, $10.8 million and $7.7 million for the years ended December 31, 2023, 2022 and
2021, respectively.
The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions
in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax
authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they
may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established
reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures
in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined,
particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s
tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and
penalties.
F-21
Note 6 – Income Taxes (continued)
The following table summarizes changes in the Company's gross liabilities, excluding interest and penalties, associated with
unrecognized tax benefits (in thousands):
Balance at beginning of year
Addition based on tax positions related to current year
Addition based on tax positions related to prior years
Reduction based on tax positions related to prior years
Currency translation adjustments
Reduction for settled tax examinations
Reduction for payments made
Reduction for lapses of statute of limitations
Balance at end of year
December 31,
2023
2022
2021
439 $
589
—
(128)
(8)
—
(94)
—
798 $
1,282 $
1,244
176
216
—
(6)
(1,229)
—
—
439 $
52
—
—
41
—
—
(55)
1,282
$
$
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax
expense. Related to the unrecognized tax benefits noted above, for the years ended December 31, 2023, 2022 and 2021, the
Company accrued total penalties and interest of 0.0 million, $(0.2) million and $0.1 million, respectively. As of December 31,
2023, 2022 and 2021, accrued penalties and interest were $0.0 million, $0.0 million and $0.2 million, respectively.
Included in the balance of unrecognized tax benefits as of December 31, 2023, 2022, and 2021 is $0.8 million, $0.4 million, and
$1.3 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. The Company believes that it
is reasonably possible that an increase in unrecognized tax benefits related to foreign exposures of between $0.1 million and
$0.2 million may be necessary in 2024. Furthermore, as of December 31, 2023, the Company does not anticipate that any of its
current unrecognized tax benefits will reverse within the next calendar year due to the expiration of the statute of limitations.
The Company and its subsidiaries file U.S. federal income tax returns, as well as income tax returns in various state, local, and
foreign jurisdictions. The Company files federal, state, and local income tax returns on a combined, unitary, or stand-alone
basis. The statute of limitations in those jurisdictions generally ranges from 3 to 4 years. Additionally, the Company's foreign
subsidiaries file income tax returns in the countries in which they have operations and the statutes of limitations in those
jurisdictions generally range from 3 to 10 years.
During the fourth quarters of 2021 and 2022, the Company concluded tax examinations in Israel for one of its subsidiaries
covering 2016 and 2017 through 2020, respectively. The conclusions of the audits resulted in the release of $1.4 million of
reserves for uncertain tax positions, including accrued interest.
During the third quarter of 2022, the Company concluded tax examinations in Germany for two of its subsidiaries, covering the
years 2017 through 2019. The conclusion of the tax examinations resulted in no significant change in tax.
During the fourth quarter of 2022, the Company concluded a tax examination in Taiwan for one of its subsidiaries, covering the
year 2020. The conclusion of the tax examinations resulted in no change in tax.
During the fourth quarter of 2023, the Company received notice that an examination of 2021 and 2022 will begin in the first
quarter of 2024 for one of its subsidiaries in France. The Company also concluded a tax examination in Taiwan for one of its
subsidiaries, covering the year 2021. The conclusion of this tax examination resulted in no change in tax.
The Company is subject to ongoing income tax audits, administrative appeals and judicial proceedings in India spanning a
number of years.
F-22
Note 7 – Long-Term Debt
Long-term debt consists of the following (in thousands):
2020 Credit Agreement - Revolving Facility
Deferred financing costs
Long-term debt
2020 Credit Agreement
December 31,
2023
2022
$
$
32,000 $
(144)
31,856 $
61,000
(201)
60,799
On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit
Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank,
National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the
“Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a
secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $75.0 million, with a sublimit of
$10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the
Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and
general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of
$25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement
terminates on March 20, 2025.
On May 5, 2023, the Company entered into Amendment No. 1 to Third Amended and Restated Credit Agreement (the “Credit
Agreement Amendment”) amending the Third Amended and Restated Credit Agreement, dated March 20, 2020. The primary
purpose of the changes made in the Credit Agreement Amendment were to update the interest rate provisions to replace LIBOR
with SOFR for U.S. dollar denominated loans as well as update the other applicable reference borrowing rates for foreign
currency loans which took effect on June 15, 2023. Interest payable on amounts borrowed under the 2020 Revolving Facility,
taking into account the effect of the Credit Agreement Amendment, is based upon the following: (a) for revolving credit loans
denominated in US Dollars, the SOFR rate plus applicable credit spread; and (b) for revolving credit loans denominated in
foreign currencies, at other applicable local reference rates plus an interest margin. Depending upon the Company’s leverage
ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable SOFR rate to determine the
interest payable on the SOFR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum
on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter.
Additional customary fees apply with respect to letters of credit.
The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and
foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the
Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate)
of the Company and such guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and
requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of
specific financial ratios. The financial maintenance covenants include an interest coverage ratio and a leverage ratio. The
Company was in compliance with its financial maintenance covenants at December 31, 2023. If the Company is not in
compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts
outstanding pursuant to the credit facility could become immediately payable.
Other Lines of Credit
In addition to the 2020 Revolving Facility discussed above, certain subsidiaries of the Company had committed short-term lines
of credit with a foreign bank aggregating approximately $5.0 million and $5.0 million at December 31, 2023 and 2022,
respectively. The Company had outstanding letters of credit under these short-term lines of credit of $2.4 million and $3.2
million at December 31, 2023 and 2022, respectively.
