10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended  March 29, 2014

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

For the transition period from _____ to _____

Commission File Number1-34679

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)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files. ý Yes ¨ No

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

Large accelerated filer ¨	Accelerated filer ý
Non-accelerated filer ¨ (Do not check if smaller reporting company)	Smaller reporting company ¨

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 May 7, 2014, the registrant had 12,727,036 shares of its common stock and 1,025,176 shares of its Class B convertible common stock outstanding.

VISHAY PRECISION GROUP, INC.

FORM 10-Q

March 29, 2014

CONTENTS

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Condensed Balance Sheets – March 29, 2014 (Unaudited) and December 31, 2013	3
	Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended March 29, 2014 and March 30, 2013	5
	Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) – Fiscal Quarters Ended March 29, 2014 and March 30, 2013	6
	Consolidated Condensed Statements of Cash Flows (Unaudited) – Three Fiscal Months Ended March 29, 2014 and March 30, 2013	7
	Consolidated Condensed Statement of Equity (Unaudited)	8
	Notes to Unaudited Consolidated Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
	SIGNATURES	34

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PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (In thousands)
	March 29, 2014			December 31, 2013
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	72,041		$	72,785
Accounts receivable, net	41,897			40,500
Inventories:
Raw materials	15,148			15,223
Work in process	20,436			19,962
Finished goods	19,319			19,788
Inventories, net	54,903			54,973
Deferred income taxes	4,190			4,784
Prepaid expenses and other current assets	10,836			10,500
Total current assets	183,867			183,542
Property and equipment, at cost:
Land	2,003			1,993
Buildings and improvements	48,226			47,793
Machinery and equipment	78,034			75,644
Software	6,537			6,333
Construction in progress	772			1,252
Accumulated depreciation	(86,125		)	(83,692		)
Property and equipment, net	49,447			49,323
Goodwill	18,153			18,880
Intangible assets, net	21,182			22,458
Other assets	18,266			17,901
Total assets	$	290,915		$	292,104

Continues on the following page.

-3-

VISHAY PRECISION GROUP, INC. Consolidated Condensed Balance Sheets (continued) (In thousands)
	March 29, 2014			December 31, 2013
	(Unaudited)
Liabilities and equity
Current liabilities:
Trade accounts payable	$	10,521		$	10,258
Payroll and related expenses	14,553			15,016
Other accrued expenses	14,172			15,814
Income taxes	626			615
Current portion of long-term debt	4,391			4,137
Total current liabilities	44,263			45,840
Long-term debt, less current portion	21,675			22,936
Deferred income taxes	1,025			1,259
Other liabilities	7,751			7,738
Accrued pension and other postretirement costs	10,679			10,780
Total liabilities	85,393			88,553
Commitments and contingencies
Equity:
Common stock	1,273			1,271
Class B convertible common stock	103			103
Capital in excess of par value	188,857			188,424
Retained earnings	34,353			32,647
Accumulated other comprehensive income (loss)	(19,246		)	(19,027		)
Total Vishay Precision Group, Inc. stockholders' equity	205,340			203,418
Noncontrolling interests	182			133
Total equity	205,522			203,551
Total liabilities and equity	$	290,915		$	292,104

See accompanying notes.

-4-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Operations

(Unaudited - In thousands, except per share amounts)

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net revenues	$	61,041		$	57,461
Costs of products sold	38,994			37,492
Gross profit	22,047			19,969
Selling, general, and administrative expenses	18,700			17,797
Acquisition costs	—			487
Restructuring costs	324			388
Operating income	3,023			1,297
Other income (expense):
Interest expense	(212		)	(197		)
Other	(542		)	(376		)
Other income (expense) - net	(754		)	(573		)
Income before taxes	2,269			724
Income tax expense	496			288
Net earnings	1,773			436
Less: net earnings attributable to noncontrolling interests	67			49
Net earnings attributable to VPG stockholders	$	1,706		$	387
Basic earnings per share attributable to VPG stockholders	$	0.12		$	0.03
Diluted earnings per share attributable to VPG stockholders	$	0.12		$	0.03
Weighted average shares outstanding - basic	13,752			13,387
Weighted average shares outstanding - diluted	13,958			13,928

See accompanying notes.

-5-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited - In thousands)

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net earnings	$	1,773		$	436
Other comprehensive income (loss):
Foreign currency translation adjustment	(224		)	(3,263		)
Pension and other postretirement actuarial items, net of tax	5			195
Other comprehensive loss	(219		)	(3,068		)
Total comprehensive income (loss)	1,554			(2,632		)
Less: comprehensive income attributable to noncontrolling interests	67			49
Comprehensive income (loss) attributable to VPG stockholders	$	1,487		$	(2,681	)

See accompanying notes.

-6-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited - In thousands)

	Three fiscal months ended
	March 29, 2014			March 30, 2013
Operating activities
Net earnings	$	1,773		$	436
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	2,849			3,007
Gain on disposal of property and equipment	(3		)	(5		)
Share-based compensation expense	222			335
Inventory write-offs for obsolescence	438			187
Other	486			(631		)
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(1,506		)	(1,890		)
Inventories	(286		)	(237		)
Prepaid expenses and other current assets	(316		)	(2,560		)
Trade accounts payable	237			373
Other current liabilities	(1,855		)	(397		)
Net cash provided by (used in) operating activities	2,039			(1,382		)
Investing activities
Capital expenditures	(1,878		)	(818		)
Proceeds from sale of property and equipment	3			13
Purchase of business	—			(49,888		)
Net cash used in investing activities	(1,875		)	(50,693		)
Financing activities
Proceeds from long-term debt	—			25,000
Principal payments on long-term debt and capital leases	(1,035		)	(789		)
Debt issuance costs	—			(384		)
Distributions to noncontrolling interests	(18		)	(13		)
Net cash (used in) provided by financing activities	(1,053		)	23,814
Effect of exchange rate changes on cash and cash equivalents	145			(930		)
Decrease in cash and cash equivalents	(744		)	(29,191		)
Cash and cash equivalents at beginning of period	72,785			93,881
Cash and cash equivalents at end of period	$	72,041		$	64,690

See accompanying notes.

-7-

VISHAY PRECISION GROUP, INC.

Consolidated Condensed Statement of Equity

(Unaudited - In thousands, except share amounts)

	Common Stock		Class B Convertible Common 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, 2013	$	1,271	$	103	$	188,424	$	32,647	$	(19,027	)	$	203,418		$	133		$	203,551
Net earnings	—		—		—		1,706		—			1,706			67			1,773
Other comprehensive loss	—		—		—		—		(219		)	(219		)	—			(219		)
Share-based compensation expense	—		—		186		—		—			186			—			186
Restricted stock issuances (15,344 shares)	2		—		247		—		—			249			—			249
Distributions to noncontrolling interests	—		—		—		—		—			—			(18		)	(18		)
Balance at March 29, 2014	$	1,273	$	103	$	188,857	$	34,353	$	(19,246	)	$	205,340		$	182		$	205,522

See accompanying notes.

-8-

Vishay Precision Group, Inc.

Notes to Unaudited Consolidated Condensed Financial Statements

Note 1 – Basis of Presentation

Background

Vishay Precision Group, Inc. (“VPG” or the “Company”) is an internationally recognized designer, manufacturer and marketer of components based on resistive foil technology, sensors, and sensor-based systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. The Company provides vertically integrated products and solutions that are primarily based upon its proprietary foil technology. These products are marketed under a variety of brand names that the Company believes are characterized as having a very high level of precision and quality. VPG’s global operations enable it to produce a wide variety of products in strategically effective geographical locations that also optimize its resources for specific technologies, sensors, assemblies and systems.

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, 2013 and 2012 and for each of the three years in the period ended December 31, 2013, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 12, 2014. The results of operations for the fiscal quarter ended March 29, 2014 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 2014 and 2013 end on the following dates: 

	2014	2013
Quarter 1	March 29,	March 30,
Quarter 2	June 28,	June 29,
Quarter 3	September 27,	September 28,
Quarter 4	December 31,	December 31,

Note 2 – Restructuring Costs

Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges.

The Company recorded restructuring costs of $0.3 million during the fiscal quarter ended March 29, 2014. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at the Company's subsidiary in Canada, and were incurred in connection with a cost reduction program. As of March 29, 2014, $0.1 million of the restructuring costs have been paid. The remaining costs are expected to be paid during the remainder of 2014 and the first quarter of 2015.

The Company recorded restructuring costs of $0.1 million during the fourth quarter of 2013. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at the Company's subsidiary in Canada and were incurred in connection with a cost reduction in one of the manufacturing areas. As of March 29, 2014, these costs have been paid.

-9-

Note 2 – Restructuring Costs (continued)

The Company recorded restructuring costs of $0.4 million during the fiscal quarter ended March 30, 2013. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance, covering 16 technical, production and administrative employees at one of the Company’s subsidiaries in Japan. The restructuring was undertaken primarily in response to the declining business conditions in Japan. The restructuring costs were fully paid during 2013.

Note 3 – Income Taxes

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology which is based on a current projection of full-year earnings before taxes amongst different taxing jurisdictions and adjusted for the impact of discrete quarterly items. The effective tax rate for the fiscal quarter ended March 29, 2014 was 21.9% versus 39.8% for the fiscal quarter ended March 30, 2013. The primary change in the effective tax rate for both periods presented is the result of changes in the geographic mix of pretax earnings, and the recording of net tax benefits associated with foreign exchange variations.

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the fiscal quarters ended March 29, 2014 and March 30, 2013 reflect VPG’s expected tax rate on reported income before income tax and tax adjustments. VPG operates in an international environment with significant operations in various locations outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting VPG’s earnings and the applicable tax rates in the various locations in which VPG operates.

