UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 26, 2020~~July 3, 2021

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

For the transition period from _____ to _____

Commission File Number 1-34679

VISHAY PRECISION GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

27-0986328

(State or Other Jurisdiction of Incorporation)

(I.R.S. Employer Identification Number)

3 Great Valley Parkway, Suite 150

Malvern, PA, 19355

484-321-5300

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.10 par value	VPG	New York Stock Exchange

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~November 3, 2020,~~August 10, 2021, the registrant had ~~12,552,439~~12,602,755 shares of its common stock and 1,022,887 shares of its Class B convertible common stock outstanding.

VISHAY PRECISION GROUP, INC.

FORM 10-Q

~~September 26, 2020~~July 3, 2021

CONTENTS


		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Condensed Balance Sheets – ~~September 26~~July ~~, 2020~~ 3, 2021 (Unaudited) and December 31, ~~2019~~2020	3

	Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended ~~September 26~~July 3, 2021 and June 27 , 2020 ~~and~~ ~~September 28, 2019~~	5

	Consolidated Condensed Statements of Operations (Unaudited) – ~~Nine~~Six Fiscal Months Ended July ~~September 26~~ 3, 2021 and June 27 , 2020 ~~and~~ ~~September 28, 201~~9	6

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – Fiscal Quarters Ended ~~September 26, 2020~~July 3, 2021 and June 27, 2020 ~~September 28, 201~~9	7

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – ~~Nine~~ Six Fiscal Months Ended ~~September 26, 2020~~July 3, 2021 and June 27, 2020 ~~September 28, 201~~9	8

	Consolidated Condensed Statements of Cash Flows (Unaudited) ~~–Fiscal Quarters~~–Six Fiscal Months Ended ~~September 26~~,July 3, 2021 and June 27, 2020 ~~and~~ ~~September 28, 2019~~	9

	Consolidated Condensed Statements of Equity (Unaudited) – Fiscal Quarters Ended ~~September 26~~,July 3, 2021 and June 27, 2020 ~~and~~ ~~September 28, 2019~~	10

	Consolidated Condensed Statements of Equity (Unaudited) – N ~~ine~~Six Fiscal Months Ended ~~September 26~~,July 3, 2021 and June 27, 2020 ~~and~~ ~~September 28, 2019~~	11

	Notes to Unaudited Consolidated Condensed Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4142

Item 4.	Controls and Procedures	4142

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4243

Item 1A.	Risk Factors	4243

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4243

Item 3.	Defaults Upon Senior Securities	4243

Item 4.	Mine Safety Disclosures	4243

Item 5.	Other Information	4243

Item 6.	Exhibits	4344

	SIGNATURES	4445

-2-

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)	VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)					VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)
		September 26, 2020		December 31, 2019			July 3, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	89,795	$	86,910	Cash and cash equivalents	$	73,456	$	98,438
Accounts receivable, net	Accounts receivable, net	44,966		43,198		Accounts receivable, net	51,818		45,339
Inventories:	Inventories:					Inventories:
Raw materials	Raw materials	22,770		21,701		Raw materials	25,858		21,894
Work in process	Work in process	24,627		23,128		Work in process	27,560		21,534
Finished goods	Finished goods	19,062		22,066		Finished goods	24,060		18,920
Inventories, net	Inventories, net	66,459		66,895		Inventories, net	77,478		62,348

Prepaid expenses and other current assets	Prepaid expenses and other current assets	15,613		15,558		Prepaid expenses and other current assets	15,698		15,761

Total current assets	Total current assets	216,833		212,561		Total current assets	218,450		221,886

Property and equipment, at cost:
Property and equipment:						Property and equipment:
Land	Land	4,217		4,243		Land	4,269		4,282
Buildings and improvements	Buildings and improvements	64,586		52,708		Buildings and improvements	68,118		67,581
Machinery and equipment	Machinery and equipment	113,519		111,492		Machinery and equipment	118,543		115,717
Software	Software	9,718		9,384		Software	9,431		10,026
Construction in progress	Construction in progress	2,261		2,485		Construction in progress	3,807		6,341
Accumulated depreciation	Accumulated depreciation	(125,583)		(119,042)		Accumulated depreciation	(127,611)		(128,931)
Property and equipment, net	Property and equipment, net	68,718		61,270		Property and equipment, net	76,557		75,016

Goodwill	Goodwill	34,724		35,018		Goodwill	45,732		31,105
Intangible assets, net	Intangible assets, net	32,170		34,198		Intangible assets, net	54,474		32,039
Operating lease right-of-use assets	Operating lease right-of-use assets	21,846		8,691		Operating lease right-of-use assets	25,451		21,788
Other assets	Other assets	18,415		18,675		Other assets	19,633		20,053
Total assets	Total assets	$	392,706	$	370,413	Total assets	$	440,297	$	401,887

Continues on the following page.

-3-


VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)	VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)					VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)
		September 26, 2020		December 31, 2019			July 3, 2021		December 31, 2020
Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	9,108	$	8,869	Trade accounts payable	$	11,061	$	10,487
Payroll and related expenses	Payroll and related expenses	15,945		16,312		Payroll and related expenses	16,818		17,595
Other accrued expenses	Other accrued expenses	16,482		16,126		Other accrued expenses	18,138		13,843
Income taxes	Income taxes	1,153		261		Income taxes	969		1,593
Current portion of operating lease liabilities	Current portion of operating lease liabilities	4,179		2,827		Current portion of operating lease liabilities	4,445		4,011
Current portion of long-term debt	Current portion of long-term debt	52		44,516		Current portion of long-term debt	0		18
Total current liabilities	Total current liabilities	46,919		88,911		Total current liabilities	51,431		47,547

Long-term debt, less current portion	Long-term debt, less current portion	40,604		17		Long-term debt, less current portion	60,670		40,626
Deferred income taxes	Deferred income taxes	3,477		3,478		Deferred income taxes	8,345		3,403
Operating lease liabilities	Operating lease liabilities	18,385		5,811		Operating lease liabilities	22,346		19,504
Other liabilities	Other liabilities	14,894		14,775		Other liabilities	15,747		16,263
Accrued pension and other postretirement costs	Accrued pension and other postretirement costs	15,883		15,669		Accrued pension and other postretirement costs	15,840		16,687
Total liabilities	Total liabilities	140,162		128,661		Total liabilities	174,379		144,030

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0

Equity:	Equity:					Equity:
Common stock	Common stock	1,317		1,312		Common stock	1,322		1,317
Class B convertible common stock	Class B convertible common stock	103		103		Class B convertible common stock	103		103
Treasury stock	Treasury stock	(8,765)		(8,765)		Treasury stock	(8,765)		(8,765)
Capital in excess of par value	Capital in excess of par value	197,514		197,125		Capital in excess of par value	197,856		197,764
Retained earnings	Retained earnings	99,957		89,288		Retained earnings	108,956		100,075
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(37,742)		(37,703)		Accumulated other comprehensive loss	(33,546)		(32,671)
Total Vishay Precision Group, Inc. stockholders' equity	Total Vishay Precision Group, Inc. stockholders' equity	252,384		241,360		Total Vishay Precision Group, Inc. stockholders' equity	265,926		257,823
Noncontrolling interests	Noncontrolling interests	160		392		Noncontrolling interests	(8)		34
Total equity	Total equity	252,544		241,752		Total equity	265,918		257,857
Total liabilities and equity	Total liabilities and equity	$	392,706	$	370,413	Total liabilities and equity	$	440,297	$	401,887

See accompanying notes.

-4-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)


		Fiscal quarter ended					Fiscal quarter ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Net revenues	Net revenues	$	67,525	$	67,421	Net revenues	$	75,339	$	59,146
Costs of products sold	Costs of products sold	40,176		41,631		Costs of products sold	45,541		36,036
Gross profit	Gross profit	27,349		25,790		Gross profit	29,798		23,110

Selling, general, and administrative expenses	Selling, general, and administrative expenses	19,144		19,057		Selling, general, and administrative expenses	22,453		18,640
Acquisition costs						Acquisition costs	1,198		0
Impairment of goodwill and indefinite-lived intangibles						Impairment of goodwill and indefinite-lived intangibles	1,223		0

Executive severance costs		0		0
Restructuring costs	Restructuring costs	84		547		Restructuring costs	0		499
Operating income	Operating income	8,121		6,186		Operating income	4,924		3,971

Other income (expense):	Other income (expense):					Other income (expense):
Interest expense	Interest expense	(309)		(324)		Interest expense	(273)		(267)
Other	Other	(39)		547		Other	(326)		(1,273)
Other income (expense)	Other income (expense)	(348)		223		Other income (expense)	(599)		(1,540)

Income before taxes	Income before taxes	7,773		6,409		Income before taxes	4,325		2,431

Income tax expense	Income tax expense	2,109		1,879		Income tax expense	262		684

Net earnings	Net earnings	5,664		4,530		Net earnings	4,063		1,747
Less: net earnings attributable to noncontrolling interests		66		21
Less: net earnings (loss) attributable to noncontrolling interests						Less: net earnings (loss) attributable to noncontrolling interests	143		(12)
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	5,598	$	4,509	Net earnings attributable to VPG stockholders	$	3,920	$	1,759

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	0.41	$	0.33	Basic earnings per share attributable to VPG stockholders	$	0.29	$	0.13
Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	0.41	$	0.33	Diluted earnings per share attributable to VPG stockholders	$	0.29	$	0.13

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	13,575		13,523		Weighted average shares outstanding - basic	13,618		13,571
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	13,637		13,607		Weighted average shares outstanding - diluted	13,646		13,609

See accompanying notes.

-5-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)


		Nine fiscal months ended					Six fiscal months ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Net revenues	Net revenues	$	194,367	$	214,816	Net revenues	$	145,928	$	126,842
Costs of products sold	Costs of products sold	118,843		127,366		Costs of products sold	87,508		78,667
Gross profit	Gross profit	75,524		87,450		Gross profit	58,420		48,175

Selling, general, and administrative expenses	Selling, general, and administrative expenses	58,075		59,401		Selling, general, and administrative expenses	44,636		38,931
Acquisition costs						Acquisition costs	1,198		0
Impairment of goodwill and indefinite-lived intangibles						Impairment of goodwill and indefinite-lived intangibles	1,223		0

Executive severance costs		0		611
Restructuring costs	Restructuring costs	713		547		Restructuring costs	0		629
Operating income	Operating income	16,736		26,891		Operating income	11,363		8,615
Other income (expense):	Other income (expense):					Other income (expense):
Interest expense	Interest expense	(1,037)		(1,071)		Interest expense	(578)		(728)
Other	Other	(629)		(385)		Other	247		(590)
Other income (expense)	Other income (expense)	(1,666)		(1,456)		Other income (expense)	(331)		(1,318)

Income before taxes	Income before taxes	15,070		25,435		Income before taxes	11,032		7,297

Income tax expense	Income tax expense	4,367		6,999		Income tax expense	2,026		2,258

Net earnings	Net earnings	10,703		18,436		Net earnings	9,006		5,039
Less: net earnings attributable to noncontrolling interests		34		119
Less: net earnings (loss) attributable to noncontrolling interests						Less: net earnings (loss) attributable to noncontrolling interests	125		(32)
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	10,669	$	18,317	Net earnings attributable to VPG stockholders	$	8,881	$	5,071

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	0.79	$	1.36	Basic earnings per share attributable to VPG stockholders	$	0.65	$	0.37

Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	0.78	$	1.35	Diluted earnings per share attributable to VPG stockholders	$	0.65	$	0.37

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	13,562		13,512		Weighted average shares outstanding - basic	13,605		13,556

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	13,611		13,588		Weighted average shares outstanding - diluted	13,638		13,598

See accompanying notes.

-6-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


		Fiscal quarter ended					Fiscal quarter ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Net earnings	Net earnings	$	5,664	$	4,530	Net earnings	$	4,063	$	1,747

Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	2,479		(2,559)		Foreign currency translation adjustment	607		3,271
Pension and other postretirement actuarial items, net of tax	Pension and other postretirement actuarial items, net of tax	(137)		(21)		Pension and other postretirement actuarial items, net of tax	109		(152)
Other comprehensive (loss) income		2,342		(2,580)
Other comprehensive income						Other comprehensive income	716		3,119

Comprehensive income	Comprehensive income	8,006		1,950		Comprehensive income	4,779		4,866

Less: comprehensive income attributable to noncontrolling interests		66		21
Less: comprehensive income (loss) attributable to noncontrolling interests						Less: comprehensive income (loss) attributable to noncontrolling interests	143		(12)

Comprehensive income attributable to VPG stockholders	Comprehensive income attributable to VPG stockholders	$	7,940	$	1,929	Comprehensive income attributable to VPG stockholders	$	4,636	$	4,878

See accompanying notes.

-7-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


		Nine fiscal months ended					Six fiscal months ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Net earnings	Net earnings	$	10,703	$	18,436	Net earnings	$	9,006	$	5,039

Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	409		(1,608)		Foreign currency translation adjustment	(1,193)		(2,070)
Pension and other postretirement actuarial items, net of tax	Pension and other postretirement actuarial items, net of tax	(448)		164		Pension and other postretirement actuarial items, net of tax	318		(311)
Other comprehensive (loss) income		(39)		(1,444)
Other comprehensive loss						Other comprehensive loss	(875)		(2,381)

Comprehensive income	Comprehensive income	10,664		16,992		Comprehensive income	8,131		2,658

Less: comprehensive income attributable to noncontrolling interests		34		119
Less: comprehensive income (loss) attributable to noncontrolling interests						Less: comprehensive income (loss) attributable to noncontrolling interests	125		(32)

Comprehensive income attributable to VPG stockholders	Comprehensive income attributable to VPG stockholders	$	10,630	$	16,873	Comprehensive income attributable to VPG stockholders	$	8,006	$	2,690

See accompanying notes.

