UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~July 2,~~October 1, 2022

☐ 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 ~~August 9,~~November 8, 2022, the registrant had ~~12,631,588~~12,550,775 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

~~July 2,~~October 1, 2022

CONTENTS


		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Condensed Balance Sheets – ~~July 2,~~October 1, 2022 (Unaudited) and December 31, 2021	3

	Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	5

	Consolidated Condensed Statements of Operations (Unaudited) – ~~Six~~Nine Fiscal Months Ended ~~July~~October 1, 2022 and October 2, ~~202~~2 ~~and~~ ~~July~~ 3 , 2021	6

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – Fiscal Quarters Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	7

	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – ~~Six~~Nine Fiscal Months Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	8

	Consolidated Condensed Statements of Cash Flows (Unaudited) ~~–Six~~–Nine Fiscal Months Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	9

	Consolidated Condensed Statements of Equity (Unaudited) – Fiscal Quarters Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	10

	Consolidated Condensed Statements of Equity ~~(Unaudite~~d)(Unaudited) – ~~Six~~Nine Fiscal Months Ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021	11

	Notes to Unaudited Consolidated Condensed Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 3.	Defaults Upon Senior Securities	41

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

	SIGNATURES	43

-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)
		July 2, 2022		December 31, 2021			October 1, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	79,429	$	84,335	Cash and cash equivalents	$	79,910	$	84,335
Accounts receivable, net	Accounts receivable, net	58,674		58,265		Accounts receivable, net	55,151		58,265
Inventories:	Inventories:					Inventories:
Raw materials	Raw materials	29,484		25,464		Raw materials	31,036		25,464
Work in process	Work in process	28,126		23,851		Work in process	27,903		23,851
Finished goods	Finished goods	26,728		27,112		Finished goods	26,384		27,112
Inventories, net	Inventories, net	84,338		76,427		Inventories, net	85,323		76,427

Prepaid expenses and other current assets	Prepaid expenses and other current assets	15,228		15,916		Prepaid expenses and other current assets	16,160		15,916

Total current assets	Total current assets	237,669		234,943		Total current assets	236,544		234,943

Property and equipment:	Property and equipment:					Property and equipment:
Land	Land	4,119		4,241		Land	4,029		4,241
Buildings and improvements	Buildings and improvements	68,339		68,778		Buildings and improvements	69,769		68,778
Machinery and equipment	Machinery and equipment	122,388		122,202		Machinery and equipment	122,412		122,202
Software	Software	9,303		8,871		Software	9,136		8,871
Construction in progress	Construction in progress	8,305		7,747		Construction in progress	6,364		7,747
Accumulated depreciation	Accumulated depreciation	(130,506)		(130,619)		Accumulated depreciation	(129,225)		(130,619)
Property and equipment, net	Property and equipment, net	81,948		81,220		Property and equipment, net	82,485		81,220

Goodwill	Goodwill	45,872		45,830		Goodwill	45,460		45,830
Intangible assets, net	Intangible assets, net	50,426		52,437		Intangible assets, net	49,081		52,437
Operating lease right-of-use assets	Operating lease right-of-use assets	25,783		27,764		Operating lease right-of-use assets	24,737		27,764
Other assets	Other assets	16,680		19,695		Other assets	15,890		19,695
Total assets	Total assets	$	458,378	$	461,889	Total assets	$	454,197	$	461,889

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)
		July 2, 2022		December 31, 2021			October 1, 2022		December 31, 2021
Liabilities and equity	Liabilities and equity					Liabilities and equity	(Unaudited)
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	13,172	$	14,876	Trade accounts payable	$	10,234	$	14,876
Payroll and related expenses	Payroll and related expenses	17,872		23,772		Payroll and related expenses	20,658		23,772
Other accrued expenses	Other accrued expenses	23,562		17,596		Other accrued expenses	21,863		17,596
Income taxes	Income taxes	478		3,774		Income taxes	818		3,774
Current portion of operating lease liabilities	Current portion of operating lease liabilities	4,343		4,610		Current portion of operating lease liabilities	4,119		4,610

Total current liabilities	Total current liabilities	59,427		64,628		Total current liabilities	57,692		64,628

Long-term debt, less current portion	Long-term debt, less current portion	60,758		60,714		Long-term debt, less current portion	60,780		60,714
Deferred income taxes	Deferred income taxes	6,096		5,848		Deferred income taxes	4,585		5,848
Operating lease liabilities	Operating lease liabilities	21,749		25,140		Operating lease liabilities	20,422		25,140
Other liabilities	Other liabilities	14,157		16,264		Other liabilities	13,959		16,264
Accrued pension and other postretirement costs	Accrued pension and other postretirement costs	10,841		12,253		Accrued pension and other postretirement costs	10,259		12,253
Total liabilities	Total liabilities	173,028		184,847		Total liabilities	167,697		184,847

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies

Equity:	Equity:					Equity:
Common stock	Common stock	1,325		1,322		Common stock	1,325		1,322
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	(9,826)		(8,765)
Capital in excess of par value	Capital in excess of par value	199,749		199,151		Capital in excess of par value	200,308		199,151
Retained earnings	Retained earnings	137,407		120,296		Retained earnings	147,525		120,296
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(44,581)		(35,008)		Accumulated other comprehensive loss	(52,995)		(35,008)
Total Vishay Precision Group, Inc. stockholders' equity	Total Vishay Precision Group, Inc. stockholders' equity	285,238		277,099		Total Vishay Precision Group, Inc. stockholders' equity	286,440		277,099
Noncontrolling interests	Noncontrolling interests	112		(57)		Noncontrolling interests	60		(57)
Total equity	Total equity	285,350		277,042		Total equity	286,500		277,042
Total liabilities and equity	Total liabilities and equity	$	458,378	$	461,889	Total liabilities and equity	$	454,197	$	461,889

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
		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021
Net revenues	Net revenues	$	88,618	$	75,339	Net revenues	$	90,057	$	81,974
Costs of products sold	Costs of products sold	51,284		45,541		Costs of products sold	52,737		50,129
Gross profit	Gross profit	37,334		29,798		Gross profit	37,320		31,845

Selling, general, and administrative expenses	Selling, general, and administrative expenses	25,879		22,453		Selling, general, and administrative expenses	25,271		24,580
Acquisition costs		—		1,198
Impairment of goodwill and indefinite-lived intangibles		—		1,223

Restructuring costs	Restructuring costs	904		—		Restructuring costs	165		—
Operating income	Operating income	10,551		4,924		Operating income	11,884		7,265

Other income (expense):	Other income (expense):					Other income (expense):
Interest expense	Interest expense	(428)		(273)		Interest expense	(636)		(328)
Other	Other	3,344		(326)		Other	1,223		174
Other income (expense)	Other income (expense)	2,916		(599)		Other income (expense)	587		(154)

Income before taxes	Income before taxes	13,467		4,325		Income before taxes	12,471		7,111

Income tax expense	Income tax expense	2,587		262		Income tax expense	2,323		1,662

Net earnings	Net earnings	10,880		4,063		Net earnings	10,148		5,449
Less: net earnings attributable to noncontrolling interests	Less: net earnings attributable to noncontrolling interests	125		143		Less: net earnings attributable to noncontrolling interests	30		70
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	10,755	$	3,920	Net earnings attributable to VPG stockholders	$	10,118	$	5,379

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	0.79	$	0.29	Basic earnings per share attributable to VPG stockholders	$	0.74	$	0.39
Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	0.79	$	0.29	Diluted earnings per share attributable to VPG stockholders	$	0.74	$	0.39

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	13,648		13,618		Weighted average shares outstanding - basic	13,649		13,626
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	13,692		13,646		Weighted average shares outstanding - diluted	13,708		13,664

See accompanying notes.

-5-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)


		Six fiscal months ended					Nine fiscal months ended
		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021
Net revenues	Net revenues	$	176,283	$	145,928	Net revenues	$	266,340	$	227,902
Costs of products sold	Costs of products sold	103,699		87,508		Costs of products sold	156,436		137,637
Gross profit	Gross profit	72,584		58,420		Gross profit	109,904		90,265

Selling, general, and administrative expenses	Selling, general, and administrative expenses	52,553		44,636		Selling, general, and administrative expenses	77,824		69,216
Acquisition costs	Acquisition costs	—		1,198		Acquisition costs	—		1,198
Impairment of goodwill and indefinite-lived intangibles	Impairment of goodwill and indefinite-lived intangibles	—		1,223		Impairment of goodwill and indefinite-lived intangibles	—		1,223

Restructuring costs	Restructuring costs	1,165		—		Restructuring costs	1,330		—
Operating income	Operating income	18,866		11,363		Operating income	30,750		18,628
Other income (expense):	Other income (expense):					Other income (expense):
Interest expense	Interest expense	(757)		(578)		Interest expense	(1,393)		(906)
Other	Other	3,783		247		Other	5,006		421
Other income (expense)	Other income (expense)	3,026		(331)		Other income (expense)	3,613		(485)

Income before taxes	Income before taxes	21,892		11,032		Income before taxes	34,363		18,143

Income tax expense	Income tax expense	4,328		2,026		Income tax expense	6,651		3,688

Net earnings	Net earnings	17,564		9,006		Net earnings	27,712		14,455
Less: net earnings attributable to noncontrolling interests	Less: net earnings attributable to noncontrolling interests	453		125		Less: net earnings attributable to noncontrolling interests	483		195
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	17,111	$	8,881	Net earnings attributable to VPG stockholders	$	27,229	$	14,260

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	1.25	$	0.65	Basic earnings per share attributable to VPG stockholders	$	2.00	$	1.05

Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	1.25	$	0.65	Diluted earnings per share attributable to VPG stockholders	$	1.99	$	1.04

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	13,643		13,605		Weighted average shares outstanding - basic	13,645		13,612

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	13,684		13,638		Weighted average shares outstanding - diluted	13,692		13,647

See accompanying notes.

-6-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


		Fiscal quarter ended					Fiscal quarter ended
		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021
Net earnings	Net earnings	$	10,880	$	4,063	Net earnings	$	10,148	$	5,449

Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:					Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	(7,943)		607		Foreign currency translation adjustment	(8,479)		(2,116)
Pension and other postretirement actuarial items	Pension and other postretirement actuarial items	81		109		Pension and other postretirement actuarial items	65		113
Other comprehensive income (loss)		(7,862)		716
Other comprehensive loss						Other comprehensive loss	(8,414)		(2,003)

Comprehensive income	Comprehensive income	3,018		4,779		Comprehensive income	1,734		3,446

Less: comprehensive income attributable to noncontrolling interests	Less: comprehensive income attributable to noncontrolling interests	125		143		Less: comprehensive income attributable to noncontrolling interests	30		70

Comprehensive income attributable to VPG stockholders	Comprehensive income attributable to VPG stockholders	$	2,893	$	4,636	Comprehensive income attributable to VPG stockholders	$	1,704	$	3,376

See accompanying notes.

-7-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)


		Six fiscal months ended					Nine fiscal months ended
		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021
Net earnings	Net earnings	$	17,564	$	9,006	Net earnings	$	27,712	$	14,455

Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(9,735)		(1,193)		Foreign currency translation adjustment	(18,214)		(3,309)
Pension and other postretirement actuarial items, net of tax	Pension and other postretirement actuarial items, net of tax	162		318		Pension and other postretirement actuarial items, net of tax	227		431
Other comprehensive loss	Other comprehensive loss	(9,573)		(875)		Other comprehensive loss	(17,987)		(2,878)

Comprehensive income	Comprehensive income	7,991		8,131		Comprehensive income	9,725		11,577

Less: comprehensive income attributable to noncontrolling interests	Less: comprehensive income attributable to noncontrolling interests	453		125		Less: comprehensive income attributable to noncontrolling interests	483		195

Comprehensive income attributable to VPG stockholders	Comprehensive income attributable to VPG stockholders	$	7,538	$	8,006	Comprehensive income attributable to VPG stockholders	$	9,242	$	11,382

See accompanying notes.