The Company and its subsidiaries are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining the provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. VPG establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when VPG believes that certain positions might be challenged despite its belief that the tax return positions are supportable. VPG adjusts these reserves in light of changing facts and circumstances and the provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Penalties and tax-related interest expense are reported as a component of income tax expense. The Company anticipates $0.1 million to $0.3 million of unrecognized tax benefits to be reversed within the next twelve months of the reporting date, due to the expiration of statute of limitations in certain jurisdictions.

Note 4 – Long-Term Debt

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

	March 29, 2014		December 31, 2013
2013 Credit Agreement - revolving facility	$	—	$	—
2013 Credit Agreement - U.S. term facility	7,500		8,000
2013 Credit Agreement - Canadian term facility	13,500		14,000
Israeli Credit Agreement - revolving facility	—		—
Exchangeable unsecured notes, due 2102	4,097		4,097
Other debt	969		976
	26,066		27,073
Less: current portion	4,391		4,137
	$	21,675	$	22,936

-10-

Note 5 – 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
Balance at January 1, 2014	$	(16,761	)	$	(2,266	)	$	(19,027	)
Other comprehensive income (loss) before reclassifications	(224		)	—			(224		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			5			5
Balance at March 29, 2014	$	(16,985	)	$	(2,261	)	$	(19,246	)

	Foreign Currency Translation Adjustment			Pension and Other Postretirement Actuarial Items			Total
Balance at January 1, 2013	$	(11,044	)	$	(3,939	)	$	(14,983	)
Other comprehensive income (loss) before reclassifications	(3,263		)	—			(3,263		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			195			195
Balance at March 30, 2013	$	(14,307	)	$	(3,744	)	$	(18,051	)

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 6).

Note 6 – 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 other postretirement benefit plans (in thousands):

	Fiscal quarter ended   March 29, 2014					Fiscal quarter ended   March 30, 2013
	Pension Plans			OPEB Plans		Pension Plans			OPEB Plans
Net service cost	$	105		$	21	$	116		$	18
Interest cost	235			31		216			24
Expected return on plan assets	(198		)	—		(151		)	—
Amortization of actuarial losses	7			9		43			7
Net periodic benefit cost	$	149		$	61	$	224		$	49

Note 7 – Share-Based Compensation

The Amended and Restated Vishay Precision Group, Inc. Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At March 29, 2014, the Company had reserved 607,238 shares of common stock for future grant of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the Plan. If any outstanding awards are forfeited by the holder or cancelled by the Company, the underlying shares would be available for regrant to others.

-11-

Note 7 – Share-Based Compensation (continued)

Stock Options

The following table summarizes the Company’s 2014 stock option activity (number of options in thousands):

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (yrs)
Outstanding:
Balance at January 1, 2014	27	$	18.06
Granted	—	—
Exercised	—	—
Expired	—	—
Balance at March 29, 2014	27	$	18.06	2.72
Exercisable:
End of period	27	$	18.23

The pretax intrinsic value (the difference between the closing stock price of VPG’s common stock on the last trading day of the fiscal quarter of $17.11 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the options holders had all option holders exercised their options on March 29, 2014 is not material.

Restricted Stock Units

On January 29, 2014, VPG’s three executive officers were granted annual equity awards in the form of RSUs, of which 75% are performance-based. The awards have an aggregate grant-date fair value of $1.2 million and were comprised of 79,453 RSUs. Twenty-five percent of these awards will vest on January 1, 2017, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2017, subject to the satisfaction of certain performance objectives relating to three year cumulative “free cash” and net earnings goals, and their continued employment. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met.

RSU activity for 2014 is presented below (number of RSUs in thousands):

	Number of RSUs		Weighted Average Grant-date Fair Value
Outstanding:
Balance at January 1, 2014	146		$	14.72
Granted	79		15.06
Vested	(18	)	16.21
Balance at March 29, 2014	207		$	14.72

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that the participant provides service in exchange for the award. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest	Not Expected to Vest	Total
January 1, 2015	9	29	38
January 1, 2016	23	24	47
January 1, 2017	60	—	60

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Note 7 – Share-Based Compensation (continued)

Share-Based Compensation Expense

The following table summarizes share-based compensation expense recognized (in thousands):

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Stock options	$	—	$	1
Restricted stock units	222		334
Total	$	222	$	335

Note 8 – Segment Information

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

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

-13-

Note 8 – Segment Information (continued)

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net third-party revenues:
Foil Technology Products	$	26,007		$	24,352
Force Sensors	16,432			16,396
Weighing & Control Systems	18,602			16,713
Total	$	61,041		$	57,461
Gross profit:
Foil Technology Products	$	9,856		$	9,145
Force Sensors	3,507			4,399
Weighing & Control Systems	8,684			6,425
Total	$	22,047		$	19,969
Reconciliation of segment operating income to consolidated results:
Foil Technology Products	$	5,200		$	4,767
Force Sensors	1,141			2,229
Weighing & Control Systems	3,025			1,725
Unallocated G&A expenses	(6,019		)	(6,549		)
Acquisition costs	—			(487		)
Restructuring costs	(324		)	(388		)
Consolidated condensed operating income	$	3,023		$	1,297
Acquisition costs:
Weighing & Control Systems	$	—		$	487
Restructuring costs:
Foil Technology Products	$	—		$	388
Weighing & Control Systems	324			—
	$	324		$	388

Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. Intersegment sales from the Foil Technology Products segment to the Force Sensors segment and Weighing and Control Systems segment were $0.5 million and $0.4 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively. Intersegment sales from the Force Sensors segment to the Foil Technology Products segment and Weighing and Control Systems segment were $0.4 million and $0.7 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively. Intersegment sales from the Weighing and Control Systems segment to the Force Sensors segment were $0.3 million and $0.4 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively.

-14-

Note 9 – 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
	March 29, 2014		March 30, 2013
Numerator:
Numerator for basic earnings per share:
Net earnings attributable to VPG stockholders	$	1,706	$	387
Adjustment to the numerator for net earnings:
Interest savings assuming conversion of dilutive exchangeable notes, net of tax	2		5
Numerator for diluted earnings per share:
Net earnings attributable to VPG stockholders	$	1,708	$	392
Denominator:
Denominator for basic earnings per share:
Weighted average shares	13,752		13,387
Effect of dilutive securities:
Exchangeable notes	181		441
Employee stock options	1		—
Restricted stock units	24		100
Dilutive potential common shares	206		541
Denominator for diluted earnings per share:
Adjusted weighted average shares	13,958		13,928
Basic earnings per share attributable to VPG stockholders	$	0.12	$	0.03
Diluted earnings per share attributable to VPG stockholders	$	0.12	$	0.03

Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares, as the effect would be antidilutive (in thousands):

	Fiscal quarter ended
	March 29, 2014	March 30, 2013
Weighted average employee stock options	23	28

-15-

Note 10 – Additional Financial Statement Information

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Foreign exchange loss	$	(531	)	$	(386	)
Interest income	38			73
Other	(49		)	(63		)
	$	(542	)	$	(376	)

Note 11 – Fair Value Measurements

Accounting Standards Codification (“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 tables provide the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands):

			Fair value measurements at reporting date using:
	Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
March 29, 2014
Assets
Assets held in rabbi trusts	$	4,569	$	950	$	3,619	$	—
December 31, 2013
Assets
Assets held in rabbi trusts	$	4,678	$	1,087	$	3,591	$	—

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 March 29, 2014 and December 31, 2013, 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 marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The fair value of the long-term debt at March 29, 2014 and December 31, 2013 is approximately $24.9 million and $25.5 million, respectively, compared to its carrying value of $26.1 million and $27.1 million, respectively. The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates. The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy.

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Note 11 – Fair Value Measurements (continued)

The Company’s financial instruments include cash and cash equivalents whose carrying amounts reported in the consolidated condensed balance sheets approximate their fair values.

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

Overview

VPG is an internationally recognized designer, manufacturer and marketer of components based on resistive foil technology, sensors and sensor-based systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. We provide vertically integrated products and solutions that are primarily based upon our proprietary foil technology. These products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality. Our global operations enable us to produce a wide variety of products in strategically effective geographical locations that also optimize our resources for specific technologies, sensors, assemblies and systems.

The Company’s products are precision foil resistors, foil strain gages, and sensors that convert mechanical inputs into an electronic signal for display, processing, interpretation, or control by our instrumentation and systems products. Precision sensors are essential to the accurate measurement, resolution and display of force, weight, pressure, torque, tilt, motion or acceleration, especially in the legal-for-trade, commercial, and industrial marketplace in a wide variety of applications. Our products are not typically used in the consumer market.

The precision sensor market is being influenced by the significant increase in intelligent products across virtually all end markets, including medical, agricultural, transportation, industrial, avionics, military, and space applications. We believe that as original equipment manufacturers (OEM's) strive to make products “smarter,” they are generally integrating more sensors to link the mechanical/physical world with digital control and/or response. We believe this offers a substantial growth opportunity for our products.

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

Net revenues for the fiscal quarter ended March 29, 2014 were $61.0 million versus $57.5 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the fiscal quarter ended March 29, 2014 were $1.7 million, or $0.12 per diluted share, versus $0.4 million, or $0.03 per diluted share, for the comparable prior year period.

The results of operations for the fiscal quarters ended March 29, 2014 and March 30, 2013 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 profit, adjusted gross margin, adjusted net earnings and adjusted net earnings per diluted share. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Non-GAAP measures such as adjusted gross profit, adjusted gross margin, adjusted net earnings and adjusted net earnings per diluted share 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 measures are meaningful because they provide insight with respect to intrinsic operating results. The reconciling items presented below represent significant charges or credits which are important to understanding our intrinsic operations.