F-23
Note 7 – Long-Term Debt (continued)
Aggregate annual maturities of long-term debt are as follows (in thousands):
2024
2025
2026
2027
2028
Thereafter
$
—
32,000
—
—
—
—
Interest paid on third-party debt was $4.0 million, $2.3 million, and $1.2 million during the years ended December 31, 2023,
2022, and 2021, respectively.
Note 8 – Stockholders’ Equity
The Company’s Class B convertible common stock carries ten votes per share. The common stock carries one vote per share.
Class B shares are transferable only to certain permitted transferees while the common stock is freely transferable. Class B
shares are convertible on a one-for-one basis at any time into shares of common stock. Transfers of Class B shares other than to
permitted transferees result in the automatic conversion of the Class B shares into common stock.
The Board of Directors may only declare dividends or other distributions with respect to the common stock or the Class B
convertible common stock if it grants such dividends or distributions in the same amount per share with respect to the other
class of stock. As discussed in Note 7, the Company is restricted from paying cash dividends. Stock dividends or distributions,
on any class of stock, are payable only in shares of stock of that class. Shares of either common stock or Class B convertible
common stock cannot be split, divided, or combined unless the other is also split, divided, or combined equally.
On August 8, 2022, the Board of Directors of the Company authorized the repurchase of up to 600,000 shares of the Company’s
outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan was originally set to expire on August
11, 2023, and the Board authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule
10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private
transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act. On
August 8, 2023, the Company announced that its Board of Directors extended the term of the previously approved stock
repurchase plan to August 9, 2024. From August 8, 2022 to December 31, 2023, the Company had repurchased an aggregate of
273,626 shares of its common stock under the Stock Repurchase Plan.
The Board of Directors is authorized, without further stockholder approval, to issue from time to time up to an aggregate of
1,000,000 shares of preferred stock in one or more series. The Board of Directors may fix or alter the designation, preferences,
rights and any qualification, limitations, restrictions of the shares of any series, including the dividend rights, dividend rates,
conversion rights, voting rights, redemption terms and prices, liquidation preferences and the number of shares constituting any
series. No shares of the Company’s preferred stock are currently outstanding.
F-24
Note 8 – Stockholders’ Equity (continued)
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 (in thousands):
December 31, 2021
Pension and other postretirement actuarial items
Reclassification adjustment for recognition of actuarial
items
Foreign currency translation adjustment
December 31, 2022
Pension and other postretirement actuarial items
Reclassification adjustment for recognition of actuarial
items
Foreign currency translation adjustment
Reclassification adjustment for foreign currency
translation
December 31, 2023
Pension and other postretirement actuarial items
Reclassification adjustment for recognition of actuarial
items
Foreign currency translation adjustment
Beginning
Balance
Before-
Tax
Amount
Tax
Effect
Net-of-
Tax
Amount
Ending
Balance
$
(7,079) $
2,332 $
(376) $
1,956 $
(5,123)
—
498
(25,592)
(4,606)
(107)
(78)
391
391
(4,684)
(30,276)
$ (32,671) $
(1,776) $
(561) $
(2,337) $ (35,008)
$
(4,732) $
5,797 $
(1,021) $
4,776 $
44
—
721
(30,276)
(11,243)
(176)
(161)
545
545
(11,404)
(41,680)
$
— $
191 $
—
191
191
$ (35,008) $
(4,534) $
(1,358) $
(5,892) $ (40,900)
$
589 $
(172) $
(26) $
(198) $
391
—
7
(5)
2
2
(41,489)
$ (40,900) $
2,237
2,072 $
(10)
(41) $
2,227
(39,262)
2,031 $ (38,869)
In 2022, Reclassification of foreign currency translation adjustment for gain on liquidation of a subsidiary is included in other
income (expense) other (See Note 15). Reclassifications of pension and other postretirement actuarial items out of accumulated
other comprehensive income (loss) are included in the computation of net periodic benefit cost (See Note 9).
Note 9 – Pensions and Other Postretirement Benefits
Defined Benefit Plans
Employees of the Company participate in various defined benefit pension and other postretirement benefit plans.
U.S. Pension Plan
The Vishay Precision Group Non-Qualified Retirement Plan, like all nonqualified plans, is considered to be unfunded. The
Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund benefits under this plan. Rabbi trust assets are
subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as
other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market
funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the
nonqualified pension plan of $1.6 million at December 31, 2023 and $1.5 million at December 31, 2022, and the related
liabilities of $2.1 million and $2.1 million at December 31, 2023 and 2022, respectively.
The Vishay Precision Group Non-Qualified Retirement Plan is frozen. Accordingly, no new employees may participate in the
plan, no further participant contributions are permitted, and no further benefits accrue. Benefits accumulated prior to the
freezing of the U.S. pension plan will be paid to employees upon retirement, and the Company will likely need to make
additional cash contributions to the rabbi trust to fund this accumulated benefit obligation.
Non-U.S. Pension Plans
The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local
practices. Pension benefits earned are generally based on years of service and compensation during active employment.
F-25
Note 9 – Pensions and Other Postretirement Benefits (continued)
The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to pension plans
(in thousands):
December 31, 2023
U.S.
Plans
Non-U.S.
Plans
December 31, 2022
U.S.
Plans
Non-U.S.
