VSH 10-K & 10-Q changes, risk factors and insider trading

As part of our strategy to drive growth and increase capacity to assure customers of reliable volume as they scale, we are increasing internal capacity by heavily investing in capital expenditures, and plan to increase external capacity by outsourcing additional commodity products to subcontractors. Our capacity expansion plans include the expansion of the recently acquired Newport wafer fab, building a 12-inch wafer fab in Itzehoe, Germany adjacent to our existing 8-inch wafer fab, a new site in Mexico for power inductors and non-linear resistors, a resistor manufacturing expansion in Mexico, and expanded diode manufacturing in Taiwan and Turin, Italy. There are demand-related risks associated with all growth initiatives. There are also inherent execution risks in building and starting new wafer fabs, acquiring existing wafer fabs, and expanding production capacity at our own facilities or that of new or existing subcontractors that could significantly increase costs and negatively impact our operating results. The execution risks include, but are not limited to, the following:

Our credit facility limits or restricts our current and future operations and requires compliance with certain financial covenants.

Our credit facility includeslimits restrictionsor on,restricts, among other things, incurring indebtedness, incurring liens on assets, making investments and acquisitions, making asset sales, sales, and paying cash dividends and making other restricted payments. Our credit facility also requires us to comply with other covenants, including the maintenance of specific financial ratios. If we are not in compliance with all of such covenants, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable. Additionally, our convertible senior notes due 2030 have cross-default provisions that could accelerate repayment in the event the indebtedness under the credit facility is accelerated.

Our business is subject to risks associated with U.S. and foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and other import charges or restrictions, which could adversely affect our operations and our ability to import products. TheIn 2025, the U.S. has taken actions that impact U.S. trade with China, including restricting the export of certain goods and equipment to China, imposingimposed tariffs on certainalmost goodsall manufacturedimported ingoods. ChinaThese tariffs negatively impacted trade relationships between the governments of the U.S. and importedthe intoimpacted countries, specifically the U.S.,People’s including certainRepublic of ourChina. products.In Theresponse, U.S.many hascountries also threatened to imposeincreased tariffs on certainU.S. goodsexports manufacturedand implemented other import / export barriers or prohibitions. While many of these tariffs and reciprocal tariffs have been reduced or paused, the tariffs and any similar disruptions to the global supply chain in Mexicothe and other countries. Such actionsfuture may impact our competitiveness and adversely affect the demand for these products, or if those costs cannot be passed on to our customers, could adversely impact our resultsbusiness by creating economic uncertainty, increasing the cost of operationsmaterials, and forreducing affected segmentscustomer and end market demand. New or revised trade agreements could require changes in operations in the Company as a whole.long-term.

We have two classes of common stock: common stock and Class B common stock. The holders of common stock are entitled to one vote for each share held, while the holders of Class B common stock are entitled to 10 votes for each share held. At December 31, 2024,2025, the holders of Class B common stock held approximately 49.4%49.5% of the voting power of the Company. The ownership of Class B common stock is highly concentrated, and holders of Class B common stock effectively can cause the election of directors and approve other actions as stockholders. Mrs. Ruta Zandman (a member of our Board of Directors) controls the voting of, solely or on a shared basis with Marc Zandman (our Executive Chairman) and Ziv Shoshani (a former member of our Board of Directors), approximately 89.7% of our Class B common stock and 44.4% of the total voting power of our capital stock as of December 31, 2024.2025. Holders of our Class B 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 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.

Conversion of our outstanding 2025 Notes and 2030 Notes may dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes.

The conversion of some or all of our outstanding 2.25% convertible senior notes due 2025 (the "2025 Notes") or our outstanding 2.25% convertible senior notes due 2030 (the "2030 Notes") may dilute the ownership interests of our existing stockholders. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.

We may not have the ability to raise the funds necessary to settle conversions of our outstanding 2025 Notes and 2030 Notes in cash or to repurchase the notes upon a fundamental change or on a repurchase date, as applicable, and our current debt contains, and our future debt may contain, limitations on our ability to pay cash upon conversion or repurchase of the 2025 Notes or 2030 Notes.

Holders of our outstanding 2025 Notes and 2030 Notes have the right to require us to repurchase all or a portion of their 2025 Notes or 2030 Notes, as the case may be, upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Notes or 2030 Notes, as the case may be, to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the 2030 Notes, we will be required to make cash payments for each $1,000 in principal amount of 2030 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2030 Notes. Our outstanding 2025 Notes contain similar provisions concerning the holders’ rights to require us to repurchase their 2025 Notes upon a fundamental change and to pay cash to settle conversions of their 2025 Notes. However, we may not have enough available cash or be able able to obtain financing at the time we are required to make repurchases of the 2030 Notes or the 2025 Notes surrendered therefor or notes being converted. In addition, our ability to repurchase the 2025 Notes or the 2030 Notes or to pay cash upon conversions conversion of the 2025 Notes or 2030 Notes may be limited by law, by regulatory authority or by agreements governing our existing and future indebtedness, as described below.