-8-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)


		Nine fiscal months ended					Six fiscal months ended
		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	10,703	$	18,436	Net earnings	$	9,006	$	5,039
Adjustments to reconcile net earnings to net cash provided by operating activities:	Adjustments to reconcile net earnings to net cash provided by operating activities:					Adjustments to reconcile net earnings to net cash provided by operating activities:

Impairment of goodwill and indefinite-lived intangibles						Impairment of goodwill and indefinite-lived intangibles	1,223		0
Depreciation and amortization	Depreciation and amortization	9,334		8,639		Depreciation and amortization	7,108		6,312
Loss from extinguishment of debt	Loss from extinguishment of debt	30		0		Loss from extinguishment of debt	—		30
Gain on sale of property and equipment		(140)		(100)
Reclassification of foreign currency translation adjustment related to disposal of subsidiary		0		(827)
Loss (gain) on sale of property and equipment						Loss (gain) on sale of property and equipment	44		(143)

Share-based compensation expense	Share-based compensation expense	1,137		1,592		Share-based compensation expense	942		757
Inventory write-offs for obsolescence	Inventory write-offs for obsolescence	1,873		1,937		Inventory write-offs for obsolescence	1,135		1,302
Deferred income taxes	Deferred income taxes	127		605		Deferred income taxes	(1,110)		(146)
Other	Other	364		(2)		Other	(1,820)		25
Net changes in operating assets and liabilities:	Net changes in operating assets and liabilities:					Net changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(1,541)		8,348		Accounts receivable, net	(776)		2,077
Inventories, net	Inventories, net	(1,214)		(4,138)		Inventories, net	(7,744)		(1,383)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(75)		(5,788)		Prepaid expenses and other current assets	314		(632)
Trade accounts payable	Trade accounts payable	605		(1,353)		Trade accounts payable	1,715		1,228
Other current liabilities	Other current liabilities	1,631		(2,727)		Other current liabilities	2,341		2,229
Net cash provided by operating activities	Net cash provided by operating activities	22,834		24,622		Net cash provided by operating activities	12,378		16,695

Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(15,815)		(8,621)		Capital expenditures	(8,309)		(11,018)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	423		265		Proceeds from sale of property and equipment	16		378

Adjustment to purchase price of a business		156		0
Purchase of business, net of cash acquired						Purchase of business, net of cash acquired	(47,216)		156
Net cash used in investing activities	Net cash used in investing activities	(15,236)		(8,356)		Net cash used in investing activities	(55,509)		(10,484)

Financing activities	Financing activities					Financing activities

Principal payments on long-term debt	Principal payments on long-term debt	(3,459)		(3,461)		Principal payments on long-term debt	(18)		(3,418)

Proceeds from revolving facility						Proceeds from revolving facility	20,000		0

Debt issuance costs	Debt issuance costs	(402)		0		Debt issuance costs	0		(402)
Purchase of noncontrolling interest	Purchase of noncontrolling interest	(253)		0		Purchase of noncontrolling interest	0		(253)
Contributions from (distributions to) noncontrolling interests		35		(45)
(Distributions to) contributions from noncontrolling interests						(Distributions to) contributions from noncontrolling interests	(167)		117
Payments of employee taxes on certain share-based arrangements	Payments of employee taxes on certain share-based arrangements	(813)		(854)		Payments of employee taxes on certain share-based arrangements	(846)		(813)
Net cash used in financing activities		(4,892)		(4,360)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	18,969		(4,769)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	179		(766)		Effect of exchange rate changes on cash and cash equivalents	(820)		(1,155)
Increase in cash and cash equivalents		2,885		11,140
(Decrease) increase in cash and cash equivalents						(Decrease) increase in cash and cash equivalents	(24,982)		287
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	86,910		90,159		Cash and cash equivalents at beginning of period	98,438		86,910
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	89,795	$	101,299	Cash and cash equivalents at end of period	$	73,456	$	87,197

Supplemental disclosure of investing transactions:	Supplemental disclosure of investing transactions:					Supplemental disclosure of investing transactions:
Capital expenditures purchased	Capital expenditures purchased	$	(15,395)	$	(7,383)	Capital expenditures purchased	$	(6,353)	$	(10,290)
Capital expenditures accrued but not yet paid	Capital expenditures accrued but not yet paid	$	762	$	613	Capital expenditures accrued but not yet paid	$	606	$	455
Supplemental disclosure of financing transactions:
Non-cash extinguishment of long-term debt facility (see Note 7)		$	(7,020)	$	0
Non-cash refinancing of revolving facility (see Note 7)		$	7,020	$	0

See accompanying notes.

-9-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)


		Fiscal quarter ended September 26, 2020																			Fiscal quarter ended July 3, 2021
		Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity			Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at June 27, 2020		$	1,317	$	103	$	(8,765)	$	197,134	$	94,359	$	(40,084)	$	244,064	$	176	$	244,240
Balance at April 3, 2021																				Balance at April 3, 2021	$	1,320	$	103	$	(8,765)	$	197,282	$	105,036	$	(34,262)	$	260,714	$	(95)	$	260,619
Net earnings	Net earnings	—		—		—		—		5,598		—		5,598		66		5,664		Net earnings	—		—		—		—		3,920		—		3,920		143		4,063
Other comprehensive income	Other comprehensive income	—		—		—		—		—		2,342		2,342		—		2,342		Other comprehensive income	—		—		—		—		—		716		716		—		716
Share-based compensation expense	Share-based compensation expense	—		—		—		380		—		—		380		—		380		Share-based compensation expense	—		—		—		576		—		—		576		—		576

Restricted stock issuances ( 15,564 shares)																				Restricted stock issuances ( 15,564 shares)	2		—		—		(2)		—		—		0		—		0

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—		—		—		—		—		—		—		(82)		(82)		Distributions to noncontrolling interests	—		—		—		—		—		—		—		(56)		(56)
Balance at September 26, 2020		$	1,317	$	103	$	(8,765)	$	197,514	$	99,957	$	(37,742)	$	252,384	$	160	$	252,544
Balance at July 3, 2021																				Balance at July 3, 2021	$	1,322	$	103	$	(8,765)	$	197,856	$	108,956	$	(33,546)	$	265,926	$	(8)	$	265,918


		Fiscal quarter ended September 28, 2019																			Fiscal quarter ended June 27, 2020
		Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity			Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at June 29, 2019		$	1,312	$	103	$	(8,765)	$	196,875	$	80,908	$	(36,329)	$	234,104	$	138	$	234,242
Balance at March 28, 2020																				Balance at March 28, 2020	$	1,316	$	103	$	(8,765)	$	196,709	$	92,600	$	(43,203)	$	238,760	$	347	$	239,107
Net earnings	Net earnings	—		—				—		4,509				4,509		21		4,530		Net earnings	—		—		—		—		1,759		—		1,759		(12)		1,747
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(2,580)		(2,580)		—		(2,580)		Other comprehensive loss	—		—		—		—		—		3,119		3,119		—		3,119
Share-based compensation expense	Share-based compensation expense	—		—		—		506		—		—		506		—		506		Share-based compensation expense	—		—		—		378		—		—		378		—		378
Restricted stock issuances (8,244 shares)																				Restricted stock issuances (8,244 shares)	1		—		—		(1)		—		—		0		—		0

Distributions to noncontrolling interests		—		—		—		—		—		—		—		(47)		(47)
Balance at September 28, 2019		$	1,312	$	103	$	(8,765)	$	197,381	$	85,417	$	(38,909)	$	236,539	$	112	$	236,651
Purchase of noncontrolling interest																				Purchase of noncontrolling interest	—		—		—		48		—		—		48		(301)		(253)
Contribution from noncontrolling interests																				Contribution from noncontrolling interests	—		—		—		—		—		—		—		142		142
Balance at June 27, 2020																				Balance at June 27, 2020	$	1,317	$	103	$	(8,765)	$	197,134	$	94,359	$	(40,084)	$	244,064	$	176	$	244,240

See accompanying notes.

-10-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)

Nine Fiscal Months Ended September 26, 2020
Common
Stock Class B
Convertible
Common Stock Treasury Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total VPG, Inc.
Stockholders'
Equity Noncontrolling
Interests Total
Equity
Balance at December 31, 2019 $ 1,312 $ 103 $ (8,765) $ 197,125 $ 89,288 $ (37,703) $ 241,360 $ 392 $ 241,752
Net earnings — — — — 10,669 — 10,669 34 10,703
Other comprehensive loss — — — — — (39) (39) — (39)
Share-based compensation expense — — — 1,137 — — 1,137 — 1,137
Restricted stock issuances (52,433 shares) 5 — — (796) — — (791) — (791)
Purchase of noncontrolling interest — — — 48 — — 48 (301) (253)
Contributions from noncontrolling interests — — — — — — — 35 35
Balance at September 26, 2020 $ 1,317 $ 103 $ (8,765) $ 197,514 $ 99,957 $ (37,742) $ 252,384 $ 160 $ 252,544


	Six Fiscal Months Ended July 3, 2021
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG, Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2020	$	1,317	$	103	$	(8,765)	$	197,764	$	100,075	$	(32,671)	$	257,823	$	34	$	257,857
Net earnings	—		—		—		—		8,881		—		8,881		125		9,006
Other comprehensive loss	—		—		—		—		—		(875)		(875)		—		(875)
Share-based compensation expense	—		—		—		942		—		—		942		—		942
Restricted stock issuances (50,316 shares)	5		—		—		(850)		—		—		(845)		—		(845)





Distributions to noncontrolling interests	—		—		—		—		—		—		—		(167)		(167)
Balance at July 3, 2021	$	1,322	$	103	$	(8,765)	$	197,856	$	108,956	$	(33,546)	$	265,926	$	(8)	$	265,918

Nine Fiscal Months Ended September 28, 2019
Common
Stock Class B
Convertible
Common Stock Treasury Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total VPG, Inc.
Stockholders'
Equity Noncontrolling
Interests Total
Equity
Balance at December 31, 2018 $ 1,307 $ 103 $ (8,765) $ 196,666 $ 66,569 $ (37,465) $ 218,415 $ 38 $ 218,453
Net earnings — — — — 18,317 — 18,317 119 18,436
Other comprehensive loss — — — — — (1,444) (1,444) — (1,444)
Share-based compensation expense — — — 1,592 — — 1,592 — 1,592
Restricted stock issuances (48,482 shares) 5 — — (877) — — (872) — (872)
Cumulative effect adjustment for adoption of ASU 2016-02
— — — — 531 — 531 — 531
Distributions to noncontrolling interests — — — — — — — (45) (45)
Balance at September 28, 2019 $ 1,312 $ 103 $ (8,765) $ 197,381 $ 85,417 $ (38,909) $ 236,539 $ 112 $ 236,651


	Six Fiscal Months Ended June 27, 2020
	Common Stock		Class B Convertible Common Stock		Treasury Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total VPG, Inc. Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2019	$	1,312	$	103	$	(8,765)	$	197,125	$	89,288	$	(37,703)	$	241,360	$	392	$	241,752
Net earnings	—		—		—		—		5,071		—		5,071		(32)		5,039
Other comprehensive loss	—		—		—		—		—		(2,381)		(2,381)		—		(2,381)
Share-based compensation expense	—		—		—		757		—		—		757		—		757
Restricted stock issuances (52,433 shares)	5		—		—		(796)		—		—		(791)		—		(791)


Purchase of noncontrolling interest	—		—		—		48		—		—		48		(301)		(253)
Contributions from noncontrolling interests	—		—		—		—		—		—		—		117		117
Balance at June 27, 2020	$	1,317	$	103	$	(8,765)	$	197,134	$	94,359	$	(40,084)	$	244,064	$	176	$	244,240

See accompanying notes.

-11-

Vishay Precision Group, Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1 – Basis of Presentation

Background

Vishay Precision Group, Inc. (“VPG” or the “Company”) is an internationally recognized designer, manufacturer and marketer of sensors, and sensor-based measurement systems, as well as specialty resistors and strain gages based upon the Company's proprietary technology. The Company provides precision products and solutions, many of which are “designed-in” by its customers, specializing in the growing markets of stress, force, weight, pressure, and current measurements.

Interim Financial Statements

These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore do not include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, ~~2019~~2020 and ~~2018~~2019 and for each of the three years in the period ended December 31, ~~2019,~~2020, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the SEC on March 11, ~~2020.~~2021. The results of operations for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 are not necessarily indicative of the results to be expected for the full year. VPG reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first quarter, which always begins on January 1, and the fourth quarter, which always ends on December 31. The four fiscal quarters in ~~2020~~2021 and ~~2019~~2020 end on the following dates:

2020

2019

2021

2020

Quarter 1

March 28,

March 30,

Quarter 1

April 3,

March 28,

Quarter 2

June 27,

June 29,

Quarter 2

July 3,

June 27,

Quarter 3

September 26,

September 28,

Quarter 3

October 2,

September 26,

Quarter 4

December 31,

Quarter 4

December 31,

Recently Adopted Accounting Pronouncements

In ~~June 2016,~~December 2019, the Financial Accounting Standards Board ~~("FASB")~~ issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13, and subsequent related amendments to ASU 2016-13, replace the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. 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 Company adopted this ASU, effective January 1, 2020, using the modified retrospective approach, and the effect on the Company's consolidated condensed financial statements and related disclosures was not material.

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~"Fair Value Measurements (Topic 820)."~~ This ASU modifies the disclosures on fair value measurements by removing the requirements to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. The ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income. The Company adopted this ASU effective January 1, 2020, and the effect on the Company's disclosures in its consolidated condensed financial statements was not material.

~~Recent Accounting Pronouncements~~

~~In August 2018, the FASB issued ASU No. 2018-14,~~ ~~"Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans."~~ This ASU amends Accounting Standards Codification ("ASC") 715 to add, remove and clarify disclosure requirements related to defined benefit and pension and other postretirement plans. The amendments in this ASU are

~~-12-~~

~~Note 1 – Basis of Presentation (continued)~~

effective for annual periods beginning after December 15, 2020 and early adoption is permitted. The Company is evaluating the standard to determine the impact on the consolidated condensed financial statements.

~~In December 2019, the FASB issued ASU~~ No. ASU 2019-12, ~~"Simplifying~~"Simplifying the Accounting for Income Taxes". This ASU amends Accounting Standards Codification ("ASC") 740 by removing certain exceptions to the general principles, clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company ~~is evaluating~~adopted this standard in the ~~standard to determine~~first quarter of 2021. The adoption of this ASU did not impact our financial statements or the ~~impact on the consolidated condensed financial statements.~~related disclosures.