Plans
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost (adjusted for actual employee contributions)
Interest cost
Actuarial loss/(gains)
Benefits paid
Curtailments and settlements
Currency translation
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Currency translation
Fair value of plan assets at end of year
Funded status at end of year
$
$
$
$
$
2,050 $
—
97
59
(108)
—
—
2,098 $
— $
—
—
—
—
— $
15,853 $
265
675
6
(573)
(310)
551
16,467 $
16,248 $
855
875
(573)
914
18,319 $
2,626 $
26,157
—
65
(533)
(108)
—
—
2,050 $
— $
—
108
(108)
—
— $
308
395
(7,125)
(652)
(567)
(2,663)
15,853
19,717
(1,773)
1,064
(652)
(2,047)
16,248
(2,098) $
1,852 $
(2,050) $
395
Actuarial losses incurred in 2023 related to our U.S. and non-U.S. plans are primarily the result of the decrease discount rate
assumptions used to estimate the benefit obligation as of December 31, 2023 compared to December 31, 2022. Actuarial gains
incurred in 2022 related to our U.S. and non-U.S. plans are primarily the result of an increase in the discount rate assumptions
used to estimate the benefit obligations as of December 31, 2022 compared to December 31, 2021.
Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands):
Other assets
Other accrued expenses
Accrued pension and other postretirement costs
Accumulated other comprehensive loss
December 31, 2023
U.S.
Plans
Non-U.S.
Plans
December 31, 2022
U.S.
Plans
Non-U.S.
Plans
$
$
$
$
$
— $
(140) $
(1,958) $
196 $
(1,902) $
4,573 $
(85) $
(2,636) $
492 $
2,344 $
— $
(137) $
(1,913) $
137 $
(1,913) $
3,301
(179)
(2,727)
577
972
F-26
Note 9 – Pensions and Other Postretirement Benefits (continued)
Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to
the obligations and from the difference between expected returns and actual returns on plan assets. Actuarial items consist of
the following (in thousands):
Unrecognized net actuarial loss
Unrecognized prior service cost
December 31, 2023
U.S.
Plans
Non-U.S.
Plans
December 31, 2022
U.S.
Plans
Non-U.S.
Plans
$
$
196 $
—
196 $
448 $
44
492 $
137 $
—
137 $
532
45
577
The following table sets forth additional information regarding the projected and accumulated benefit obligations for the
pension plans (in thousands):
Accumulated benefit obligation, all plans
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation
Accumulated benefit obligation
Accumulated benefit obligation, all plans
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation
Accumulated benefit obligation
December 31, 2023
U.S.
Plans
Non-U.S.
Plans
2,098
$
14,992
2,098
2,098
$
$
2,842
2,203
December 31, 2022
U.S.
Plans
Non-U.S.
Plans
2,050
$
14,489
2,050
2,050
$
$
3,008
2,448
$
$
$
$
$
$
Unrecognized gains and losses are amortized into future net periodic pension cost using the 10% corridor method over the
expected remaining service life of the employee group. The following table sets forth the components of net periodic cost of
pension (in thousands):
2023
Years ended December 31,
2022
2021
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
Annual service cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses
Amortization of prior service cost
Amortization of transition obligation
Curtailment and settlement losses
Net periodic benefit cost
$
$
— $
97
—
—
—
—
265 $
675
(879)
39
(10)
—
—
97 $
50
140 $
— $
308 $
— $
65
—
22
—
—
—
395
(454)
736
—
(40)
(512)
57
—
27
—
—
—
87 $
433 $
84 $
379
353
(393)
459
—
(8)
(108)
682
See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended
December 31, 2023, 2022, and 2021.
F-27
Note 9 – Pensions and Other Postretirement Benefits (continued)
The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective
years:
Discount rate
Rate of compensation increase
Expected return on plan assets
2023
2022
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
4.71 %
N/A
N/A
4.19 %
4.00 %
5.13 %
4.91 %
N/A
N/A
4.23 %
2.49 %
3.96 %
The following weighted-average assumptions were used to determine the net periodic pension costs for the years ended
December 31, 2023 and 2022:
Discount rate
Rate of compensation increase
Expected return on plan assets
2023
2022
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
4.91 %
N/A
N/A
4.23 %
2.49 %
3.96 %
2.53 %
N/A
N/A
1.66 %
2.97 %
2.10 %
The plans’ expected return on assets is based on management’s expectation of long-term average rates of return to be achieved
by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns
for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current
economic and capital market conditions.
The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing
higher return, more volatile equity securities, and lower return, less volatile fixed income securities. The target allocation of
plan assets approximates the actual allocation of plan assets at December 31, 2023 and 2022.
Plan assets are comprised of:
Equity securities
Fixed income securities
Cash and cash equivalents
Total
December 31, 2023
U.S.
Plans
Non-U.S.
Plans
December 31, 2022
U.S.
Plans
Non-U.S.
Plans
—
—
—
—
— %
84 %
16 %
100 %
—
—
—
—
48 %
42 %
10 %
100 %
The Company maintains defined benefit retirement plans in certain of its subsidiaries. The assets of the plans are measured at
fair value.
Equity securities held by the defined benefit retirement plans consist of equity securities that are valued based on quoted market
prices on the last business day of the year. The fair value measurement of the equity securities is considered a Level 2
measurement within the fair value hierarchy.
Fixed income securities held by the defined benefit retirement plans consist of government bonds and corporate notes that are
valued based on quoted market prices on the last business day of the year. The fair value measurement of the fixed income
securities is considered a Level 2 measurement within the fair value hierarchy.