For example, our credit facility in effect from time to time may prohibit us from making any cash payments on the conversion or repurchase of the 2025 Notes or the 2030 Notes, as the case may be, upon a fundamental change repurchase if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in pro forma compliance with the applicable financial covenants under that facility. Any new credit facility into which we may enter may have similar restrictions unless certain conditions are met. Our failure to make cash payments upon the conversion or repurchase of the 20252030 Notes or the 2030 Notes, as the case may be, as required under the terms of the applicable indenture governing such notes would permit holders of the 20252030 Notes or the 2030 Notes, as the case may be, to accelerate our obligations under the 20252030 Notes or the 2030 Notes, as the case may be.Notes.

Our failure to repurchase the 2025 Notes or 2030 Notes at a time when the repurchase is required by the applicable indenture or to pay any cash payable on future conversions of the 2025 Notes or the 2030 Notes as required by the applicable indenture would constitute a default under such indenture. A default under such indenture or the fundamental change itself could also lead to a default under agreements governing our existing and future indebtedness, including our credit facility. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes or make cash payments upon conversions thereof. The repurchase of $53 million principal amount of the 2025 Notes in the fourth fiscal quarter of 2024 reduces the risk associated with the 2025 Notes.

Certain provisions in the indentures governing the 20252030 Notes and 2030 Notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us.

Certain provisions in the 2025 Notes and 2030 Notes and the applicable indenture could make it more difficult or more expensive for a third party to acquire us. For example, if a takeover would constitute a fundamental change, holders of the notes will have the right to require us to repurchase their notes in cash. In addition, if a takeover constitutes a make-whole fundamental change, we may be required to increase the conversion rate for holders who convert their notes in connection with such takeover. In either case, and in other cases, our obligations under the notes and the applicable indenture could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of the notes or holders of our common stock may view as favorable.

Vishay Intertechnology, Inc. ("Vishay," "we," "us," or "our") manufactures one of the world’s largest portfolios of discrete semiconductors and passive electronic components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medicalhealthcare markets.

WeOur aregoal focusedis onto enhancingenhance stockholder value by growing our business and improving earnings per share. Since 1985, we have pursued a business business strategy of growth through focused research and development and acquisitions. We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure. structure. To drive growth and optimize stockholder value, we plan to capitalize on the mega trends of e-mobility, sustainability, and connectivity through initiatives. We arehave developingdeveloped go-to-market strategies and are investing in and expanding the key product lines for growth that we have identified. In addition, we are strategically expanding our outsourced production of commodity products to subcontractors. At the same time, we are enhancing our channel management while investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage. Taken together, each of these initiatives supports our Think Customer First organizational structure. To increase our internal capacity, we had planned to invest approximately $435 million in 2024. The industry recovery has been slower than expected. Accordingly, we adjusted our timetable for investments for our new 12-inch wafer fab in Itzehoe, Germany beyond 2024 and invested $320 for capital expenditures in 2024. We remain committed to our long-term plan of increasing Vishay's capacity, to assure our customers of reliable volume as they scale. We have and will continue to modulate the amount and timing of our capital expenditures in response to order flow and the timing of customer demand and qualifications. The decreased lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.culture.

Our business and operating results have been and will continue to be impacted by worldwide economic conditions. Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets. In this volatile economic environment, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs. We believe we can react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth. We implemented restructuring actions in the third fiscal quarter of 2024 designed to optimize our manufacturing footprint and streamline business decision making. We believe we have significantsufficient liquidity to withstand temporary disruptions in the economic environment. See additional information regarding our competitive strengths and key challenges as disclosed in Part I.

We utilize several financial metrics, including net revenues, gross profit margin, segment operating income, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. See further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below. The key financial metrics decreasedwere inmostly higher versus the fourthprior fiscal quarter of 2024 primarily due toand the negativeprior impactsyear of an on-going distributor inventory correction that resulted in lower orders.period. Net revenues and margins decreasedincreased versus the prior fiscal quarter and the prior year period primarily due to lowerhigher volumesales volume, but margins were mixed versus the prior fiscal quarter and decreasedprior year period. Margins were negatively impacted by lower average selling prices.prices, higher metals prices and labor costs, and tariffs.