~~Reclassifications~~

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

Note 2 – Revenues

Revenue Recognition

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

Fiscal quarter ended

September 26, 2020 Fiscal quarter ended

September 28, 2019
Foil Technology
Products Force
Sensors Weighing and
Control Systems Total Foil Technology
Products Force
Sensors Weighing and
Control Systems Total
United States $ 12,733 $ 6,974 $ 8,328 $ 28,035 $ 13,737 $ 9,008 $ 5,223 $ 27,968
United Kingdom 778 2,321 2,633 5,732 762 2,554 3,650 6,966
Other Europe 7,660 2,357 3,441 13,458 8,262 2,475 3,116 13,853
Israel 5,981 78 0 6,059 2,768 127 0 2,895
Asia 5,754 2,132 2,471 10,357 6,590 2,053 1,836 10,479
Canada 0 0 3,884 3,884 0 0 5,260 5,260
Total $ 32,906 $ 13,862 $ 20,757 $ 67,525 $ 32,119 $ 16,217 $ 19,085 $ 67,421
Nine Fiscal Months Ended September 26, 2020 Nine Fiscal Months Ended September 28, 2019
Foil Technology
Products Force
Sensors Weighing and
Control Systems Total Foil Technology
Products Force
Sensors Weighing and
Control Systems Total
United States $ 35,456 $ 19,479 $ 23,226 $ 78,161 $ 43,748 $ 25,557 $ 16,150 $ 85,455
United Kingdom 2,315 6,012 8,068 16,395 2,436 8,265 12,228 22,929
Other Europe 22,346 6,165 10,615 39,126 25,212 8,456 11,931 45,599
Israel 14,627 268 0 14,895 9,019 330 0 9,349
Asia 20,424 5,549 6,001 31,974 21,752 6,690 6,726 35,168
Canada 0 0 13,816 13,816 0 0 16,316 16,316
Total $ 95,168 $ 37,473 $ 61,726 $ 194,367 $ 102,167 $ 49,298 $ 63,351 $ 214,816

-12-

Note 2 – Revenues (continued)


	Fiscal quarter ended July 3, 2021								Fiscal quarter ended June 27, 2020
	Foil Technology Products		Force Sensors		Weighing and Control Systems		Total		Foil Technology Products		Force Sensors		Weighing and Control Systems		Total
United States	$	11,003	$	8,017	$	10,574	$	29,594	$	10,789	$	4,113	$	6,009	$	20,911
United Kingdom	1,102		514		3,681		5,297		587		1,711		1,723		4,021
Other Europe	6,604		5,018		5,204		16,826		6,973		1,434		3,430		11,837
Israel	5,284		261		0		5,545		5,691		93		0		5,784
Asia	9,315		3,406		2,012		14,733		7,745		1,565		1,859		11,169
Canada	0		0		3,344		3,344		0		0		5,424		5,424
Total	$	33,308	$	17,216	$	24,815	$	75,339	$	31,785	$	8,916	$	18,445	$	59,146


	Six Fiscal Months Ended July 3, 2021								Six Fiscal Months Ended June 27, 2020
	Foil Technology Products		Force Sensors		Weighing and Control Systems		Total		Foil Technology Products		Force Sensors		Weighing and Control Systems		Total
United States	$	21,482	$	15,788	$	18,241	$	55,511	$	22,723	$	12,505	$	14,898	$	50,126
United Kingdom	2,000		1,081		7,694		10,775		1,537		3,691		5,435		10,663
Other Europe	13,870		10,493		9,765		34,128		14,686		3,808		7,174		25,668
Israel	11,725		391		0		12,116		8,646		190		0		8,836
Asia	16,942		6,396		3,613		26,951		14,670		3,417		3,530		21,617
Canada	0		0		6,447		6,447		0		0		9,932		9,932
Total	$	66,019	$	34,149	$	45,760	$	145,928	$	62,262	$	23,611	$	40,969	$	126,842

The following table disaggregates net revenue from contracts with customers by market sector (in thousands). ~~The Company revised its market sector categories beginning in 2020. Prior year data has been reclassified to reflect the current market sectors.~~

~~-13-~~

~~Note 2 – Revenues (continued)~~


		Fiscal quarter ended				Nine fiscal months ended					Fiscal quarter ended				Six fiscal months ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Test & Measurement	Test & Measurement	$	11,953	$	16,203	$	40,325	$	51,804	Test & Measurement	$	16,279	$	14,027	$	30,695	$	28,372
Avionics, Military & Space	Avionics, Military & Space	9,225		5,312		22,112		17,375		Avionics, Military & Space	5,872		6,727		11,902		12,887
Transportation	Transportation	7,138		8,679		20,570		28,738		Transportation	11,930		5,188		21,484		13,432
Other Markets	Other Markets	15,350		12,480		40,670		37,952		Other Markets	17,489		12,192		35,034		25,320
Industrial Weighing	Industrial Weighing	10,708		13,224		31,758		41,838		Industrial Weighing	12,042		8,583		24,047		21,050
General Industrial	General Industrial	3,753		4,684		11,415		15,550		General Industrial	4,173		3,623		8,255		7,662
Steel	Steel	9,398		6,839		27,517		21,559		Steel	7,554		8,806		14,511		18,119
Total	Total	$	67,525	$	67,421	$	194,367	$	214,816	Total	$	75,339	$	59,146	$	145,928	$	126,842

Contract Assets & Liabilities

Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due is not significant.

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

Contract Asset Contract Liability
Unbilled Revenue Accrued Customer Advances
Balance at December 31, 2019 $ 3,937 $ 4,561
Balance at September 26, 2020 2,993 4,079
(Decrease)/increase $ (944) $ (482)

-13-

Note 2 – Revenues (continued)


	Contract Asset		Contract Liability
	Unbilled Revenue		Accrued Customer Advances
Balance at December 31, 2020	$	3,605	$	2,873
Balance at July 3, 2021	4,656		4,525
(Decrease)/increase	$	1,051	$	1,652

The amount of revenue recognized during the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 that was included in the contract liability balance at December 31, ~~2019~~2020 was $~~4.2~~2.4 million.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts that have a duration of one year or less and for contracts that are substantially complete. The Company treats shipping and handling activities as fulfillment costs.

Note 3 ~~– Acquisitions~~- Acquisition

~~Dynamic Systems Inc.~~

On ~~November~~June 1, ~~2019,~~2021, VPG completed the acquisition of ~~New York-based Dynamic~~California-based Diversified Technical Systems, Inc. ~~("DSI"~~(“DTS”), a ~~provider~~manufacturer of ~~specialized dynamic thermal-mechanical test~~data acquisition systems and ~~simulation systems used to develop new metal alloys~~sensors for product safety and ~~optimize production processes,~~testing, for a purchase price of ~~$40.3~~$47.2 million, subject to customary adjustments. ~~During the second quarter of 2020, the~~The Company ~~received $0.2 million from escrow as a purchase price adjustment, resulting in a reduction of goodwill. Additionally, it was determined that an earn out, which was part of~~used cash on hand and borrowings under its revolving credit facility to fund the purchase price ~~was not achieved. DSI~~under the purchase agreement. DTS reports into the Company's Weighing and Control Systems segment. The following table summarizes the ~~preliminary~~provisional fair values assigned to the assets and liabilities of ~~DSI~~DTS as of ~~November~~June 1, ~~2019~~ ~~(in~~2021 (in thousands):

~~-14-~~

~~Note 3 - Acquisitions ( continued)~~


	June 1, 2021
Working capital	$	12,999
Property and equipment	1,209
Deferred income tax liability	(6,274)

Intangible assets:
Acquired technology	13,167
Customer relationships	8,135
Trade names	2,393
Total intangible assets	23,695
Fair value of acquired identifiable assets	31,629
Purchase price	$	47,216
Goodwill	$	15,587

November 1, 2019 Adjustments Adjusted
Working capital (a)
$ 6,874 $ 6,874
Property and equipment 1,727 1,727
Long-term deferred income tax liability (4,321) (4,321)
Non-controlling interest (299) (299)
Intangible assets:
Patents and acquired technology 10,250 10,250
Customer relationships 4,344 4,344
Trade names 3,300 3,300
Total intangible assets 17,894 — 17,894
Fair value of acquired identifiable assets 21,875 — 21,875
Purchase price $ 40,481 $ (156) $ 40,325
Goodwill $ 18,606 $ (156) $ 18,450

~~(a) Working capital accounts include accounts receivable, inventory, prepaid expenses, accounts payable, accrued expenses, and accrued payroll.~~

The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. These valuations and studies are currently being analyzed and have yet to be finalized. Accordingly, the assets and liabilities assumed are subject to adjustment once the detailed analysis is completed. The provisional estimated weighted average useful lives for the ~~patents and~~ acquired technology and customer relationships are ~~16 years, and~~ 15 ~~years, respectively. Most~~years. Trade names are treated as indefinite-lived intangible assets. None of the goodwill associated with ~~DSI~~DTS will be deductible for income tax purposes.

The Company recorded acquisition costs associated with this transaction as follows (in thousands):


	Fiscal quarter ended		Six fiscal months ended
	July 3, 2021			July 3, 2021
Legal fees	$	341		$	341
Appraisal fees	18			18
Other (investment banker and insurance costs)	839			839
	$	1,198		$	1,198

-14-

Note 3 - Acquisition (continued)

Included in the results of ~~$0.4~~the operations of the Company, starting on June 1, 2021, are net revenues of $3.0 million ~~during~~and a net loss of $0.2 million from DTS for the ~~fourth~~fiscal quarter and six fiscal months ended July 3, 2021. DTS results include amortization of ~~2019.~~the inventory step-up of $0.9 million and amortization of intangible assets of $0.1 million.

Following is the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the ~~DSI~~DTS acquisition had been consummated on January 1, ~~2019:~~2020:

Fiscal quarter ended Nine fiscal months ended
September 28, 2019 September 28, 2019
Pro forma net revenues $ 70,953 $ 228,774
Pro forma net earnings attributable to VPG stockholders $ 3,068 $ 20,203
Pro forma basic earnings per share attributable to VPG stockholders $ 0.23 $ 1.50
Pro forma diluted earnings per share attributable to VPG stockholders $ 0.23 $ 1.49


	Fiscal quarter ended		Six fiscal months ended		Fiscal quarter ended		Six fiscal months ended
	June 27, 2020		June 27, 2020		July 3, 2021		July 3, 2021
Pro forma net revenues	$	64,907	$	139,158	80,243		159,164

Pro forma net earnings attributable to VPG stockholders	$	1,629	$	3,658	6,741		13,411

Pro forma basic earnings per share attributable to VPG stockholders	$	0.12	$	0.27	$	0.50	$	0.99
Pro forma diluted earnings per share attributable to VPG stockholders	$	0.12	$	0.27	$	0.49	$	0.98

Note 4 – Goodwill and Other Intangible Assets

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of it's fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Due to updated financial projections, the Company performed a quantitative impairment test for the instrumentation reporting unit during the second quarter of 2021. In estimating the fair value of our instrumentation reporting unit the Company used the income approach.

The results of the quantitative impairment test for the instrumentation reporting unit's goodwill and indefinite-lived trade name indicated an impairment, and in the second quarter of 2021, the Company recognized a non-cash impairment loss of $1.1 million in goodwill and $0.1 million to the indefinite-lived trade name. The impairment was driven mainly by changes in forecasted projections including a slower growth rate in revenues. After considering the impact of the impairment charges, the carrying amount of goodwill and indefinite-lived trade names as of July 3, 2021 was $0.0 million and $0.3 million, respectively.

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


	Total		Weighing and Control Systems Segment								Foil Technology Products Segment
			KELK Acquisition		DSI Acquisition		DTS Acquisition		Stress-Tek Acquisition		Pacific Acquisition
Balance at December 31, 2020	$	31,105	$	6,726	$	16,942			$	6,311	$	1,126
Goodwill acquired	15,587						15,587
Impairment charges	(1,126)										(1,126)
Foreign currency translation adjustment	166		180		(14)				—		—

Balance at July 3, 2021	$	45,732	$	6,906	$	16,928	$	15,587	$	6,311	$	0

-15-

Note 4 – Goodwill and Other Intangible Assets (continued)

Intangible assets were as follows (in thousands):

Total Weighing and Control Systems Segment Foil Technology Products Segment
KELK Acquisition DSI Acquisition Stress-Tek Acquisition Pacific Acquisition
Balance at December 31, 2019 $ 35,018 $ 6,559 $ 18,606 $ 6,311 $ 3,542
Adjustment to purchase price $ (156) 0 (156) 0 0
Foreign currency translation adjustment (138) (153) 15 0 0
Balance at September 26, 2020 $ 34,724 $ 6,406 $ 18,465 $ 6,311 $ 3,542


	July 3, 2021		December 31, 2020
Intangible assets subject to amortization
(Definite-lived):
Patents and acquired technology	$	33,069	$	19,804
Customer relationships	34,393		26,061
Trade names	1,697		1,747
Non-competition agreements	11,646		12,259
	80,805		59,871
Accumulated amortization:
Patents and acquired technology	(6,552)		(5,895)
Customer relationships	(14,191)		(13,363)
Trade names	(1,697)		(1,747)
Non-competition agreements	(11,639)		(12,250)
	(34,079)		(33,255)
Net intangible assets subject to amortization	$	46,726	$	26,616

Intangible assets not subject to amortization
(Indefinite-lived):
Trade names	7,748		5,423

	$	54,474	$	32,039

The increase in net intangible assets from December 31, 2020 is due to the acquisition of DTS on June 1, 2021. The Company has preliminarily allocated $21.3 million of the purchase price to definite-lived intangible assets and $2.4 million to indefinite-lived intangible assets.

Amortization expense for the fiscal quarter and six fiscal months ended July 3, 2021 was $0.7 million and $1.4 million, respectively. The DTS intangible assets accounted for $0.1 million of amortization expense for the fiscal quarter and six fiscal months ended July 3, 2021.

Estimated annual amortization expense for the full year of 2021 and each of the next four years, is as follows ( in thousands):


2021	$	3,280
2022	3,871
2023	3,763
2024	3,728
2025	3,728

Note 5 – Leases

Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified retrospective method of applying the new standard at the adoption date. 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.

~~-15-~~

~~Note 5 - Leases (continued)~~

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. Refer to Note 7 for discussion of the Company's borrowing rate. 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. Additionally, the Company elected the package of practical expedients permitted under the transition guidance, which allows the carryforward the historical lease classification. The Company also made an election 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.

The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to ~~twelve~~eleven years. The Company has no finance leases. One of the Company's indirect wholly-owned subsidiaries entered into a lease agreement as tenant related to a property in Israel. The facility was made available to the Company during the second quarter of 2020, at which time the Company established an operating right of use asset and operating lease liability, with a lease term of 12.5 years, of $14.8 million, in accordance with the terms of the lease agreement.