F-28
Note 9 – Pensions and Other Postretirement Benefits (continued)
Cash held by the defined benefit retirement plans consists of deposits on account in various financial institutions. The carrying
amount of the cash approximates its fair value. A summary of the Company’s pension plan assets for each fair value hierarchy
level are as follows for the periods presented (see Note 16 for further description of the levels within the fair value hierarchy (in
thousands)):
As of December 31, 2023
Defined benefit pension plan assets
Equity securities
Fixed income securities
Cash and cash equivalents
As of December 31, 2022
Defined benefit pension plan assets
Equity securities
Fixed income securities
Cash and cash equivalents
Fair value measurements at reporting date
using:
Level 2
Inputs
Level 1
Inputs
Level 3
Inputs
Total Fair
Value
$
— $
— $
— $
15,417
2,902
—
1,637
15,417
1,265
$
18,319 $
1,637 $
16,682 $
—
—
—
—
Fair value measurements at reporting date
using:
Level 2
Inputs
Level 1
Inputs
Level 3
Inputs
Total Fair
Value
$
7,736 $
— $
7,736 $
6,813
1,699
—
1,511
6,813
188
$
16,248 $
1,511 $
14,737 $
—
—
—
—
Estimated future benefit payments are as follows (in thousands):
2024
2025
2026
2027
2028
2029-2033
US Pension
Plans
Non-US
Plans
$
140 $
142
142
142
172
812
747
832
703
885
758
6,342
The Company anticipates making contributions to its funded and unfunded pension of approximately $1.2 million during 2024.
Other Postretirement Benefit Plans
In the U.S., the Company maintains two unfunded non-pension other postretirement benefit plans (“OPEB”) which are funded
as costs are incurred. These plans provide medical and death benefits to retirees.
F-29
Note 9 – Pensions and Other Postretirement Benefits (continued)
The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to other
postretirement benefit plans (in thousands):
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost (adjusted for actual employee contributions)
Interest cost
Contributions by participants
Actuarial losses/(gains)
Benefits paid
Plan amendments and other
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Company contributions
Contributions by participants
Benefits paid
Fair value of plan assets at end of year
Funded status at end of year
OPEB Plans
December 31,
2023
2022
2,386 $
17
111
—
95
(119)
—
2,490 $
— $
119
—
(119)
— $
(2,490) $
2,885
29
67
—
(453)
(142)
—
2,386
—
142
—
(142)
—
(2,386)
$
$
$
$
$
Actuarial losses incurred in 2023 related to our post-retirement plans are primarily the result of the decrease discount rate
assumptions used to estimate the benefit obligation as of December 31, 2023 compared to December 31, 2022. Actuarial gains
incurred in 2022 related to our post-retirement plans are primarily the result of an increase in the discount rate assumptions used
to estimate the benefit obligations as of December 31, 2022 compared to December 31, 2021.
Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands):
Other accrued expenses
Accrued pension and other postretirement costs
Accumulated other comprehensive gain
Actuarial items consist of the following (in thousands):
Unrecognized net actuarial gain
F-30
OPEB Plans
December 31,
2023
2022
(286) $
(2,204) $
(367) $
(2,857) $
(189)
(2,197)
(484)
(2,870)
OPEB Plans
December 31,
2023
2022
(367) $
(367) $
(484)
(484)
$
$
$
$
$
$
Note 9 – Pensions and Other Postretirement Benefits (continued)
Unrecognized gains and losses are amortized into future net periodic benefit cost using the 10% corridor method over the
expected remaining service life of the employee group. The following table sets forth the components of net periodic benefit
costs (in thousands):
Net service cost
Interest cost
Amortization of actuarial (gains)/ losses
Net periodic benefit cost
$
OPEB Plans
Years ended December 31,
2023
OPEB
Plans
2022
OPEB
Plans
2021
OPEB
Plans
17
111
(22)
106 $
29
67
3
99 $
36
68
20
124
See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended
December 31, 2023, 2022, and 2021.
The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective
years:
Discount rate
OPEB Plans
December 31,
2023
2022
4.69 %
4.88 %
The following weighted-average assumptions were used to determine the net periodic benefit costs for the years ended
December 31, 2023 and 2022:
Discount rate
Health care trend rate
OPEB Plans
December 31,
2023
2022
4.88 %
6.50 %
2.46 %
6.50 %
The health care trend ultimate rate is 4.04% per the terms of the plan. The impact of a one-percentage-point change in assumed
health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material.
Estimated future benefit payments are as follows (in thousands):
2024
2025
2026
2027
2028
2029-2033
OPEB
Plans
$
286
220
236
245
234
773
As the plans are unfunded, the Company's anticipated contributions for 2024 are equal to the estimated benefit payment.
F-31
Note 9 – Pensions and Other Postretirement Benefits (continued)
Other Retirement Obligations
The Company participates in various other defined contribution plans based on local law or custom. The Company periodically
makes contributions to these plans. At December 31, 2023 and 2022, the consolidated balance sheets include $0.5 million and
$0.9 million, respectively, within accrued pension and other postretirement costs related to these plans.
Most of the Company’s U.S. employees are eligible to participate in 401(k) savings plans which provide company matching
under various formulas. The Company’s matching expense for the plans was $1.2 million, $1.1 million, and $1.0 million for the
years ended December 31, 2023, 2022, and 2021, respectively. No material amounts are included in the consolidated balance
sheets related to unfunded 401(k) contributions.
Certain key employees participate in a nonqualified deferred compensation plan, which allows these employees to defer a
portion of their compensation until retirement, or elect shorter deferral periods. The accompanying consolidated balance sheets
include a liability within other noncurrent liabilities related to these deferrals. The Company maintains a nonqualified trust,
referred to as a “rabbi” trust, to fund payments under this plan. Rabbi trust assets are subject to creditor claims under certain
conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the
consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life
insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified deferred
compensation plan of $4.3 million and $3.9 million at December 31, 2023 and 2022 respectively, and the related liabilities of
$5.6 million and $5.3 million at December 31, 2023 and 2022, respectively.