Net revenues for the year ended December 31, 20242025 were $2.938$3.069 billion, compared to net revenues of $3.402$2.938 billion and $3.497$3.402 billion for the years ended December 31, 20232024 and 2022,2023, respectively. The net loss attributable to Vishay stockholders for the year ended December 31, 20242025 was $(9.0) million, or $(0.07) per share, compared to a net loss of $(31.2) million, or $(0.23) per share, compared toand net earnings of $323.8 million, or $2.31 per diluted share, and $428.8 million, or $2.98 per diluted share, for the years ended December 31, 20232024 and 2022,2023, respectively.

We define adjusted net earnings as net earnings (loss) determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating performance of our business. We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment. We define segment operating income as operating income excluding selling, general, and administrative costs of our global operations, sales and marketing, information systems, finance, and administrative groups, as well as restructuring and severance costs, goodwill impairments, and other items affecting comparability. The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash. Note 15 to our consolidated financial statements includes the reconciliation for segment operating income. These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, free cash, and freesegment cashoperating income do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that adjusted net earnings andearnings, adjusted earnings per shareshare, and segment operating income are meaningful because they provide insight with respect to our intrinsic operating results. Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends. We utilize the free cash metric in defining our Stockholder Return Policy. Management uses segment operating income, along with segment gross profit, to make decisions, allocate resources, and assess performance of its operating segments.

Our free cash results were significantly impacted by the installment payments of the U.S. transition tax of $47.0 million in 2025, $37.6 million in 2024, and $27.7 million in 2023, and $14.8 million in 2022, respectively, and payments of foreign, withholding,foreign and claw-backwithholding cash taxes of $9.4 million in 2025, $15.0 million in 2024, and $63.6 million in 2023, and $25.2 million in 20222023 on foreign earnings of $105.0$75.0 million, $276.8$105.0 million, and $81.2$276.8 million (net of taxes) that were repatriated to the U.S. in 2025, 2024, and 2023, and 2022, respectively.

Effective January 1, 2023, a new executive leadership team, promoted from within, embarked on a new era at Vishay ("Vishay 3.0"). The new executive management team laid out a three-year plan to expand capacity to support our highest growth and highest return product lines and to position Vishay to be ready for the next phase of megatrends in e-mobility, sustainability, and connectivity. The year 2023 was generally seen as the staging year for this plan,plan andas all elements of the plan have progressed throughout the organization. In 2024, many of these initiatives advanced and increased manufacturing capacity wasbegan to be available. BeginningAdditional capacity became available in early 2025,2025 and we began to benefit from the additional capacity as we are now able to satisfy quick-turn demand while maintaining competitive lead times. In 2026, we expect to beuse our additional capacity to supply customers that are in need of product due to unforeseen events or spikes in demand. We are also in a bettermuch-improved position to capture the next stepparticipate in the growingEMS channel as EMS customers are frequently operating with only short-term demand for electrification in our key end-markets.visibility.

Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment gross profit and segment operating income. Only dedicated, direct selling, general, and administrative ("SG&A") expenses of the segments are included in the calculation of segment operating income. We do not allocate certain SG&A expenses that are managed at the regional or corporate global level to our segments. Accordingly, segment operating income excludes these SG&A expenses that are not directly traceable to the segments. Segment operating income would also exclude costs not routinely used in the management of the segments in periods when those items are present, such as restructuring and severance costs, goodwill impairment charges, the direct impact of the COVID-19 pandemic, and other items affecting comparability. Segment operating income is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs. Segment operating margin is segment operating income expressed as a percentage of net revenues.

_______________ (1) Operating margin for the thirdsecond fiscal quarter of 20242025 includes $40.6an $11.3 million gain recognized upon the favorable resolution of restructuringa and severance expensescontingency (seeSee Note 32 to our consolidated financial statements). Operating margin for the fourth fiscal quarter of 2024 includes $66.5 million of goodwill impairment charges (see Note 19 to our consolidated financial statements).

Revenues in the fourth fiscal quarter of 2025 increased versus the fourth fiscal quarter of 2024 and prior fiscal quarter primarily due to higher sales volume. Favorable foreign currency impacts also contributed to the increase versus the fourth fiscal quarter of 2024. The book-to-bill ratio and backlog increased significantly versus the prior fiscal quarter and the fourth fiscal quarter of 2024. We continue to increase capacity for critical product lines. Average selling prices, including tariff adders, decreased versus the fourth fiscal quarter of 2023 and versus the prior fiscal quarter primarily due to lower sales volume and lower average selling prices. The book-to-bill ratio increased versus the prior fiscal quarter, but orders backlog were negatively impacted by the distributor inventory correction that began in 2022 and continued through 2024. We continue to increase manufacturing capacity for critical product lines. Average selling prices decreased versus the fourth fiscal quarter of 20232024 and prior fiscal quarter.