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

Leases September 26, 2020 December 31, 2019
Assets
Operating lease right of use asset $ 21,846 $ 8,691
Liabilities
Operating lease - current $ 4,179 $ 2,827
Operating lease - non-current $ 18,385 $ 5,811

-16-

Note 5 - Leases (continued)


Leases	July 3, 2021		December 31, 2020
Assets
Operating lease right of use asset	$	25,451	$	21,788

Liabilities
Operating lease - current	$	4,445	$	4,011
Operating lease - non-current	$	22,346	$	19,504

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


	~~September 26, 2020~~July 3, 2021
Operating leases weighted average remaining lease term (in years)	~~9.15~~8.49 years
Operating leases weighted average discount rate	~~3.67~~3.36	%

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


		Fiscal quarter ended				Nine Fiscal Months Ended					Fiscal quarter ended				Six Fiscal Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Operating lease cost	Operating lease cost	$	1,164	$	866	$	3,177	$	2,501	Operating lease cost	$	1,258	$	1,139	$	2,439	$	2,013
Variable lease cost		0		5		0		14
Short-term lease cost	Short-term lease cost	31		7		88		66		Short-term lease cost	35		34		68		57
Total lease cost		$	1,195	$	878	$	3,265	$	2,581
Sublease income										Sublease income	(19)		0		(28)		0
Total net lease cost										Total net lease cost	$	1,274	$	1,173	$	2,479	$	2,070

Right of use assets obtained in exchange for new operating lease liability during ~~2020~~2021 were ~~$15.7~~$5.9 million. The Company paid ~~$2.6~~$2.4 million and $1.7 million for its operating leases for each of the ~~nine~~six fiscal months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of ~~September 26, 2020~~July 3, 2021 are summarized as follows (in thousands):

~~-16-~~

~~Note 5 - Leases (continued)~~


2020 (excluding the nine months ended September 26, 2020)		$	1,318
2021		4,239
2021 (excluding the six months ended July 3, 2021)				2021 (excluding the six months ended July 3, 2021)	$	2,596
2022	2022	3,378		2022	4,500
2023	2023	2,879		2023	3,968
2024	2024	2,378		2024	3,555
2025				2025	3,083
Thereafter	Thereafter	11,991		Thereafter	12,894
Total future minimum lease payments	Total future minimum lease payments	$	26,183	Total future minimum lease payments	$	30,596
Less: amount representing interest	Less: amount representing interest	(3,619)		Less: amount representing interest	(3,805)
Present value of future minimum lease payments	Present value of future minimum lease payments	$	22,564	Present value of future minimum lease payments	$	26,791

Note 6 – Income Taxes

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 was ~~27.1%~~6.1% compared to ~~29.3%~~28.1% for the fiscal quarter ended ~~September 28, 2019. The~~June 27, 2020, and the effective tax rate for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 was ~~29.0%~~18.4% compared to ~~27.5%~~30.9% for the ~~nine~~six fiscal months ended ~~September 28, 2019.~~June 27, 2020. The tax rate for ~~the nine fiscal months of 2020~~both periods presented in 2021 is ~~higher~~lower than the prior year ~~period~~periods primarily due to the acquisition of DTS, which enabled the Company to reduce its valuation allowance against deferred tax assets, tax rate changes in certain foreign jurisdictions, and changes in the mix of worldwide income.

-17-

Note 6 - Income Taxes (continued)

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.

Note 7 – Long-Term Debt

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


		September 26, 2020		December 31, 2019			July 3, 2021		December 31, 2020
2020 Credit Agreement - Revolving Facility	2020 Credit Agreement - Revolving Facility	$	41,000	$	0	2020 Credit Agreement - Revolving Facility	$	61,000	$	41,000
2015 Credit Agreement - Revolving Facility		0		34,000
2015 Credit Agreement - U.S. Closing Date Term Facility		0		2,038
2015 Credit Agreement - U.S. Delayed Draw Term Facility		0		4,982
2015 Credit Agreement - Canadian Term Facility		0		3,476

Other debt	Other debt	52		149		Other debt	0		18
Deferred financing costs	Deferred financing costs	(396)		(112)		Deferred financing costs	(330)		(374)
Total long-term debt	Total long-term debt	40,656		44,533		Total long-term debt	60,670		40,644
Less: current portion	Less: current portion	52		44,516		Less: current portion	0		18
Long-term debt, less current portion	Long-term debt, less current portion	$	40,604	$	17	Long-term debt, less current portion	$	60,670	$	40,626

~~2020 Credit Agreement~~

On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) among the Company, the lenders, 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 was 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 which may be used for working capital and general corporate purposes, and a portion of which were used to refinance the Company’s existing revolving credit facility in the amount of $34 million and the Company’s existing term loans as follows: (1) the “2015 U.S. Closing Date Term Facility” in an aggregate principal amount of $2.0

~~-17-~~

~~Note 7 - Long-Term Debt (continued)~~

million; and (2) the "2015 U.S. Delayed Draw Term Facility" in an aggregate principal amount of $5.0 million. 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.

Interest payable on amounts borrowed under the 2020 Revolving Facility is based upon, at the Company’s option, (1) the greatest of: the Agent’s prime rate, the Federal Funds rate, or a LIBOR floor (the “Base Rate”), or (2) LIBOR or CDOR plus a specified margin. An interest margin of 0.25% is added to Base Rate loans. 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 LIBOR or CDOR rate to determine the interest payable on the Libor or CDOR 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 interest coverage ratio and a leverage ratio. 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.

Note 8 – Accumulated Other Comprehensive Income (Loss)

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


		Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total			Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total
Balance at January 1, 2020		$	(30,761)	$	(6,942)	$	(37,703)
Balance at January 1, 2021								Balance at January 1, 2021	$	(25,591)	$	(7,080)	$	(32,671)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	409		0		409		Other comprehensive loss before reclassifications	(1,193)		0		(1,193)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	0		(448)		(448)		Amounts reclassified from accumulated other comprehensive income (loss)	0		318		318
Balance at September 26, 2020		$	(30,352)	$	(7,390)	$	(37,742)
Balance at July 3, 2021								Balance at July 3, 2021	$	(26,784)	$	(6,762)	$	(33,546)


		Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total			Foreign Currency Translation Adjustment		Pension and Other Postretirement Actuarial Items		Total
Balance at January 1, 2019		$	(31,319)	$	(6,146)	$	(37,465)
Balance at January 1, 2020								Balance at January 1, 2020	$	(30,761)	$	(6,942)	$	(37,703)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(781)		0		(781)		Other comprehensive loss before reclassifications	(2,070)		0		(2,070)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	(827)		164		(663)		Amounts reclassified from accumulated other comprehensive income (loss)	0		(311)		(311)
Balance at September 28, 2019		$	(32,927)	$	(5,982)	$	(38,909)
Balance at June 27, 2020								Balance at June 27, 2020	$	(32,831)	$	(7,253)	$	(40,084)

~~Reclassification of foreign currency translation adjustment for a gain on liquidation of a subsidiary is included in other income (expense) other ( see Note 13).~~ 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 – Pension and Other Postretirement Benefits

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

-18-

Note 9 - Pension and Other Postretirement Benefits ( continued)


		Fiscal quarter ended September 26, 2020				Fiscal quarter ended September 28, 2019					Fiscal quarter ended July 3, 2021				Fiscal quarter ended June 27, 2020
		Pension Plans		OPEB Plans		Pension Plans		OPEB Plans			Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	Net service cost	$	99	$	31	$	82	$	32	Net service cost	$	96	$	9	$	99	$	31
Interest cost	Interest cost	128		33		154		45		Interest cost	103		17		127		33
Expected return on plan assets	Expected return on plan assets	(110)		0		(130)		0		Expected return on plan assets	(97)		0		(109)		0
Amortization of actuarial losses	Amortization of actuarial losses	77		34		50		39		Amortization of actuarial losses	102		5		76		34
Net periodic benefit cost	Net periodic benefit cost	$	194	$	98	$	156	$	116	Net periodic benefit cost	$	204	$	31	$	193	$	98


		Nine fiscal months ended September 26, 2020				Nine fiscal months ended September 28, 2019					Six fiscal months ended July 3, 2021				Six fiscal months ended June 27, 2020
		Pension Plans		OPEB Plans		Pension Plans		OPEB Plans			Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	Net service cost	$	297	$	93	$	247	$	94	Net service cost	$	193	$	18	$	198	$	62
Interest cost	Interest cost	384		$	99	$	468	$	135	Interest cost	206		34		256		66
Expected return on plan assets	Expected return on plan assets	(330)		$	0	$	(395)	$	0	Expected return on plan assets	(194)		0		(220)		0
Amortization of actuarial losses	Amortization of actuarial losses	230		$	102	$	150	$	117	Amortization of actuarial losses	204		10		153		68
Net periodic benefit cost	Net periodic benefit cost	$	581	$	294	$	470	$	346	Net periodic benefit cost	$	409	$	62	$	387	$	196

Note 10 – Share-Based Compensation

The Amended and Restated Vishay Precision Group, Inc. 2010 Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At ~~September 26, 2020,~~July 3, 2021, the Company had reserved ~~371,637~~320,654 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the 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.

On March ~~5, 2020,~~4, 2021 and in accordance with their respective employment agreements, VPG’s 3 ~~current~~ executive officers were granted annual equity awards in the form of RSUs, of which ~~75%~~50% are performance-based. The awards have an aggregate target grant-date fair value of ~~$1.2~~$1.7 million and were comprised of ~~44,269~~52,486 RSUs. NaN percent of these awards will vest on January 1, ~~2023,~~2024, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, ~~2023,~~2024, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and ~~net~~"net earnings ~~goals,~~goals", each weighted equally.

On March ~~16, 2020,~~8, 2021, certain non-executive VPG employees were granted annual equity awards in the form of ~~RSUs,~~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 grant-date fair value of ~~$0.4~~$0.6 million and were comprised of ~~18,940~~17,793 RSUs. ~~NaN percent~~The non-performance portion of these awards (NaN percent for certain employees and 50 percent for certain employees) will vest on January 1, ~~2023~~2024 subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, ~~2023,~~2024, 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 ~~21, 2020,~~27, 2021 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of ~~15,564~~9,936 RSUs to the independent board members of the Board of Directors and to the non-executive Chairman of the Board of Directors. The awards have an aggregate grant-date fair value of $0.3 million and will vest on the earlier of the ~~2021~~2022 Annual Stockholders Meeting or May ~~21, 2021,~~27, 2022, subject to the directors' continued service on the Board of Directors.

Vesting of equity awards is subject to acceleration under certain circumstances.

-19-

Note 10 - Share-Based Compensation (continued)

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

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Restricted stock units $ 380 $ 506 $ 1,137 $ 1,592

~~-20-~~


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Restricted stock units	$	576	$	378	$	942	$	757

Note 11 – Segment Information

VPG reports in 3 product segments: the Foil Technology Products segment, the Force Sensors segment, and the Weighing and Control Systems segment. The Foil Technology Products reporting segment is comprised of the foil resistor and strain gage operating segments. The Force Sensors reporting segment is comprised of transducers, load cells, and modules. The Weighing and Control Systems reporting segment is comprised of complete systems which include load cells and instrumentation for weighing, force control and force measurement for a variety of uses such as process control on-board weighing applications.

VPG evaluates reporting segment performance based on multiple performance measures including third party net revenues, gross profits and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring costs, executive severance costs, and other items is meaningful because it provides insight with respect to the intrinsic operating results of VPG. The following table sets forth reporting segment information (in thousands):

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Net revenues:
Foil Technology Products $ 32,906 $ 32,119 $ 95,168 $ 102,167
Force Sensors 13,862 16,217 37,473 49,298
Weighing and Control Systems 20,757 19,085 61,726 63,351
Total $ 67,525 $ 67,421 $ 194,367 $ 214,816
Gross profit:
Foil Technology Products $ 13,515 $ 11,970 $ 38,002 $ 42,943
Force Sensors 4,235 4,932 8,845 14,385
Weighing and Control Systems 9,599 8,888 28,677 30,122
Total $ 27,349 $ 25,790 $ 75,524 $ 87,450
Reconciliation of segment operating income to consolidated results:
Foil Technology Products $ 8,078 $ 6,259 $ 21,532 $ 25,185
Force Sensors 2,010 2,726 2,201 7,300
Weighing and Control Systems 5,222 4,808 13,909 16,426
Unallocated G&A expenses (7,105) (7,060) (20,193) (20,862)
Executive severance costs 0 0 0 (611)
Restructuring costs (84) (547) (713) (547)
Operating income $ 8,121 $ 6,186 $ 16,736 $ 26,891
Restructuring costs:
Foil Technology Products $ (23) $ 0 $ (466) $ 0
Force Sensors $ 0 $ (429) $ (108) $ (429)
Weighing and Control Systems (61) 0 (61) 0
Corporate/Other 0 (118) (78) (118)
$ (84) $ (547) $ (713) $ (547)
Executive severance costs:
Corporate/Other $ 0 $ 0 $ 0 $ (611)
$ 0 $ 0 $ 0 $ (611)

~~-21-~~-20-

Note 11 - Segment Information (continued)


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Net revenues:
Foil Technology Products	$	33,308	$	31,785	$	66,019	$	62,262
Force Sensors	17,216		8,916		34,149		23,611
Weighing and Control Systems	24,815		18,445		45,760		40,969
Total	$	75,339	$	59,146	$	145,928	$	126,842

Gross profit:
Foil Technology Products	$	12,942	$	13,286	$	25,981	$	24,487
Force Sensors	5,969		1,038		12,008		4,610
Weighing and Control Systems	10,887		8,786		20,431		19,078
Total	$	29,798	$	23,110	$	58,420	$	48,175

Reconciliation of segment operating income to consolidated results:
Foil Technology Products	$	7,219	$	8,070	$	14,052	$	13,454
Force Sensors	3,474		(1,013)		6,977		191
Weighing and Control Systems	4,595		4,019		8,419		8,687
Unallocated G&A expenses	(7,943)		(6,606)		(15,664)		(13,088)
Acquisition costs	(1,198)		0		(1,198)		0
Impairment of goodwill and indefinite-lived intangibles	(1,223)		0		(1,223)		0

Restructuring costs	0		(499)		0		(629)
Operating income	$	4,924	$	3,971	$	11,363	$	8,615

Acquisition costs:


Weighing and Control Systems	(1,198)		0		(1,198)		0
	$	(1,198)	$	0	$	(1,198)	$	0

Impairment of goodwill and indefinite-lived intangibles:
Foil Technology Products	$	(1,223)	$	0	$	(1,223)	$	0


	$	(1,223)	$	0	$	(1,223)	$	0

Restructuring costs:
Foil Technology Products	$	0	$	(341)	$	0	$	(443)
Force Sensors	$	0	$	(80)	$	0	$	(108)

Corporate/Other	0		(78)		0		(78)
	$	0	$	(499)	$	0	$	(629)

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

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Foil Technology Products to Force Sensors and Weighing and Control Systems $ 858 $ 1,011 $ 2,451 $ 3,018
Force Sensors to Foil Technology Products and Weighing and Control Systems $ 0 $ 369 $ 0 $ 980
Weighing and Control Systems to Foil Technology Products and Force Sensors $ 83 $ 75 $ 294 $ 373

~~-22-~~-21-

Note 11 - Segment Information (continued)


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Foil Technology Products to Force Sensors and Weighing and Control Systems	$	959	$	868	$	1,920	$	1,592

Weighing and Control Systems to Foil Technology Products and Force Sensors	$	150	$	124	$	264	$	211

Note 12 – Earnings Per Share

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


		Fiscal quarter ended				Nine fiscal months ended					Fiscal quarter ended				Six fiscal months ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Numerator:	Numerator:									Numerator:
Numerator for basic earnings per share:	Numerator for basic earnings per share:									Numerator for basic earnings per share:
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	5,598	$	4,509	$	10,669	$	18,317	Net earnings attributable to VPG stockholders	$	3,920	$	1,759	$	8,881	$	5,071