-8-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)


		Six fiscal months ended					Nine fiscal months ended
		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021
Operating activities	Operating activities					Operating activities
Net earnings	Net earnings	$	17,564	$	9,006	Net earnings	$	27,712	$	14,455
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		Impairment of goodwill and indefinite-lived intangibles	—		1,223
Depreciation and amortization	Depreciation and amortization	7,622		7,108		Depreciation and amortization	11,519		11,033

Loss (gain) on sale of property and equipment		(178)		44
Gain on sale of property and equipment						Gain on sale of property and equipment	(182)		(35)
Reclassification of foreign currency translation adjustment related to disposal of subsidiary	Reclassification of foreign currency translation adjustment related to disposal of subsidiary	191		—		Reclassification of foreign currency translation adjustment related to disposal of subsidiary	191		—
Share-based compensation expense	Share-based compensation expense	1,024		942		Share-based compensation expense	1,583		1,328
Inventory write-offs for obsolescence	Inventory write-offs for obsolescence	866		1,135		Inventory write-offs for obsolescence	1,451		1,613
Deferred income taxes	Deferred income taxes	1,116		(1,110)		Deferred income taxes	(72)		(1,412)
Other	Other	(3,485)		(1,820)		Other	(4,319)		(2,022)
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	(3,434)		(776)		Accounts receivable, net	(2,077)		(3,078)
Inventories, net	Inventories, net	(10,739)		(7,744)		Inventories, net	(14,151)		(9,624)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	254		314		Prepaid expenses and other current assets	(984)		(3,591)
Trade accounts payable	Trade accounts payable	14		1,715		Trade accounts payable	(1,459)		3,695
Other current liabilities	Other current liabilities	(2,059)		2,341		Other current liabilities	1,303		4,496
Net cash provided by operating activities	Net cash provided by operating activities	8,756		12,378		Net cash provided by operating activities	20,515		18,081

Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(8,815)		(8,309)		Capital expenditures	(15,545)		(11,191)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	380		16		Proceeds from sale of property and equipment	397		181

Purchase of business, net of cash acquired	Purchase of business, net of cash acquired	—		(47,216)		Purchase of business, net of cash acquired	—		(47,216)
Net cash used in investing activities	Net cash used in investing activities	(8,435)		(55,509)		Net cash used in investing activities	(15,148)		(58,226)

Financing activities	Financing activities					Financing activities

Principal payments on long-term debt	Principal payments on long-term debt	—		(18)		Principal payments on long-term debt	—		(18)

Proceeds from revolving facility	Proceeds from revolving facility	—		20,000		Proceeds from revolving facility	—		20,000

Purchase of treasury stock						Purchase of treasury stock	(1,061)		—

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(284)		(167)		Distributions to noncontrolling interests	(366)		(244)
Payments of employee taxes on certain share-based arrangements	Payments of employee taxes on certain share-based arrangements	(435)		(846)		Payments of employee taxes on certain share-based arrangements	(435)		(853)
Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(719)		18,969		Net cash (used in) provided by financing activities	(1,862)		18,885
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(4,508)		(820)		Effect of exchange rate changes on cash and cash equivalents	(7,930)		(1,634)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(4,906)		(24,982)		Decrease in cash and cash equivalents	(4,425)		(22,894)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	84,335		98,438		Cash and cash equivalents at beginning of period	84,335		98,438
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	79,429	$	73,456	Cash and cash equivalents at end of period	$	79,910	$	75,544

Supplemental disclosure of investing transactions:	Supplemental disclosure of investing transactions:					Supplemental disclosure of investing transactions:
Capital expenditures purchased	Capital expenditures purchased	$	(8,432)	$	(6,353)	Capital expenditures purchased	$	(13,198)	$	(9,368)
Capital expenditures accrued but not yet paid	Capital expenditures accrued but not yet paid	$	2,684	$	606	Capital expenditures accrued but not yet paid	$	720	$	738

See accompanying notes.

-9-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)


		Fiscal quarter ended July 2, 2022																			Fiscal quarter ended October 1, 2022
		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 April 2, 2022		$	1,324	$	103	$	(8,765)	$	199,223	$	126,652	$	(36,719)	$	281,818	$	25	$	281,843
Balance at July 2, 2022																				Balance at July 2, 2022	$	1,325	$	103	$	(8,765)	$	199,749	$	137,407	$	(44,581)	$	285,238	$	112	$	285,350
Net earnings	Net earnings	—		—		—		—		10,755		—		10,755		125		10,880		Net earnings	—		—		—		—		10,118		—		10,118		30		10,148
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(7,862)		(7,862)		—		(7,862)		Other comprehensive loss	—		—		—		—		—		(8,414)		(8,414)		—		(8,414)
Share-based compensation expense	Share-based compensation expense	—		—		—		527		—		—		527		—		527		Share-based compensation expense	—		—		—		559		—		—		559		—		559
Restricted stock issuances (10,531 shares)		1		—		—		(1)		—		—		—		—		—

Purchase of treasury stock. (32,601 shares)																				Purchase of treasury stock. (32,601 shares)	—		—		(1,061)		—		—		—		(1,061)		—		(1,061)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—		—		—		—		—		—		—		(38)		(38)		Distributions to noncontrolling interests	—		—		—		—		—		—		—		(82)		(82)
Balance at July 2, 2022		$	1,325	$	103	$	(8,765)	$	199,749	$	137,407	$	(44,581)	$	285,238	$	112	$	285,350
Balance at October 1, 2022																				Balance at October 1, 2022	$	1,325	$	103	$	(9,826)	$	200,308	$	147,525	$	(52,995)	$	286,440	$	60	$	286,500


		Fiscal quarter ended July 3, 2021																			Fiscal quarter ended October 2, 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 April 3, 2021		$	1,320	$	103	$	(8,765)	$	197,282	$	105,036	$	(34,262)	$	260,714	$	(95)	$	260,619
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
Net earnings	Net earnings	—		—		—		—		3,920		—		3,920		143		4,063		Net earnings	—		—		—		—		5,379		—		5,379		70		5,449
Other comprehensive income	Other comprehensive income	—		—		—		—		—		716		716		—		716		Other comprehensive income	—		—		—		—		—		(2,003)		(2,003)		—		(2,003)
Share-based compensation expense	Share-based compensation expense	—		—		—		576		—		—		576		—		576		Share-based compensation expense	—		—		—		386		—		—		386		—		386
Restricted stock issuances (15,564 shares)		2		—		—		(2)		—		—		—		—		—
Restricted stock issuances (465 shares)																				Restricted stock issuances (465 shares)	—		—		—		(7)		—		—		(7)		—		(7)

Distribution to noncontrolling interests	Distribution to noncontrolling interests	—		—		—		—		—		—		—		(56)		(56)		Distribution to noncontrolling interests	—		—		—		—		—		—		—		(77)		(77)
Balance at July 3, 2021		$	1,322	$	103	$	(8,765)	$	197,856	$	108,956	$	(33,546)	$	265,926	$	(8)	$	265,918
Balance at October 2, 2021																				Balance at October 2, 2021	$	1,322	$	103	$	(8,765)	$	198,235	$	114,335	$	(35,549)	$	269,681	$	(15)	$	269,666

See accompanying notes.

-10-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Equity

(Unaudited - In thousands, except share amounts)


		Six Fiscal Months Ended July 2, 2022																			Nine Fiscal Months Ended October 1, 2022
		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 December 31, 2021	Balance at December 31, 2021	$	1,322	$	103	$	(8,765)	$	199,151	$	120,296	$	(35,008)	$	277,099	$	(57)	$	277,042	Balance at December 31, 2021	$	1,322	$	103	$	(8,765)	$	199,151	$	120,296	$	(35,008)	$	277,099	$	(57)	$	277,042
Net earnings	Net earnings	—		—		—		—		17,111		—		17,111		453		17,564		Net earnings	—		—		—		—		27,229		—		27,229		483		27,712
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(9,573)		(9,573)		—		(9,573)		Other comprehensive loss	—		—		—		—		—		(17,987)		(17,987)		—		(17,987)
Share-based compensation expense	Share-based compensation expense	—		—		—		1,024		—		—		1,024		—		1,024		Share-based compensation expense	—		—		—		1,583		—		—		1,583		—		1,583
Restricted stock issuances (28,368 shares)	Restricted stock issuances (28,368 shares)	3		—		—		(426)		—		—		(423)		—		(423)		Restricted stock issuances (28,368 shares)	3		—		—		(426)		—		—		(423)		—		(423)

Purchase of treasury stock (32,601 shares)																				Purchase of treasury stock (32,601 shares)	—		—		(1,061)		—		—		—		(1,061)		—		(1,061)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	—		—		—		—		—		—		—		(284)		(284)		Distributions to noncontrolling interests	—		—		—		—		—		—		—		(366)		(366)
Balance at July 2, 2022		$	1,325	$	103	$	(8,765)	$	199,749	$	137,407	$	(44,581)	$	285,238	$	112	$	285,350
Balance at October 1, 2022																				Balance at October 1, 2022	$	1,325	$	103	$	(9,826)	$	200,308	$	147,525	$	(52,995)	$	286,440	$	60	$	286,500


		Six Fiscal Months Ended July 3, 2021																			Nine Fiscal Months Ended October 2, 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 December 31, 2020	Balance at December 31, 2020	$	1,317	$	103	$	(8,765)	$	197,764	$	100,075	$	(32,671)	$	257,823	$	34	$	257,857	Balance at December 31, 2020	$	1,317	$	103	$	(8,765)	$	197,764	$	100,075	$	(32,671)	$	257,823	$	34	$	257,857
Net earnings	Net earnings	—		—		—		—		8,881		—		8,881		125		9,006		Net earnings	—		—		—		—		14,260		—		14,260		195		14,455
Other comprehensive loss	Other comprehensive loss	—		—		—		—		—		(875)		(875)		—		(875)		Other comprehensive loss	—		—		—		—		—		(2,878)		(2,878)		—		(2,878)
Share-based compensation expense	Share-based compensation expense	—		—		—		942		—		—		942		—		942		Share-based compensation expense	—		—		—		1,328		—		—		1,328		—		1,328
Restricted stock issuances (50,316 shares)		5		—		—		(850)		—		—		(845)		—		(845)
Restricted stock issuances (50,781 shares)																				Restricted stock issuances (50,781 shares)	5		—		—		(857)		—		—		(852)		—		(852)

Distribution to noncontrolling interests	Distribution to noncontrolling interests	—		—		—		—		—		—		—		(167)		(167)		Distribution to noncontrolling interests	—		—		—		—		—		—		—		(244)		(244)
Balance at July 3, 2021		$	1,322	$	103	$	(8,765)	$	197,856	$	108,956	$	(33,546)	$	265,926	$	(8)	$	265,918
Balance at October 2, 2021																				Balance at October 2, 2021	$	1,322	$	103	$	(8,765)	$	198,235	$	114,335	$	(35,549)	$	269,681	$	(15)	$	269,666

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 a global, diversified company focused on precision measurement sensing technologies, including specialized sensors, weighing solutions, and measurement systems. Many of our precision measurement sensing products and solutions are “designed-in” by our customers, and address growing applications across a diverse array of industries and markets. 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, and we employ an operationally diversified structure to manage our businesses.