Gross profit margin decreasedincreased slightly versus the prior fiscal quarter, but decreased versus the fourth fiscal quarter andof prior2024. yearThe decrease versus the fourth fiscal quarter of 2024 is primarily due to lower volume and decreased average selling prices.prices, the impact of tariffs, and higher input costs.

As part of its growth strategy, the Company seeks to expand through targeted acquisitions of other manufacturers of electronic components. These acquisition targets include businesses that have established positions in major markets, reputations for product quality and reliability, and product lines with which the Company has substantial marketing and technical expertise. It also includes certain businesses that possess technologies which the Company expects to further develop and commercialize, such as MaxPower Semiconductor, Inc., acquired in 2022; businesses with well-developed technologies that the Company expects to grow using its manufacturing capabilities, capacity, and economies of scale to expand production and sell to its global customer base, such as Ametherm, Inc., acquired in 2024; and key niche suppliers to vertically integrate our supply chain, such as Birkelbach Kondensatortechnik GmbH ("Birkelbach"),GmbH, acquired in 2024, and Centerline Technologies, LLC, acquired in 2023.2024. To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization (“EBITDA”). For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for the trailing four fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the trailing four fiscal quarters.

On March 5,In 2024, we completedacquired the acquisition of Nexperia’sNexperia's wafer fabrication facility and operations located in Newport, South Wales, U.K. for approximately $177.5 million in cash, net of cash acquired. The wafer fabrication facility is located on 28 acres and is an automotive-certified, 200mm semiconductor wafer fab with capacity to produce more than 30,000 wafers per month. We plan to position the facility as a manufacturing excellence center and use it as the homeNewport forwafer MaxPowerfabrication facility to further develop and scale our SiC MOSFETs and diodes capabilities. The facility is currently generating a netlong-term lossinvestment which was not expected to generate income or cash flows in 2024 and 2025 while we invested in new equipment and qualified new products, but should enhance the long-term position of our MOSFETs business. We expect the facility to continuestart to generategenerating a net loss while we investprofit in new equipment and qualify new products.2026.

The acquisition of Nexperia's Newport fab in 2024 will enhance the manufacturing capacity and capabilities of our MOSFETs segment. The facility added significant depreciation and other costs to our MOSFETs segment. The facility ishas generatinggenerated a loss and we expect it to continue to generate a losslosses while we investinvested in new equipment and qualifyqualified new products. AlsoWe expect the facility to start generating profit in 2026. Also, beginning in 2023, we began making significant investments in capital expenditures primarily for capital expansion projects primarily outside of China, which has and will alsofurther increase depreciation expense. At the same time, we are focusing on increasing our technical resources, adding additional customer-facing engineers, and intensifying our activities in R&D.

For several years prior to 2023, share-based compensation expense was between $4 million and $6 million annually. During 2023, we implemented the Vishay Intertechnology, Inc. 2023 Long-Term Incentive Plan (the "2023 Plan") to enable us to recruit and retain highly qualified employees, directors, consultants and other service providers, provide them with an incentive for productivity, and create an opportunity for them to share in the growth and value of the Company. The 2023 Plan enhanced incentive compensation for our executive officers and is the first broad-based stock compensation program at Vishay in over 20 years. ThisShare-based compensation programexpense increasedwas operating expenses by $5.1$22.4 million in 2024 versus 20232025 and is expected to increase operating expenses bybe between $4approximately $27 million and $7$30 million in 2025 versus 2024.2026. Management believes such additional non-cash costs will enhance the long-term performance of the Company by providing selected participants with an incentive to improve the growth and profitability of the Company.

In 2024, we revised our short-term incentive ("STI") compensation structure to better align with our growth objectives. The revised structure incentivizes daily behaviors and actions of our our organizational leaders to create immediate growth in line with our cross-functional business objectives. Under the new structure, organizational leaders will beare rewarded annually for meeting determined targets in revenue, operating margin, gross margin, and variable margin. Managers will beare able to earn up to 130% of their former STI bonus targets for results which exceed expectations. The better alignment of the STI program with business results creates higher volatility in costs. The industry downturn that led to results that were below expectations in 2024 led to relatively low bonus accruals and thus lower reported SG&A expenses.expenses, Suchwhile costs2025 bonus accruals were higher compared to 2024. Costs associated with the STI program in 2026 are expected to be significantly higher if business results meet or exceed expectations.

We continue to monitor the economic environment and its potential effects on our customers and the end markets that we serve. We are continuing to assess our manufacturing footprint in light of ongoing geopolitical events and cost savings opportunities.

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 statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies. The net change of the dollar was not material when comparing 2024 versus 2023, but the dollar was weaker during 2023 2025 versus 2022,2024, with the translation of foreign currency revenues and expenses into U.S. dollars increasing reported revenues and expenses in 20232025 versus 2022.2024. The net change of the dollar was not material when comparing 2024 versus 2023.