Denominator:	Denominator:									Denominator:
Denominator for basic earnings per share:	Denominator for basic earnings per share:									Denominator for basic earnings per share:
Weighted average shares	Weighted average shares	13,575		13,523		13,562		13,512		Weighted average shares	13,618		13,571		13,605		13,556

Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:

Restricted stock units	Restricted stock units	62		84		49		76		Restricted stock units	28		38		33		42
Dilutive potential common shares	Dilutive potential common shares	62		84		49		76		Dilutive potential common shares	28		38		33		42

Denominator for diluted earnings per share:	Denominator for diluted earnings per share:									Denominator for diluted earnings per share:
Adjusted weighted average shares	Adjusted weighted average shares	13,637		13,607		13,611		13,588		Adjusted weighted average shares	13,646		13,609		13,638		13,598

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	0.41	$	0.33	$	0.79	$	1.36	Basic earnings per share attributable to VPG stockholders	$	0.29	$	0.13	$	0.65	$	0.37

Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	0.41	$	0.33	$	0.78	$	1.35	Diluted earnings per share attributable to VPG stockholders	$	0.29	$	0.13	$	0.65	$	0.37

~~-23-~~-22-

Note 13 – Additional Financial Statement Information

Other Income (Expense) Other

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


		Fiscal quarter ended				Nine fiscal months ended					Fiscal quarter ended				Six fiscal months ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Foreign exchange gain (loss)		$	162	$	(306)	$	(123)	$	(1,360)
Foreign exchange (loss) gain										Foreign exchange (loss) gain	$	(174)	$	(1,185)	$	561	$	(285)
Interest income	Interest income	29		181		205		519		Interest income	20		109		65		176
Pension expense	Pension expense	(159)		(157)		(482)		(470)		Pension expense	(143)		(164)		(280)		(323)
Other	Other	(71)		829		(229)		926		Other	(29)		(33)		(99)		(158)
		$	(39)	$	547	$	(629)	$	(385)		$	(326)	$	(1,273)	$	247	$	(590)

Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. For the fiscal quarter ended July 3, 2021, the change in foreign exchange gains and ~~nine~~losses during the period, as compared to the prior year period, is largely due to exposure to currency fluctuations with the Canadian dollar, Japanese yen, the Israeli shekel and the British pound.

For the six fiscal months ended ~~September 26, 2020,~~July 3, 2021, the change in foreign exchange gains and losses during the period as compared to the prior year period is largely due to exposure to currency fluctuations with the Canadian dollar, the Israeli ~~Shekel,~~shekel, the ~~Euro,~~Japanese yen, the euro and the British ~~pound.~~

~~Included in Other for the fiscal quarter and nine fiscal months ended September 28, 2019, respectively, is a one-time $0.8 million gain on liquidation of one of the Company's subsidiaries.~~

~~Executive Severance Costs~~

During the second fiscal quarter of 2019, the Company recorded $0.6 million of severance costs associated with the resignation of an executive office of the Company. The severance costs consisted of payments and other benefits as specified in the executive officer's resignation agreement.pound

Note 14 – Fair Value Measurements

ASC Topic 820, Fair Value Measurement, establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

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

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

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

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

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

~~-24-~~

~~Note 14 - Fair Value Measurements (continued)~~


				Fair value measurements at reporting date using:									Fair value measurements at reporting date using:
		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs			Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
September 26, 2020
July 3, 2021										July 3, 2021
Assets	Assets									Assets
Assets held in rabbi trusts	Assets held in rabbi trusts	$	5,224	$	80	$	5,144	$	0	Assets held in rabbi trusts	$	5,995	$	80	$	5,915	$	0

December 31, 2019
December 31, 2020										December 31, 2020
Assets	Assets									Assets
Assets held in rabbi trusts	Assets held in rabbi trusts	$	5,169	$	53	$	5,116	$	0	Assets held in rabbi trusts	$	5,601	$	61	$	5,540	$	0

The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019,~~2020, and company-owned life insurance assets. The marketable securities held

-23-

Note 14 - Fair Value Measurements (continued)

in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The fair value of the long-term debt, excluding capitalized deferred financing costs, at ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019~~2020 approximates its carrying ~~value. The~~value as the revolving debt ~~at September 26, 2020~~ is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement. ~~The revolving debt and term loans at December 31, 2019 were reset on a quarterly basis based on current market rates, plus a base rate as specified in the corresponding debt agreements.~~ The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy. The Company’s financial instruments include cash and cash equivalents, ~~whose~~accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values.

Note 15 – 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 ~~$0.1~~$0.0 million and $0.5 million of restructuring costs during the fiscal quarter ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively and ~~$0.7~~$0.0 million and ~~$0.5~~$0.6 million ~~for~~of restructuring costs during the ~~nine~~six fiscal months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively. Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, and were incurred in connections with various cost reduction programs.

The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019,~~2020, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands):






Balance at December 31, ~~2019~~2020	$	~~604~~63
~~Restructuring charges in 2020~~	~~713~~

Cash payments	~~(1,140)~~(51)
~~Foreign currency translation~~	~~(2)~~
Balance at ~~September 26, 2020~~July 3, 2021	$	~~175~~12

~~-25-~~-24-

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

VPG is an internationally recognized designer, manufacturer and marketer of sensors, and sensor-based measurement systems, as well as specialty resistors and strain gages based upon our proprietary technology. We provide precision products and solutions, many of which are “designed-in” by our customers, specializing in the growing markets of stress, force, weight, pressure, and current measurements. A significant portion of our products and solutions are primarily based upon our proprietary foil technology and are produced as part of our vertically integrated structure. We believe this strategy results in higher quality, more cost effective and focused solutions for our customers. Our products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality. Our global operations enable us to produce a wide variety of products in strategically effective geographic locations that also optimize our resources for specific technologies, sensors, assemblies, and systems.

The Company also has a long heritage of innovation in precision foil resistors, foil strain gages, and sensors that convert mechanical inputs into an electronic signal for display, processing, interpretation, or control by our instrumentation and systems products. Our advanced sensor product line continues this heritage by offering high-quality foil strain gages produced in a proprietary, highly automated environment. Precision sensors are essential to the accurate measurement, resolution and display of force, weight, pressure, torque, tilt, motion, or acceleration, especially in the legal-for-trade, commercial, and industrial marketplaces. This expertise served as a foundation for our expansion into strain gage instrumentation, load cells, transducers, weighing modules, and complete systems for process control and on-board weighing. Although our products are typically used in the industrial market, our advanced sensors have been used in a consumer electronics product and are being evaluated for other non-industrial applications.

The precision sensor market is integral to the development of intelligent products across a wide variety of end markets upon which we focus, including medical, agricultural, transportation, industrial, avionics, military, and space applications. We believe that as original equipment manufacturers (“OEMs”) continue a drive to make products “smarter,” they will integrate more sensors and related systems into their solutions to link the mechanical/physical world with digital control and/or response. We believe this offers a substantial growth opportunity for our products and expertise.

Impact of COVID-19 on Our Business

As the COVID-19 pandemic began to unfold around the world, the Company took measures to protect its employees and customers. Those measures included suspending business travel, enabling certain employees to work from home, implementing workplace distancing, and adjusting work shifts to minimize employees’ contact with other employees. While the majority of the Company’s operations were able to operate despite the impacts from the COVID-19 pandemic, the Company’s Force Sensors manufacturing facility in India had operated at partial capacity as a result of government-mandated restrictions. In the third quarter of 2020, these restrictions reduced Force Sensors revenue by approximately $2.5 million and Force Sensors operating income by approximately $1.0 million due to the lower volume. For the first nine months of 2020, these restrictions impacted Force Sensors revenue in aggregate by approximately $10 million from pre-COVID runrate levels and reduced its operating income by approximately $4 million due to the lower revenue. The Company received approval from the Indian government to operate its facility without limitation on July 1, 2020, and as of the end of the third quarter the facility was operating at full capacity.

~~As of November 3, 2020,~~August 10, 2021, all of the Company’s facilities are ~~operating without limitations with the~~open and operational. The Company ~~implementing~~is continuing to maintain COVID-19 best practices it believes are warranted with respect to working ~~conditions and enabling some employees to work remotely where possible.~~conditions. Nonetheless, given ~~the impacts to date and~~ the ongoing uncertainty concerning the magnitude ~~of the impact~~ and duration of the COVID-19 pandemic around the world, any ongoing economic disruption may ~~continue to~~ adversely affect the Company’s business and financial results.

Overview of Financial Results

VPG reports in three product segments: the Foil Technology Products segment, the Force Sensors segment, and the Weighing and Control Systems segment. The Foil Technology Products reporting segment is comprised of the foil resistor and strain gage operating segments. The Force Sensors reporting segment is comprised of transducers, load cells, and modules. The Weighing and Control Systems reporting segment is comprised of complete systems which include load cells and instrumentation for weighing, force control and force measurement for a variety of uses such as process control on-board weighing applications.

~~-26-~~

On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing. DTS reports into the Company's Weighing and Control Systems segment.

Net revenues for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 were ~~$67.5~~$75.3 million versus ~~$67.4~~$59.1 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 were ~~$5.6~~$3.9 million, or ~~$0.41~~$0.29 per diluted share, versus ~~$4.5~~$1.8 million, or ~~$0.33~~$0.13 per diluted share, for the comparable prior year period.

Net revenues for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 were ~~$194.4~~$145.9 million versus ~~$214.8~~$126.8 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 were ~~$10.7~~$8.9 million, or ~~$0.78~~$0.65 per diluted share, versus ~~$18.3~~$5.1 million, or ~~$1.35~~$0.37 per diluted share, for the comparable prior year period.

The results of operations for the fiscal ~~quarters~~quarter ended July 3, 2021 and ~~nine fiscal months ended September 26,~~June 27, 2020 ~~and September 28, 2019~~ 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, ~~and~~ adjusted net earnings per diluted ~~share.~~share, EBITDA and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of

-25-

performance. Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, ~~and~~ 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 performance 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. Beginning in the fourth quarter of 2020, the Company determined to include the impact of foreign currency exchange rates on its assets and liabilities in certain of its non-GAAP measures for its current and comparative periods.


		Gross Profit						Operating Income						Net Earnings Attributable to VPG Stockholders				Diluted Earnings Per share					Gross Profit						Operating Income						Net Earnings Attributable to VPG Stockholders				Diluted Earnings Per share
Three months ended	Three months ended	September 26, 2020			September 28, 2019			September 26, 2020			September 28, 2019			September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Three months ended	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
As reported - GAAP	As reported - GAAP	$	27,349		$	25,790		$	8,121		$	6,186		$	5,598	$	4,509	$	0.41	$	0.33	As reported - GAAP	$	29,798		$	23,110		$	4,924		$	3,971		$	3,920	$	1,759	$	0.29	$	0.13
As reported - GAAP Margins	As reported - GAAP Margins	40.5		%	38.3		%	12.0		%	9.2		%									As reported - GAAP Margins	39.6		%	39.1		%	6.5		%	6.7		%
Acquisition purchase accounting adjustments (a)	Acquisition purchase accounting adjustments (a)	4			—			4			—			4		—		—		—		Acquisition purchase accounting adjustments (a)	919			41			919			41			919		41		0.07		—

Acquisition costs (b)																						Acquisition costs (b)				—			1,198			—			1,198		—		0.09		—
COVID-19 impact (b)	COVID-19 impact (b)	(22)						(320)						(320)				(0.03)				COVID-19 impact (b)	(26)			558			(242)			443			(242)		443		(0.02)		0.03

Start-up costs (c)																						Start-up costs (c)	1,159			—			1,159			—			1,159		—		0.08		—
Impairment of goodwill and indefinite-lived intangibles																						Impairment of goodwill and indefinite-lived intangibles				—			1,223			—			1,223		—		0.09		—
Restructuring costs	Restructuring costs				—			84			547			84		547		0.01		0.04		Restructuring costs				—			—			499			—		499		—		0.04

Foreign exchange (gain)/loss (d)																						Foreign exchange (gain)/loss (d)				—						—			174		1,185		0.01		0.09
Less: Tax effect of reconciling items and discrete tax items	Less: Tax effect of reconciling items and discrete tax items				—						—			(84)		80		(0.01)		—		Less: Tax effect of reconciling items and discrete tax items				—						—			1,639		340		0.12		0.02
As Adjusted - Non GAAP	As Adjusted - Non GAAP	$	27,331		$	25,790		$	7,889		$	6,733		$	5,450	$	4,976	$	0.40	$	0.37	As Adjusted - Non GAAP	$	31,850		$	23,709		$	9,181		$	4,954		$	6,712	$	3,587	$	0.49	$	0.27
As Adjusted - Non GAAP Margins	As Adjusted - Non GAAP Margins	40.5		%	38.3		%	11.7		%	10.0		%									As Adjusted - Non GAAP Margins	42.3		%	40.1		%	12.2		%	8.4		%

~~-27-~~-26-


		Gross Profit						Operating Income						Net Earnings Attributable to VPG Stockholders				Diluted Earnings Per share
Nine fiscal months ended		September 26, 2020			September 28, 2019			September 26, 2020			September 28, 2019			September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
																							Gross Profit						Operating Income						Net Earnings Attributable to VPG Stockholders				Diluted Earnings Per share
Six fiscal months ended																						Six fiscal months ended	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
As reported - GAAP	As reported - GAAP	75,524			87,450			16,736			26,891			$	10,669	$	18,317	$	0.78	$	1.35	As reported - GAAP	58,420			48,175			11,363			8,615			$	8,881	$	5,071	$	0.65	$	0.37
As reported - GAAP Margins	As reported - GAAP Margins	38.9		%	40.7		%	8.6		%	12.5		%									As reported - GAAP Margins	40.0		%	38.0		%	7.8		%	6.8		%
Acquisition purchase accounting adjustments (a)	Acquisition purchase accounting adjustments (a)	560			—			560			—			560		—		0.04		—		Acquisition purchase accounting adjustments (a)	930			556			930			556			930		556		0.07		0.04

Acquisition costs (b)																						Acquisition costs (b)				—			1,198			—			1,198		—		0.09		—
COVID-19 impact (b)	COVID-19 impact (b)	536						123						123				0.01				COVID-19 impact (b)	(177)			558			(685)			443			(685)		443		(0.05)		0.03
Executive Severance costs					—						611					611		—		0.04

Start-up costs (c)																						Start-up costs (c)	1,288			—			1,288			—			1,288		—		0.09		—
Impairment of goodwill and indefinite-lived intangibles																						Impairment of goodwill and indefinite-lived intangibles	—			—			1,223			—			1,223		—		0.09		—
Restructuring costs	Restructuring costs				—			713			547			713		547		0.05		0.04		Restructuring costs							—			629			—		629		—		0.05