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, 2021 and 2020 and for each of the three years in the period ended December 31, 2021, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 4, 2022. The results of operations for the fiscal quarter ended ~~July 2,~~October 1, 2022 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 2022 and 2021 end on the following dates:


	2022	2021
Quarter 1	April 2,	April 3,
Quarter 2	July 2,	July 3,
Quarter 3	October 1,	October 2,
Quarter 4	December 31,	December 31,

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):

-12-

Note 2 – Revenues (continued)


		Fiscal quarter ended July 2, 2022								Fiscal quarter ended July 3, 2021									Fiscal quarter ended October 1, 2022								Fiscal quarter ended October 2, 2021
		Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total			Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total
United States	United States	$	13,469	$	12,463	$	11,308	$	37,240	$	9,437	$	12,932	$	7,226	$	29,595	United States	$	12,992	$	14,671	$	13,065	$	40,728	$	9,640	$	12,729	$	13,914	$	36,283
United Kingdom	United Kingdom	933		3,859		161		4,953		744		4,195		358		5,297		United Kingdom	752		4,090		55		4,897		746		4,366		129		5,241
Other Europe	Other Europe	8,024		8,820		1,117		17,961		6,396		9,897		534		16,827		Other Europe	7,740		8,714		986		17,440		6,063		9,681		1,194		16,938
Israel	Israel	8,050		110		—		8,160		5,284		261		—		5,545		Israel	7,447		101		—		7,548		4,711		232		—		4,943
Asia	Asia	9,804		3,207		811		13,822		9,315		4,390		1,027		14,732		Asia	8,948		3,815		2,462		15,225		9,561		3,668		1,933		15,162
Canada	Canada	—		—		6,482		6,482		—		—		3,343		3,343		Canada	—		8		4,211		4,219		—		—		3,407		3,407
Total	Total	$	40,280	$	28,459	$	19,879	$	88,618	$	31,176	$	31,675	$	12,488	$	75,339	Total	$	37,879	$	31,399	$	20,779	$	90,057	$	30,721	$	30,676	$	20,577	$	81,974

		Six Fiscal Months Ended July 2, 2022								Six Fiscal Months Ended July 3, 2021									Nine Fiscal Months Ended October 1, 2022								Nine Fiscal Months Ended October 2, 2021
		Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total			Sensors		Weighing Solutions		Measurement Systems		Total		Sensors		Weighing Solutions		Measurement Systems		Total
United States	United States	$	26,475	$	26,541	$	21,773	$	74,789	$	19,143	$	25,512	$	10,857	$	55,512	United States	$	39,467	$	41,212	$	34,838	$	115,517	$	28,783	$	38,241	$	24,771	$	91,795
United Kingdom	United Kingdom	1,810		8,193		459		10,462		1,604		8,775		396		10,775		United Kingdom	2,562		12,283		514		15,359		2,350		13,141		525		16,016
Other Europe	Other Europe	15,816		19,351		2,999		38,166		13,577		19,830		722		34,129		Other Europe	23,556		28,065		3,985		55,606		19,640		29,511		1,916		51,067
Israel	Israel	15,381		300		—		15,681		11,725		391		—		12,116		Israel	22,828		401		—		23,229		16,436		623		—		17,059
Asia	Asia	18,548		6,842		1,821		27,211		16,942		8,126		1,882		26,950		Asia	27,496		10,657		4,283		42,436		26,503		11,794		3,815		42,112
Canada	Canada	—		—		9,974		9,974		—		9		6,437		6,446		Canada	—		8		14,185		14,193		—		9		9,844		9,853
Total	Total	$	78,030	$	61,227	$	37,026	$	176,283	$	62,991	$	62,643	$	20,294	$	145,928	Total	$	115,909	$	92,626	$	57,805	$	266,340	$	93,712	$	93,319	$	40,871	$	227,902

The following table disaggregates net revenue from contracts with customers by market sector (in thousands).


		Fiscal quarter ended				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Test & Measurement	Test & Measurement	$	21,483	$	16,279	$	39,456	$	30,695	Test & Measurement	$	20,659	$	15,883	$	60,115	$	46,578
Avionics, Military & Space	Avionics, Military & Space	6,878		5,872		15,040		11,902		Avionics, Military & Space	6,523		7,542		21,563		19,444
Transportation	Transportation	13,195		11,930		27,149		21,484		Transportation	13,912		13,668		41,061		35,152
Other Markets	Other Markets	18,035		17,489		39,185		35,034		Other Markets	20,110		17,453		59,295		52,487
Industrial Weighing	Industrial Weighing	12,944		12,042		26,153		24,047		Industrial Weighing	12,473		12,254		38,626		36,301
General Industrial	General Industrial	5,325		4,173		11,191		8,255		General Industrial	4,981		4,069		16,172		12,324
Steel	Steel	10,758		7,554		18,109		14,511		Steel	11,399		11,105		29,508		25,616

Total	Total	$	88,618	$	75,339	$	176,283	$	145,928	Total	$	90,057	$	81,974	$	266,340	$	227,902

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):

-13-

Note 2 – Revenues (continued)

Contract Asset Contract Liability
Unbilled Revenue Accrued Customer Advances
Balance at December 31, 2021 $ 3,570 $ 4,765
Balance at July 2, 2022 2,416 8,407
(Decrease)/increase $ (1,154) $ 3,642


	Contract Asset		Contract Liability
	Unbilled Revenue		Accrued Customer Advances
Balance at December 31, 2021	$	3,570	$	4,765
Balance at October 1, 2022	3,621		8,867
Increase	$	51	$	4,102

The amount of revenue recognized during the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 that was included in the contract liability balance at December 31, 2021 was $~~2.7~~3.2 million.

Note 3 - Acquisition

Diversified Technical Systems, Inc.

On June 1, 2021, VPG completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $47.2 million. The Company used cash on hand and borrowings under its revolving credit facility to fund the purchase price under the purchase agreement. DTS reports into the Company's Measurement Systems segment. The following table summarizes the final fair values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands):


	June 1, 2021
Working capital	$	12,494
Property and equipment	1,209
Deferred income tax liability	(6,215)

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	31,183
Purchase price	$	47,216
Goodwill	$	16,033

The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. The estimated weighted average useful lives for the acquired technology and customer relationships are 15 years. Trade names are treated as indefinite-lived intangible assets. None of the goodwill associated with DTS is deductible for income tax purposes. The Company recorded acquisition costs associated with this transaction of $1.2 million in the second quarter of 2021, which included legal fees, appraisal fees, investments banker fees and insurance costs.

Included in the results of the operations of the Company for the fiscal quarter ended ~~July 2,~~October 1, 2022, are net revenues of ~~$6.9~~$7.9 million from DTS and a net ~~loss~~income of ~~$0.6~~$0.2 million from DTS. DTS results include amortization of the inventory step-up of ~~$0.7~~$0.3 million for the fiscal quarter ended ~~July 2,~~October 1, 2022, and amortization of intangible assets of $0.4 million for the fiscal quarter ended ~~July 2,~~October 1, 2022. Included in the results of the operations of the Company for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 are net revenues of ~~$14.6~~$22.5 million from DTS and a net loss of ~~$0.5~~$0.3 million from DTS. DTS results include amortization of the inventory step-up of ~~$1.1~~$1.3 million and amortization of intangible assets of ~~$0.7~~$1.1 million for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022.

Following is the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the DTS acquisition had been consummated on January 1, 2021:

-14-

Fiscal quarter ended Six fiscal months ended
July 3, 2021 July 3, 2021
Pro forma net revenues $ 80,243 $ 159,164
Pro forma net earnings attributable to VPG stockholders $ 6,929 $ 12,262
Pro forma basic earnings per share attributable to VPG stockholders $ 0.51 $ 0.90
Pro forma diluted earnings per share attributable to VPG stockholders $ 0.51 $ 0.90


	Nine fiscal months ended
	October 2, 2021
Pro forma net revenues	$	241,138

Pro forma net earnings attributable to VPG stockholders	$	17,641

Pro forma basic earnings per share attributable to VPG stockholders	$	1.30
Pro forma diluted earnings per share attributable to VPG stockholders	$	1.29

Note 4 – Goodwill

The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of its fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred.

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


		Total		Measurement Systems						Weighing Solutions			Total		Measurement Systems						Weighing Solutions
				KELK Acquisition		DSI Acquisition		DTS Acquisition		Stress-Tek Acquisition					KELK Acquisition		DSI Acquisition		DTS Acquisition		Stress-Tek Acquisition
Balance at December 31, 2021	Balance at December 31, 2021	$	45,830	$	6,706	$	16,910	$	15,903	$	6,311	Balance at December 31, 2021	$	45,830	$	6,706	$	16,910	$	15,903	$	6,311
Adjustment to goodwill acquired	Adjustment to goodwill acquired	130		—		—		130		—		Adjustment to goodwill acquired	130		—		—		130		—

Foreign currency translation adjustment	Foreign currency translation adjustment	(88)		(58)		(30)		—		—		Foreign currency translation adjustment	(500)		(446)		(54)		—		—

Balance at July 2, 2022		$	45,872	$	6,648	$	16,880	$	16,033	$	6,311
Balance at October 1, 2022												Balance at October 1, 2022	$	45,460	$	6,260	$	16,856	$	16,033	$	6,311

Note 5 – Leases

The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to fourteen years. The Company has no finance leases.

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


Leases	Leases	July 2, 2022		December 31, 2021		Leases	October 1, 2022		December 31, 2021
Assets	Assets					Assets
Operating lease right of use asset	Operating lease right of use asset	$	25,783	$	27,764	Operating lease right of use asset	$	24,737	$	27,764

Liabilities	Liabilities					Liabilities
Operating lease - current	Operating lease - current	$	4,343	$	4,610	Operating lease - current	$	4,119	$	4,610
Operating lease - non-current	Operating lease - non-current	$	21,749	$	25,140	Operating lease - non-current	$	20,422	$	25,140

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


	~~July 2,~~October 1, 2022
Operating leases weighted average remaining lease term (in years)	~~8.09~~7.94 years
Operating leases weighted average discount rate	~~3.1~~3.12	%

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

-15-

Note 5 - Leases (continued)


		Fiscal quarter ended				Six Fiscal Months Ended					Fiscal quarter ended				Nine Fiscal Months Ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Operating lease cost	Operating lease cost	$	1,299	$	1,258	$	2,609	$	2,439	Operating lease cost	$	1,267	$	1,407	$	3,876	$	3,847
Short-term lease cost	Short-term lease cost	17		35		42		68		Short-term lease cost	30		30		72		98
Sublease income	Sublease income	(105)		(19)		(217)		(28)		Sublease income	(104)		(78)		(321)		(106)
Total net lease cost	Total net lease cost	$	1,211	$	1,274	$	2,434	$	2,479	Total net lease cost	$	1,193	$	1,359	$	3,627	$	3,839

Right of use assets obtained in exchange for new operating lease liability during ~~2021~~2022 were ~~$0.5~~$0.7 million. The Company paid ~~$2.6~~$3.9 million and ~~$2.4~~$3.8 million for its operating leases for each of the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021, which are included in operating cash flows on the consolidated condensed statements of cash flows.

Undiscounted maturities of operating lease payments as of ~~July 2,~~October 1, 2022 are summarized as follows (in thousands):


2022 (excluding the six months ended July 2, 2022)		$	2,463
2022 (excluding the nine months ended October 1, 2022)				2022 (excluding the nine months ended October 1, 2022)	$	1,172
2023	2023	4,510		2023	4,432
2024	2024	3,851		2024	3,809
2025	2025	3,270		2025	3,223
2026	2026	2,945		2026	2,886
Thereafter	Thereafter	12,421		Thereafter	12,123
Total future minimum lease payments	Total future minimum lease payments	$	29,460	Total future minimum lease payments	$	27,645
Less: amount representing interest	Less: amount representing interest	(3,368)		Less: amount representing interest	(3,104)
Present value of future minimum lease payments	Present value of future minimum lease payments	$	26,092	Present value of future minimum lease payments	$	24,541

Note 6 – Income Taxes

On December 28, 2021, the United States Treasury Department and the Internal Revenue Service issued final regulations relating to the foreign tax credit and clarifying the rules relating to foreign derived intangible income. These new regulations apply to tax years beginning on or after December 28, 2021. The Company is still in the process of analyzing the potential tax impact that these regulations could have on the Company’s tax position.

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.