Note 10 – Share-Based Compensation
The Vishay Precision Group, Inc. 2022 Stock Incentive Plan (the "2022 plan") permits the issuance of up to 608,000 shares of
common stock. At December 31, 2023, the Company had reserved 525,239 shares of common stock for future grant of equity
awards (restricted stock, unrestricted stock, restricted stock units (“RSUs”), or stock options) pursuant to the 2022 Plan. If any
outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-
grant to others. If shares are withheld for payment of taxes, those shares do not become available for future grant under the
2022 plan.
Restricted Stock Units
Pursuant to the 2022 plan, the Company issued RSUs to board members, executive officers, and certain employees of the
Company during 2023. The amount of compensation cost related to share-based payment transactions is measured based on the
grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair
value of the underlying common stock. Compensation cost is recognized over the period that the participant provides service in
exchange for the award. The Company recognizes compensation cost for RSUs that are expected to vest and for which
performance criteria are expected to be met.
On February 28, 2023, and in accordance with their respective employment agreements, VPG’s three executive officers were
granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate target
grant-date fair value of $1.9 million were comprised of 43,243 RSUs. Fifty percent of these awards will vest on January 1,
2026, subject to the executives' continued employment. The performance-based portion of the RSUs will also vest on January 1,
2026, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-
year cumulative “adjusted free cash flow” and net earnings goals, each weighted equally.
On March 9, 2023, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain
employees received awards, of which 75% are performance-based and certain employees received awards of which 50% are
performance based. The awards have an aggregate target grant-date fair value of $0.6 million and were comprised of 14,338
RSUs. The non-performance portion of these awards (twenty-five percent for certain employees and fifty percent for certain
employees) will vest on January 1, 2026, subject to the employees' continued employment. The performance-based portion of
the RSUs will also vest on January 1, 2026, subject to the employees' continued employment and the satisfaction of certain
performance objectives relating to three-year cumulative earnings and cash flow goals, each weighted equally.
On May 24, 2023 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, as amended at such
time, the Board of Directors approved the issuance of an aggregate of 13,923 RSUs to each of the Company's non-employee
directors. The awards have an aggregate grant-date fair value of $0.5 million and will vest on the earlier of the 2024 Annual
Stockholders meeting or May 24, 2024, subject to the directors' continued service on the Board of Directors.
Vesting of equity awards may be subject to acceleration under certain circumstances.
F-32
Note 10 – Share-Based Compensation (continued)
RSU activity is presented below (number of RSUs in thousands):
2023
Years ended December 31,
2022
2021
Number
of
RSUs
Weighted
Average
Grant-date
Fair Value
Number
of
RSUs
Weighted
Average
Grant-date
Fair Value
Number
of
RSUs
Weighted
Average
Grant-date
Fair Value
204 $
72
(67)
(7)
202 $
29.92
42.09
26.54
24.85
35.50
198 $
82
(40)
(36)
204 $
31.07
30.68
34.29
33.15
29.92
205 $
80
(77)
(10)
198 $
28.23
33.13
25.87
29.43
31.07
Outstanding:
Beginning of year
Granted
Vested
Forfeited
End of year
The fair value of the RSUs vested during 2023 was $2.7 million. Included in the 2023, 2022 and 2021 activity are RSU's
forfeited as a result of performance objectives not being met. These awards are therefore available for future grants under the
Plan.
RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):
Vesting Date
Expected to Vest
January 1, 2024
January 1, 2025 and July 1 2025
January 1, 2026
Share-Based Compensation Expense
33
24
14
Not Expected to Vest
1
10
16
Total
34
34
30
The following table summarizes pre-tax share-based compensation expense recognized (in thousands):
Restricted stock units
Years ended December 31,
2023
2022
2021
$
2,290 $
2,439 $
2,244
Share-based compensation expense is recognized ratably over the vesting period of the awards and for RSUs with performance
criteria, is recognized for RSU's that are expected to vest and for which performance criteria are expected to be met.
During 2023, a net adjustment of $0.4 million decreasing share-based compensation expense was recorded, based on the
evaluation of performance objectives associated with awards granted in 2021, 2022 and 2023. It was determined that certain
objectives were not likely to be fully met, necessitating a reversal of certain compensation expense associated with those
awards.
During the fourth quarter of 2022, a net adjustment of $0.3 million increasing share-based compensation expense was recorded,
based on the evaluation of performance objectives associated primarily with awards granted in 2020. It was determined that
certain objectives, which were deemed not likely to be met in previous years, were met.
During the fourth quarter of 2021, a net adjustment of $0.5 million increasing share-based compensation expense was recorded,
based on the evaluation of performance objectives associated with awards granted in 2019. It was determined that certain
objectives, which were deemed not likely to be met in previous years, were met.
The total tax benefit on share-based compensation expense was $0.5 million, $0.5 million and $0.5 million for the years ended
December 31, 2023, 2022 and 2021, respectively. The deferred tax benefit on share-based compensation expense was $0.1
million, $0.2 million, and $0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.
As of December 31, 2023, the Company had $2.2 million of unrecognized share-based compensation expense related to share-
based awards that will be recognized over a weighted-average period of approximately 1.5 years.
F-33
Note 11 – Commitments, Contingencies, and Concentrations
Litigation
The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. The
Company is of the opinion that the disposition of these proceedings will not have a material adverse effect on its business or its
financial condition, results of operations, and cash flows.
Executive Employment Agreements
The Company has employment agreements with its executive officers which outline base salary, incentive compensation, and
equity-based compensation. The employment agreements with the Company's executive officers also provide for incremental
compensation in the event of termination without cause or resignation for good reason.
Sources of Supplies
Although most materials incorporated in the Company’s products are available from a number of sources, certain materials are
available only from a relatively limited number of suppliers.
Some of the most highly specialized materials for the Company’s sensors are sourced from a single vendor. The Company
maintains a safety stock inventory of certain critical materials at its facilities.