The items affecting comparability are (dollars in thousands, except per share amounts):

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Gross profit	$	22,047		$	19,969
Gross margin	36.1		%	34.8		%
Reconciling items affecting gross margin
Acquisition purchase accounting adjustments (1)	39			1,238
Adjusted gross profit	$	22,086		$	21,207
Adjusted gross margin	36.2		%	36.9		%

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	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Net earnings attributable to VPG stockholders	$	1,706	$	387
Reconciling items affecting operating margin
Acquisition purchase accounting adjustments (1)	39		1,238
Acquisition costs	—		487
Restructuring costs	324		388
Reconciling items affecting income tax expense
Tax effect of purchase accounting adjustments, acquisition cost adjustments, restructuring cost adjustments, and discrete tax items	92		692
Adjusted net earnings attributable to VPG stockholders	$	1,977	$	1,808
Weighted average shares outstanding - diluted	13,958		13,928
Adjusted net earnings per diluted share	$	0.14	$	0.13

(1) Acquisition purchase accounting adjustments, recorded in connection with the acquisition of the KELK business, include fair market value adjustments associated with inventory and advance customer payments.

Financial Metrics

We utilize several financial measures and metrics to evaluate the performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross margin, end-of-period backlog, book-to-bill ratio, and inventory turnover.

Gross 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 margin is clearly a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs.

End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months. If demand falls below customers’ forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, the backlog is not necessarily indicative of the results to be expected for future periods.

Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the product that we ship during that period. A book-to-bill ratio that is greater than one indicates that demand is higher than current revenues and manufacturing capacities, and it indicates that we may generate increasing revenues in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand compared to existing revenues and current capacities and may foretell declining sales.

We focus on our inventory turnover as a measure of how well we are managing our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.

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The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross margin, the end-of-period backlog, the book-to-bill ratio, and the inventory turnover for our business as a whole during the five quarters beginning with the first quarter of 2013 and through the first quarter of 2014(dollars in thousands):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			1st Quarter
	2013			2013			2013			2013			2014
Net revenues	$	57,461		$	62,837		$	57,729		$	62,248		$	61,041
Gross margin	34.8		%	34.3		%	33.3		%	37.1		%	36.1		%
End-of-period backlog	$	63,100		$	59,400		$	60,900		$	60,000		$	65,800
Book-to-bill ratio	1.02			0.98			1.01			1.00			1.09
Inventory turnover	2.79			2.87			2.75			2.86			2.84

See “Financial Metrics by Segment” below for net revenues, gross margin, end-of-period backlog, book-to-bill ratio, and inventory turnover broken out by segment.

After experiencing an increase in net revenues in the second quarter of 2013, there was a decline in net revenues in the third quarter of 2013. Inefficiencies in three of our manufacturing facilities in the Foil Technology Products segment, due to the enterprise resource planning ("ERP") implementation, resulted in lower shipments during the third quarter. In the fourth quarter of 2013 and the first quarter of 2014, revenues have improved in the Foil Technology Products segment, resulting in improved net revenues overall, as compared to the third quarter of 2013. The Force Sensors segment also has increased revenues in the first quarter of 2014, as compared to the fourth quarter of 2013, mainly due to higher volume. These improvements, however, were offset in the first quarter of 2014 by a decline in revenues in the Weighing and Control Systems segment, primarily attributable to declines in the on-board weighing business and the steel business.

The gross margins for the 2013 quarters were impacted by the purchase accounting adjustments recorded in connection with the acquisition of the KELK business in 2013. The gross margins, excluding the impacts of the purchase accounting adjustments, were 36.9%, 37.9%, 34.9% and 37.8% for the first, second, third and fourth quarters of 2013, respectively. The gross margin in the third quarter of 2013 reflected the effects of the ERP implementation in three of our manufacturing facilities in the Foil Technology Products segment, which caused manufacturing inefficiencies and a slowdown in shipments. In the fourth quarter of 2013, the improvement in the Foil Technology Products segment revenues and cost reductions in the Force Sensors segment helped improve the overall gross margin. In the first quarter of 2014, lower volume overall along with higher manufacturing costs in the Foil Technology Products segment contributed to the overall decline in the gross margin.

The first quarter 2014 book-to-bill ratio reflects strong orders generated by all three reporting segments.

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Financial Metrics by Segment

The following table shows net revenues, gross margin, end-of-period backlog, book-to-bill ratio, and inventory turnover broken out by segment for the five quarters beginning with the first quarter of 2013 and through the first quarter of 2014(dollars in thousands):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter			1st Quarter
	2013			2013			2013			2013			2014
Foil Technology Products
Net revenues	$	24,352		$	24,523		$	22,433		$	25,737		$	26,007
Gross margin	37.6		%	38.1		%	36.7		%	40.5		%	37.9		%
End-of-period backlog	$	20,700		$	21,600		$	24,100		$	25,800		$	29,000
Book-to-bill ratio	1.06			1.05			1.10			1.07			1.12
Inventory turnover	3.42			3.52			3.28			3.34			3.40
Force Sensors
Net revenues	$	16,396		$	16,092		$	16,388		$	15,970		$	16,432
Gross margin	26.8		%	20.5		%	17.6		%	21.5		%	21.3		%
End-of-period backlog	$	13,000		$	13,600		$	12,500		$	12,800		$	13,500
Book-to-bill ratio	1.04			1.04			0.92			1.01			1.04
Inventory turnover	1.94			1.99			2.08			2.03			2.06
Weighing and Control Systems
Net revenues	$	16,713		$	22,222		$	18,908		$	20,541		$	18,602
Gross margin	38.4		%	40.1		%	43.0		%	44.9		%	46.7		%
End-of-period backlog	$	29,400		$	24,200		$	24,300		$	22,000		$	23,300
Book-to-bill ratio	0.94			0.87			0.98			0.91			1.09
Inventory turnover	3.64			3.65			3.38			3.90			3.63

Optimize Core Competence

The Company’s core products incorporate certain technologies that provide customers with precision foil products, force measurement sensors, and systems. Our foil technology resistors and strain gages are recognized as global market leading products that provide high precision and high stability over extreme temperature ranges, and long life. Our force sensor products and our weighing and control systems products are also certified to meet some of the highest levels of precision measurements of force, weight, pressure, torque, tilt, motion, and acceleration. While these competencies form a solid basis for our products, we believe there are several areas that can be optimized, including: increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our manufacturing processes.

Our foil technology research group continues to provide innovations that enhance the capability and performance of our strain gages, while simultaneously reducing their size and power consumption. We believe this new level of 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 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, Costa Rica, Israel, the People’s Republic of China, and the Republic of China (Taiwan), where we can benefit from lower labor costs, improved efficiencies, or available tax and other government-sponsored incentives.

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Acquisition Strategy

We expect to continue to make strategic acquisitions where opportunities present themselves to grow our segments. Our growth and acquisition strategy has been largely focused on vertical product integration, using our foil strain gages in our force sensor products and incorporating our sensors and electronic measurement instrumentation (containing foil resistors) and software into our weighing and control systems. Precision foil resistor products are used in many of the control systems that we manufacture. We expect to continue to focus our acquisition strategy in this direction, as exemplified by our acquisition of the KELK business in January 2013. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing operations and distribution channels.

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 from higher-labor-cost countries to lower-labor-cost countries. This will 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 have begun to realize 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 on March 12, 2014.

We recorded restructuring costs of $0.3 million during the fiscal quarter ended March 29, 2014. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at our subsidiary in Canada and were incurred in connection with a cost reduction program.

We are presently executing plans to further reduce our costs by consolidating additional manufacturing operations. These plans will require us to incur restructuring and severance costs in future periods. However, after implementing these plans, we do not anticipate significant restructuring and severance costs for our business except in the context of acquisition integration.

While streamlining and reducing fixed overhead, we are exercising caution so that we will not negatively impact our customer service, or our ability to further develop products and processes.

Foreign Currency

We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. U.S. GAAP requires that entities identify the “functional currency” of each of their subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary’s functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company’s operations generally would have the parent company’s currency as its functional currency. We have subsidiaries that fall into each of these categories.

Foreign Subsidiaries which use the Local Currency as the Functional Currency

We finance our operations in Europe, Canada, and certain locations in Asia using local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of equity.

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For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the year. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated 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 are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly related to payroll, which are incurred in the local currency.

For the fiscal quarter ended March 29, 2014, exchange rates reduced net revenues by $0.3 million, and costs of products sold and selling, general, and administrative expenses by $0.1 million, when compared to the comparable prior year period.

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Results of Operations

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

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Costs of products sold	63.9	%	65.2	%
Gross profit	36.1	%	34.8	%
Selling, general, and administrative expenses	30.6	%	31.0	%
Operating income	5.0	%	2.3	%
Income before taxes	3.7	%	1.3	%
Net earnings	2.9	%	0.8	%
Net earnings attributable to VPG stockholders	2.8	%	0.7	%
Effective tax rate	21.9	%	39.8	%

Net Revenues

Net revenues were as follows (dollars in thousands):

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net revenues	$	61,041		$	57,461
Change versus comparable prior year period	$	3,580
Percentage change versus prior year period	6.2		%

Changes in net revenues were attributable to the following:

	vs. prior year quarter
Change attributable to:
Change in volume	6.8	%
Change in average selling prices	-0.1	%
Foreign currency effects	-0.3	%
Other	-0.2	%
Net change	6.2	%

During the fiscal quarter ended March 29, 2014, the improvement in revenues, as compared to the prior year period, is due primarily to volume increases in the Foil Technology Products and Weighing and Control Systems segments.