Our operations in Israel, the United Kingdom, and most significant locations in Asia are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly payroll-related, which are incurred in the local currency. The cost of products sold and selling, general, and administrative expense have been favorablyunfavorably impacted for the year ended December 31, 20242025 compared to 2023 and for the year ended December 31, 2023 compared to 20222024 by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency. The costs of products sold and selling, general, currency.and administrative expense were favorably impacted for the year ended December 31, 2024 compared to 2023.

See Item 7A for additional discussion of foreign currency exchange risk.risk and forward contracts used to mitigate certain foreign currency risks.

We value our inventories at the lower of cost or net realizable value, with cost determined underusing moving average and the first-in, first-out method.methods. The valuation of our inventories requires our management to make 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 on age of the inventory and upon estimates of future demand, technology developments, and market conditions.

During 2024,2025, certain tax examinations were concluded and certain statutes of limitations lapsed. Our tax provision for those years2025 includes adjustments related to the resolution of these matters. During 2023, we settled an examination of our U.S. federal income tax returns for the periods ended December 31, 2017 through 2019. Our federal income tax returns for the years 20212022 through 20232024 remain subject to examination. The tax returns of significant non-U.S. subsidiaries currently under examination examination are located in the following jurisdictions: Israel (2021), GermanyChina (20172022 through 20212024), India (2004 through 20212023), and Philippines (20172020 through 20232022). The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examination.

DespiteFor themost inventoryof correction2024 thatand 2025, we areoperated experiencing,in a challenging environment, in part due to distribution customers digesting high channel inventories. The fourth quarter of 2025 saw short-term market conditions improving, and the long-term prospects for our business remain favorable,favorable. andWe we continue to increase manufacturing capacities for critical product lines. The increase in net revenues in 2025 is primarily due to higher sales volume. The decrease in net revenues in 2024 iswas primarily due to lower sales volume and decreased average selling prices. The decrease in net revenues in 2023 was primarily sales volume-driven, partially offset by increased average selling prices.

Gross profit margins for the year ended December 31, 20242025 were 21.3%,19.4%, as compared to 28.6%21.3% for the year ended December 31, 2023.2024. The decrease in gross profit margin is primarily due to lower salesaverage volume, decreased average selling prices,prices and thehigher metals impactand ofmaterials the Newport acquisition.costs. Higher labor costs and depreciation expense also negatively impacted the gross profit margin.

Analysis of revenues and margins for our segments is provided below. Direct costs of the COVID-19 pandemic are not allocated to the segments.

Net revenues of the MOSFETs segment decreased significantlyincreased in 20242025 versus the prior year. The decreaseincrease is primarily due to decreasedincreased sales to distribution customerscustomers, computing end market customers, and customers in the industrial,Asia power supply, and automotive end markets.region.

The grossGross profit margin in 2024 decreased versus the prior year primarily due to lower sales volume and decreased average selling prices.prices, partially offset by higher sales volume. Costs associated with the Newport wafer fab also contributed to decreasesthe decrease versus the prior year.

The segmentSegment operating margin decreased versus the prior year. The decreasesdecrease areis primarily due to gross profit margin decreases and increased increased segment SG&A expenses associated with the Newport wafer fab.

We acquiredcontinue leadingto edgeinvest siliconto expand mid- and siliconlong-term carbidemanufacturing MOSFETscapacity productsfor withstrategic our acquisitionproduct of MaxPower in the fourth fiscal quarter of 2022.lines. We plan to use the Newport wafer fabrication facility facility, acquired in the first fiscal quarter of 2024 as the home for MaxPower2024, to further develop and scale our SiC MOSFETs and diodes capabilities. TheWe acquisitionsare ofalso MaxPowercommitted Semiconductor,to Inc.building anda the Newport12-inch wafer fab,fab asin wellItzehoe, asGermany. the planned capacity expansions at Itzehoe and Newport,These are long-term investments which were not expected to generate significant income or cash flows in the near-term, but should greatly enhance the long-term position of our MOSFETs business. Despite the goodwill impairment charge recorded in 2024, we remain committed to these long-term projects.

Net revenues of the Diodes segment decreased significantlyincreased in 2024. 2025 versus the prior year. The decreaseincrease versus the prior year is primarily due to decreasedincreased sales in all regions to distribution customers, and EMS customers and industrial, automotive,industrial and power supply end market customers.customers, and customer in the Europe region.

Gross profit margin decreased significantly versus the prior year primarily due to lower sales volume, decreased average selling prices, andpartially offset by higher materials,sales labor, and fixed costs.volume.