Certain metals used in the manufacture of the Company’s products are traded on active markets, and can be subject to
significant price volatility.
Market Concentrations
No single customer comprises greater than 10% of net revenues.
The vast majority of the Company’s products are used in the broad industrial market, with selected uses in military and
aerospace, medical, agriculture, and construction. Within the broad industrial segment, the Company’s products serve wide
applications in the waste management, bulk hauling, logging, scale manufacturing, engineering systems, pharmaceutical, oil,
chemical, steel, paper, and food industries.
Credit Risk Concentrations
Financial instruments with potential credit risk consist principally of cash and cash equivalents, accounts receivable, and notes
receivable. The Company maintains cash and cash equivalents with various major financial institutions. Concentrations of
credit risk with respect to receivables are generally limited due to the Company’s large number of customers and their
dispersion across many countries and industries. At December 31, 2023 and 2022, the Company had no significant
concentrations of credit risk.
Geographic Concentrations
At December 31, 2023 and 2022, a significant percentage of the Company’s cash and cash equivalents are held outside the
United States. See the following table for the percentage of cash and cash equivalents by region at December 31, 2023 and
December 31, 2022:
Asia
United States
Israel
Europe
United Kingdom
Canada
Total
Note 12 - Leases
December 31,
2023
2022
22 %
8 %
36 %
18 %
5 %
11 %
100 %
27 %
17 %
28 %
13 %
10 %
5 %
100 %
The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less
than one year to thirteen years.
F-34
Note 12 - Leases ( continued)
Leases recorded on the balance sheet consist of the following (in thousands):
Leases
Assets
Operating lease right of use asset
Liabilities
Operating lease - current
Operating lease - non-current
Other information related to lease term and discount rate is as follows:
Operating leases weighted average remaining lease term (in years)
Operating leases weighted average discount rate
The components of lease expense are as follows (in thousands):
$
$
$
December 31,
2023
December 31,
2022
26,953 $
24,342
4,004 $
22,625 $
4,208
20,043
December 31, 2023
7.9 years
4.97 %
Operating lease cost
Short-term lease cost
Sublease income
Total net lease cost
Year Ended
December 31, 2023
December 31, 2022
December 31, 2021
$
$
5,171 $
150
(385)
4,936 $
5,098 $
121
(423) (220)
4,796 $
5,185
141
(220)
5,106
Right of use assets obtained in exchange for new operating lease liability during 2023 were $6.8 million and in 2022 were
$1.2 million. The Company paid $5.1 million for its operating leases for the year ended December 31, 2023 and $5.1 million
for the year ended December 31, 2022, which are included in operating cash flows on the consolidated statements of cash
flows.
Undiscounted maturities of operating lease payments as of December 31, 2023 are summarized as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Less: amount representing interest
Present value of future minimum lease payments
$
$
$
4,933
4,442
3,763
3,471
3,268
12,102
31,979
(5,350)
26,629
F-35
Note 13 – Segment and Geographic Data
VPG reports in three reportable segments: Sensors segment, Weighing Solutions segment, and Measurement Systems segment.
The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions
segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The
Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials
development, and safety testing.
The chief operating decision maker ("CODM") is our chief executive officer. The evaluation of the segments performance is
based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items.
Management believes that evaluating segment performance, excluding items such as restructuring and severance costs,
impairment of goodwill and indefinite-lived intangible assets, acquisition costs, and other items is meaningful because they
relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures
provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see
Note 1). Reporting segment assets are the owned or allocated assets used by each segment. Products are transferred between
segments on a basis intended to reflect, as nearly as practicable, the market value of the products.
F-36
Note 13 – Segment and Geographic Data (continued)
The following table sets forth reporting segment information (in thousands):
2023
Net third-party revenues
Intersegment revenues
Gross profit
Segment operating income (loss)
Restructuring costs
Depreciation and amortization expense
Capital expenditures
Total assets
2022
Net third-party revenues
Intersegment revenues
Gross profit
Segment operating income (loss)
Restructuring costs
Depreciation and amortization expense
Capital expenditures
Total assets
2021
Net third-party revenues
Intersegment revenues
Gross profit
Segment operating income (loss)
Acquisition costs
Impairment of goodwill and indefinite-lived intangibles
Restructuring costs
Depreciation and amortization expense
Capital expenditures
Total assets
Sensors
Weighing
Solutions
Measurement
Systems
Corporate/
Other
Total
$ 139,783 $ 122,528 $
92,737 $
— $ 355,048
1,743
55,130
34,825
—
6,141
8,181
—
45,276
21,570
1,478
3,389
6,447
—
(1,743)
—
49,936
20,607
32
4,239
1,111
—
150,342
(35,048)
50
1,781
2
41,954
1,560
15,550
15,741
156,384
142,152
154,559
18,471
471,566
$ 152,221 $ 125,715 $
2,121
61,087
41,671
1,460
5,816
11,515
—
43,178
21,232
—
3,343
7,094
84,644 $
—
— $ 362,580
—
(2,121)
45,337
18,399
58
4,308
1,324
—
149,602
(37,503)
—
1,886
18
43,799
1,518
15,353
19,951
156,816
148,041
153,547
18,338
476,742
$ 127,861 $ 125,390 $
64,668 $
— $ 317,919
—
(3,487)
—
3,487
45,474
26,527
—
—
—
5,967
13,213
142,510
—
45,900
23,184
—
—
76
3,415
3,434
33,768
13,480
1,198
1,223
—
3,834
913
—
125,142
(35,819)
27,372
—
—
—
1,780
7
7,164
1,198
1,223
76
14,996
17,567
461,889
152,399
159,816
The “Corporate/Other” column for segment operating income (loss) includes unallocated selling, general, and administrative
expenses and certain items which management excludes from segment results when evaluating segment performance, as
follows (in thousands):
Unallocated selling, general, and administrative expenses
Acquisition costs
Impairment of goodwill and indefinite-lived intangibles
Restructuring costs
F-37
Years ended December 31,
2022
2023
2021
$
$
(33,488) $
—
—
(1,560)
(35,048) $
(35,985) $
(33,322)
—
—
(1,518)
(1,198)
(1,223)
(76)
(37,503) $
(35,819)
Note 13 – Segment and Geographic Data (continued)
The following geographic data includes property and equipment based on physical location (in thousands):
Property and Equipment - Net
United States
United Kingdom
Other Europe
Israel
Asia
Canada and Other
December 31,
2023
2022
$
$
12,935 $
3,364
1,957
43,987
26,946
1,447
90,636 $
12,651
3,368
1,721
44,551
23,264
1,572
87,127
F-38
Note 14 – Earnings Per Share
Basic earnings per share are computed using the weighted average number of common shares outstanding during the periods
presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding, adjusted
to include the potentially dilutive effect of restricted stock units (see Note 10), and other potentially dilutive securities.