Note 7 – Long-Term Debt

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


		July 2, 2022		December 31, 2021			October 1, 2022		December 31, 2021
2020 Credit Agreement - Revolving Facility	2020 Credit Agreement - Revolving Facility	$	61,000	$	61,000	2020 Credit Agreement - Revolving Facility	$	61,000	$	61,000

Deferred financing costs	Deferred financing costs	(242)		(286)		Deferred financing costs	(220)		(286)
Total long-term debt	Total long-term debt	$	60,758	$	60,714	Total long-term debt	$	60,780	$	60,714

-16-

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

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, 2022	Balance at January 1, 2022	$	(30,276)	$	(4,732)	$	(35,008)	Balance at January 1, 2022	$	(30,276)	$	(4,732)	$	(35,008)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(9,926)		—		(9,926)		Other comprehensive loss before reclassifications	(18,405)		—		(18,405)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	191		162		353		Amounts reclassified from accumulated other comprehensive income	191		227		418
Balance at July 2, 2022		$	(40,011)	$	(4,570)	$	(44,581)
Balance at October 1, 2022								Balance at October 1, 2022	$	(48,490)	$	(4,505)	$	(52,995)


		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, 2021	Balance at January 1, 2021	$	(25,591)	$	(7,080)	$	(32,671)	Balance at January 1, 2021	$	(25,591)	$	(7,080)	$	(32,671)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(1,193)		—		(1,193)		Other comprehensive loss before reclassifications	(3,309)		—		(3,309)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	—		318		318		Amounts reclassified from accumulated other comprehensive income	—		431		431
Balance at July 3, 2021		$	(26,784)	$	(6,762)	$	(33,546)
Balance at October 2, 2021								Balance at October 2, 2021	$	(28,900)	$	(6,649)	$	(35,549)

Reclassification of foreign currency translation adjustment for the loss on liquidation of subsidiaries is included in other income and 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):

-17-

Note 9 - Pension and Other Postretirement Benefits ( continued)


		Fiscal quarter ended July 2, 2022				Fiscal quarter ended July 3, 2021					Fiscal quarter ended October 1, 2022				Fiscal quarter ended October 2, 2021
		Pension Plans		OPEB Plans		Pension Plans		OPEB Plans			Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	Net service cost	$	81	$	7	$	96	$	9	Net service cost	$	79	$	7	$	96	$	9
Interest cost	Interest cost	120		17		103		17		Interest cost	117		17		102		17
Expected return on plan assets	Expected return on plan assets	(119)		—		(97)		—		Expected return on plan assets	(116)				(97)		—
Amortization of actuarial losses	Amortization of actuarial losses	72		1		102		5		Amortization of actuarial losses	69		1		102		5
Net periodic benefit cost	Net periodic benefit cost	$	154	$	25	$	204	$	31	Net periodic benefit cost	$	149	$	25	$	203	$	31


		Six fiscal months ended July 2, 2022				Six fiscal months ended July 3, 2021					Nine fiscal months ended October 1, 2022				Nine fiscal months ended October 2, 2021
		Pension Plans		OPEB Plans		Pension Plans		OPEB Plans			Pension Plans		OPEB Plans		Pension Plans		OPEB Plans
Net service cost	Net service cost	$	165	$	14	$	193	$	18	Net service cost	$	244	$	21	$	289	$	27
Interest cost	Interest cost	243		34		206		34		Interest cost	360		51		308		51
Expected return on plan assets	Expected return on plan assets	(242)		—		(194)		—		Expected return on plan assets	(358)		—		(291)		—
Amortization of actuarial losses	Amortization of actuarial losses	146		2		204		10		Amortization of actuarial losses	215		3		306		15
Net periodic benefit cost	Net periodic benefit cost	$	312	$	50	$	409	$	62	Net periodic benefit cost	$	461	$	75	$	612	$	93

Note 10 – Share-Based Compensation

On May 26, 2022, the Company’s stockholders voted to approve the adoption of the Vishay Precision Group, Inc. 2022 Stock Incentive Plan (the "2022 plan"), which replaced the Amended and Restated Vishay Precision Group, Inc. 2010 Stock Incentive Program (the "previous plan"). The 2022 plan permits issuance of up to 608,000 shares of common stock, which includes approximately 308,000 shares that were reserved for issuance under the previous plan and up to an additional 197,685 additional shares underlying awards outstanding under the previous plan. At ~~July 2,~~October 1, 2022, the Company had reserved ~~591,466~~590,034 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the 2022 plan. If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others. If shares are withheld for payment of taxes, those shares do not become available for grant under the 2022 plan.

On March 3, 2022 and in accordance with their respective employment agreements, VPG’s 3three executive officers were granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate target grant-date fair value of $1.5 million and were comprised of 47,831 RSUs. ~~NaN~~Fifty percent of these awards will vest on January 1, 2025, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2025, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and "net earnings goals", each weighted equally.

On March 9, 2022, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain employees received awards, of which 75% are performance-based and certain employees received awards of which 50% are performance-based. The awards have an aggregate grant-date fair value of $0.5 million and were comprised of 16,324 RSUs. The non-performance portion of these awards ~~(NaN~~(twenty-five percent for certain employees and 50fifty percent for certain employees) will vest on January 1, 2025 subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2025, 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 January 1, 2022 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan (the "Director Plan"), the Board of Directors approved the issuance of an aggregate of 595 RSUs to the newly-appointed independent member of the Board of Directors. This award represented a pro-rated portion of the annual equity grant made to non-executive directors pursuant to the Director Plan. The aggregate grant-date fair value of this award is immaterial, and the award vested on May 26, 2022, the date of the 2022 Annual Stockholders Meeting.

-18-

Note 10 - Share-Based Compensation (continued)

On May 26, 2022 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 16,534 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 $0.5 million and will vest on the earlier of the 2023 Annual Stockholders Meeting or May 26, 2023, subject to the directors' continued service on the Board of Directors.

On July 1, 2022, a non-executive VPG employee was granted an annual equity award in the form of RSU's, of which 50% are performance-based. The award has an aggregate grant-date fair value of $0.04 million and was comprised of 1,432 RSU's. The non-performance portion of this award will vest on July 1, 2025, subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on July 1, 2025, 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.

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

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 Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Restricted stock units $ 527 $ 576 $ 1,024 $ 942


	Fiscal quarter ended				Nine fiscal months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Restricted stock units	$	559	$	386	$	1,583	$	1,328

Note 11 – Segment Information

VPG reports in 3three product segments: the Sensors segment, the Weighing Solutions segment, and the Measurement Systems segment. The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

The chief operating decision maker ("CODM") is our chief executive officer. The CODM evaluates each operating segment's performance. The evaluation of the segment's performance is based on multiple performance measures including gross profits, revenues, and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring and severance costs, impairment of goodwill and indefinite-lived intangible assets, acquisition costs, and other items is meaningful because they relate to occurrences or events that are outside of our core operations, and management believes that the use of these measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods.

The following table sets forth reporting segment information. The reporting segment information reported for the fiscal quarter and ~~six~~nine fiscal months ended ~~July 3,~~October 2, 2021 has been recast to reflect the new reporting segments adopted by the Company in the fourth quarter of 2021, as described in the consolidated financial statements as of December 31, 2021, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2022 (in thousands):

-19-

Note 11 - Segment Information (continued)


		Fiscal quarter ended				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Net revenues:	Net revenues:									Net revenues:
Sensors	Sensors	$	40,280	$	31,176	$	78,030	$	62,991	Sensors	$	37,879	$	30,721	$	115,909	$	93,712
Weighing Solutions	Weighing Solutions	28,459		31,675		61,227		62,643		Weighing Solutions	31,399		30,676		92,626		93,319
Measurement Systems	Measurement Systems	19,879		12,488		37,026		20,294		Measurement Systems	20,779		20,577		57,805		40,871
Total	Total	$	88,618	$	75,339	$	176,283	$	145,928	Total	$	90,057	$	81,974	$	266,340	$	227,902

Gross profit:	Gross profit:									Gross profit:
Sensors	Sensors	$	17,831	$	12,120	$	32,117	$	24,953	Sensors	$	15,324	$	9,568	$	47,441	$	34,521
Weighing Solutions	Weighing Solutions	9,585		11,791		21,664		23,565		Weighing Solutions	10,470		11,422		32,134		34,988
Measurement Systems	Measurement Systems	9,918		5,887		18,803		9,902		Measurement Systems	11,526		10,855		30,329		20,756
Total	Total	$	37,334	$	29,798	$	72,584	$	58,420	Total	$	37,320	$	31,845	$	109,904	$	90,265

Reconciliation of segment operating income to consolidated results:	Reconciliation of segment operating income to consolidated results:									Reconciliation of segment operating income to consolidated results:
Sensors	Sensors	$	13,060	$	7,477	$	22,018	$	15,146	Sensors	$	10,703	$	5,070	$	32,721	$	20,217
Weighing Solutions	Weighing Solutions	4,177		6,097		10,391		11,914		Weighing Solutions	5,392		5,917		15,783		17,831
Measurement Systems	Measurement Systems	3,263		1,714		5,474		2,388		Measurement Systems	4,876		4,659		10,350		7,046
Unallocated G&A expenses	Unallocated G&A expenses	(9,045)		(7,943)		(17,852)		(15,664)		Unallocated G&A expenses	(8,922)		(8,381)		(26,774)		(24,045)
Acquisition costs	Acquisition costs	—		(1,198)		—		(1,198)		Acquisition costs	—		—		—		(1,198)
Impairment of goodwill and indefinite-lived intangibles	Impairment of goodwill and indefinite-lived intangibles	—		(1,223)		—		(1,223)		Impairment of goodwill and indefinite-lived intangibles	—		—		—		(1,223)

Restructuring costs	Restructuring costs	(904)		—		(1,165)		—		Restructuring costs	(165)		—		(1,330)		—
Operating income	Operating income	$	10,551	$	4,924	$	18,866	$	11,363	Operating income	$	11,884	$	7,265	$	30,750	$	18,628

Acquisition costs:	Acquisition costs:									Acquisition costs:

Measurement Systems	Measurement Systems	—		(1,198)		—		(1,198)		Measurement Systems	—		—		—		(1,198)
		$	—	$	(1,198)	$	—	$	(1,198)		$	—	$	—	$	—	$	(1,198)

Impairment of goodwill and indefinite-lived intangibles:	Impairment of goodwill and indefinite-lived intangibles:									Impairment of goodwill and indefinite-lived intangibles:

Measurement Systems	Measurement Systems	—		(1,223)		—		(1,223)		Measurement Systems	—		—		—		(1,223)
		$	—	$	(1,223)	$	—	$	(1,223)		$	—	$	—	$	—	$	(1,223)

Restructuring costs:	Restructuring costs:									Restructuring costs:
Sensors	Sensors	$	(904)	$	—	$	(1,107)	$	—	Sensors	$	(165)	$	—	$	(1,272)	$	—

Measurement Systems	Measurement Systems	—		—		(58)		—		Measurement Systems	—		—		(58)		—

		$	(904)	$	—	$	(1,165)	$	—		$	(165)	$	—	$	(1,330)	$	—

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				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Sensors to Weighing Solutions	Sensors to Weighing Solutions	$	433	$	951	$	822	$	1,905	Sensors to Weighing Solutions	$	542	$	824	$	1,364	$	2,730

Sensors to Measurement Systems	Sensors to Measurement Systems	98		7		159		15		Sensors to Measurement Systems	32		51		191		66

-20-

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				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
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	$	10,755	$	3,920	$	17,111	$	8,881	Net earnings attributable to VPG stockholders	$	10,118	$	5,379	$	27,229	$	14,260

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	13,648		13,618		13,643		13,605		Weighted average shares	13,649		13,626		13,645		13,612

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

Restricted stock units	Restricted stock units	44		28		41		33		Restricted stock units	59		38		47		35
Dilutive potential common shares	Dilutive potential common shares	44		28		41		33		Dilutive potential common shares	59		38		47		35

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	13,692		13,646		13,684		13,638		Adjusted weighted average shares	13,708		13,664		13,692		13,647

Basic earnings per share attributable to VPG stockholders	Basic earnings per share attributable to VPG stockholders	$	0.79	$	0.29	$	1.25	$	0.65	Basic earnings per share attributable to VPG stockholders	$	0.74	$	0.39	$	2.00	$	1.05

Diluted earnings per share attributable to VPG stockholders	Diluted earnings per share attributable to VPG stockholders	$	0.79	$	0.29	$	1.25	$	0.65	Diluted earnings per share attributable to VPG stockholders	$	0.74	$	0.39	$	1.99	$	1.04

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				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Foreign exchange gain (loss)		$	3,380	$	(174)	$	3,934	$	561
Foreign currency exchange gain (loss)										Foreign currency exchange gain (loss)	$	1,261	$	(38)	$	5,195	$	522
Interest income	Interest income	80		20		144		65		Interest income	91		151		235		216
Pension expense	Pension expense	(104)		(143)		(180)		(280)		Pension expense	(81)		(151)		(261)		(431)
Other	Other	(12)		(29)		(115)		(99)		Other	(48)		212		(163)		114
		$	3,344	$	(326)	$	3,783	$	247		$	1,223	$	174	$	5,006	$	421

-21-

Foreign currency exchange gains represent the impact of changes in foreign currency exchange rates. For the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, the change in foreign currency exchange gains and losses during the period, as compared to the prior year periods, is largely due to exposure toof currency fluctuations with the Israeli shekel, the Japanese yen, the Canadian dollar, and the British pound. The change in the dollar-shekel exchange rate resulted in a favorable foreign currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel.

~~.Included~~

Included in Other for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 is a $0.2 million loss on the liquidation of 2two of the Company's European subsidiaries.

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):


				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
July 2, 2022
October 1, 2022										October 1, 2022
Assets	Assets									Assets
Assets held in rabbi trusts	Assets held in rabbi trusts	$	5,477	$	97	$	5,380	$	—	Assets held in rabbi trusts	$	5,282	$	79	$	5,203	$	—

December 31, 2021	December 31, 2021									December 31, 2021
Assets	Assets									Assets
Assets held in rabbi trusts	Assets held in rabbi trusts	$	6,158	$	49	$	6,109	$	—	Assets held in rabbi trusts	$	6,158	$	49	$	6,109	$	—

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 ~~July 2,~~October 1, 2022 and December 31, 2021, and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the cash equivalents held in the rabbi trust are 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 ~~July 2,~~October 1, 2022 and December 31, 2021 approximates its carrying value as the revolving debt is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement. 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, 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

-22-

costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially

~~-22-~~

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 ~~$0.9~~$0.2 million and $0.0 million of restructuring costs during the fiscal quarter ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021, respectively and ~~$1.2~~$1.3 million and $0.0 million of restructuring costs during the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, and were incurred in connection with various cost reduction programs.