Segment operating margin decreased significantly versus the prior year primarily due to decreased gross profit and increased SG&A costs.profit.

Net revenues of the Optoelectronic Components segment decreasedincreased in 2025 versus the prior year. The decreaseincrease wasis primarily due to decreasedincreased sales to distribution customers and customers in thecustomers, industrial end market customers, and automotive end markets. Sales significantly decreasedcustomers in the Europe and Americas regions, partially offset by an increase in sales in the Asia region.regions.

The grossGross profit margin decreasedincreased versus the prior year. The decreaseincrease is primarily due to lowerincreased sales volume, higherlower materials prices,fixed and variable costs, and less inventory obsolescence.

The segmentSegment operating margin decreasedincreased primarily due to the decreaseincrease in gross profit.

Net revenues of the Resistors segment decreasedincreased significantlyin 2025 versus the prior year. The decreaseincrease wasis primarily due to decreasedincreased sales to distribution customers and customers in thecustomers, industrial and automotive end markets.market Sales decreased in the Europecustomers, and Americas regions, partially offset by an increase in salescustomers in the Asia region.and Americas regions.

The grossGross profit margin decreased versus the prior year. The decrease is due to lower sales volume, decreased average selling prices,prices and higher labormaterials and materials costs, partially offset by ahigher sales favorable product mix and decreased utilities costs.volume.

Segment operating margin decreased versus the prior year. The decrease is primarily due to decreased gross profit.profit and increased SG&A costs.

Net revenues of the Inductors segment increased slightly in 2025 versus the prior year. The increase is primarily due to increased sales to EMSdistribution customers, medical, industrial and military and aerospacehealthcare end market customers, and customers in the Americas and Asia regions,region, partially offset by decreased sales to industrialmilitary and automotiveaerospace end market customers and customers in the Europe region.customers.

The grossGross profit margin decreased versus the prior year. The decrease is primarily due to lower average selling prices and higher logistics and laborvariable costs.

Net revenues of the Capacitors segment decreasedincreased significantly in 2025 versus the prior year. The decreaseincrease is primarily due to decreasedincreased sales to distribution customers, customers in the industrial and automotivetelecommunications end markets,market customers, and customers in the AmericasAsia and Europe regions,region, partially offset by increaseddecreased sales to customersmilitary inand theaerospace Asiaend region.market customers.

The grossGross profit margin decreased slightly versus the prior year. The decrease is primarily due to lower sales volume, decreased average selling prices, higher labormaterial and tantalum fixed costs, partially offset by ahigher favorablesales product mix,volume and increased decreasedaverage utilitiesselling costs.prices.

Our goal is to enhance stockholder value by growing our business and improving earnings per share. Since 1985, we have pursued a business strategy of growth through focused research and development and acquisitions. We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure. As we advance our Think Customer First organizational culture in 2026, we are focused on maintaining capacity readiness to fulfill rising demand, growing existing customer relationships, attracting new customer relationships, driving innovation, delivering new products and solutions, and expanding production in low cost countries to support our regional competitiveness. We continue to evaluate our manufacturing footprint for ways to improve efficiency and profitability while maintaining capacity readiness.

We are focused on realizing the full value of our broad product portfolio, becoming a customer-first company, and capitalizing on the mega trends of e-mobility, sustainability, and connectivity to drive top line growth, expand margins, and optimize stockholder returns. We are using eight strategic levers to achieve these goals. Our elevated capital expenditure levels over the past three years has have positioned us with increased capacity in an effort to assureensure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

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

Net revenues for the fiscal quarter ended AprilJuly 4, 2026 were $839.2$888.6 million, compared to $800.9 $839.2 million and $715.2$762.3 million for the fiscal quarters ended DecemberApril 31,4, 20252026 and MarchJune 29,28, 2025, respectively. Net earnings for the fiscal quarter ended AprilJuly 4, 2026 were $7.2$28.1 million, or $0.05$0.19 per diluted share, compared to net earnings of $1.0 $7.2 million, or $0.05 per diluted share for the fiscal quarter ended April 4, 2026, and net earnings of $2.0 million, or $0.01 per diluted share for the fiscal quarter ended DecemberJune 31, 2025, and a net loss of $(4.1) million, or $(0.03) per share for the fiscal quarter ended March 29,28, 2025.