The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in
thousands, except earnings per share):
Numerator:
Years ended December 31,
2022
2023
2021
Numerator for basic and diluted earnings per share:
Net earnings attributable to VPG stockholders
$
25,707 $
36,063 $
20,221
Denominator:
Denominator for basic earnings per share:
Weighted average shares
Effect of dilutive securities:
Restricted stock units
Dilutive potential common shares
Denominator for diluted earnings per share:
Adjusted weighted average shares
Basic earnings per share attributable to VPG stockholders
Diluted earnings per share attributable to VPG stockholders
Note 15 – Additional Financial Statement Information
13,574
13,628
13,616
79
79
60
60
41
41
13,653
13,688
13,657
$
$
1.89 $
2.65 $
1.49
1.88 $
2.63 $
1.48
The caption “Other” on the consolidated statements of operations consists of the following (in thousands):
Foreign exchange (loss)/gain
Interest income
Pension expense
Other
Years ended December 31,
2022
2023
2021
$
$
(822) $
1,651
(52)
(321)
456 $
3,579 $
401
(241)
(181)
3,558 $
(110)
252
(468)
96
(230)
Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in
foreign exchange gains / (losses) for the year ended December 31, 2023, as compared to the prior year period, is primarily due
to fluctuations in the Israeli shekel, the Canadian dollar and the British pound. The change in the dollar-shekel exchange rate
resulted in a unfavorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors
facility in Israel.
F-39
Note 15 – Additional Financial Statement Information (continued)
Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in
foreign exchange gains / (losses) for the year ended December 31, 2022, as compared to the prior year period, is primarily due
to fluctuations in the Israeli shekel, the Japanese yen and the British pound. The change in the dollar-shekel exchange rate
resulted in a favorable currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors
facility in Israel.
Pension expense represents the net periodic benefit cost excluding the service cost.
Other accrued expenses consist of the following (in thousands):
Customer advance payments
Accrued restructuring
Goods received, not yet invoiced
Accrued taxes, other than income taxes
Accrued commissions
Accrued professional fees
Accrued technical warranty
Current accrued pension and other post retirement costs
Other
Israeli Severance Pay
December 31,
2023
2022
$
$
8,712 $
249
2,837
1,370
4,077
1,343
770
511
2,558
22,427 $
7,983
183
2,523
1,141
3,217
1,360
740
505
2,654
20,306
The Israeli Severance Pay Law, 1963 ("Severance Pay Law"), specifies that employees of our Israeli subsidiary are entitled to
severance payment, following the termination of their employment. Under the Severance Pay Law, the severance payment is
calculated as one-month salary for each year of employment, or a portion thereof.
Part of the subsidiary's liability for severance pay is covered by the provisions of Section 14 of the Severance Pay Law
("Section 14"). Under Section 14, employees are entitled to monthly deposits, at a rate of 8.33% of their monthly salary,
contributed on their behalf to their insurance funds. Payments in accordance with Section 14 release the subsidiary from any
future severance payments in respect of those employees. As a result, the Company does not recognize any liability for
severance pay due to these employees and the deposits under Section 14 are not recorded as an asset in the Company's balance
sheet.
For the subsidiary's employees in Israel who are not subject to Section 14, the Company calculated the liability for severance
pay pursuant to the Severance Pay Law based on the most recent salary of these employees multiplied by the number of years
of employment as of the balance sheet date. The Company recorded as expenses the increase in the severance liability, net of
earnings (losses) from the related investment fund. The subsidiary's liability was partially funded by monthly payments
deposited with insurers and the value of these deposits is recorded as an asset on the Company's balance sheet. Any unfunded
amounts would be paid from operating funds and are covered by a provision established by the subsidiary. The accompanying
consolidated balance sheets at December 31, 2023 and December 31, 2022 include a $7.1 million and $7.0 million non-current
liability, respectively, associated with Israeli severance requirements in other liabilities and a $5.3 million and $5.3 million non-
current asset, respectively, associated with Israeli severance requirements in other assets.
Note 16 – Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, establishes a valuation hierarchy of the inputs used to measure fair
value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value 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.
F-40
Note 16 – Fair Value Measurements (continued)
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.