Gross Profit and Margins

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

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Gross margin	36.1	%	34.8	%

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The gross margin for the fiscal quarter ended March 29, 2014 increased compared to the comparable prior year period. However, the KELK acquisition purchase accounting adjustments increased costs of products sold during the fiscal quarter ended March 30, 2013 by $1.2 million, thereby impacting the gross margin. Excluding these adjustments, the gross margin would have been 36.9% for the fiscal quarter ended March 30, 2013, which is slightly higher than the gross margin for the current fiscal quarter.

Segments

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

Foil Technology Products

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net revenues	$	26,007		$	24,352
Change versus comparable prior year period	$	1,655
Percentage change versus prior year period	6.8		%

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

	vs. prior year quarter
Change attributable to:
Change in volume	8.0	%
Change in average selling prices	-0.6	%
Foreign currency effects	-0.4	%
Other	-0.2	%
Net change	6.8	%

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

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Gross margin	37.9	%	37.6	%

Despite the increase in revenue for the fiscal quarter ended March 29, 2014, fluctuations in exchange rates and overtime costs incurred due to weather disruptions in the United States increased costs; therefore, the gross margin for the fiscal quarter ended March 29, 2014 remained flat as compared to the comparable prior year period.

Force Sensors

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net revenues	$	16,432		$	16,396
Change versus comparable prior year period	$	36
Percentage change versus prior year period	0.2		%

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

	vs. prior year quarter
Change attributable to:
Change in volume	-1.6	%
Change in average selling prices	0.7	%
Foreign currency effects	1.2	%
Other	-0.1	%
Net change	0.2	%

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

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Gross margin	21.3	%	26.8	%

The gross margin for the fiscal quarter ended March 29, 2014 decreased from the comparable prior year period due to higher variable costs, including wage increases, and higher fixed manufacturing costs.

Weighing and Control Systems

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net revenues	$	18,602		$	16,713
Change versus comparable prior year period	$	1,889
Percentage change versus prior year period	11.3		%

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

	vs. prior year quarter
Change attributable to:
Change in volume	13.5	%
Change in average selling prices	0.0	%
Foreign currency effects	-1.8	%
Other	-0.4	%
Net change	11.3	%

A portion of the volume increase for the fiscal quarter ended March 29, 2014, as compared to the comparable prior year period, is due to one additional month of net revenues from the KELK business, since the acquisition became effective January 31, 2013.

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

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Gross margin	46.7	%	38.4	%

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The gross margin for the fiscal quarter ended March 29, 2014 increased compared to the comparable prior year period mainly due to higher volume. The KELK acquisition purchase accounting adjustments increased costs of products sold during the fiscal quarter ended March 30, 2013 by $1.2 million, thereby impacting the gross margin. Excluding these adjustments, the gross margin would have been 45.8% for the fiscal quarter ended March 30, 2013.

Selling, General, and Administrative Expenses

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Total SG&A expenses	$	18,700		$	17,797
as a percentage of net revenues	30.6		%	31.0		%

Given the specialized nature of our products and our direct sales approach, we incur significant selling, general, and administrative costs. SG&A expenses for the fiscal quarter ended March 29, 2014 increased $0.9 million as compared to the comparable prior year period, mainly due to an increase in personnel costs. Approximately $0.6 million of the increase relates to having one additional month of expenses from the KELK business, since the acquisition became effective January 31, 2013.

Acquisition Costs

In connection with the acquisition of the KELK business in January 2013, we recorded acquisition costs in our consolidated condensed statement of operations for the fiscal quarter ended March 30, 2013, as follows (in thousands):

	Fiscal quarter ended
	March 30, 2013
Accounting and legal fees	$	375
Appraisal fees	54
Other	58
	$	487

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.

We recorded restructuring costs of $0.3 million during the fiscal quarter ended March 29, 2014. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at our subsidiary in Canada, and were incurred in connection with a cost reduction program. As of March 29, 2014, $0.1 million of the restructuring costs have been paid. The remaining costs are expected to be paid during the remainder of 2014 and the first quarter of 2015.

We recorded restructuring costs of $0.4 million during the fiscal quarter ended March 30, 2013. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance, covering 16 technical, production and administrative employees at one of the Company’s subsidiaries in Japan. The restructuring was undertaken primarily in response to the declining business conditions in Japan. The restructuring costs were fully paid during 2013.

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Other Income (Expense)

Total interest expense for the fiscal quarter ended March 29, 2014 was consistent with interest expense in the comparable prior year period.

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013			Change
Foreign exchange loss	$	(531	)	$	(386	)	$	(145	)
Interest income	38			73			(35		)
Other	(49		)	(63		)	14
	$	(542	)	$	(376	)	$	(166	)

Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. The change in foreign exchange loss during the period, as compared to the prior year period is largely due to exposure to currency fluctuations with the Canadian dollar. In the first fiscal quarter of 2013, our Canadian subsidiary entered into a $15.0 million term facility denominated in U.S. dollars. The Canadian dollar weakened against the U.S. dollar in the current year fiscal quarter as compared to the prior year fiscal quarter, resulting in an increased foreign exchange loss.

Income Taxes

For the current quarter, fluctuations in the effective tax rate have generally been caused by the geographical earnings mix and the impact of discrete items that are required to be recognized within the respective interim reporting period. The effective tax rate for the fiscal quarter ended March 29, 2014 was 21.9% versus 39.8% for the fiscal quarter ended March 30, 2013. The primary change in the effective tax rate for both periods presented is the result of changes in the geographic mix of pretax earnings, and the recording of net tax benefits associated with foreign exchange variations.

The effective tax rates reflect the fact that we could not recognize for accounting purposes the tax benefit of losses incurred in certain jurisdictions, although these losses may be available to offset future taxable income. We evaluate our deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. We give consideration to whether valuation allowances should be established against deferred tax assets based on all available evidence, both positive and negative, using a “more likely than not” standard. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with loss carryforwards not expiring and tax planning alternatives, as we operate and derive income across multiple jurisdictions. We may not recognize deferred tax assets for loss carryforwards in jurisdictions where there is a recent history of cumulative losses, where there is no taxable income in the carryback period, where there is insufficient evidence of future earnings to overcome the loss history and where there is no other positive evidence, such as the likely reversal of taxable temporary differences, that would result in the utilization of loss carryforwards for tax purposes.

Financial Condition, Liquidity, and Capital Resources

We focus on our ability to generate cash flows from operations. The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of capital expenditure needs is available to fund our acquisition strategy and to reduce debt levels.

At March 29, 2014 and December 31, 2013, we had significant cash balances and limited third-party debt. 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.

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In January 2013 we entered into an amended and restated credit agreement. The terms of our credit agreement provide for the following facilities: (1) a secured revolving facility of $15.0 million (which may be increased by a maximum of $10.0 million at our request), the proceeds of which can be used for general corporate purposes, with sublimits of $10.0 million for letters of credit and $5.0 million for swing loans outstanding for up to 5 business days; (2) a secured term facility of $10.0 million for the Company; and (3) a secured term facility of $15.0 million for Vishay Precision Group Canada ULC ("VPG Canada"), our Canadian subsidiary. The credit agreement terminates on January 29, 2018. The term loans are being repaid in quarterly installments.

Per our credit agreement, borrowings under all facilities (excluding swing loans) bear interest at either, upon our option, (1) a base rate which is the greater of the agent's prime rate, the Federal Funds rate, or a LIBOR floor, plus a margin of 0.25% or (2) LIBOR plus, depending upon our leverage ratio, an interest rate margin ranging from 2.00% to 3.00% . We are also required to pay a quarterly fee of 0.30% per annum to 0.50% per annum on the unused portion of the secured revolving facility, which is determined based on our leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.

The obligations of VPG and the guarantors under our credit agreement are secured by substantially all the assets (excluding real estate) of VPG, and by pledges of stock in certain domestic and foreign subsidiaries, as well as by guarantees by substantially all of our domestic subsidiaries and the assets (excluding real estate) of the guarantors. The VPG Canada term facility is secured by substantially all the assets of VPG Canada, and by a secured guarantee of VPG and our domestic subsidiaries. The credit agreement restricts us from paying cash dividends, and requires us to comply with other customary covenants, representations and warranties, including the maintenance of specific financial ratios.

The financial maintenance covenants include (a) a tangible net worth of not less than $118.0 million, plus 50% of cumulative net earnings for each fiscal quarter since inception, excluding quarterly net losses; (b) a leverage ratio of not more than 2.5 to 1.0; and (c) a fixed charges coverage ratio of not less than 1.5 to 1.0. We were in compliance with these covenants at March 29, 2014. If we are not in compliance with any of these covenant restrictions, the credit agreement could be terminated by the lenders, and all amounts outstanding pursuant to the credit agreement could become immediately payable.

Vishay Advanced Technologies Ltd. (“VAT”), an Israeli company and subsidiary of VPG, maintains a credit agreement providing for a multi-currency, secured revolving facility of $15.0 million. The VAT revolving facility terminates on November 30, 2014. There was no balance outstanding on this facility at March 29, 2014 or December 31, 2013.

Interest payable on the VAT revolving facility is based upon LIBOR plus an interest rate margin of 2.15% per annum. VAT is required to pay a quarterly fee of 0.40% per annum on the unused portion of the revolving facility. VAT's credit agreement requires compliance with customary covenants, representations and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include (a) a leverage ratio of not more than 2.5 to 1.0; (b) a tangible shareholders’ equity of not less than $48.0 million; and (c) a tangible net worth to total assets ratio of not less than 0.65 to 1.0. As of March 29, 2014, VAT was in compliance with its financial maintenance covenants. In the event of covenant non-compliance, the VAT credit agreement could be terminated by the lender, and any amounts outstanding pursuant to the VAT credit agreement could become immediately payable.

We have outstanding exchangeable unsecured notes with a principal amount of approximately $4.1 million, which are exchangeable for an aggregate of 181,537 shares of VPG common stock. The maturity date of these notes is December 13, 2102.

