Vishay Intertechnology (VSH) risk factors, FY2024 10-K

Risks relating to our business

1. 01Our business is cyclical and future periods of decline and increased demand are not predictable
2. 02We face significant challenges managing our capacity expansion strategy
3. 03We have incurred, and may in the future incur, restructuring costs and associated asset write-downs
4. 04Our business may be adversely affected by the widespread outbreak of diseases and the mitigation efforts by governments worldwide to control their spread
5. 05In the past we have grown through successful integration of acquired businesses, but this may not continue
6. 06To remain successful, we must continue to innovate, and our investments in new technologies may not prove successful
7. 07We are evaluating investments in A.I. initiatives, including generative A.I
8. 08Our business and our results of operations are sensitive to supply chain disruptions
9. 09Our production can be disrupted by the unavailability of resources, such as water, energy, and gases. The unavailability or reduced availability of these resources could require us to reduce production or incur additional costs
10. 10Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our technology and to operate our business without infringing or violating the intellectual property rights of others
11. 11We face intense competition in our business, and are susceptible to certain concentrations
12. 12Our backlog is subject to customer cancellation
13. 13Our future success is substantially dependent on our ability to attract and retain highly qualified technical, managerial, marketing, finance, and administrative personnel
14. 14Significant fluctuations in interest rates could adversely affect our results of operations and financial position
15. 15Cyberattacks and other interruptions in our information technology systems could adversely affect our business
16. 16Future acquisitions could require us to issue additional indebtedness or equity
17. 17We may experience significant variability in our quarterly and annual effective tax rate which would affect our reported net income
18. 18Our intangible assets may become impaired

Regulatory and compliance related risks

1. 19Future changes in our environmental liability and compliance obligations may harm our ability to operate or increase our costs
2. 20Our credit facility restricts our current and future operations and requires compliance with certain financial covenants
3. 21We are subject to the risks of political, economic, and military instability in countries outside the United States in which we operate
4. 22Our global operations are subject to extensive anti-corruption laws and other regulations
5. 23We attempt to improve profitability by controlling labor costs, but these activities could result in labor unrest or considerable expense
6. 24We are exposed to foreign currency exchange rate risks, particularly due to market values of transactions in currencies other than the functional currencies of certain subsidiaries. From time to time, we utilize forward contracts to hedge a portion of projected cash flows from these exposures
7. 25Changes in U.S. trade policies, and related factors beyond our control, may adversely impact our business, financial condition, and results of operations

Risks related to our capital structure

1. 26The holders of our Class B common stock have effective voting control of our company, giving them the effective ability to prevent a change in control transaction
2. 27Our acquisition strategy could be impeded if our Board of Directors were reluctant to authorize the issuance of substantial additional shares
3. 28Our outstanding convertible debt instruments may impact the trading price of our common stock
4. 29Conversion of our outstanding 2025 Notes and 2030 Notes may dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes
5. 30The conditional conversion feature of our outstanding 2030 Notes, if triggered, may adversely affect our financial condition and operating results
6. 31Certain provisions in the indentures governing the 2025 Notes and 2030 Notes could delay or prevent an otherwise beneficial takeover or takeover attempt of us
7. 32The capped call transactions may affect the market price of our common stock
8. 33In addition, if any such capped call transactions fail to become effective, the option counterparties or their respective affiliates may unwind their hedge positions with respect to our common stock, which could adversely affect the value of our common stock
9. 34We are subject to counterparty risk with respect to the capped call transactions
10. 35Anti-takeover defenses in our amended and restated certificate of incorporation, our amended and restated bylaws and under Delaware law may impede or discourage a merger, a takeover attempt or other business combinations, which could also reduce the market price of our common stock
11. 36the ability of our board of directors, by majority vote, to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt

Risks related to the spin-off of the Vishay Precision Group

1. 37Vishay Precision Group is using the Vishay name under license from us, which could result in product and market confusion or the loss of certain of our rights to the Vishay name
2. 38economic and political conditions in international markets, including governmental changes and restrictions on the ability to transfer capital across borders