Foreign exchange (gain)/loss (d)																						Foreign exchange (gain)/loss (d)													(561)		285		(0.04)		0.02
Less: Tax effect of reconciling items and discrete tax items	Less: Tax effect of reconciling items and discrete tax items				—						—			59		80		—		—		Less: Tax effect of reconciling items and discrete tax items													1,406		147		0.10		0.01
As Adjusted - Non GAAP	As Adjusted - Non GAAP	$	76,620		$	87,450		$	18,132		$	28,049		$	12,006	$	19,395	$	0.88	$	1.43	As Adjusted - Non GAAP	$	60,461		$	49,289		$	15,317		$	10,243		$	10,868	$	6,837	$	0.80	$	0.50
As Adjusted - Non GAAP Margins	As Adjusted - Non GAAP Margins	39.4		%	40.7		%	9.3		%	13.1		%									As Adjusted - Non GAAP Margins	41.4		%	38.9		%	10.5		%	8.1		%


	Three months ended						Six fiscal months ended
	July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020
Net earnings attributable to VPG stockholders	$	3,920		$	1,759		$	8,881		$	5,071
Interest Expense	273			267			578			728
Income tax expense	262			684			2,026			2,258
Depreciation	2,829			2,509			5,736			5,080
Amortization	757			604			1,372			1,232
EBITDA	8,041			$	5,823		18,593			$	14,369
EBITDA MARGIN	10.7		%	9.8		%	12.7		%	11.3		%
Impairment of goodwill and indefinite-lived intangibles	1,223			—			1,223			—
Acquisition purchase accounting adjustments (a)	919			41			930			556
Acquisition costs	1,198			—			$	1,198		$	—
Restructuring costs	—			499			—			629
COVID-19 impact (b)	(242)			443			(685)			443
Start-up costs (c)	1,159			—			1,288			—
Foreign exchange (gain)/loss (d)	174			1,185			(561)			285
ADJUSTED EBITDA	$	12,472		$	7,991		$	21,986		$	16,282
ADJUSTED EBITDA MARGIN	16.6		%	13.5		%	15.1		%	12.8		%

(a) Acquisition purchase accounting adjustments ~~in 2020~~ 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.

(d) Impact of foreign currency exchange rates on assets and liabilities. Note that impacts in prior year have been added to this table.

-27-

Financial Metrics

We utilize several financial measures and metrics to evaluate 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 computed as gross profit 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 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, backlog is not necessarily indicative of the results 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 amount of product shipped during that period. A book-to-bill ratio that is greater than one indicates that revenues may increase in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand and may foretell declining sales. The book-to-bill ratio is also impacted by the timing of orders, particularly from our project-based product lines.

We focus on inventory turnover as a measure of how well we manage 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.

~~-28-~~

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the ~~third~~second quarter of ~~2019~~2020 through the ~~third~~second quarter of ~~2020~~2021 (dollars in thousands):


		3rd Quarter			4th Quarter			1st Quarter			2nd Quarter			3rd Quarter				2nd Quarter			3rd Quarter			4th Quarter			1st Quarter			2nd Quarter
		2019			2019			2020			2020			2020				2020			2020			2020			2021			2021
Net revenues	Net revenues	$	67,421		$	69,142		$	67,696		$	59,146		$	67,525		Net revenues	$	59,146		$	67,525		$	75,445		$	70,589		$	75,339

Gross profit margin	Gross profit margin	38.3		%	35.0		%	37.0		%	39.1		%	40.5		%	Gross profit margin	39.1		%	40.5		%	38.1		%	40.5		%	39.6		%

End-of-period backlog	End-of-period backlog	$	79,300		$	90,900		$	94,300		$	92,900		$	90,800		End-of-period backlog	$	92,900		$	90,800		$	87,600		$	100,700		$	130,900

Book-to-bill ratio	Book-to-bill ratio	0.96			1.15			1.08			0.95			0.95			Book-to-bill ratio	0.95			0.95			0.93			1.21			1.40

Inventory turnover	Inventory turnover	2.60			2.72			2.58			2.20			2.38			Inventory turnover	2.20			2.38			2.86			2.67			2.64

3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter
2019 2019 2020 2020 2020
Foil Technology Products
Net revenues $ 32,119 $ 29,636 $ 30,477 $ 31,785 $ 32,906
Gross profit margin 37.3 % 34.9 % 36.7 % 41.8 % 41.1 %
End-of-period backlog $ 38,900 $ 44,600 $ 51,700 $ 47,500 $ 48,500
Book-to-bill ratio 0.91 1.18 1.25 0.85 1.01
Inventory turnover 2.79 2.66 2.74 2.58 2.63
Force Sensors
Net revenues $ 16,217 $ 15,059 $ 14,695 $ 8,916 $ 13,862
Gross profit margin 30.4 % 24.2 % 24.3 % 11.6 % 30.5 %
End-of-period backlog $ 15,200 $ 17,100 $ 16,900 $ 22,300 $ 21,300
Book-to-bill ratio 0.94 1.11 1.02 1.58 0.90
Inventory turnover 2.30 2.43 2.64 2.02 2.28
Weighing and Control Systems
Net revenues $ 19,085 $ 24,447 $ 22,524 $ 18,445 $ 20,757
Gross profit margin 46.6 % 41.6 % 45.7 % 47.6 % 46.2 %
End-of-period backlog $ 25,200 $ 29,200 $ 25,700 $ 23,100 $ 21,000
Book-to-bill ratio 1.04 1.15 0.90 0.82 0.88
Inventory turnover 2.61 3.10 2.31 1.81 2.13

-28-


	2nd Quarter			3rd Quarter			4th Quarter			1st Quarter			2nd Quarter
	2020			2020			2020			2021			2021
Foil Technology Products
Net revenues	$	31,785		$	32,906		$	36,477		$	32,711		$	33,308
Gross profit margin	41.8		%	41.1		%	38.4		%	39.9		%	38.9		%
End-of-period backlog	$	47,500		$	48,500		$	43,700		$	48,400		$	60,600
Book-to-bill ratio	0.85			1.01			0.84			1.19			1.37
Inventory turnover	2.58			2.63			3.05			2.72			2.67

Force Sensors
Net revenues	$	8,916		$	13,862		$	16,251		$	16,933		$	17,216
Gross profit margin	11.6		%	30.5		%	29.1		%	35.7		%	34.7		%
End-of-period backlog	$	22,300		$	21,300		$	24,700		$	26,800		$	30,700
Book-to-bill ratio	1.58			0.90			1.18			1.14			1.23
Inventory turnover	2.02			2.28			2.74			2.72			2.57

Weighing and Control Systems
Net revenues	$	18,445		$	20,757		$	22,717		$	20,945		$	24,815
Gross profit margin	47.6		%	46.2		%	44.0		%	45.6		%	43.9		%
End-of-period backlog	$	23,100		$	21,000		$	19,200		$	25,500		$	39,600
Book-to-bill ratio	0.82			0.88			0.88			1.30			1.56
Inventory turnover	1.81			2.13			2.67			2.54			2.64

Net revenues for the ~~third quarter of 2020 increased 14.2% from the~~ second quarter of ~~2020~~2021 increased 6.7% from the first quarter of 2021 mainly due to increased volume in all of the Company's reporting segments. Net revenues increased ~~0.2%~~27.4% from the ~~third~~second quarter of ~~2019~~2020 with increased volume primarily from the Force Sensors reporting segment and the Weighing and Control Systems segment. The increase in the Weighing and Control Systems ~~and Foil Technology Products~~ reporting segment ~~mostly offset~~was aided by ~~lower volume in~~ the ~~Force Sensors reporting segment.~~addition of revenues from the acquisition of DTS.

Net revenues in the Foil Technology Products reporting segment increased ~~3.5%~~1.8% compared to the first quarter of 2021 and increased 4.8% from the second quarter of ~~2020~~2020. Sequentially, the increase in revenue was primarily driven by higher sales of precision foil resistors in the test and ~~increased 2.5% from~~measurements market, partially offset by lower revenue to the ~~third quarter~~Avionics, Military and Space market. In addition, the sequential increase in revenue in our Pacific Instrument product line in the Avionics, Military and Space market was partially offset by lower revenue of ~~2019.~~advanced sensors in our other markets. The ~~sequential and~~ year-over-year ~~increases~~increase in ~~revenues were~~revenue was primarily attributable to an increase in our advanced sensors product line, primarily in our ~~consumer-related markets~~general industrial market and an increase in our Pacific ~~Instruments~~Instrument product line in the ~~avionics, military~~Avionics, Military and ~~space market, which partially offset a decrease in precision resistor sales in the test and measurement~~Space market.

~~-29-~~

Net revenues in the Force Sensors reporting segment increased ~~55.5%~~1.7% from the first quarter of 2021 and increased 93.1% from the second quarter of 2020 and decreased 14.5% from the third quarter of 2019. Sequentially net revenues increased as a result of COVID-19 mitigation restrictions being lifted as of July 1, 2020 by the Indian government and the subsequent ramping up of production without limitations at our India operations during the third quarter of 2020. The sequential increase was primarily due to higher revenue in our Other markets, mainly in consumer and construction. The year-over-year increase primarily reflected ~~higher sales~~operational limitations in the ~~industrial weighing and our other markets. Compared to the third~~second fiscal quarter of ~~2019,~~2020 from the ~~decrease reflects the impact of the COVID-19~~COVID pandemic onat our ~~India facility.~~facility in India.

Net revenues in the Weighing and Control Systems reporting segment increased ~~12.5%~~18.5% from the first quarter of 2021 and increased 34.5% from the second quarter of ~~2020 and increased 8.8% from the third quarter of 2019. Sequentially, the higher~~2020. The sequential increase in net revenues ~~are~~was primarily due to the acquisition of DTS and higher revenue of process weighing solutions and KELK products.The year-over-year increase in revenue was primarily attributable to the ~~Dynamic Systems Inc. ("DSI") product line and an increase in sales~~addition of revenue for DTS, higher revenue of our onboard weighing products for the transportation market, higher revenue of our process weighing solutions for the industrial market, and higher revenue of our Dynamic Systems, Inc. ("DSI") products for the steel market, which was partially offset by lower revenue of KELK steel-related sales. Compared to the third quarter of 2019, the increase in net revenues is primarily attributable to the additional revenues of DSI acquired in November 2019, which was partially offset by lower volume of our onboard weighing products for the transportation market and lower KELK steel-related sales.products.

Overall gross profit margin in the ~~third~~second quarter of ~~2020 increased 1.4%~~2021 decreased 0.9% as compared to the first quarter of 2021 and increased 0.5% from the second quarter of ~~2020 and increased 2.2% from the third quarter of 2019.~~2020.

Sequentially, ~~improved~~all reporting segments contributed to the decrease in the gross profit ~~margin in the Force Sensors reporting segment was partially offset by decreased gross profit margins in the Weighing and Control Systems reporting segment, while the~~margin. The Foil Technology Products reporting segment gross profit margins ~~remained flat.~~decreased sequentially due to the impact of charges related to start-up costs in our new advanced sensors facility and the impact of COVID-19, which were partially offset by manufacturing efficiencies, an increase

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in inventory and higher volume. The Force Sensors reporting segment gross profit margin ~~increased~~decreased sequentially due to ~~higher~~unfavorable foreign exchange rates, partially offset by increases in inventory and volume. In the Weighing and Control Systems reporting segment, the decrease in gross profit margin ~~was 46.2%~~ compared to ~~47.6% in~~ the prior sequential ~~quarter. The decrease in the gross profit margin~~quarter was ~~mainly~~ due to ~~unfavorable product mix~~the impact of charges related to the purchase accounting adjustment from the DTS acquisition and ~~a reduction in inventory,~~the impact of COVID-19, which were partially offset by ~~higher volume.~~the addition of DTS.

Compared to the ~~third~~second quarter of ~~2019,~~2020, the Foil Technology Products reporting segment had a ~~higher~~lower gross profit ~~margin primarily due~~margin. Impacts from charges related to ~~manufacturing efficiencies~~start-up costs in our new advanced sensors facility and ~~cost controls.~~the impact of COVID-19 were partially offset by higher volume and favorable product mix. The Force Sensors reporting segment increase in gross profit margin as compared to ~~2019~~2020 was primarily due to ~~cost controls~~higher revenue and ~~a positive impact of foreign exchange, partially offset by lower volume due to the COVID-19 impacts mentioned above and a reduction~~an increase in ~~export grants.~~inventory. In the Weighing and Control Systems segment, the decrease in gross profit margin as compared to the second quarter of ~~46.2% decreased~~2020 was due to the impact of charges related to purchase accounting adjustments from the ~~third quarter~~DTS acquisition and the impact of ~~2019 mostly due to~~COVID-19, along with an unfavorable product mix, which were partially offset by ~~higher volume.~~the addition of DTS and favorable exchange rates.

Optimize Core Competence

The Company’s core competency and key value proposition is providing customers with proprietary foil technology products and precision measurement sensors and sensor-based systems. Our foil technology resistors and strain gages are recognized as global market leading products that provide high precision and high stability over extreme temperature ranges, and long life. Our force sensor products and our weighing and control systems products are also certified to meet some of the highest levels of precision measurements of force, weight, pressure, torque, tilt, motion, and acceleration. 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.~~processes

Our foil technology 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 ~~recently~~ signed a long-term lease for a ~~state- of-the-art~~state of the art facility ~~to be~~which has been constructed in ~~Israel~~Israel. Our administrative personnel have moved to ~~support~~the new facility, and we have begun the transition of our advanced sensors ~~business.~~business to that facility and we expect to complete the transition to the new facility in the third quarter of 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, China, and Israel, where we can benefit from lower labor costs, improved efficiencies, or available tax and other government-sponsored incentives. For example in 2019, ~~and 2018,~~ we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our force sensor products to facilities

~~-30-~~

in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint. ~~In 2017, we closed two leased facilities in the United States and moved to more cost effective locations.~~

Acquisition Strategy

We expect to continue to make strategic acquisitions where opportunities present themselves to grow our segments. Historically, our growth and acquisition strategy has been largely focused on vertical product integration, using our foil strain gages in our force sensor products, and incorporating those products into our weighing and control systems. The acquisitions of Stress-Tek and KELK, each of which ~~employ~~employs our foil strain gages to manufacture load cells for ~~their~~its systems, continued this strategy. Additionally, the KELK acquisition resulted in the acquisition of certain optical sensor technology. The Pacific Instruments acquisition significantly broadened our existing data acquisition offerings and opened new markets for us. ~~Our most recent~~The acquisition of DSI ~~expands~~expanded our position in the steel market. ~~Along~~On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc., a manufacturer of data acquisition systems and sensors for product safety and testing, DTS is an established niched-market leader with a strong brand in automotive, avionics, military and defense markets. DTS adds complementary technology to our ~~success in MEMS~~platform and brings unique engineering capabilities, centered on miniaturized data acquisition and systems integration with sensor technology for ~~on-board weighing, we~~critical testing applications. We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision sensor solutions in the fields of

-30-

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.