Our other long-term debt is not significant and consists of zero percent interest rate debt held by our Japanese subsidiary of approximately $1.0 million at March 29, 2014 and $1.0 million at December 31, 2013, respectively.

Our business has historically generated operating cash flow. Our cash generated from operating activities for the three fiscal months ended March 29, 2014 was $2.0 million, compared to cash used in operating activities of $1.4 million for the comparable prior year period.

We refer to the amount of cash generated from operations ($2.0 million) in excess of our capital expenditure needs ($1.9 million) and net of proceeds from the sale of assets ($0.0 million) as “free cash,” a measure which management uses to evaluate our ability to fund acquisitions and repay debt. For the three fiscal months ended March 29, 2014, we generated free cash of $0.2 million and 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.

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The following table summarizes the components of net cash (debt) at March 29, 2014 and December 31, 2013(in thousands):

	March 29, 2014		December 31, 2013
Cash and cash equivalents	$	72,041	$	72,785
Third-party debt, including current and long-term:
Revolving credit facilities	—		—
Term loans	21,000		22,000
Third-party debt held by Japanese subsidiary	969		976
Exchangeable notes due 2102	4,097		4,097
Total third-party debt	26,066		27,073
Net cash	$	45,975	$	45,712

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

Approximately 86% and 75% of our cash and cash equivalents balance at March 29, 2014 and December 31, 2013, respectively, was held by our non-U.S. subsidiaries. If cash is repatriated to the United States, we would be subject to additional U.S. income taxes (adjusted for foreign tax credits), state income taxes, incremental foreign income taxes, and withholding taxes payable to various foreign countries. See the following table for the percentage of cash and cash equivalents, by region, at March 29, 2014 and December 31, 2013:

	March 29, 2014		December 31, 2013
Israel	26	%	16	%
Asia	30	%	30	%
Europe	17	%	16	%
United States	15	%	25	%
United Kingdom	8	%	7	%
Canada	4	%	6	%
	100	%	100	%

Our financial condition as of March 29, 2014 remains strong, with a current ratio (current assets to current liabilities) of 4.2 to 1.0, as compared to a ratio of 4.0 to 1.0 at December 31, 2013.

Cash paid for property and equipment for the three fiscal months ended March 29, 2014 was $1.9 million as compared to $0.8 million in the comparable prior year period. Capital expenditures for the three fiscal months ended March 29, 2014 are comprised of projects related to the normal maintenance of business.

Contractual Commitments

During the first quarter of 2014, we entered into a lease agreement with a third party at a new facility in Be'er Sheva, Israel. The contract value over the five year lease term is approximately $1.1 million, with an option to renew for an additional 5 year term. Lease payments commence on June 1, 2014. We will terminate our lease arrangement with Vishay Intertechnology at our current facility in Be'er Sheva Israel.

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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 "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, changes in the current pace of economic recovery, including if such recovery stalls or does not continue as expected; difficulties or delays in completing acquisitions and integrating acquired companies, including KELK, 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; difficulties in implementing our ERP system and the associated impact on manufacturing efficiencies and customer satisfaction; 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 lower-labor-cost countries; 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, 2013. 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, 2013, filed with the SEC on March 12, 2014.

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.

Changes in Internal Control over Financial Reporting

During our last fiscal quarter ended March 29, 2014, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on March 12, 2014.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

10.1	Lease agreement, dated January 26, 2014, by and among between Vishay Advanced Technologies, Inc. and Tefen Enterprises Ltd.
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 March 29, 2014, 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: May 7, 2014

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EX-10.1

Rental Agreement

Details of the Premises

Location: Omer Industrial Park

Building No: A1 + B1 + C1 + D1.

Floor area of the building in square meters: 2,193 sq. m.

Appendixes:

Appendix 1     -     The first page of the lease agreement

Appendix 1a     -     Diagram

Appendix 2     -     Rental and Service Fees

Appendix 3     -     Electrical Connection

Appendix 4     -     Authorization of drawing up work insurance

Appendix 5     -     Authorization of drawing up various insurance

Appendix 6     -     Fire Detection and Air Conditioning

Appendix 7     -     Bank Account Debit Order Instruction

Appendix 8     -     List of Facilities and Equipment Existing in the Premises

Non Protected Rental Agreement

Drawn up and signed at the Omer Industrial Park on January 26, 2014

Between: Tefen Enterprises Ltd.            Pr. Co. No. 51-141489-8

The address of which is:

P. O. Box 1, Tefen, 24959

Tel: (04) 910-9603

Fax: (04) 987-2861

(Hereinafter: “The Company”)

The party of the first part

And: Vishai Advanced Technologies Ltd. Pr. Co. No. 51-2868142

Of 2 Ha’ofan St., Holon Industrial Zone 5881419

Tel: (03) 557-0888

Fax: (03) 556-8116

(Hereinafter: “The Tenant”)

The party of the other part

Whereas: The Company holds the long term lease rights regarding the land and buildings located at the Omer Industrial Park pursuant to the lease agreement, as detailed on the first page of the lease agreement, marked as Appendix 1;

And whereas: The Company operates the Omer Industrial Park, where it constructed industrial buildings and office buildings and provides associated services (hereinafter: “The Industrial Park”);

And whereas: The Company holds the rights as stated and operates, inter alia, an industrial and office building that incorporates Units A1 + B1 + C1 + D1, in the Omer Industrial Park, of a gross floor area of 2,193 sq. m. (exterior measurements) (hereinafter: “The Premises”).

A drawing of the building and the land upon which the premises is located, including measurements, is attached and marked as Appendix 1A;

And whereas: The parties are interested in setting down, in this agreement, the terms of the rental as non protected rental, all pursuant to the terms and conditions and directives as detailed below in this agreement;

And whereas: The Company declares that there is no preclusion, pursuant to the agreement or the law, to rent the premises to the tenant and that there is no preclusion pursuant to the agreement or the law to enter into this agreement;

And whereas: The Tenant has viewed the premises, examined the state thereof and found such and the surroundings to be suitable to the Tenant’s needs;

And whereas: The Tenant is interested is renting the premises and the Company agreed to let the premises to the Tenant for purposes of a manufacturing assembly factory and offices; (hereinafter: “The Objective of the Rental”).

Therefore did the parties declare, agree and condition as follows:

1. Preamble, Appendixes and Interpretation

1.1 The preamble to this agreement and the appendixes to it, that are attached at the time of the signing of this agreement, being signed by both parties, will constitute an integral part thereof.

1.2 The heading of the sections of this agreement are there for convenience only and do not have any weight, and no such weight will be afforded such, for purposes of the interpretation thereof.

1.3 This agreement replaces any other agreement signed between the parties and exhausts the endorsements, the conditions, the declarations, the legal relationship between the parties and no proposal, summation, understanding, custom, representation or promise done or given prior to the signing of this agreement, or at the time of the signing of this agreement, by one party to the other, will be valid, whether in writing or verbally, whether explicit or implied, except as stipulated in this agreement.

1.4 No change, addition or diminution to this agreement will be valid after the date of the signing thereof, unless put in writing and signed by the parties to this agreement.

2. The Rental Period and Options to Extend the Rental Period

2.1 The Company hereby associates with the Tenant and the Tenant hereby rents the premises from the Company for a period commencing on January 20, 2014, and concluding on January 19, 2019, (hereinafter: “The Date of Termination of the Rental Period”).

2.2 The Tenant alone is given the option to notify the Company by means of a 90 day notice, at minimum, prior to the date of termination of the rental period, and in writing, regarding its desire to extend the rental for an additional 5 (five) year period, commencing from the date of termination of the rental period, (hereinafter: “The Option Period”), as long as the Tenant has fulfilled all the provisions of this agreement.

2.3 At any time after the conclusion of the first year of rental and by means of a 12 month prior notice, the Tenant has the right to notify the Company of the curtailing of the rental period and the cancellation of the rental agreement (hereinafter: “The Date of Termination of the Rental Period”).

2.4 The provisions of this agreement will apply during the option period, with the exception of the changes detailed in this agreement – regarding the one off increase of the rental fee by 5% over and above the rental fee that will be paid by the Tenant in the last month of the rental period.

2.5 All the rest of the provisions of this agreement, with the exception of the update as stipulated in this section, applicable to the rental period, will apply as is to the entire extension period and with the exception of the right of the Tenant to extend the rental period and any place in this agreement where the words “rental period” are stipulated, this expression will also include the option period.

2.6 Reducing the Size of the Premises

It is hereby agreed that after the first year of rental, the Tenant will have the right to reduce the floor area of the premises pursuant to a written notification and under the following conditions:

2.6.1 The notification will be submitted 180 days in advance;

2.6.2 The floor area handed back [to the Company] will be one, or more of the 4 areas marked on the drawing in Appendix 1A to this agreement, with the letters 1ka, 1kb, 1kc, 1kd.

The floor area handed back [to the Company] will be an area separated, by the Tenant and for the Tenant’s account, from the premises that will remain in the Tenant’s possession and will include a separate entrance and all the facilities detailed in Appendix 8 to this agreement.

2.7 The Objective of the Rental

2.7.1 The Tenant undertakes to use the premises during the rental period only for purposes of conducting and developing its existing and future business dealings, which is the type of business that it currently conducts, and not for any other purpose, unless the Tenant has obtained the Company’s prior consent to this end. It is clarified that for purposes of running its business, the Tenant runs a factory at the premises in the field of manufacture of electronic components and weighing devices, including manufacture, processing, marketing, administration, etc.

2.7.2 The Company hereby declares and undertakes that the Tenant is permitted, pursuant to the provisions of the Urban Building Plan, to use the premises for purposes of its existing business activities.