The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of ~~July 2,~~October 1, 2022 and December 31, 2021, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands):






Balance at December 31, 2021	$	—
Restructuring charges in 2022	~~1,165~~1,330

Cash payments	~~(616)~~(1,338)
Foreign currency translation	8
Balance at ~~July 2,~~October 1, 2022	$	~~557~~—

Note 16 – ~~Subsequent Event~~Stockholder's Equity

On August 8, 2022, the ~~Company announced that its~~ Board of Directors ~~approved a~~(the “Board”) of the Company authorized the repurchase of up to 600,000 shares ofthe Company’s outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan will expire on August 11, 2023, and the Board authorized purchases thereunder to be made through an issuer repurchase plan ~~authorizing~~adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act. At October 1, 2022, the Company ~~to repurchase in the aggregate up to 600,000~~had repurchased 32,601 shares of its ~~outstanding~~ common stock ~~until August 11, 2023.~~under the Stock Repurchase Plan.

-23-

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

Overview

VPG is a global, diversified company focused on precision measurement sensing technologies, including specialized sensors, weighing solutions, and measurement systems. Many of our precision measurement sensing products and solutions are “designed-in” by our customers and address growing applications across a diverse array of industries and markets. 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, and we employ an operationally diversified structure to manage our businesses.

Driven by the continued proliferation of data generated by the expanding use of sensors across a widening array of industrial and non-industrial applications, precision measurement technologies help ensure and deliver required levels of quality of mission-critical or high-value data. Over the past few years, we have seen a broadening of precision sensing applications in both our traditional industrial markets and new markets, due to the development of higher functionality in our customers' end products. Our precision measurement solutions are used across a wide variety of end markets upon which we focus, including industrial, test and measurement, transportation, steel, medical, agriculture, avionics, military and space, and consumer product applications. The Company has a long heritage of innovation in sensor technologies that provide accuracy, reliability and repeatability that make our customers' products safer, smarter, and more productive. As the functionality of customers products increases, and they integrate more precision measurement sensors and related systems into their solutions in order to link the mechanical and physical world with digital control and/or response, we believe this will offer substantial growth opportunities for our products and expertise.

~~Impact of COVID-19 on Our Business~~

~~As of August 9, 2022,~~all of the Company’s facilities are open and operational. Nonetheless, given the ongoing uncertainty concerning the magnitude and duration of the COVID-19 pandemic around the world, any ongoing economic disruption may adversely affect the Company’s business and financial results.

Overview of Financial Results

VPG reports in three product segments: the Sensors segment, the Weighing Solutions segment, and the Measurement Systems segment. The Sensors reporting segment is comprised of the foil resistor and strain gage operating segments. The Weighing Solutions segment is comprised of specialized modules and systems used to precisely measure weight, force torque, and pressure. The Measurement Systems reporting segment is comprised of highly specialized systems for steel production, materials development, and safety testing.

Net revenues for the fiscal quarter ended ~~July 2,~~October 1, 2022 were ~~$88.6~~$90.1 million versus ~~$75.3~~$82.0 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the fiscal quarter ended ~~July 2,~~October 1, 2022 were ~~$10.8~~$10.1 million, or ~~$0.79~~$0.74 per diluted share, versus ~~$3.9~~$5.4 million, or ~~$0.29~~$0.39 per diluted share, for the comparable prior year period.

Net revenues for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 were ~~$176.3~~$266.3 million versus ~~$145.9~~$227.9 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 were ~~$17.1~~$27.2 million, or ~~$1.25~~$1.99 per diluted share, versus ~~$8.9~~$14.3 million, or ~~$0.65~~$1.04 per diluted share, for the comparable prior year period.

The results of operations for the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021 include items affecting comparability as listed in the reconciliations below. The reconciliations below include certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA, and adjusted EBITDA do not have uniform definitions. These measures, as calculated by VPG, may not be comparable to similarly titled measures used by other companies. Management believes that these non-GAAP measures are useful to investors because each presents what management views as our core operating results for the relevant period. The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the Company’s financial performance to that of its peer companies and competitors. Management believes that the Company’s non-GAAP measures are regarded as supplemental to its GAAP financial results.

-24-


		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	July 2, 2022			July 3, 2021			July 2, 2022			July 3, 2021			July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021		Three months ended	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
As reported - GAAP	As reported - GAAP	$	37,334		$	29,798		$	10,551		$	4,924		$	10,755	$	3,920	$	0.79	$	0.29	As reported - GAAP	$	37,320		$	31,845		$	11,884		$	7,265		$	10,118	$	5,379	$	0.74	$	0.39
As reported - GAAP Margins	As reported - GAAP Margins	42.1		%	39.6		%	11.9		%	6.5		%									As reported - GAAP Margins	41.4		%	38.8		%	13.2		%	8.9		%
Acquisition purchase accounting adjustments (a)	Acquisition purchase accounting adjustments (a)	679			919			679			919			679		919		0.05		0.07		Acquisition purchase accounting adjustments (a)	260			1,329			260			1,329			260		1,329		0.02		0.10
Acquisition costs					—			—			1,198			—		1,198		—		0.09

COVID-19 impact (b)	COVID-19 impact (b)	—			(26)			—			(242)			—		(242)		—		(0.02)		COVID-19 impact (b)	—			111			—			111			—		111		—		0.01
Start-up costs (c)	Start-up costs (c)	—			1,159			—			1,159			—		1,159		—		0.08		Start-up costs (c)	—			970			—			970			—		970		—		0.07
Impairment of goodwill and indefinite-lived intangibles					—			—			1,223			—		1,223		—		0.09

Restructuring costs	Restructuring costs				—			904			—			904		—		0.07		—		Restructuring costs				—			165			—			165		—		0.01		—
Foreign exchange (gain)/loss (d)					—						—			(3,380)		174		(0.25)		0.01
Foreign currency exchange (gain)/loss (d)																						Foreign currency exchange (gain)/loss (d)				—						—			(1,261)		38		(0.09)		0.01
Less: Tax effect of reconciling items and discrete tax items	Less: Tax effect of reconciling items and discrete tax items				—						—			(377)		1,639		(0.02)		0.12		Less: Tax effect of reconciling items and discrete tax items				—						—			(194)		754		(0.01)		0.06
As Adjusted - Non GAAP	As Adjusted - Non GAAP	$	38,013		$	31,850		$	12,134		$	9,181		$	9,335	$	6,712	$	0.68	$	0.49	As Adjusted - Non GAAP	$	37,580		$	34,255		$	12,309		$	9,675		$	9,476	$	7,073	$	0.69	$	0.52
As Adjusted - Non GAAP Margins	As Adjusted - Non GAAP Margins	42.9		%	42.3		%	13.7		%	12.2		%									As Adjusted - Non GAAP Margins	41.7		%	41.8		%	13.7		%	11.8		%


		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
Six fiscal months ended		July 2, 2022			July 3, 2021			July 2, 2022			July 3, 2021			July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Nine fiscal months ended																						Nine fiscal months ended	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
As reported - GAAP	As reported - GAAP	72,584			58,420			18,866			11,363			$	17,111	$	8,881	$	1.25	$	0.65	As reported - GAAP	109,904			90,265			30,750			18,628			$	27,229	$	14,260	$	1.99	$	1.04
As reported - GAAP Margins	As reported - GAAP Margins	41.2		%	40.0		%	10.7		%	7.8		%									As reported - GAAP Margins	41.3		%	39.6		%	11.5		%	8.2		%
Acquisition purchase accounting adjustments (a)	Acquisition purchase accounting adjustments (a)	1,050			930			1,050			930			1,050		930		0.08		0.07		Acquisition purchase accounting adjustments (a)	1,310			2,259			1,310			2,259			1,310		2,259		0.10		0.17
Acquisition costs	Acquisition costs				—			—			1,198			—		1,198		—		0.09		Acquisition costs				—			—			1,198			—		1,198		—		0.09
COVID-19 impact (b)	COVID-19 impact (b)	138			(177)			138			(685)			138		(685)		0.01		(0.05)		COVID-19 impact (b)	138			(66)			138			(574)			138		(574)		0.01		(0.04)
Start-up costs (c)	Start-up costs (c)	150			1,288			150			1,288			150		1,288		0.01		0.09		Start-up costs (c)	150			2,258			150			2,258			150		2,258		0.01		0.17
Impairment of goodwill and indefinite-lived intangibles	Impairment of goodwill and indefinite-lived intangibles	—			—			—			1,223			—		1,223		—		0.09		Impairment of goodwill and indefinite-lived intangibles	—			—			—			1,223			—		1,223		—		0.09
Restructuring costs	Restructuring costs							1,165			—			1,165		—		0.09		—		Restructuring costs							1,330			—			1,330		—		0.10		—
Foreign exchange (gain)/loss (d)														(3,934)		(561)		(0.29)		(0.04)
Foreign currency exchange (gain)/loss (d)																						Foreign currency exchange (gain)/loss (d)													(5,195)		(523)		(0.38)		(0.04)
Less: Tax effect of reconciling items and discrete tax items	Less: Tax effect of reconciling items and discrete tax items													(302)		1,406		(0.02)		0.10		Less: Tax effect of reconciling items and discrete tax items													(496)		2,160		(0.03)		0.16
As Adjusted - Non GAAP	As Adjusted - Non GAAP	$	73,922		$	60,461		$	21,369		$	15,317		$	15,982	$	10,868	$	1.17	$	0.80	As Adjusted - Non GAAP	$	111,502		$	94,716		$	33,678		$	24,992		$	25,458	$	17,941	$	1.86	$	1.32
As Adjusted - Non GAAP Margins	As Adjusted - Non GAAP Margins	41.9		%	41.4		%	12.1		%	10.5		%									As Adjusted - Non GAAP Margins	41.9		%	41.6		%	12.6		%	11.0		%

-25-


		Three months ended						Six fiscal months ended							Three months ended						Nine fiscal months ended
		July 2, 2022			July 3, 2021			July 2, 2022			July 3, 2021				October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	$	10,755		$	3,920		$	17,111		$	8,881		Net earnings attributable to VPG stockholders	$	10,118		$	5,379		$	27,341		$	14,260
Interest Expense	Interest Expense	428			273			757			578			Interest Expense	636			328			1,393			906
Income tax expense	Income tax expense	2,587			262			4,328			2,026			Income tax expense	2,323			1,662			6,539			3,688
Depreciation	Depreciation	2,832			2,829			5,685			5,736			Depreciation	2,937			2,955			8,622			8,691
Amortization	Amortization	967			757			1,937			1,372			Amortization	960			970			2,897			2,342
EBITDA	EBITDA	17,569			$	8,041		29,818			$	18,593		EBITDA	16,974			$	11,294		46,792			$	29,887
EBITDA MARGIN	EBITDA MARGIN	19.8		%	10.7		%	16.9		%	12.7		%	EBITDA MARGIN	18.8		%	13.8		%	17.6		%	13.1		%
Impairment of goodwill and indefinite-lived intangibles	Impairment of goodwill and indefinite-lived intangibles	—			1,223			—			1,223			Impairment of goodwill and indefinite-lived intangibles	—			—			—			1,223
Acquisition purchase accounting adjustments (a)	Acquisition purchase accounting adjustments (a)	679			919			1,050			930			Acquisition purchase accounting adjustments (a)	260			1,329			1,310			2,259
Acquisition costs	Acquisition costs	—			1,198			—			1,198			Acquisition costs	—			—			—			1,198
Restructuring costs	Restructuring costs	904			—			1,165			—			Restructuring costs	165			—			1,330			—
COVID-19 impact (b)	COVID-19 impact (b)	—			(242)			138			(685)			COVID-19 impact (b)	—			111			138			(574)
Start-up costs (c)	Start-up costs (c)	—			1,159			150			1,288			Start-up costs (c)	—			970			150			2,258
Foreign exchange (gain)/loss (d)		(3,380)			174			(3,934)			(561)
Foreign currency exchange (gain)/loss (d)														Foreign currency exchange (gain)/loss (d)	(1,261)			38			(5,195)			(523)
ADJUSTED EBITDA	ADJUSTED EBITDA	$	15,772		$	12,472		$	28,387		$	21,986		ADJUSTED EBITDA	$	16,138		$	13,742		$	44,525		$	21,986
ADJUSTED EBITDA MARGIN	ADJUSTED EBITDA MARGIN	17.8		%	16.6		%	16.1		%	15.1		%	ADJUSTED EBITDA MARGIN	17.9		%	16.8		%	16.7		%	9.6		%

(a) Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of products sold.