Measures such as adjusted net earnings (loss), free cashcash, and segment operating income are considered non-GAAP measures. We define adjusted net earnings (loss) as net earnings (loss) determined in accordance with GAAP adjusted for various items that management believes are not indicative of the intrinsic operating performance of our business. We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and equipment. We define segment operating income as operating income excluding selling, general, and administrative costs of our global operations, sales and marketing, information systems, finance, and administrative groups, as well as restructuring and severance costs, goodwill impairments, and other items affecting comparability. The reconciliationreconciliations of adjusted net earnings (loss), adjusted net earnings (loss) per share, and free cash isare below. Note 10 to our consolidated condensed financial statements includes the reconciliation for segment operating income. These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings (loss), adjusted net earnings (loss) per share, free cashcash, and segment operating income do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that adjusted net earnings (loss) and adjusted net earnings (loss) per share are meaningful because they provide insight with respect to our intrinsic operating results. Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends. We utilize the free cash metric in defining our Stockholder Return Policy. Management uses segment operating income, along with segment gross profit, to make decisions, allocate resources, and assess performance of its operating segments.

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

In 2022, our Board of Directors adopted a Stockholder Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis. We intend to return such amounts to stockholders directly, in the form of dividends, or indirectly, in the form of stock repurchases. The policy sets forth our intention, but does not obligate us to acquire any shares of common stock or declare any dividends, and the policy may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations. For 2026, we expect to maintain our dividend and opportunistically repurchase shares based on U.S. available liquidity in line with this policy. We did not repurchase any shares of common stock in the second fiscal quarter of 2026. We expect to be in compliance with our Stockholder Return Policy without repurchasing any common stock in 2026.

Our chief operating decision maker makes decisions, allocates resources, and evaluates business segment performance based on segment gross profit and segment operating income. Only dedicated, direct selling, general, and administrative ("SG&A") expenses of the segments are included in the calculation of segment operating income. We do not allocate certain SG&A expenses that are managed at the regional or corporate global level to our segments. Accordingly, segment operating income does not include these SG&A expenses that are not directly traceable to the segments. Segment operating income also would not include income or costs not routinely used in the management of the segments in periods when those items are present, such as tariff refunds received from the U.S. government, tariff refunds passed through to customers, restructuring and severance costs, goodwill impairment charges, and other items affecting comparability. Segment operating income is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs. Segment operating margin is segment operating income expressed as a percentage of net revenues.

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

_________________________________________ (1) OperatingNet marginrevenues for the second fiscal quarter of 20252026 includeshave anbeen $11.3reduced by $30.0 million gainfor recognizedtariff uponrefunds thepassed favorablethrough resolutionto ofcustomers, awith contingency.no impact on gross profit.

Revenues increased versus the prior fiscal quarter and prior year quarter. The increases versus the prior fiscal quarter and prior year quarter are primarily due to higher sales volume.volume Theand book-to-billimproved ratiopricing conditions. Order levels remain high and backlog increased versus the prior fiscal quarter and prior year quarter due to higher order levels.quarter. We continue to increase capacity for critical product lines. Average selling prices,prices including tariff adders, decreasedincreased versus the prior fiscal quarter and prior year quarter.

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

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

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

Gross profit margins for the fiscal quarter ended AprilJuly 4, 2026 were 21.0%,23.3%, versus 19.6%21.0% and 19.0%19.5% for the comparable prior fiscal quarter and prior year period,quarter, respectively. Gross profit margins for the six fiscal months ended July 4, 2026 were 22.2%, versus 19.2% for the comparable prior year period. Gross profit margin increased versus the prior fiscal quarter and prior year quarter primarily due to higher sales volume andvolume, associated manufacturing efficiencies, and higher average selling prices, which offset higher metals and materials costs.costs and unfavorable foreign exchange impacts.

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

Gross profit margin decreasedincreased versus the prior fiscal quarter,quarter but increased versus theand prior year quarter.periods. The decreaseincrease versus the prior fiscal quarter is primarily due to lowerhigher sales volume and higher average selling prices. The increase versus the prior year quarterperiods is primarily due to higher sales volume, partially offset by lower average selling prices and higher metals costs.volume.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter.periods. The increases are primarily due to changes in gross profit and decreased segment SG&A expenses associated with the Newport wafer fab.

GrossNet profitrevenues marginof the Diodes segment increased versus the prior fiscal quarter and prior year quarter.periods. The increases versus the prior fiscal quarter and prior year quarterperiods wereare primarily due to higherincreased sales volume,to partiallydistribution offsetcustomers, byindustrial lowerand averageautomotive selling prices.end markets customers, and customers in all regions. Increased sales to OEM customers also contributed to the increase versus the prior year periods.

SegmentGross operatingprofit margin increased versus the prior fiscal quarter and prior year quarter.periods. The increases areversus the prior fiscal quarter and prior year periods were primarily due to changeshigher insales grossvolume profit.and higher average selling prices.