2.7.3 The parties agree that the rental pursuant to this agreement is solely for the premises and the Tenant does not have any right to hold or use or benefit from any other part of the Omer Industrial Park, with the exception of the premises itself and with the exception of the joint use of those parts and facilities at the Omer Industrial Park that will be determined by the Company as being access roads to the premises.

2.7.4 Despite the above states, the Tenant is permitted to position devices on the roof of the premises, such as a generator and / or motors (chillers) for the air conditioning and ventilation system, without such being considered as a deviation from the premises and subject to the fact that installation and use will be carried out pursuant to the directives of the law and as long as the installation will be within the boundaries of the area marked in red on the drawing (the service roof above the lowered offices), of a weight that will not exceed 500 kg. / sq. m. and the height of the devices will not exceed 4 meters from the floor of the roof. In order to eliminate doubt, insofar as the installation of devices will obligate any payment / fees / levy whatsoever, the tenant will bear such.

2.7.5 The Company declares that the premises have been constructed pursuant to the drawing, the specification, the Urban Building Plan and pursuant to the directives of any permit issued vis-à-vis the premises.

3. Rental Fees

3.1 The Tenant will pay the Company, in advance, for the rental of the premises, on the first day of every month, monthly rental fees of the amount stipulated in Appendix 2 to this agreement, such being linked to the Consumer Price Index. The Tenant will be exempt from the payment of rental fees up to June 1, 2014.

3.2 Linkage to the index will be effected by multiplying the amount of the rental fee by the ratio between the new index and the base index.

3.3 For purposes of this Section:

“Index”: Means the Consumer Price Index, including fruit and vegetables, published by the Central Bureau of Statistics. Should the index be replaced or should the method of calculation and formulation of the index be replaced or should the index be published by another organization in place of the above stated Bureau, the calculation of the increase of the index for purposes of this section of the agreement, will be carried out pursuant to the new index, using the linking formula between the new index and the old index.

“The Base Index”: The April 2014 index that will be published on May 15, 2014.

“The New Index”: The latest index that will be known on the date of execution of each payment of rental fees. A decreased [negative] index will not be taken into account.

3.4 All the payment stipulated in the agreement applying to this Tenant will be linked to the Index pursuant to the above stated provisions, and VAT pursuant to the law will be added.

4. Instruction to Debit a Bank Account

4.1 To facilitate the collection of the rental fee, the Tenant will sign a bank stop order, in the wording submitted by the Company to the Tenant.

The wording of the bank stop order is attached to this agreement and marked Appendix 7.

4.2 The payment of rental fees will be carried out by means of a written letter of authorization by debiting the Tenant’s bank account. As long as the Tenant has not vacated the premises, the Tenant will not be entitled to alter or cancel the written letter of authorization, without the prior written consent on the part of the Company.

4.3 In order to eliminate doubt, the cancellation of the written letter of authorization on the part of the Tenant without the prior written consent of the Company, will allow the Company to make immediate use of the security deposit lodged with the Company.

5. Adaptation of the Premises

The Tenant confirms that it has viewed, inspected and examined the premises and found such to be suitable for its needs from all aspects and without reservation, and that the Tenant waives any condition of allegation of flaw, defect, incongruence or argument pertaining to the property and the content thereof, including concealed non congruence or for any other reason. At the time of handing over the key to the Tenant, a handover protocol will be drawn up and insofar as defects will be apparent at the premises (with the exception of the fire detection and extinguishing system, which is handed over “as is”), such will be rectified by the Company as soon as possible.

6. Use

6.1 The Tenant will make use of the premises only for purposes of the rental. The parties agree that, without derogation from any other relief at the disposal of the Company pursuant to the agreement and / or the law, the breach of this section will be considered a fundamental breach of the agreement and will constitute a pretext of eviction against the Tenant

6.2 Without derogating from the above stated, should the Tenant cease to make use of the premise or cease to make use of the premises for purposes of the rental, for a period that exceeds six continuous months, the Company will be at liberty, but not obligated, to terminate the contractual association by means of a prior, written 60 day notice.

6.3 The Tenant is not permitted to remove equipment or furniture belonging to the Company from the premises unless it has obtained the prior, written consent of the Company.

7. Obtaining Permits

7.1 The Tenant will take care of obtaining all the permits required by law to run its business.

7.2 Subject to that stipulated in this agreement and in its associated appendixes, the Tenant declares that it is aware of the fact that the Company will not bear any responsibility whatsoever for obtaining permits of any kind that will be required for purposes of the Tenant conducting its business.

7.3 If, for any reason whatsoever, the Tenant did not obtain a permit to conduct its business, such will not relieve the Tenant of the responsibility of paying rental fees until the end of the rental period, pursuant to this agreement.

7.4 The Tenant and the Company hereby undertake to obey all the laws, regulations, orders and directives of any kind issued by the Government, municipal or other regimes vis-à-vis the occupation of the premises, and the use thereof and to compensate the Company vis-à-vis any damage or expenditure incurred by the Company in the wake thereof.

7.5 There is no fire detection and extinguishing system in the premises, pursuant to the Fire Fighting Service requirements, and neither a fire detection controller board. The Tenant will install the fire detection controller board and / or sprinkler system, in the premises, for the Tenant’s account, pursuant to the Fire Fighting Service requirements.

8. Mandatory Payments – Telephone, Electricity and Water

8.1 The Company will supply the Tenant with water for its needs pursuant to the permit approved for the building by the Authorities in the original building permit and the Tenant will pay the Company for the water consumption pursuant to the tariffs laid down by the Omer Local Council, as will be valid at the time of consumption. It is hereby clarified that the Company will not be responsible for any malfunction in the supply of water or for any cutoff of the water supply, whatever the reason for the cutoff of the water supply may be.

8.2 The Company will supply the Tenant with low voltage electricity (at least 400 V with a 3 * 600 ampere connection) for its needs and the Tenant will pay the Company for the electricity actually consumed pursuant to the Israel Electric Corporation’s low voltage tariffs, including power coefficient fines pursuant to the IEC’s definitions. It is hereby clarified that the Company will not be responsible for any malfunction in the supply of electricity or for any cutoff of the electricity supply, whatever the reason for the cutoff of the electricity supply may be.

In the event that the Tenant will require an increase in the size of the electrical connection, the Company will give its authorization to increase the electricity supply, on condition that the Tenant will bear the costs, pursuant to the account that the Company will receive.

8.3 The payment for the above stated ongoing supply of water and electricity will be carried out by means of the bank debit order (Appendix 7).

8.4 Without derogating from the above stated, the Tenant agrees that the non supply of electricity and water to the premises, for reasons not under the Company’s control, will not derogate from the Tenant’s obligation pursuant to this agreement.

8.5 There are electricity and water meters at the premises.

8.6 There is a main electrical board and electricity feed at the premises and the Company declares that such is in good working order and the Tenant receives such in the state as is.

8.7 The tenant declares that it is aware of the fact that the Company executes an initiated electricity shutdown once a year for about 12 hours, for purposes of servicing, maintenance and repair of the electricity grid transformers and high voltage system at the Industrial Park. The Company will give the Tenant a 30 day notice regarding the planned shutdown date and coordination of the date of the shutdown with the Tenant and the Tenant will not have any allegations against the Company due to the initiated electricity shutdown.

8.8 The Tenant will bear all payments of municipal taxes applicable to the premises, all the applicable local council taxes as well as any tax, municipal tax, levy or other obligatory payment applicable vis-à-vis the occupation of the premises and / or the use thereof, the payment of which have been lawfully imposed upon the actual user or actual occupant. The Tenant undertakes to register with the Council as the occupant of the premises within 7 days of the date of the commencement of the rental period pursuant to this agreement. The Tenant undertakes to not inform the Council regarding the curtailing of the rental period, unless it has obtained the written consent of the Company to this end.

8.9 The Tenant will order telephone lines in accordance with its needs, for the Tenant’s account and will bear all the cost of maintaining and using such.

8.10 The Tenant undertakes to settle any payments, applicable to the Tenant, pursuant to this agreement, on time.

8.11 Any fine, expense or damage incurred as a result of a delay in payment, due to the tardiness on the part of the Tenant in payment thereof, including any expenditure or damages incurred in the wake of the suspension of services to the premises, will apply to the Tenant.

8.12 In the event that after the Tenant vacates the premises, such bills as stipulated above will arrive vis-à-vis the period that the premises were occupied by the Tenant, the Tenant will be obligated, as stated, to pay such payments forthwith upon receipt of the notification thereof from the Company or from the Company’s representative.

9. Maintenance of the Premises

9.1 The Tenant undertakes to maintain the rented building (which is the property of the Company) in a good and complete state of repair while referring to all the requirements and instructions that it will receive from time to time from the Company Engineer, at the accepted standards regarding the proper maintenance of the premises.

9.2 In the case that the Company will carry out the work stipulated in paragraph (1) above at the behest of the Tenant, the Tenant will pay the Company, within 15 days of demand, any amount that the Company will expend for maintaining the premises.

10. Repairs to the Premises

10.1 The Company will be responsible to repair, for the Company’s account, within a reasonable period if time, pursuant to the case, of damages resulting from reasonable wear and tear sustained by the exterior walls, the piping, the floor and the roof of the premises, including external infrastructure.

10.2 In order to eliminate doubt, in the case of a blockage of the drain system, the Tenant is responsible for the repair thereof for the Tenant’s account.

10.3 The Company will be responsible for preventing rain leaks into the premises.

10.4 Without derogating from that stipulated in section 9 above, the Tenant is responsible for the repair of the parts of the premises not detailed in paragraph (1) above and will bear such costs.