(b) COVID-19 impact is the net impact to the Company of costs incurred as a result of the COVID-19 pandemic, net of government subsidies received.

(d) Impact of foreign currency exchange rates on assets and liabilities.

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.

-26-

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 ~~second~~third quarter of 2021 through the ~~second~~third quarter of 2022 (dollars in thousands):


		2nd Quarter			3rd Quarter			4th Quarter			1st Quarter			2nd Quarter				3rd Quarter			4th Quarter			1st Quarter			2nd Quarter			3rd Quarter
		2021			2021			2021			2022			2022				2021			2021			2022			2022			2022
Net revenues	Net revenues	$	75,339		$	81,974		$	90,017		$	87,665		$	88,618		Net revenues	$	81,974		$	90,017		$	87,665		$	88,618		$	90,057

Gross profit margin	Gross profit margin	39.6		%	38.8		%	38.7		%	40.2		%	42.1		%	Gross profit margin	38.8		%	38.7		%	40.2		%	42.1		%	41.4		%

End-of-period backlog	End-of-period backlog	$	130,900		$	146,700		$	150,500		$	170,600		$	171,400		End-of-period backlog	$	146,700		$	150,500		$	170,600		$	171,400		$	171,700

Book-to-bill ratio	Book-to-bill ratio	1.40			1.21			1.06			1.25			1.08			Book-to-bill ratio	1.21			1.06			1.25			1.08			1.08

Inventory turnover	Inventory turnover	2.64			2.55			2.82			2.69			2.52			Inventory turnover	2.55			2.82			2.69			2.52			2.47


		2nd Quarter			3rd Quarter			4th Quarter			1st Quarter			2nd Quarter				3rd Quarter			4th Quarter			1st Quarter			2nd Quarter			3rd Quarter
		2021			2021			2021			2022			2022				2021			2021			2022			2022			2022
Sensors	Sensors																Sensors
Net revenues	Net revenues	$	31,176		$	30,721		$	34,149		$	37,750		$	40,280		Net revenues	$	30,721		$	34,149		$	37,750		$	40,280		$	37,879
Gross profit margin	Gross profit margin	38.9		%	31.1		%	32.1		%	37.8		%	44.3		%	Gross profit margin	31.1		%	32.1		%	37.8		%	44.3		%	40.5		%
End-of-period backlog	End-of-period backlog	$	59,200		$	70,100		$	72,900		$	81,300		$	84,200		End-of-period backlog	$	70,100		$	72,900		$	81,300		$	84,200		$	80,600
Book-to-bill ratio	Book-to-bill ratio	1.38			1.37			1.11			1.27			1.17			Book-to-bill ratio	1.37			1.11			1.27			1.17			0.99
Inventory turnover	Inventory turnover	2.90			3.14			3.53			3.54			3.20			Inventory turnover	3.14			3.53			3.54			3.20			3.04

Weighing Solutions	Weighing Solutions																Weighing Solutions
Net revenues	Net revenues	$	31,675		$	30,676		$	32,071		$	32,768		$	28,459		Net revenues	$	30,676		$	32,071		$	32,768		$	28,459		$	31,399
Gross profit margin	Gross profit margin	37.2		%	37.2		%	34.0		%	36.9		%	33.7		%	Gross profit margin	37.2		%	34.0		%	36.9		%	33.7		%	33.3		%
End-of-period backlog	End-of-period backlog	$	41,100		$	42,600		$	41,800		$	43,600		$	43,000		End-of-period backlog	$	42,600		$	41,800		$	43,600		$	43,000		$	43,000
Book-to-bill ratio	Book-to-bill ratio	1.16			1.06			0.98			1.06			1.03			Book-to-bill ratio	1.06			0.98			1.06			1.03			1.05
Inventory turnover	Inventory turnover	2.78			2.47			2.63			2.61			2.33			Inventory turnover	2.47			2.63			2.61			2.33			2.48

Measurement Systems	Measurement Systems																Measurement Systems
Net revenues	Net revenues	$	12,488		$	20,577		$	23,797		$	17,147		$	19,879		Net revenues	$	20,577		$	23,797		$	17,147		$	19,879		$	20,779
Gross profit margin	Gross profit margin	47.1		%	52.8		%	54.7		%	51.8		%	49.9		%	Gross profit margin	52.8		%	54.7		%	51.8		%	49.9		%	55.5		%
End-of-period backlog	End-of-period backlog	$	30,600		$	34,000		$	35,800		$	45,700		$	44,200		End-of-period backlog	$	34,000		$	35,800		$	45,700		$	44,200		$	48,100
Book-to-bill ratio	Book-to-bill ratio	2.03			1.18			1.08			1.56			0.98			Book-to-bill ratio	1.18			1.08			1.56			0.98			1.27
Inventory turnover	Inventory turnover	1.85			1.92			2.18			1.68			1.90			Inventory turnover	1.92			2.18			1.68			1.90			1.68

Net revenues for the ~~second~~third quarter of 2022 increased ~~1.1%~~1.6% from the ~~first~~second quarter of 2022 mainly due to increased volume in ~~Sensors~~the Weighing Solutions and Measurement Systems reporting segments partially offset by decreased volume in the ~~Weighing Solutions~~Sensors reporting segment. Net revenues increased ~~17.6%~~9.9% from the ~~second~~third quarter of 2021 with increased volume primarily from the Sensors ~~and Measurement Systems~~ reporting ~~segments.~~segment.

Net revenues in the Sensors reporting segment ~~increased 6.7%~~decreased 6.0% compared to the ~~first~~second quarter of 2022 and increased ~~29.2%~~23.3% from the third quarter of 2021. Excluding the unfavorable impact of foreign currency exchange rates, revenue increased 35.1% from the third quarter of 2021. Excluding the unfavorable impact of foreign currency exchange rates, revenue decreased 4.2% from the second quarter of ~~2021.~~2022. Sequentially, the ~~increase~~decrease primarily reflected lower advanced sensors revenue in ~~revenues reflected~~Other markets (mainly for consumer applications) and lower revenue ~~growth in our sales~~ of precision resistors in the Test and ~~Measurement market, partially offset by a decrease in revenues for precision resistors in the Avionics, Military and Space~~Measurements market. The year-over-year increase in revenues was primarily attributable to higher sales of precision resistors in the Test and

-27-

Measurements market and higher revenue of our advanced sensors products primarily in Other markets (mainly for consumer ~~and medical~~ applications) ~~and in our General Industrial markets for energy applications.~~

~~-27-~~

Net revenues in the Weighing Solutions reporting segment ~~decreased 13.1%~~increased 10.3% from the ~~first~~second quarter of 2022 and ~~decreased 10.2%~~increased 2.4% from the ~~second~~third quarter of 2021. The year-over-year and sequential ~~decreases~~increases in revenues were primarily attributable to ~~a decrease in revenue related to force sensor products to our OEM customers~~increases in our Other markets for precision agriculture and ~~lower sales of onboard weighing products to the Transportation market.~~construction applications.

Net revenues in the Measurement Systems reporting segment increased ~~15.9%~~4.5% from the ~~first~~second quarter of 2022 and increased ~~59.2%~~1.0% from the ~~second~~third quarter of 2021. Sequentially, the increase in revenue was primarily due to the higher revenue of ~~KELK and~~ Dynamic Systems Inc. ("DSI") products toin the Steel ~~market. The year-over-year increase in revenue was primarily attributable to the addition of revenue for~~market and our Diversified Technical Systems Inc. ("DTS")~~, which~~ products in the Transportation market. The year-over-year increase was ~~acquired on June 1, 2021, and higher~~primarily attributable to increased revenue ~~of our KELK and DSI steel-related businesses~~.in the Steel market.

Overall gross profit margin in the ~~second~~third quarter of 2022 ~~increased 1.9%~~decreased 0.7% as compared to the ~~first~~second quarter of 2022 and increased ~~2.5%~~2.6% from the ~~second~~third quarter of 2021.

Sequentially, the decrease in the gross profit margin in the Sensors and Weighing Solutions reporting segments was partially offset by an increase in the gross profit margin in the ~~Sensors reporting segment was partially offset by a decrease in the gross profit margin in the Weighing Solutions and~~ Measurement Systems reporting segments. In the Sensors reporting segment, the gross profit margins ~~increased~~decreased sequentially due to ~~higher~~lower volume, one-time inventory adjustments, and ~~labor efficiencies.~~unfavorable foreign currency exchange rates. In the Weighing Solutions reporting segment, the sequential decrease in gross profit margins was primarily due to ~~lower~~higher materials costs and reduction of inventories partially offset by higher volume and ~~an unfavorable product mix.~~selling price increases. The sequential ~~decrease~~increase in the gross profit margins in the Measurement Systems reporting segment was a result of ~~unfavorable~~favorable product mix and ~~a reduction in inventory which offset the~~ higher volume.

Compared to the ~~second~~third quarter of 2021, the Sensors and Measurement Systems reporting segments had higher gross profit margins, while the Weighing Solutions reporting segment gross profit margin was lower.

The Sensors reporting segment had a higher gross profit margin due to higher volume and selling price increases partially offset by unfavorable foreign currency exchange rates and wage ~~increases, and labor inefficiencies due to the hiring of new personnel.~~increases. In the Measurement Systems reporting segment, the gross profit margin was higher as compared to the ~~second~~third quarter of 2021 primarily due to ~~higher revenue,~~lower purchase accounting adjustments related to the DTS acquisition, partially offset by an unfavorable ~~foreign exchange rate and a full quarter of costs for DTS compared to one month in the prior year period.~~product mix. The Weighing Solutions reporting segment decrease in gross profit margin as compared to 2021 was primarily due to ~~lower volume,~~higher materials costs, unfavorable product mix, unfavorable foreign currency exchange rates, and ~~unfavorable product mix.~~reduction of inventories, partially offset by higher volume and selling price increases.

Optimize Core Competence

The Company’s core competencies include our innovative, deep technical and applications-specific expertise that adds value to our customers' products, our strong brands and customer relationships, our focus on operational excellence, our ability to select and develop our management teams, and our proven M&A strategy. We continue to optimize all aspects of our development, manufacturing and sales processes, including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our manufacturing processes.

Our Sensors segment research group developed innovations that enhance the capability and performance of our strain gages, while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this unique foil technology will create new markets as customers “design in” these next generation products in existing and new applications. Our development engineering team is also responsible for creating new processes to further automate manufacturing, and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we signed a long-term lease for a state-of-the-art facility that has been constructed in Israel. We fully transitioned to this facility in the third quarter of fiscal 2021.

Our design, research, and product development teams, in partnership with our marketing teams, drive our efforts to bring innovations to market. We intend to leverage our insights into customer demand to continually develop and roll out new, innovative products within our existing lines and to modify our existing core products in ways that make them more appealing, addressing changing customer needs and industry trends in terms of form, fit, and function.

We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing operations in countries such as India, China, and Israel, where we can benefit from improved efficiencies or available tax and other government-sponsored incentives. In the past several years, we incurred restructuring expense related to closing and

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downsizing of facilities as part of the manufacturing transitions of our load cell products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.

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Acquisition Strategy

We expect to continue to make strategic acquisitions where opportunities present themselves to grow and expand our segments. Historically, our growth and acquisition strategy had been largely focused on vertical product integration, using our foil strain gages in our load cell products, and incorporating those products into our weighing solutions. In recent years, we widened our acquisition strategy to include a broader set of precision measurement systems and product companies.

We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision measurement solutions, including in the fields of measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.

Research and Development

Research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.

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 on March 4, 2022.

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, as of the first day of our fourth quarter, 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.

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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

~~-29-~~

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.

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

Our operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly related to payroll, which are incurred in the local currency and significant lease assets and liabilities.