The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis (in
thousands):
As of December 31, 2023
Assets:
Assets held in rabbi trusts
As of December 31, 2022
Assets:
Assets held in rabbi trusts
Fair value measurements at reporting date
using:
Level 2
Inputs
Level 1
Inputs
Level 3
Inputs
Total Fair
Value
$
5,841 $
59 $
5,782 $
—
Fair value measurements at reporting date
using:
Level 2
Inputs
Level 1
Inputs
Level 3
Inputs
Total Fair
Value
$
5,427 $
53 $
5,374 $
—
The Company maintains nonqualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and
nonqualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money
market funds at December 31, 2023 and December 31, 2022, 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 year. 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 cash and cash equivalents held in the rabbi trust is considered a
Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement
within the fair value hierarchy.
The fair value of the long-term debt, excluding capitalized deferred financing costs at December 31, 2023 and December 31,
2022 approximates its carrying value, as the revolving debt and term loans are reset monthly based on current market rates, plus
a base rate as specified in the 2020 Credit Agreement. The fair value measurement of long-term debt is considered a Level 2
measurement.
The Company’s financial instruments include cash and cash equivalents, accounts receivable, short-term notes payable, and
accounts payable. The carrying amounts for these financial instruments reported in the consolidated balance sheets approximate
their fair values.
Note 17 – Related Party Transactions
Following the spin-off from Vishay Intertechnology, Inc. on July 6, 2010, VPG is an independent, publicly-traded company,
and Vishay Intertechnology does not retain any ownership interest in VPG, although a common group of stockholders control a
significant portion of the voting power of each company and the companies have three common board members.
Subsequent to the spin-off, VPG and Vishay Intertechnology continue to share certain manufacturing locations. VPG owns one
location in Japan at which it leases space to Vishay Intertechnology. Vishay Intertechnology owns one location in the United
States, at which it leases space to VPG. Lease receipts and payments related to the shared facilities are immaterial.
F-41
Note: Name of Subsidiaries are indented under name of its parent. Subsidiaries are wholly owned unless otherwise noted.
(Director's or other share required by statute in foreign jurisdictions and totaling less than 1% of equity are omitted).
SUBSIDIARIES OF THE REGISTRANT
EXHIBIT 21.1
Vishay Precision Foil, Inc.
Vishay Precision Foil GmbH
Vishay Measurements Group GmbH
Powertron GmbH
Vishay Measurements Group, Inc.
Vishay Transducers, Ltd. (a)
Vishay Transducers India Private Limited
Pharos de Costa Rica, S.A.
Vishay Celtron Technologies, Inc.
Vishay Precision España S.L.
Vishay Precision Asia Investments Pte., Ltd.
Vishay Precision Measurement Trading (Shanghai) Co., Ltd.
Vishay Celtron (Tianjin) Technologies Co., Ltd.
Vishay Precision Foil K.K.
Alpha Electronics Corp.
Pacific Instruments, Inc.
DSI Holdings DE Inc.
Dynamic Systems Inc.
DSI Europe GmbH
Diversified Technical Systems, Inc.
Vishay Precision Israel Ltd.
Vishay Measurements Group UK Ltd.
Vishay Advanced Technologies Ltd.
Vishay Precision Transducers India Private Limited
Vishay Measurements Group France S.A.S.
SCI Vijafranc
VPG Systems UK, Ltd.
Vishay Precision Group Canada ULC (b)
Vishay PM Onboard (Ireland) Limited
Vishay PME France SARL
Vishay PM Onboard Limited
Vishay Nobel AB
Vishay Nobel AS
VPG Technology Development Ltd.
(a)
(b)
Registrant has a direct ownership interest of 62% in Vishay Transducers, Ltd.
VPG Systems UK, Ltd. owns 80% and Vishay Transducers, Ltd. owns 20% of Vishay Precision Group Canada ULC
Delaware
Germany
Germany
Germany
Delaware
Delaware
India
Costa Rica
Taiwan
Spain
Singapore
China
China
Japan
Japan
California
Delaware
New York
Germany
California
Israel
England and Wales
Israel
India
France
France
England and Wales
Canada
Ireland
France
England and Wales
Sweden
Norway
Israel
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 23.1
We consent to the incorporation by reference in Registration Statement Nos. 333-187211 and 333-265228 on Form S-8 of our
reports dated February 29, 2024, relating to the financial statements of Vishay Precision Group, Inc. (the "Company") and the
effectiveness of the Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the
year ended December 31, 2023.
/s/ Brightman Almagor Zohar & Co.
Brightman Almagor Zohar & Co.
Certified Public Accountants
A Firm in the Deloitte Global Network
Tel Aviv, Israel
February 29, 2024
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Ziv Shoshani, certify that:
1.
I have reviewed this Form 10-K of Vishay Precision Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 29, 2024
/s/ Ziv Shoshani
Ziv Shoshani
Chief Executive Officer
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, William M. Clancy, certify that:
1.
I have reviewed this Form 10-K of Vishay Precision Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or
persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 29, 2024
/s/ William M. Clancy
William M. Clancy
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of Vishay Precision Group, Inc. (the “Company”) on Form 10-K for the fiscal year ended
December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ziv Shoshani,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 29, 2024
/s/ Ziv Shoshani
Ziv Shoshani
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report of Vishay Precision Group, Inc. (the “Company”) on Form 10-K for the fiscal year ended
December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William M.
Clancy, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 29, 2024
/s/ William M. Clancy
William M. Clancy
Chief Financial Officer
[This page intentionally left blank]
VPG’s precision sensing and measurement
solutions are helping to make the world
SAFER,
SMARTER,
AND MORE
PRODUCTIVE
Vishay Precision Group, Inc.
Global Headquarters
3 Great Valley Parkway, Suite 150
Malvern, PA 19355
© Copyright 2024 Vishay Precision Group, Inc. All rights reserved.