11. Damage Caused by the Tenant

The Tenant undertakes to make use of the premises in a cautious and reasonable manner and to ensure that, for the entire rental period, the premises and all the facilities associated with the premises are in a good state of repair and will refrain from causing damage and / or breakdown vis-à-vis the premises and / or of its facilities and / or defacing and / or dirtying any part of the premises. Without derogating from the above stated, the Company will be at liberty to repair any damage and or breakdown and / or alteration as stated and charge the Tenant with the cost of the repair. The Tenant will inform the Company of any damage within 48 hours of such being detected.

12. Responsibility and Insurance

Commencing from the date of the signing of the agreement, the Tenant:

12.1 Will bear full responsibility for any damage caused as a result of a deed and / or blunder on the part of the Tenant and / or those representing the Tenant vis-à-vis this agreement, to the life and limb and / or the property of any person and any corporation and, without derogating from the generality of the above stated, including the Tenant, the Tenant’s employees, the Company, the Company’s employees and any third party whatsoever.

12.2 Hereby undertakes to compensate any of the Tenant’s employees, for the Tenant’s account, as well as the Company and any third party vis-à-vis any costs of damage, loss, expense or compensation owing to them as a result of damage incurred by them during and / or in association with the activities of the Tenant and the Tenant absolves the Company of any responsibility for the damage as stated.

12.3 Hereby undertakes to compensate the Company for any damage, loss or expense incurred by the Company as stated, immediately upon the first demand on the part of the Company to do so, as well as regarding any expenditure borne by the Company vis-à-vis the stated damage. Despite the above stated – it is clarified that the Tenant will indemnify the Company only vis-à-vis payment based on a verdict, the execution of which was not delayed, as long as the Company informed the Tenant regarding any demand and / or claim to this effect – immediately upon the receipt thereof. The Company will not be entitled to compromise vis-à-vis grounds in which the Tenant was indebted without obtaining prior written authorization from the Tenant.

Insurance

12.4 Without derogating from the responsibility of the Tenant pursuant to the law and / or pursuant to that stipulated in this agreement, prior to the date of taking possession of the premises and / or prior to the date of commencement of any work whatsoever on the premises on the part of the Tenant and / or anyone acting on behalf of the Tenant – the earlier of the two dates, the Tenant hereby undertakes to take out and uphold “Establishment Work Insurance” as detailed in the “Authorization of Taking Out Work Insurance” document attached to this agreement as Appendix 4, which constitutes an integral part of the agreement, regarding any work carried out by the Tenant and by anyone acting on behalf of the Tenant, in the premises and any investment in the premises, including equipment, systems and machinery that will serve the Tenant’s business operation as well as repairs, renovations, improvements, alterations and additions carried out in the premises

12.5 The limits of liability in the third party insurance taken out by the Tenant as stipulated in paragraph (2) of the Tenant’s Authorization of Taking Out Work Insurance (Appendix 1) is an amount of $ 1,000 (one thousand US dollars) multiplied by the floor area of the premises, with a minimum of $ 100,000 and a maximum of $ 2,000,000 per event and accumulative for the insurance period. All the above stated is subject to that stipulated in paragraph 12.18 below.

12.6 The Tenant undertakes to produce, for the Company, at the time of signing this agreement, or the date of commencement of work in the premises, the earlier of the two dates, an authorization of taking out Establishment Work Insurance pursuant to the wording of the “Authorization of Taking Out Work Insurance” document attached to this contract as Appendix 4, it being duly signed by the insurer. The Tenant declares that it is aware of the fact that producing an “Authorization of Taking Out Work Insurance”, as stated, constitutes a dependent and preliminary condition for the commencement of the Tenant’s work in the premises and the Company will be at liberty to prevent the Tenant from carrying out work in the premises and / or bringing in assets, as stated, in the case that the stipulated authorization was not produced to the Company prior to the date stipulated above.

12.7 Without derogating from the responsibility and undertaking on the part of the Tenant pursuant to this agreement, and / or pursuant to the law, from the date of bringing assets and / or any property whatsoever into the premises (with the exception of the assets included in the above stated work) or from the date of conclusion of work in the premises – the earlier of the two, the Tenant undertakes to purchase, for its account, and to maintain valid throughout the entire rental period and / or the entire option period, the insurance stipulated in the “Authorization of Taking Out Tenant’s Insurances” attached as Appendix 5 to this agreement.

12.8 The Tenant undertakes to update the insurance amounts vis-à-vis the insurance stipulated in the “Authorization of Taking Out Tenant’s Insurances” in such a manner that such will always reflect the value of the property in replacement value.

12.9 Without any need for a demand on the part of the Company, the Tenant undertakes to produce for the Company, no later that the date of commencement of this agreement or the date of bringing in any assets whatsoever into the premises, the earlier of the two dates, an authorization regarding taking out premises insurance pursuant to the wording of the “Authorization of Taking Out Tenant’s Insurance” document, attached as Appendix 5 to this agreement, it being duly signed by the insurer. The Tenant declares that it is aware of the fact that producing an “Authorization of Taking Out Tenant’s Insurance” as stated, constitutes a dependent and preliminary condition for the commencement of the Tenant’s activities in the premises and / or bringing in any assets whatsover into the premises, as stipulated above and the Company will be at liberty to prevent the tenant from carrying out activities in the premises and / or bringing in assets, as stated, in the case that the stipulated authorization was not produced to the Company prior to the date stipulated above.

12.10 The limits of liability in the third party insurance taken out by the Tenant as stipulated in paragraph (2) of the Authorization of Taking Out Tenant’s Insurance (Appendix 5) is an amount of $ 3,500 multiplied by the floor area of the premises with a minimum of $ 250,000 and a maximum of $ 5,000,000 per event and accumulative for the insurance period. All the above stated is subject to that stipulated in paragraph 12.18 below.

12.11 It is agreed that the Tenant is at liberty to not take out loss of income insurance, in full or in part, as detailed in Paragraph (4) of the authorization of taking out of insurance on the part of the Tenant (Appendix 5) and the Tenant is at liberty to not take out glass breakage insurance as detailed in paragraph (1) of the authorization (property insurance) while, however, the exemption included in paragraph 12.21 below will apply as if the insurance required in the authorization has been taken out.

12.12 In order to eliminate doubt, it is hereby clarified that not producing the insurance authorization at the above stated date, will not affect the Tenant’s undertakings pursuant to this contract, including, and without derogating from the generality as stated, to carry out any payment applicable to the Tenant and the Tenant undertakes to uphold all its undertakings pursuant to this contract even if the Tenant will be prevented from carrying out work and / or taking possession of the premises and or bringing assets into the premises and / or opening a business in the premises due to not producing authorizations on time.

12.13 No later than 14 days prior to the date of conclusion of the period of insurance of the Tenant, The Tenant undertakes to lodge with the Company, an authorization of taking out Tenant’s insurance as stated above vis-à-vis extending the validity for an additional year.

12.14 The Company will be entitled to examine the insurance authorizations produced by the Tenant as stipulated above and the Tenant undertakes to carry any change or amendment required in order to adapt such to the Tenant’s undertakings pursuant to the insurance clauses detailed in this agreement.

12.15 The Tenant declares and undertakes that the rights of the Company to conduct an examination and demand the changes as detailed above do not impose any responsibility whatsoever on the Company or on anyone acting on behalf of the Company, regarding the authorization of the stated insurance, the quality thereof, the scope or the validity thereof, or regarding the absence thereof and such will not derogate from any obligation whatsoever imposed upon the Tenant pursuant to this contract.

12.16 The tenant undertakes to fulfill all the terms and conditions of the policies stipulated in this section above, to pay the insurance premiums in full and on time and to ensure and verify that the premises insurance policies will be renewed from time to time, as required and will be valid for the entire rental period. Should the Tenant not comply with its undertakings pursuant to this section in whole, the Company will be entitled, but not obligated, to take out the insurance or part thereof in lieu of the Tenant and for the Tenant’s account and / or to pay in lieu of the Tenant any amount whatsoever, without derogating from the rights of the Company to any other relief.

12.17 The Tenant undertakes to uphold the reasonable safety procedures that will be published from time to time by the Company.

12.18 In order to eliminate doubt, it is hereby agreed that setting a limit of liability as stipulated in paragraphs 12.5 and 12.10 above, is the minimum requirement imposed upon the Tenant. The Tenant declares and confirms that it will refrain from raising any allegations and / or claims vis-à-vis the Company and / or the Management Company and / or anyone acting of behalf of them, in all matters related to the minimum limits of liability as stated.

12.19 The Tenant undertakes to not carry out, and / or to not permit anyone acting on behalf of the Tenant to carry out any deed or blunder which may increase the insurance expenses applicable to the Company and / or the other tenants vis-à-vis building insurance or tenant insurance. The Tenant undertakes that should the Company be charged with payment of additional insurance premiums over and above the acceptable amounts due to the activities of the Tenant, the Tenant will pay the Company the additional amount, as stated, immediately upon receipt of the first demand.

12.20 The Tenant declares that it will not have any allegations and / or demands and / or claims against vis-à-vis any damage liable for indemnity pursuant to the insurance detailed in the authorizations of taking out insurance stipulated above and the Tenant hereby absolves the Company and / or anyone acting on behalf of the Company from any responsibility for damage as stated. The above stated regarding absolution from responsibility will not apply to an individual who maliciously caused damage.

12.21 The Tenant absolves the Company, the Management Company and those acting on their behalf as well as other tenants, other renters and other rights holders in the Industrial Park in whose rental agreements or in any other agreement grants them Industrial Park rights, a parallel exemption vis-à-vis the Tenant is included, that exempts the Tenant from any liability vis-à-vis any damage for which the Tenant is eligible for indemnification (or which it would have been eligible for indemnification but for the deductible amount stipulated in the policies) pursuant to the insurance taken out pursuant to paragraph (1) of the authorization of taking out Tenant’s work insurance, Appendix 4, and paragraph (1) and (4) of the authorization of taking out Tenant’s insurance, Appendix 5, as long as the exemption from liability will not apply vis-à-vis an individual who maliciously caused damage.