Effects of Foreign Currency Exchange Rate on Operations

For the fiscal quarter ended ~~July 2,~~October 1, 2022, exchange rates decreased net revenues by ~~$4.0~~$5.3 million, and decreased costs of products sold and selling, general, and administrative expenses by ~~$3.2~~$4.2 million, when compared to the comparable prior year period.

For the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, exchange rates decreased net revenues by ~~$5.5~~$10.8 million, and decreased costs of products sold and selling, general, and administrative expenses by ~~$3.4~~$7.7 million, when compared to the comparable prior year period.

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Results of Operations

Results of operations by reporting segments for the fiscal quarter and ~~six~~nine fiscal months ended ~~July 3,~~October 2, 2021 have been recast to reflect the new reporting segments as described under Item 7. Overview of Financial Results of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2022.

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


		Fiscal quarter ended				Six fiscal months ended					Fiscal quarter ended				Nine fiscal months ended
		July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021			October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Costs of products sold	Costs of products sold	57.9	%	60.4	%	58.8	%	60.0	%	Costs of products sold	58.6	%	61.2	%	58.7	%	60.4	%
Gross profit	Gross profit	42.1	%	39.6	%	41.2	%	40.0	%	Gross profit	41.4	%	38.8	%	41.3	%	39.6	%
Selling, general, and administrative expenses	Selling, general, and administrative expenses	29.2	%	29.8	%	29.8	%	30.6	%	Selling, general, and administrative expenses	28.1	%	30.0	%	29.2	%	30.4	%
Operating income	Operating income	11.9	%	6.5	%	10.7	%	7.8	%	Operating income	13.2	%	8.9	%	11.5	%	8.2	%
Income before taxes	Income before taxes	15.2	%	5.7	%	12.4	%	7.6	%	Income before taxes	13.8	%	8.7	%	12.9	%	8.0	%
Net earnings	Net earnings	12.3	%	5.4	%	10.0	%	6.2	%	Net earnings	11.3	%	6.6	%	10.4	%	6.3	%
Net earnings attributable to VPG stockholders	Net earnings attributable to VPG stockholders	12.1	%	5.2	%	9.7	%	6.1	%	Net earnings attributable to VPG stockholders	11.2	%	6.6	%	10.2	%	6.3	%

Effective tax rate	Effective tax rate	19.2	%	6.1	%	19.8	%	18.4	%	Effective tax rate	18.6	%	23.4	%	19.4	%	20.3	%

Net Revenues

Net revenues were as follows (dollars in thousands):


		Fiscal quarter ended					Six fiscal months ended						Fiscal quarter ended					Nine fiscal months ended
		July 2, 2022			July 3, 2021		July 2, 2022			July 3, 2021			October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net revenues	Net revenues	$	88,618		$	75,339	$	176,283		$	145,928	Net revenues	$	90,057		$	81,974	$	266,340		$	227,902
Change versus comparable prior year period	Change versus comparable prior year period	$	13,279				$	30,355				Change versus comparable prior year period	$	8,083				$	38,438
Percentage change versus prior year period	Percentage change versus prior year period	17.6		%			20.8		%			Percentage change versus prior year period	9.9		%			16.9		%

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	15.6	%	14.4	%	Change in volume	13.7	%	14.2	%
Change in average selling prices	Change in average selling prices	2.6	%	2.3	%	Change in average selling prices	2.9	%	2.5	%
Foreign currency effects	Foreign currency effects	(5.6)	%	(3.8)	%	Foreign currency effects	(6.7)	%	(4.8)	%
Acquisitions	Acquisitions	5.0	%	7.9	%	Acquisitions	0.0	%	5.0	%

Net change	Net change	17.6	%	20.8	%	Net change	9.9	%	16.9	%

During the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, net revenues increased ~~17.6%~~9.9% and ~~20.8%~~16.9%, respectively, as compared to the comparable prior year periods, with increased volume primarily from the Sensors ~~and Measurement Systems~~ reporting ~~segments.~~

segment.

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Gross Profit Margin

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

Fiscal quarter ended Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Gross profit margin 42.1 % 39.6 % 41.2 % 40.0 %


	Fiscal quarter ended				Nine fiscal months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Gross profit margin	41.4	%	38.8	%	41.3	%	39.6	%

The gross profit margin for the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 increased ~~2.5%~~2.6% and ~~1.2%~~1.7%, respectively, as compared to the comparable prior year ~~periods, with~~periods. For the fiscal quarter period, the Sensors and Measurement Systems reporting segments reported higher gross profit margins inwhile the ~~Sensors and Measurements Systems~~Weighing Solutions reporting ~~segments and~~segment reported lower gross profit margins inwhen compared to the prior year period. For the nine fiscal month period, the Sensors and Measurement Systems reporting segments reported higher gross profit margins while the Weighing Solutions reporting ~~segment.~~segment reported lower gross profit margins when compared to the prior year period.

Segments

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

Sensors

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


		Fiscal quarter ended					Six fiscal months ended						Fiscal quarter ended					Nine fiscal months ended
		July 2, 2022			July 3, 2021		July 2, 2022			July 3, 2021			October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net revenues	Net revenues	$	40,280		$	31,176	$	78,030		$	62,991	Net revenues	$	37,879		$	30,721	$	115,909		$	93,712
Change versus comparable prior year period	Change versus comparable prior year period	$	9,104				$	15,039				Change versus comparable prior year period	$	7,158				$	22,197
Percentage change versus prior year period	Percentage change versus prior year period	29.2		%			23.9		%			Percentage change versus prior year period	23.3		%			23.7		%

Changes in 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	34.6	%	26.5	%	Change in volume	32.1	%	28.3	%
Change in average selling prices	Change in average selling prices	2.1	%	2.0	%	Change in average selling prices	1.7	%	1.9	%
Foreign currency effects	Foreign currency effects	(7.5)	%	(4.6)	%	Foreign currency effects	(10.5)	%	(6.5)	%

Net change	Net change	29.2	%	23.9	%	Net change	23.3	%	23.7	%

Net revenues increased ~~29.2%~~23.3% for the fiscal quarter ended ~~July 2,~~October 1, 2022, as compared to the comparable prior year period and increased ~~23.9%~~23.7% for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, as compared to the comparable prior year period. The year-over-year increase in revenues was primarily attributable to higher sales of precision resistors in the Test and Measurements market and higher revenue of our advanced sensors products primarily in Other markets (mainly for consumer ~~and medical~~ applications) ~~and in our General Industrial markets for energy applications.~~.

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

Fiscal quarter ended Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Gross profit margin 44.3 % 38.9 % 41.2 % 39.6 %


	Fiscal quarter ended				Nine fiscal months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Gross profit margin	40.5	%	31.1	%	40.9	%	36.8	%

The gross profit margin increased ~~5.4%~~9.4% for the fiscal quarter ended ~~July 2,~~October 1, 2022, when compared to the comparable prior year period due to higher volume and selling price increases partially offset by unfavorable foreign currency exchange rates and wage ~~increases, and labor inefficiencies due to the hiring of new personnel.~~increases. Additionally, there were higher start-up costs associated with our new advanced sensors facility in 2021.

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The gross profit margin increased ~~1.6%~~4.1% for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 as compared to the comparable prior year period. Volume increases were ~~mostly~~partially offset by impacts from charges related to start-up costs in our new advanced sensors facility, wage increase, and labor inefficiencies.

Weighing Solutions

Net revenues of the Weighing Solutions segment were as follows (dollars in thousands):


		Fiscal quarter ended					Six fiscal months ended						Fiscal quarter ended					Nine fiscal months ended
		July 2, 2022			July 3, 2021		July 2, 2022			July 3, 2021			October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net revenues	Net revenues	$	28,459		$	31,675	$	61,227		$	62,643	Net revenues	$	31,399		$	30,676	$	92,626		$	93,319
Change versus comparable prior year period	Change versus comparable prior year period	$	(3,216)				$	(1,416)				Change versus comparable prior year period	$	723				$	(693)
Percentage change versus prior year period	Percentage change versus prior year period	(10.2)		%			(2.3)		%			Percentage change versus prior year period	2.4		%			(0.7)		%

Changes in Weighing Solutions 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	(9.0)	%	(1.8)	%	Change in volume	4.5	%	0.2	%
Change in average selling prices	Change in average selling prices	4.2	%	3.3	%	Change in average selling prices	5.3	%	4.0	%
Foreign currency effects	Foreign currency effects	(5.4)	%	(3.8)	%	Foreign currency effects	(7.4)	%	(4.9)	%

Net change	Net change	(10.2)	%	(2.3)	%	Net change	2.4	%	(0.7)	%

Net revenues ~~decreased 10.2%~~increased 2.4% for the fiscal quarter ended ~~July 2,~~October 1, 2022, and decreased ~~2.3%~~0.7% for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 as compared to the comparable prior year periods. The ~~decreases~~increase in fiscal quarter net revenues ~~were~~was primarily attributable to ~~a decrease in revenue related to force sensor products to our OEM customers~~increases in our Other markets for precision agriculture and ~~lower sales of onboard weighing products to~~construction applications, while the ~~Transportation market.~~same market reflected a decrease for the nine fiscal month period. Both the fiscal quarter and nine fiscal month periods were negatively impacted by foreign currency exchange rate effects.

Gross profit as a percentage of net revenues for the Weighing Solutions segment was as follows:

Fiscal quarter ended Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Gross profit margin 33.7 % 37.2 % 35.4 % 37.6 %


	Fiscal quarter ended				Nine fiscal months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Gross profit margin	33.3	%	37.2	%	34.7	%	37.5	%

The gross profit margin for the fiscal quarter ended ~~July 2,~~October 1, 2022 decreased ~~3.5%~~3.9% as compared to the comparable prior year period and decreased ~~2.2%~~2.8% for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 when compared to the prior year period. The ~~decreases were~~decrease for the fiscal quarter was primarily due to higher materials costs, unfavorable product mix, unfavorable foreign currency exchange rates, and reduction of inventories, partially offset by higher volume and selling price increases. The decrease for the nine fiscal month period was primarily due to lower volume, higher materials costs, unfavorable product mix, unfavorable foreign currency exchange rates, and ~~unfavorable product mix.~~reduction of inventories, partially offset by selling price increases.

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Measurement Systems

Net revenues of the Measurement Systems segment were as follows (dollars in thousands):

Fiscal quarter ended Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Net revenues $ 19,879 $ 12,488 $ 37,026 $ 20,294
Change versus comparable prior year period $ 7,391 $ 16,732
Percentage change versus prior year period 59.2 % 82.4 %

~~-33-~~


	Fiscal quarter ended					Nine fiscal months ended
	October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net revenues	$	20,779		$	20,577	$	57,805		$	40,871
Change versus comparable prior year period	$	202				$	16,934
Percentage change versus prior year period	1.0		%			41.4		%

Changes in Measurement Systems 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	31.6	%	27.6	%	Change in volume	1.3	%	14.3	%
Change in average selling prices	Change in average selling prices	1.2	%	0.8	%	Change in average selling prices	1.8	%	1.2	%
Foreign currency effects	Foreign currency effects	(3.8)	%	(2.5)	%	Foreign currency effects	(2.1)	%	(2.1)	%
Acquisitions	Acquisitions	30.2	%	56.5	%	Acquisitions	0.0	%	28.0	%

Net change	Net change	59.2	%	82.4	%	Net change	1.0	%	41.4	%

Net revenues increased ~~59.2%~~1.0% for the fiscal quarter ended ~~July 2,~~October 1, 2022 as compared to the comparable prior year period and increased ~~82.4%~~41.4% for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 as compared to the comparable prior year period. The ~~year-over-year~~increase for the fiscal quarter was primarily due to increased revenue in the Steel market. The increase in revenue for the nine fiscal months period was primarily attributable to the addition of revenue for DTS, which was acquired on June 1, 2021, and higher revenue of our KELK and DSI steel-related businesses.

Gross profit as a percentage of net revenues for the Measurement Systems segment were as follows:

Fiscal quarter ended Six fiscal months ended
July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021
Gross profit margin 49.9 % 47.1 % 50.8 % 48.8 %


	Fiscal quarter ended				Nine fiscal months ended
	October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021
Gross profit margin	55.5	%	52.8	%	52.5	%	50.8	%

The gross profit margin for the fiscal quarter ended ~~July 2,~~October 1, 2022 increased ~~2.8%~~2.7% compared to the ~~second~~third quarter of 2021. The increase was ~~mainly~~primarily due to ~~higher revenue,~~lower purchase accounting adjustments related to the DTS acquisition partially offset by an unfavorable ~~foreign exchange rate and a full quarter of costs for DTS compared to one month in the prior year period.~~product mix.