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 our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ~~(“SEC”)~~ on March 11, ~~2020.~~2021.

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.

Goodwill

We test the goodwill in each of our reporting units for impairment at least annually, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Determining whether to test goodwill for impairment, and the application of goodwill impairment tests, require significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Changes in these estimates could materially affect the determination of fair value for each reporting unit. A slowdown or deferral of orders for a business, with which we have goodwill associated, could impact our valuation of that goodwill.

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.

~~-31-~~

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 condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of equity.

For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the period. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated condensed statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies.

-31-

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.~~currency and significant lease assets and liabilities.

Effects of Foreign Exchange Rate on Operations

For the fiscal quarter ended ~~September 26, 2020,~~July 3, 2021, exchange rates increased net revenues by ~~$0.7~~$2.8 million, and increased costs of products sold and selling, general, and administrative expenses by ~~$0.9~~$3.5 million, when compared to the comparable prior year period.

For the ~~nine~~six fiscal months ended ~~September 26, 2020,~~July 3, 2021, exchange rates ~~decreased~~increased net revenues by ~~$0.5~~$4.9 million, and increased costs of products sold and selling, general, and administrative expenses by ~~$1.5~~$5.8 million, when compared to the comparable prior year period.

Off-Balance Sheet Arrangements

As of ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019,~~2020, we did not have any off-balance sheet arrangements.

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Results of Operations

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


		Fiscal quarter ended				Nine fiscal months ended					Fiscal quarter ended				Six fiscal months ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Costs of products sold	Costs of products sold	59.5	%	61.7	%	61.1	%	59.3	%	Costs of products sold	60.4	%	60.9	%	60.0	%	62.0	%
Gross profit	Gross profit	40.5	%	38.3	%	38.9	%	40.7	%	Gross profit	39.6	%	39.1	%	40.0	%	38.0	%
Selling, general, and administrative expenses	Selling, general, and administrative expenses	28.4	%	28.3	%	29.9	%	27.7	%	Selling, general, and administrative expenses	29.8	%	31.5	%	30.6	%	30.7	%
Operating income	Operating income	12.0	%	9.2	%	8.6	%	12.5	%	Operating income	6.5	%	6.7	%	7.8	%	6.8	%
Income before taxes	Income before taxes	11.5	%	9.5	%	7.8	%	11.8	%	Income before taxes	5.7	%	4.1	%	7.6	%	5.8	%
Net earnings	Net earnings	8.4	%	6.7	%	5.5	%	8.6	%	Net earnings	5.4	%	3.0	%	6.2	%	4.0	%
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	8.3	%	6.7	%	5.5	%	8.5	%	Net earnings attributable to VPG stockholders	5.2	%	3.0	%	6.1	%	4.0	%

Effective tax rate	Effective tax rate	27.1	%	29.3	%	29.0	%	27.5	%	Effective tax rate	6.1	%	28.1	%	18.4	%	30.9	%

Net Revenues

Net revenues were as follows (dollars in thousands):


		Fiscal quarter ended					Nine fiscal months ended						Fiscal quarter ended					Six fiscal months ended
		September 26, 2020			September 28, 2019		September 26, 2020			September 28, 2019			July 3, 2021			June 27, 2020		July 3, 2021			June 27, 2020
Net revenues	Net revenues	$	67,525		$	67,421	$	194,367		$	214,816	Net revenues	$	75,339		$	59,146	$	145,928		$	126,842
Change versus comparable prior year period	Change versus comparable prior year period	$	104				$	(20,449)				Change versus comparable prior year period	$	16,193				$	19,086
Percentage change versus prior year period	Percentage change versus prior year period	0.2		%			(9.5)		%			Percentage change versus prior year period	27.4		%			15.0		%

Changes in net revenues were attributable to the following:


		vs. prior year quarter		vs. prior year- to-date			vs. prior year quarter		vs. prior year- to-date
Change attributable to:	Change attributable to:					Change attributable to:
Change in volume	Change in volume	(6.6)	%	(14.0)	%	Change in volume	16.8	%	8.5	%
Change in average selling prices	Change in average selling prices	0.0	%	0.3	%	Change in average selling prices	(0.1)	%	(0.1)	%
Foreign currency effects	Foreign currency effects	1.1	%	(0.2)	%	Foreign currency effects	5.6	%	4.2	%
Acquisitions	Acquisitions	5.7	%	4.4	%	Acquisitions	5.1	%	2.4	%

Net change	Net change	0.2	%	(9.5)	%	Net change	27.4	%	15.0	%

During the fiscal quarter ended ~~September 26, 2020,~~July 3, 2021, net revenues increased ~~0.2%~~27.4% as compared to the comparable prior year period, with increased volume primarily from the Force Sensors reporting segment and the Weighing and Control Systems segment. The increase in the Weighing and Control Systems ~~and Foil Technology Products~~ reporting segment ~~mostly offset~~was aided by ~~lower volume in~~ the ~~Force Sensors reporting segment.~~ addition of revenues from the acquisition of DTS.

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During ~~nine~~six fiscal months ended ~~September 26, 2020,~~July 3, 2021, net revenues ~~decreased 9.5%~~increased 15.0%, as compared to the comparable prior year period, mainly due to ~~decreased~~increased volume in ~~all~~the Foil Technology and Force Sensors reporting ~~segments.~~segment, and the addition of revenues from the acquisition of DTS on June 1, 2021.

Gross Profit Margin

Gross profit as a percentage of net revenues was as follows:

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Gross profit margin 40.5 % 38.3 % 38.9 % 40.7 %


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Gross profit margin	39.6	%	39.1	%	40.0	%	38.0	%

The gross profit margin for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 increased ~~2.2%~~0.5% as compared to the comparable prior year period with higher gross profit margins in the Force Sensors reporting segment being offset by lower margin in the Foil Technology ~~Products~~ and ~~Force Sensors reporting segments being partially offset by~~

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~~lower margins in the~~ Weighing and ~~Control~~Controls Systems ~~segment.~~ reporting segments.

The gross profit margin for the ~~nine~~six fiscal months ended ~~September 26, 2020 decreased 1.8%~~July 3, 2021 increased 2% as compared to the comparable prior year period, ~~with all~~mainly from higher gross profit margins in the Force Sensors reporting ~~segments contributing to the decline.~~segment.

Segments

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

Foil Technology Products

Net revenues of the Foil Technology Products segment were as follows (dollars in thousands):


		Fiscal quarter ended					Nine fiscal months ended						Fiscal quarter ended					Six fiscal months ended
		September 26, 2020			September 28, 2019		September 26, 2020			September 28, 2019			July 3, 2021			June 27, 2020		July 3, 2021			June 27, 2020
Net revenues	Net revenues	$	32,906		$	32,119	$	95,168		$	102,167	Net revenues	$	33,308		$	31,785	$	66,019		$	62,262
Change versus comparable prior year period	Change versus comparable prior year period	$	787				$	(6,999)				Change versus comparable prior year period	$	1,523				$	3,757
Percentage change versus prior year period	Percentage change versus prior year period	2.5		%			(6.9)		%			Percentage change versus prior year period	4.8		%			6.0		%

Changes in Foil Technology Products segment net revenues were attributable to the following:


		vs. prior year quarter		vs. prior year- to-date			vs. prior year quarter		vs. prior year- to-date
Change attributable to:	Change attributable to:					Change attributable to:
Change in volume	Change in volume	1.1	%	(7.4)	%	Change in volume	1.8	%	3.3	%
Change in average selling prices	Change in average selling prices	0.3	%	0.6	%	Change in average selling prices	0.6	%	0.5	%
Foreign currency effects	Foreign currency effects	1.1	%	(0.1)	%	Foreign currency effects	2.4	%	2.2	%

Net change	Net change	2.5	%	(6.9)	%	Net change	4.8	%	6.0	%

Net revenues increased ~~2.5%~~4.8% for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021, as compared to the comparable prior year period. ~~Increases~~The year-over-year increase in ~~revenues were~~revenue was primarily attributable to an increase in our advanced sensors product line, primarily in our ~~consumer-related markets~~general industrial market and an increase in our Pacific ~~Instruments~~Instrument product line in the ~~avionics, military~~Avionics, Military and ~~space market, which partially offset a decrease in precision resistor sales in the test and measurement~~Space market.

Net revenues ~~decreased 6.9%~~increased 6.0% for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021, as compared to the comparable prior year period. ~~Decreases~~Increases in net revenues ~~in precision resistor products sales in the test and measurement market and strain gages in~~are primarily attributable to our ~~general industrial market were partially offset by increases in net revenues in the avionics, military and space market, and increases in our net revenues from the~~ advanced sensors product line ~~primarily~~ in ~~our consumer-related~~other markets, test and measurement markets, and general industrial markets.

Gross profit as a percentage of net revenues for the Foil Technology Products segment was as follows:

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Gross profit margin 41.1 % 37.3 % 39.9 % 42.0 %


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Gross profit margin	38.9	%	41.8	%	39.4	%	39.3	%

The gross profit margin ~~increased 3.8%~~decreased 2.9% for the fiscal quarter ended ~~September 26, 2020,~~July 3, 2021, when compared to the comparable prior year ~~period, primarily due~~period. Impacts from charges related to ~~manufacturing efficiencies~~start-up costs in our new advanced sensors facility and ~~cost controls.~~ the impact of COVID-19 were partially offset by higher volume and favorable product mix.

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The gross profit margin ~~decreased 2.1%~~increased 0.1% for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 as compared to the comparable prior year ~~period primarily due~~period. Impacts from charges related to ~~lower~~start-up costs in our new advanced sensors facility and the impact COVIID-19 completely offset the higher volume ~~from products in the test~~ and ~~measurement and general industrial market segments.~~favorable product mix.

Force Sensors

Net revenues of the Force Sensors segment were as follows (dollars in thousands):

~~-34-~~


		Fiscal quarter ended					Nine fiscal months ended						Fiscal quarter ended					Six fiscal months ended
		September 26, 2020			September 28, 2019		September 26, 2020			September 28, 2019			July 3, 2021			June 27, 2020		July 3, 2021			June 27, 2020
Net revenues	Net revenues	$	13,862		$	16,217	$	37,473		$	49,298	Net revenues	$	17,216		$	8,916	$	34,149		$	23,611
Change versus comparable prior year period	Change versus comparable prior year period	$	(2,355)				$	(11,825)				Change versus comparable prior year period	$	8,300				$	10,538
Percentage change versus prior year period	Percentage change versus prior year period	(14.5)		%			(24.0)		%			Percentage change versus prior year period	93.1		%			44.6		%

Changes in Force Sensors segment net revenues were attributable to the following:


		vs. prior year quarter		vs. prior year- to-date			vs. prior year quarter		vs. prior year- to-date
Change attributable to:	Change attributable to:					Change attributable to:
Change in volume	Change in volume	(14.4)	%	(23.8)	%	Change in volume	88.5	%	41.9	%
Change in average selling prices	Change in average selling prices	(1.0)	%	(0.1)	%	Change in average selling prices	(1.7)	%	(1.5)	%
Foreign currency effects	Foreign currency effects	0.9	%	(0.1)	%	Foreign currency effects	6.3	%	4.2	%

Net change	Net change	(14.5)	%	(24.0)	%	Net change	93.1	%	44.6	%

Net revenues ~~decreased 14.5%~~increased 93.1% for the fiscal quarter ended ~~September 26, 2020,~~July 3, 2021, and 44.6% for the six fiscal months ended July 3, 2021 as compared to the comparable prior year ~~period, reflecting~~periods. The year-over-year increase primarily reflected operational limitations in the ~~impact~~second fiscal quarter of 2020 from the ~~COVID-19~~COVID pandemic onat our ~~India facility. This limitation in our production also contributed to the year to date decline in Force Sensor revenues of 24.0% when compared to the prior year. The manufacturing~~ facility in ~~India operated at partial capacity as a result of government mandated restrictions until July 1, 2020, when restrictions were lifted.~~India.

Gross profit as a percentage of net revenues for the Force Sensors segment was as follows:

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Gross profit margin 30.5 % 30.4 % 23.6 % 29.2 %


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Gross profit margin	34.7	%	11.6	%	35.2	%	19.5	%

The gross profit margin for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 increased ~~0.1%~~23.1% as compared to the comparable prior year ~~period. This increase was~~period primarily due to ~~cost controls~~higher revenue and ~~a positive impact of foreign exchange, partially offset by lower volume due to the COVID-19 impacts mentioned above and a reduction~~an increase in ~~export grants.~~ inventory.

The gross profit margin for the ~~nine~~six fiscal months ended ~~September 26, 2020 decreased 5.6%~~July 3, 2021 increased 15.7% as compared to the prior year ~~period. Lower volume~~period primarily due to ~~COVID-19 impacts was partially offset by cost savings initiatives.~~higher revenue and an increase in inventory.

Weighing and Control Systems

Net revenues of the Weighing and Control Systems segment were as follows (dollars in thousands):


		Fiscal quarter ended					Nine fiscal months ended						Fiscal quarter ended					Six fiscal months ended
		September 26, 2020			September 28, 2019		September 26, 2020			September 28, 2019			July 3, 2021			June 27, 2020		July 3, 2021			June 27, 2020
Net revenues	Net revenues	$	20,757		$	19,085	$	61,726		$	63,351	Net revenues	$	24,815		$	18,445	$	45,760		$	40,969
Change versus comparable prior year period	Change versus comparable prior year period	$	1,672				$	(1,625)				Change versus comparable prior year period	$	6,370				$	4,791
Percentage change versus prior year period	Percentage change versus prior year period	8.8		%			(2.6)		%			Percentage change versus prior year period	34.5		%			11.7		%

-35-

Changes in Weighing and Control Systems segment net revenues were attributable to the following:

vs. prior year
quarter vs. prior year-
to-date
Change attributable to:
Change in volume (13.2) % (17.4) %
Change in average selling prices 0.3 % 0.2 %
Foreign currency effects 1.6 % (0.7) %
Acquisitions 20.1 % 15.3 %
Net change 8.8 % (2.6) %

~~-35-~~


	vs. prior year quarter		vs. prior year- to-date
Change attributable to:
Change in volume	7.9	%	(1.8)	%
Change in average selling prices	0.6	%	0.3	%
Foreign currency effects	9.7	%	6.6	%
Acquisitions	16.3	%	6.6	%

Net change	34.5	%	11.7	%

Net revenues increased ~~8.8%~~34.5% for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 as compared to the comparable prior year period. ~~This~~The year-over-year increase in revenue was primarily attributable to ~~additional revenues~~the addition of ~~DSI, acquired in November 2019, which was partially offset by lower volume~~revenue for DTS, higher revenue of our onboard weighing products for the transportation market, higher revenue of our process weighing solutions for the industrial market, and higher revenue of our Dynamic Systems, Inc. ("DSI") products for the steel market, which was partially offset by lower revenue of KELK steel-related ~~sales.~~ products.