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

Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter.periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume and thehigher positiveaverage impactselling of increased inventory.prices. The decreasedecreases versus the prior year quarterperiods isare primarily due to lowerhigher average sellingmetals prices and unfavorablefixed productoverhead mix,costs, partially offset by higher sales volume. volume and higher average selling prices.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior yearyear-to-date quarter.period. The changes are primarily due to changes in gross profit.

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

Gross profit margin increased slightly versus the prior fiscal quarter, but decreased versus the prior year quarter.periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume,volume and higher average selling prices, partially offset by higher metals costs. The decreasedecreases versus the prior year quarterperiods isare primarily due to higher labor, materials, and metals costs andcosts, unfavorable product mix, and unfavorable foreign exchange impacts, partially offset by higher sales volume.volume and higher average selling prices.

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

Net revenues of the Inductors segment were flatincreased versus the prior fiscal quarter,quarter but increased versus theand prior year quarter.periods. The increase versus the prior yearfiscal quarter is primarily due to increased sales to distribution customers, customers in thenearly healthcareall andsales military and aerospacechannels, end markets, and regions, most significantly distribution customers and customers in the AsiaAmericas region. The increases versus the prior year periods are primarily due to increased sales to distribution customers, military and aerospace and healthcare end market customers, and customers in the Americas and Asia regions.

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

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

Net revenues of the Capacitors segment increased versus the prior fiscal quarter and prior year quarter.periods. The increase versus the prior fiscal quarter is primarily due to increased sales to distribution and OEM customers, customers in the military and aerospaceindustrial end market,market customers, and customers in the Europe and Americas regions, partially offset by decreased sales to customers in the Asia region due to Lunar New Year.region. The increaseincreases versus the prior year quarterperiods isare primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution end market customers, industrial and military and aerospace end market customers, and customers in the Asia and Americas regions.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter.periods. The increase versus the prior fiscal quarter is primarily due to higher sales volume, volume and higher average selling prices, partially offset by unfavorablehigher productmetals mix.costs. The increaseincreases versus the prior year quarterperiods isare primarily due to higher sales volume and higher average selling prices.

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

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

Interest expense for the fiscal quarter ended AprilJuly 4, 2026 increased by $0.2$0.3 million versus the fiscal quarter ended DecemberApril 31,4, 20252026 and $1.2decreased $(0.3) million versus the fiscal quarter ended MarchJune 29,28, 2025. Interest expense for the six fiscal months ended July 4, 2026 increased $0.9 million versus the six fiscal months ended June 28, 2025. The increasesincrease areversus the prior year-to-date period is due to higher average outstanding balances on our revolving credit facility.

For the fiscal quarter ended AprilJuly 4, 2026, our effective tax rate was 44.3%,33.7%, as compared to 82.3%44.3% and 3.2%83.7% for the fiscal quarters ended DecemberApril 31,4, 20252026 and MarchJune 29,28, 2025, respectively. For the six fiscal months ended July 4, 2026, our effective tax rate was 36.1%, as compared to 125.9% for the six fiscal months ended June 28, 2025. We expect that our effective tax rate will be higher than the U.S. statutory rate, excluding unusual transactions, even at higher levels of pre-tax income.

Our financial condition as of AprilJuly 4, 2026 is adequate to meet our capital expenditure and other growth plans. We have historically been a strong generator of operating cash flows. The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition strategy, fund our Stockholder Return Policy, and to reduce debt levels.

Cash flows provided by operating activities were $63.7$169.0 million for the threesix fiscal months ended AprilJuly 4, 2026, as compared to cash flows provided by operations of $16.1$7.3 million for the threesix fiscal months ended MarchJune 29,28, 2025.

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

The cash conversion cycle improved to 116110 days in the firstsecond fiscal quarter of 2026, reflecting increased revenues and cost of products sold, our sale of an additional $63.1net $15.5 million trade receivables receivables, and disciplined working capital management.

Cash paid for property and equipment for the three six fiscal months ended AprilJuly 4, 2026 was $110.7 $205.9 million, as compared to $61.6$126.2 million for the threesix fiscal months ended MarchJune 29,28, 2025. To be well positioned to service our customers and to fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term. Our elevated capital expenditure levels over the past three years have positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them. We are committed to completing our capacity expansion projects, but have modulated and will continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity. For 2026, we plan to spend between $400 million to $440 million for capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

Free cash flow for the threesix fiscal months ended AprilJuly 4, 2026 decreased slightlyincreased versus the three six fiscal months ended MarchJune 29,28, 2025. Free cash flow for the threesix fiscal months ended AprilJuly 4, 2026 was negativelypositively impacted by aincreased high levelnet ofearnings, capitalas expenditures.well as tariff refunds received from the U.S. government and additional net cash inflows related to our account receivable securitization programs. We expect that free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion after which we expect to generate increasingly higher levels of free cash. There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.