The gross profit margin for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 increased ~~2.0%~~1.7% from the prior year period. Higher revenues coming from DTS and our KELK and DSI steel-related businesses and lower purchase accounting adjustment related to the DTS acquisition were partially offset by an unfavorable product mix and an unfavorable foreign currency exchange rate impact. Additionally, COVID-19 subsidies were received in 2021 that did not continue in 2022.

Selling, General, and Administrative Expenses

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


		Fiscal quarter ended						Six fiscal months ended							Fiscal quarter ended						Nine fiscal months ended
		July 2, 2022			July 3, 2021			July 2, 2022			July 3, 2021				October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Total SG&A expenses	Total SG&A expenses	$	25,879		$	22,453		$	52,553		$	44,636		Total SG&A expenses	$	25,271		$	24,580		$	77,824		$	69,216

As a percentage of net revenues	As a percentage of net revenues	29.2		%	29.8		%	29.8		%	30.6		%	As a percentage of net revenues	28.1		%	30.0		%	29.2		%	30.4		%

SG&A expenses for the fiscal quarter ended ~~July 2,~~October 1, 2022 increased ~~$3.4~~$0.7 million compared to the comparable prior year period ~~with $2.3 million of the increase driven by SG&A expenses from DTS, which was acquired~~due to increases in ~~June of 2021. The remaining increase is from additional SG&A expenses related to wage increases,~~wages, travel costs and ~~commissions.~~other fees, partially offset by favorable foreign currency exchange rate impacts.

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SG&A expenses for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 increased ~~$7.9~~$8.6 million compared to the comparable prior year periods with $6.1 million of the increase driven by SG&A expenses from DTS. The remaining increase is from additional SG&A expenses related to wage increases, ~~commissions,~~travel costs, and other ~~costs.~~fees.

Impairment of Goodwill and Indefinite-lived Intangible Assets

For the ~~fiscal quarter and six~~nine fiscal months ended ~~July 3,~~October 2, 2021, as a result of our interim impairment test, we recorded a $1.2 million pre-tax, non-cash impairment charge which reduced the carrying value of our goodwill and indefinite-lived intangible assets.

Acquisition Costs

For the ~~fiscal quarter and six~~nine fiscal months ended ~~July 3,~~October 2, 2021, we recorded Acquisition Costs associated with the acquisition of DTS 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


	Nine fiscal months ended
		October 2, 2021
Legal fees		$	341
Appraisal fees		18
Other (investment banker and insurance costs)		839
		$	1,198

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 ~~$0.9~~$0.2 million and $0.0 million of restructuring costs during the fiscal quarter ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021, respectively, and ~~$1.2~~$1.3 million and $0.0 million of restructuring costs during the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 and ~~July 3,~~October 2, 2021, respectively. Restructuring costs were comprised primarily of employee termination costs, including severance and statutory retirement allowances, in connection with various cost reduction programs.

Other Income (Expense)

Interest expense for the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was higher when compared with the comparable prior year periods mainly due to higher borrowing rates in 2022.

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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
		July 2, 2022		July 3, 2021		Change			October 1, 2022		October 2, 2021		Change
Foreign exchange gain (loss)		$	3,380	$	(174)	$	3,554
Foreign currency exchange gain (loss)								Foreign currency exchange gain (loss)	$	1,261	$	(38)	$	1,299

Interest income	Interest income	80		20		60		Interest income	91		151		(60)
Pension expense	Pension expense	(104)		(143)		39		Pension expense	(81)		(151)		70
Other	Other	(12)		(29)		17		Other	(48)		212		(260)
		$	3,344	$	(326)	$	3,670		$	1,223	$	174	$	1,049


		Six fiscal months ended							Nine fiscal months ended
		July 2, 2022		July 3, 2021		Change			October 1, 2022		October 2, 2021		Change
Foreign exchange gain		$	3,934	$	561	$	3,373
Foreign currency exchange gain								Foreign currency exchange gain	$	5,195	$	522	$	4,673
Interest income	Interest income	144		65		79		Interest income	235		216		19
Pension expense	Pension expense	(180)		(280)		100		Pension expense	(261)		(431)		170
Other	Other	(115)		(99)		(16)		Other	(163)		114		(277)
		$	3,783	$	247	$	3,536		$	5,006	$	421	$	4,585

Foreign currency exchange gains represent the impact of changes in foreign currency exchange rates. For the fiscal quarter and ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, the change in foreign currency exchange gains and losses during the period, as compared to the prior year periods, is largely due to exposure to currency fluctuations with the Israeli shekel, the Japanese yen, the Canadian dollar, and the British pound. The change in the dollar-shekel exchange rate resulted in a favorable foreign currency exchange impact primarily related to the shekel-denominated lease liability for the Sensors facility in Israel.

Included in Other for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 is a $0.2 million loss on the liquidation of two of the Company's European subsidiaries.

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 ~~July 2,~~October 1, 2022 was ~~19.2%~~18.6% compared to ~~6.1%~~23.4% for the fiscal quarter ended ~~July 3,~~October 2, 2021. The effective tax rate for the fiscal quarter ended ~~July 2,~~October 1, 2022 was ~~higher~~lower than the prior year period primarily due to foreign currency exchange gains and losses, ~~offset by~~ tax rate changes and a reduction in our valuation allowance on deferred tax assets. The effective tax rate for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was ~~19.8%~~19.4% compared to ~~18.4%~~20.3% for the ~~six~~nine fiscal months ended ~~July 3,~~October 2, 2021. The effective tax rate for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was ~~higher~~lower than the prior year period primarily due to changes in the mix of worldwide income and foreign currency exchange gains and losses, ~~offset by~~ tax rate changes and a reduction in our valuation allowance on deferred tax assets.

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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.

On March 20, 2020, the Company entered into a Third Amended and Restated Credit Agreement (the “2020 Credit Agreement”) among the Company, the lenders named therein, Citizens Bank, National Association and Wells Fargo Bank, National Association as joint lead arrangers and JPMorgan Chase Bank, National Association as agent for such lenders (the “Agent”), pursuant to which the terms of the Company’s multi-currency, secured credit facility were revised to provide a secured revolving facility (the “2020 Revolving Facility”) in an aggregate principal amount of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement. The proceeds of the 2020 Revolving Facility may be used on an ongoing basis for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025.

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 an interest coverage ratio and a leverage ratio. The Company was in compliance with its financial maintenance covenants at ~~December 31, 2021.~~October 1, 2022. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.

Our business has historically generated significant cash flow. For the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, cash provided by operating activities was ~~$8.8~~$20.5 million compared to cash provided by operations of ~~$12.4~~$18.1 million in the comparable prior year period. The decrease in cash provided by operations was due to our working capital needs to support our increased level backlog. We also had significant cash payments for bonuses in first half of fiscal 2022 compared to the first half of fiscal 2021. Our net cash used in investing activities for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was lower compared to the prior year period mainly due to the acquisition of DTS which took place in the second quarter of 2021. Our net cash used in financing activities for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was lower than the comparable to prior year period due to the 2021 borrowings in connection with the acquisition of DTS.

Approximately ~~92%~~91% and 87% of our cash and cash equivalents balance at ~~July 2,~~October 1, 2022 and December 31, 2021, respectively, was held by our non-U.S. subsidiaries.

See the following table for the percentage of cash and cash equivalents, by region, at ~~July 2,~~October 1, 2022 and December 31, 2021:


		July 2, 2022		December 31, 2021			October 1, 2022		December 31, 2021
Israel	Israel	18	%	25	%	Israel	24	%	25	%
Asia	Asia	33	%	24	%	Asia	27	%	24	%
Europe	Europe	16	%	18	%	Europe	15	%	18	%
United States	United States	8	%	13	%	United States	9	%	13	%
United Kingdom	United Kingdom	13	%	12	%	United Kingdom	11	%	12	%
Canada	Canada	12	%	8	%	Canada	14	%	8	%
		100	%	100	%		100	%	100	%

We earn a significant amount of our operating income outside the United States, and we consider the majority of the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, as of ~~July 2,~~October 1, 2022. As a result, as discussed

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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

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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.

Adjusted free cash flow generated during the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022, was ~~$0.3~~$5.4 million. We refer to the amount of cash provided by operating activities ($~~8.8~~20.5 million) in excess of our capital expenditures ($~~8.8~~15.5 million) and net of proceeds from the sale of assets ($~~0.3~~0.4 million) as “adjusted free cash flow.”

The following table summarizes the components of net cash at ~~July 2,~~October 1, 2022 and December 31, 2021 (in thousands):


		July 2, 2022		December 31, 2021			October 1, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	79,429	$	84,335	Cash and cash equivalents	$	79,910	$	84,335

Third-party debt, including current and long-term:	Third-party debt, including current and long-term:					Third-party debt, including current and long-term:
Revolving debt	Revolving debt	61,000		61,000		Revolving debt	61,000		61,000
Deferred financing costs	Deferred financing costs	(242)		(286)		Deferred financing costs	(220)		(286)
Total third-party debt	Total third-party debt	60,758		60,714		Total third-party debt	60,780		60,714
Net cash	Net cash	$	18,671	$	23,621	Net cash	$	19,130	$	23,621

Measurements such as “adjusted free cash flow” and “net cash" do not have uniform definitions and are not recognized in accordance with U.S. GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or liquidity. However, management believes that “adjusted free cash flow” is a meaningful measure of our ability to fund acquisitions, and that an analysis of “net cash” assists investors in understanding aspects of our cash and debt management. These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.

Our financial condition as of ~~July 2,~~October 1, 2022 remains strong, with a current ratio (current assets to current liabilities) of ~~4.0~~4.1 to 1.0, as compared to a ratio of 3.6 to 1.0 at December 31, 2021.

Cash paid for property and equipment for the ~~six~~nine fiscal months ended ~~July 2,~~October 1, 2022 was ~~$8.8~~$15.5 million compared to ~~$8.3~~$11.2 million in the comparable prior year period.

As of ~~July 2,~~October 1, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements.

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Safe Harbor Statement

From time to time, information provided by us, including, but not limited to, statements in this report, or other statements made by or on our behalf, may contain or constitute "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.

Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; impact of inflation, global labor and supply chain challenges; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political, economic, 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; compliance issues under applicable laws, such as export control laws, including the outcome of our voluntary self-disclosure of export control non-compliance; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource allocations, manufacturing and supply chains; our status as a “critical”, “essential” or “life-sustaining” business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; our ability to execute our new corporate strategy and business continuity, operational and budget plans; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this report or as of the dates otherwise indicated in such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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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, 2021, filed with the SEC on March 4, 2022.

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 ~~July 2,~~October 1, 2022, 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.

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PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Company is subject to various legal proceedings that constitute ordinary, routine litigation incidental to its business. In addition, the Company ~~recently~~has determined that certain export shipments of products from one of its subsidiaries did not comply with the filing requirements of U.S. export administration and foreign trade regulations, and the Company voluntarily self-disclosed such non-compliance to the U.S. government. Non-compliance with the filing requirements may result in fines and penalties.

The Company believes that the foregoing matters will not have a material adverse effect on the Company’s business or its financial condition, results of operations, and cash flows.

Item 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, 2021, filed with the SEC on March 4, 2022. 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, 2021.

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

~~None.~~The following table provides information about repurchases of the Company's common stock during the three-month period ended October 1, 2022.


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans (a)
July 3, 2022 - August 3, 2022	—	—		—	—
August 4, 2022 - September 4, 2022	6,085	$	34.60	6,085	593,915
September 5, 2022 - October 1, 2022	26,516	32.05		26,516	567,399
Total	32,601			32,601	567,399
(a) On August 8, 2022, the Board of Directors (the “Board”) of the Company authorized the repurchase of up to 600,000 shares of the Company’s outstanding common stock (the “Stock Repurchase Plan”). The Stock Repurchase Plan will expire on August 11, 2023, and the Board authorized purchases thereunder to be made through an issuer repurchase plan adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), open market purchases or private transactions, in accordance with the applicable federal securities laws, including Rule 10b-18 under the Exchange Act. As of October 1, 2022, the Company had repurchased 32,601 shares under the Stock Repurchase Plan.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

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Item 6. EXHIBITS


10.1						First Amendment to Vishay Precision Group, Inc. 2017 Non-Employee Director Compensation Plan.
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 ~~July 2~~October 1 2022, furnished in XBRL (eXtensible Business Reporting Language).

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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: ~~August 9,~~November 8, 2022

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