Net revenues ~~decreased 2.6%~~increased 11.7% for the ~~nine~~six fiscal months ended ~~September 26, 2020,~~July 3, 2021 as compared to the comparable prior year ~~periods. Additional revenues~~period primarily due to the addition of ~~DSI, were offset by lower volume of our onboard weighing products~~revenue for ~~the transportation market~~DTS and ~~lower KELK steel-related sales.~~favorable foreign currency effects.

Gross profit as a percentage of net revenues for the Weighing and Control Systems segment were as follows:

Fiscal quarter ended Nine fiscal months ended
September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019
Gross profit margin 46.2 % 46.6 % 46.5 % 47.5 %


	Fiscal quarter ended				Six fiscal months ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Gross profit margin	43.9	%	47.6	%	44.6	%	46.6	%

The gross profit margin for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 of ~~46.2%~~43.9% decreased from the ~~third~~second quarter of ~~2019 mostly~~2020 due to the impacts of charges related to purchase accounting adjustments from the DTS acquisitions and the impact of COVID-19, along with an unfavorable product mix, which were partially offset by ~~higher volume.~~ the addition of DTS and favorable exchange rates.

The gross profit margin for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 of ~~46.5%~~44.6%, decreased from the prior year period due to the impacts of charges related to purchase accounting adjustments from the DTS acquisitions, lower volume anand unfavorable product mix, which were partially offset by the addition of DTS and ~~unfavorable~~favorable exchange rate impacts.

Selling, General, and Administrative Expenses

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


		Fiscal quarter ended						Nine fiscal months ended							Fiscal quarter ended						Six fiscal months ended
		September 26, 2020			September 28, 2019			September 26, 2020			September 28, 2019				July 3, 2021			June 27, 2020			July 3, 2021			June 27, 2020
Total SG&A expenses	Total SG&A expenses	$	19,144		$	19,057		$	58,075		$	59,401		Total SG&A expenses	$	22,453		$	18,640		$	44,636		$	38,931

As a percentage of net revenues	As a percentage of net revenues	28.4		%	28.3		%	29.9		%	27.7		%	As a percentage of net revenues	29.8		%	31.5		%	30.6		%	30.7		%

SG&A expenses for the fiscal quarter and six fiscal months ended ~~September 26, 2020 were flat~~July 3, 2021 increased compared to the comparable prior year ~~period~~periods with additional SG&A expenses related to ~~DSI being offset by lower travel costs,~~ personnel costs and ~~professional fees.~~foreign currency impacts and SG&A expenses ~~for~~from the ~~nine~~acquisition of DTS.

-36-

Impairment of Goodwill and Indefinite-lived Intangible Assets

For the fiscal quarter and six fiscal months ended ~~September 26, 2020 decreased compared to~~July 3, 2021, as a result of our interim impairment test, we recorded a $1.2 million pre-tax, non-cash impairment charge which reduced the ~~comparable prior year period mainly due to lower travel costs, personnel costs, commissions,~~carrying value of our goodwill and ~~professional fees, partially offset by SG&A expenses related to DSI.~~indefinite-lived intangible assets. See Note 4 for further discussion.

~~Executive Severance~~Acquisition Costs

~~During the second fiscal quarter of 2019, the Company recorded $0.6 million of severance~~Acquisition costs associated with the ~~resignation~~acquisition of ~~an executive office of the Company. The severance costs consisted of payments and other benefits~~DTS were as ~~specified~~ follows (in ~~the executive officer's resignation agreement.~~thousands):


	Fiscal quarter ended		Six fiscal months ended
	July 3, 2021			July 3, 2021
Legal fees	$	341		$	341
Appraisal fees	18			18
Other (investment banker and insurance costs)	839			839
	$	1,198		$	1,198

Restructuring Costs

The Company recorded ~~$0.1~~$0.0 million and $0.5 million of restructuring costs during the fiscal quarter ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively, and ~~$0.7~~$0.0 million and ~~$0.5~~$0.6 million ~~for~~of restructuring costs during the ~~nine~~six fiscal months ended ~~September 26,~~July 3, 2021 and June 27, 2020, ~~and September 28, 2019,~~ respectively. Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, and were incurred in connections with various cost reduction programs.

Other Income (Expense)

Interest expense for the fiscal quarter ~~and nine fiscal months~~ ended ~~September 26, 2020~~July 3, 2021 was ~~lower~~flat when compared with interest expense in the comparable prior year ~~periods~~period. The impact of increased borrowings on the Company's revolving credit facility in conjunction with the acquisition of DTS were offset by more favorable borrowing rates in 2021. Interest expense for the six fiscal months ended July 3, 2021 was lower when compared with the comparable prior year period mainly due to ~~the lower debt balances during 2020 and the~~more favorable borrowing rates ~~negotiated with the 2020 Restated and Amended Revolving Credit Facility~~ in ~~March 2020.~~2021.

~~-36-~~-37-

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


		Fiscal quarter ended							Fiscal quarter ended
		September 26, 2020		September 28, 2019		Change			July 3, 2021		June 27, 2020		Change
Foreign exchange gain (loss)		$	162	$	(306)	$	468
Foreign exchange loss								Foreign exchange loss	$	(174)	$	(1,185)	$	1,011

Interest income	Interest income	29		181		(152)		Interest income	20		109		(89)
Pension expense	Pension expense	(159)		(157)		(2)		Pension expense	(143)		(164)		21
Other	Other	(71)		829		(900)		Other	(29)		(33)		4
		$	(39)	$	547	$	(586)		$	(326)	$	(1,273)	$	947

Nine fiscal months ended
September 26, 2020 September 28, 2019 Change
Foreign exchange (loss) gain $ (123) $ (1,360) $ 1,237
Interest income 205 519 (314)
Pension expense (482) (470) (12)
Other (229) 926 (1,155)
$ (629) $ (385) $ (244)



	Six fiscal months ended
	July 3, 2021		June 27, 2020		Change
Foreign exchange gain (loss)	$	561	$	(285)	$	846
Interest income	65		176		(111)
Pension expense	(280)		(323)		43
Other	(99)		(158)		59
	$	247	$	(590)	$	837

~~Included in Other for the fiscal quarter and nine fiscal months ended September 28, 2019, respectively, is a one-time $0.8 million gain on liquidation of one of the Company's subsidiaries.~~pound

Income Taxes

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate for the fiscal quarter ended ~~September 26, 2020~~July 3, 2021 was ~~27.1%~~6.1% compared to ~~29.3%~~28.1% for the fiscal quarter ended ~~September 28, 2019. The~~June 27, 2020 and the effective tax rate for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 was ~~29.0%~~18.4% compared to ~~27.5%~~30.9% for the ~~nine~~six fiscal months ended ~~September 28, 2019.~~June 27, 2020. The tax rate for ~~the nine fiscal months of 2020~~both periods presented in 2021 is ~~higher~~lower than the prior year ~~period~~periods primarily due to the acquisition of DTS, which enabled the Company to reduce its valuation allowance against deferred tax assets, tax rate changes in certain foreign jurisdictions, and changes in the mix of worldwide income.

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.

~~-37-~~-38-

Financial Condition, Liquidity, and Capital Resources

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.

In March, 2020, we entered into a third amended and restated credit agreement. The terms of our credit agreement provide for the following facilities: (1) secured revolving facility 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 which may be used for working capital and general corporate purposes. The restated credit agreement was used to refinance the Company’s existing revolving credit facility in the amount of $34 million and the Company’s existing term loans as follows: (1) the “2015 U.S. Closing Date Term Facility” in an aggregate principal amount of $2.0 million; (2) the "2015 U.S. Delayed Draw Term Facility" in an aggregate principal amount of $5.0 million. 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.

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 interest coverage ratio and a leverage ratio. We were in compliance with these covenants at ~~September 26, 2020.~~July 3, 2021. 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 other long-term debt is not significant and consists of zero percent interest rate debt held by our Japanese subsidiary of approximately $0.1 million at September 26, 2020 and $0.1 million at December 31, 2019.

~~Our~~ business has historically generated significant cash flow. For the ~~nine~~six fiscal months ended ~~September 26, 2020,~~July 3, 2021, cash provided by operating activities was ~~$22.8~~$12.4 million compared to ~~$24.6~~$16.7 million in the comparable prior year period. Our net cash used in investing activities for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 was higher compared to the prior year period mainly due to ~~increased capital spending.~~the acquisition of DTS. Our net cash ~~used~~provided by financing activities for the ~~nine~~six fiscal months ended ~~September 26, 2020, reflects~~July 3, 2021 was higher compared to prior year mainly due to the ~~repayment of the Canadian term loans and the conversion of the US term loans to revolver under~~borrowings on the 2020 credit ~~facility.~~facility for the acquisition of DTS.

Adjusted free cash flow generated during the ~~nine~~six fiscal months ended ~~September 26, 2020,~~July 3, 2021, was ~~$7.4~~$4.1 million. We refer to the amount of cash provided by operating activities ($~~22.8~~12.4 million) in excess of our capital expenditures ($~~15.8~~8.3 million) and net of proceeds from the sale of assets ($~~0.4~~0.0 million) as “adjusted free cash flow.”

~~-38-~~

The following table summarizes the components of net cash at ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019~~2020 (in thousands):


		September 26, 2020		December 31, 2019			July 3, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	89,795	$	86,910	Cash and cash equivalents	$	73,456	$	98,438

Third-party debt, including current and long-term:	Third-party debt, including current and long-term:					Third-party debt, including current and long-term:
Term loans		—		10,496

Revolving debt	Revolving debt	41,000		34,000		Revolving debt	61,000		41,000
Third-party debt held by Japanese subsidiary	Third-party debt held by Japanese subsidiary	52		149		Third-party debt held by Japanese subsidiary	—		18

Deferred financing costs	Deferred financing costs	(396)		(112)		Deferred financing costs	(330)		(374)
Total third-party debt	Total third-party debt	40,656		44,533		Total third-party debt	60,670		40,644
Net cash	Net cash	$	49,139	$	42,377	Net cash	$	12,786	$	57,794

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.

Approximately ~~91%~~87% and ~~93%~~90% of our cash and cash equivalents balance at ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019,~~2020, respectively, was held by our non-U.S. subsidiaries.

-39-

See the following table for the percentage of cash and cash equivalents, by region, at ~~September 26, 2020~~July 3, 2021 and December 31, ~~2019:~~2020:


		September 26, 2020		December 31, 2019			July 3, 2021		December 31, 2020
Israel	Israel	19	%	28	%	Israel	18	%	26	%
Asia	Asia	24	%	23	%	Asia	25	%	18	%
Europe	Europe	19	%	14	%	Europe	21	%	16	%
United States	United States	9	%	7	%	United States	13	%	10	%
United Kingdom	United Kingdom	17	%	17	%	United Kingdom	16	%	18	%
Canada	Canada	12	%	11	%	Canada	7	%	12	%
		100	%	100	%		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 ~~September 26, 2020,~~July 3, 2021, to be indefinitely reinvested.

Our financial condition as of ~~September 26, 2020~~July 3, 2021 remains strong, with a current ratio (current assets to current liabilities) of ~~4.6~~4.2 to 1.0, as compared to a ratio of ~~2.4~~4.7 to 1.0 at December 31, ~~2019.~~2020.

Cash paid for property and equipment for the ~~nine~~six fiscal months ended ~~September 26, 2020~~July 3, 2021 was ~~$15.8~~$8.3 million compared to ~~$8.6~~$11.0 million in the comparable prior year period.

~~-39-~~-40-

~~Contractual Commitments~~

Our Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 11, 2020, includes a table of contractual commitments. There were no material changes to these commitments since the filing of our Annual Report on Form 10-K, except that the Company recorded a material lease liability during the second quarter of 2020 in connection with a lease of a new manufacturing facility in Israel. Lease maturities for the Company's operating leases are fully described in Note 5 to the consolidated condensed financial statements.

Safe Harbor Statement

From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. 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; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired ~~companies (including DSI);~~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, health (including the COVID-19 pandemic) and military instability in the countries in which we operate; 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; 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 allocations, manufacturing and supply chains; the Company’s 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; the Company’s ability to execute its business continuity, operational and budget plans in light of the COVID-19 pandemic; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,~~ 2020. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

~~-40-~~-41-

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the market risks previously disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the SEC on March 11, ~~2020.~~2021.

Item 4. 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 quarterly report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

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 Control over Financial Reporting

During our last fiscal quarter ended ~~September 26, 2020,~~July 3, 2021, there was no change in our internal control over financial reporting that materially affected, or is reasonable likely to materially affect, internal control over financial reporting.

~~-41-~~-42-

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, filed with the SEC on March 11, ~~2020, and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 28, 2020, filed with the SEC on May 5, 2020.~~2021. There have been no material changes in reported risk factors from the information reported in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019 and Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,~~ 2020.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

~~-42-~~-43-

Item 6. EXHIBITS


10.1						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).
31.1						Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Ziv Shoshani, Chief Executive Officer.
31.2						Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – William M. Clancy, Chief Financial Officer.
32.1						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Ziv Shoshani, Chief Executive Officer.
32.2						Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – William M. Clancy, Chief Financial Officer.
101						Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended ~~September 26, 2020,~~July 3, 2021, furnished in XBRL (eXtensible Business Reporting Language).

~~-43-~~-44-

SIGNATURES

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


			VISHAY PRECISION GROUP, INC.

			/s/ William M. Clancy
			William M. Clancy
			Executive Vice President and Chief Financial Officer
			(as a duly authorized officer and principal financial and accounting officer)

Date: ~~November 3, 2020~~August 10, 2021

~~-44-~~-45-


	November 1, 2019		Adjustments		Adjusted
Working capital (a)	$	6,874			$	6,874
Property and equipment	1,727				1,727
Long-term deferred income tax liability	(4,321)				(4,321)
Non-controlling interest	(299)				(299)
Intangible assets:
Patents and acquired technology	10,250				10,250
Customer relationships	4,344				4,344
Trade names	3,300				3,300
Total intangible assets	17,894		—		17,894
Fair value of acquired identifiable assets	21,875		—		21,875
Purchase price	$	40,481	$	(156)	$	40,325
Goodwill	$	18,606	$	(156)	$	18,450