12.22 If, in the opinion of the Tenant, there is a need to take out additional and / or complementary insurance to the tenant insurance as stated above, the Tenant undertakes, that any additional or complementary property insurance, as stated, will include a clause regarding the waiver of the right of subrogation as detailed in paragraph 1 of Appendix 4 in favor of the Company and the Management Company and those acting on their behalf, although the waiver as stated will not apply vis-à-vis an individual who maliciously caused damage.

12.23 These clauses constitute significant terms in this contract and the breach thereof and / or the breach of any of the terms and conditions will constitute a fundamental breach of the contract.

Tenant Insurance

12.24 Without derogating from the liability of the tenant pursuant to this agreement and or by law, the Tenant undertakes to take out and maintain, throughout the period of the agreement, the following insurance (hereinafter: “Tenant Insurance”): -

12.25 Expanded fire insurance that fully covers the replacement value of the building housing the premises (including the premises building explicitly), and all its systems, adjacent structures and facilities and any other property owned by the Tenant, against the accepted risks in expanded fire insurance including fire, lightening, smoke, explosion, earthquake, storm, hurricane, flood, water damage, impact by aircraft, collision, break in, robbery, riots, strikes and malicious damage (hereinafter: “Expanded Fire Insurance”).

The insurance will include a waiver of the right of subrogation vis-à-vis the Tenant, as long as the stated waiver of the right of subrogation will not apply vis-à-vis an individual who maliciously caused damage.

12.26 Consequential Loss Insurance for the premises (including a loss of rental fees), in the wake of a loss and / or damage to the building and / or the insured’s property as stipulated in paragraph 12.25 above, in the wake of expanded fire insurance (with the exception of a break in), for an indemnity period of 12 months. The insurance will include a waiver of the right of subrogation vis-à-vis the Tenant, as long as the stated waiver of the right of subrogation will not apply vis-à-vis an individual who maliciously caused damage.

Despite the above stated, it is agreed that the Tenant is entitled to not take out the stated insurance, in full or in part, however the exemption as stated in paragraph 12.29 below will apply as if the insurance has been taken out in full.

12.27 Third party liability insurance for cover of the liability of the Tenant pursuant to the law vis-à-vis injury and / or damage that is liable to be incurred by life or property of any person and / or body, in the limits of liability of $ 1,000,000 per incident and accumulative for the annual insurance period. The insurance will not include a limitation regarding liability resulting from fire, explosion, panic, lifting devices, loading and offloading devices, defective sanitary facilities, poisoning, anything harmful in food or drink, riots, strikes, malicious damage, liability regarding and vis-à-vis contractors, sub contractors and their employees as well as subrogation claims on the part of the National Insurance Institute. The insurance will be expanded to indemnify the Tenant vis-à-vis responsibility for the deeds and / or blunders on the part of the Tenant, subject to a cross-liability clause.

12.28 Employers liability insurance to cover the Tenant’s responsibility pursuant to the Damages Law (New Format) and / or the Responsibility for Defective Goods Law, 5740 – 1980, vis-à-vis the employees of the Tenant regarding physical injury and / or illness that is liable to be incurred by such during the course of and / or in the wake of their work, within the limits of liability of $ 5,000,000 per claimant, per incident and accumulative for the annual period of insurance. The insurance will not include a limitation regarding liability vis-à-vis contractors, sub contractors and their employees as well as regarding working at heights and depths, bait and toxins, hours of work and employment of youths. The insurance will be expanded to indemnify the Company should the Company be considered as being the employer of any of the Tenant’s employees.

12.29 The Company declares that it will not have any allegations and / or demands and / or claims against the Tenant vis-à-vis loss and / or damage for which the Company is eligible for indemnification pursuant to the insurance that the Tenant undertook to take out as stipulated in paragraphs 12.25 and 12.28 above, (or should have been eligible for indemnification but for the deductible amount) and absolves the Tenant from responsibility for any loss and / or damage as stated.

13. Cleanliness

13.1 The Tenant undertakes to maintain the premises in a good state of repair and keep the premises and surroundings clean. Without derogating from the generality of that stated in this paragraph, the Tenant undertakes to ensure that any industrial waste belonging to the Tenant will be removed from the premises or from the vicinity of the premises and to position a container for the removal of industrial waste, including cardboard boxes and voluminous waste.

13.2 The Tenant is responsible for the fact that the sewage and effluent emanating from the premises will comply with sewage standards obligating all the factories located at the Industrial Park and the demands of the Local Authority. Should the sewage and effluent generated at the Tenant’s factory not comply with the stipulated standards and requirements, the Tenant will take all the steps required, for the Tenant’s account, to adapt the effluent to the stated standards and requirements.

13.3 The Tenant will indemnify the Company vis-à-vis any expenditure or loss incurred by the Company in the wake of a deed or blunder on the part of the Tenant that will cause the effluent emanating from the Tenant’s factory to not comply with the obligating standards and the requirements of the Local Authority.

14. Safeguarding the Premises

14.1 Should the Tenant request to make use of the walls of the premises and / or the ceiling and roof systems of the premises, and / of the other components of the premises, for purpose of connecting or loading facilities and / or items of any kind whatsoever, the Tenant will be obligated to obtain, prior to the execution as stated, the written consent of the Company. The Company’s objection will be out of reasonable justification.

14.2 The Tenant will not bring, into the premises, equipment that is liable to cause damage to the premises and will not load the roof of the office block of the premises more than the permitted weight limit – 500 kg / sq. m.

15. Public Areas

The Tenant will not be permitted to make any use whatsoever of the sidewalks, roads and any other public area outside of the premises, as defined above, except for the objective for which the public area was intended.

16. Signs

The Company will design, in conjunction with the Tenant, directional signs in the industrial park. This design will take into account and will be expressed by the Tenant’s text only. The Company will execute the Tenant’s sign in the format and at the location determined by the Company as stipulated above. The payment for the sign will apply to the Tenant. The payment for a directional sign is a one time cost paid as part of the first stop order payment and is NIS 850. Any additional sign will be executed after obtaining authorization from the Company and for the Tenant’s account.

17. Payment for Services

17.1 The Company will provide the Tenant, together with the rest of the tenants at the industrial park, with the services detailed below: Peripheral guarding, landscaping, cleaning of public areas, maintenance of systems: Water, electricity up to the premises, sewers, internal roads, parking lots and lighting in public areas inside the boundaries of the industrial park. In order to eliminate doubt, it is clarified that the peripheral guarding of the industrial park includes only control of those entering and exiting the park and does not include protecting the premises from unauthorized entry. The Company will not be responsible under any circumstances for any damage caused to the Tenant as a result of a break in to the premises or unauthorized entry into the premises.

17.2 The Tenant will pay the Company, each month, together with the rental fee, a service levy as stipulated in Appendix 2, for each square meter of premises. The linkage of the prices will be pursuant to Section 3 of the contract. The Tenant will be exempt from payment of the service levy until June 1, 2014.

18. Alterations to the Premises.

18.1 The Tenant undertakes to not alter the premises building in any manner whatsoever or to affect it in any way, to not make any change or addition to the premises in any manner whatsoever, including adding any structure or facility or other permanent addition, to not damage the plumbing and electrical systems and to not install any additional systems or any additional electrical switches in the premises and to not install antennae or any other system – unless the Tenant has obtained the prior written consent of the Company.

18.2 The Tenant will not be entitled to make any changes to the premises without the prior written consent of the Company. The authorized changes will be carried out by a duly qualified contractor selected by the Tenant and subject to approval by the Company.

The Tenant will submit plans to the Company for the approval of the alterations and the plan will include: Building division plans, electrical plans including fire detection connected to the general system at the Industrial Park, air conditioning and plumbing plans.

It is hereby clarified that for purposes of carrying out the alterations requested by the Tenant, the Tenant will also be permitted to increase the floor space of the premises by means of use of the building percentages (hereinafter: “The Additional Area”), without having to be obligated to pay anything to the Company and subject to all the permits and licenses required to this end by the law. The type of method of increase of floor space is the construction of a gallery, the creation of an additional level by dividing the ground floor into two floors, under the following conditions:

1. Obtain all the authorizations required from the Authorities.

2. Bear all the payments of fees and levies / taxes demanded by any organization including the Israel Land Authority.

18.3 Despite the above stated, it is hereby agreed that the Company will be entitled to not approve the requested alterations only in the case that the alterations are liable to impact upon the mantle of the premises and / or the infrastructure contained therein.

18.4 Any alteration made to the premises after obtaining the approval of the Company and / or equipment that will be installed will be owned by the Tenant and will be dismantled by the Tenant upon the termination of the rental period and the handing back of the premises to the Company. The premises will be handed back to the Company in the state in which such was handed over to the tenant and including all the systems detailed in Appendix 8.

18.5 The Company will be entitled to remove or demolish any alteration or addition made by the Tenant without the Company’s consent, and to reinstate the premises to their former state, and the Tenant will bear all the costs incurred by the Company in this respect.

19. Preventing Damages

19.1 The Tenant will refrain from creating any hazard whatsoever and, in this regard, the Tenant undertakes to not generate loud noise, odors or shocks that are liable to disturb the neighboring factories to the premises.

19.2 In any case of a disturbance as stipulated above, then in addition to any other right at the disposal of the Company pursuant to the provisions of this contract and / or pursuant to the directives of the law, the Company will be entitled to carry out any inspection and / or measurement and / or repair and / or any other action that the Company will deem fit to reinstate the state of the premises to its former state and / or to remove the hazard. All reasonable expenses that the Company will incur will apply to and will be paid by the Tenant, by means of a prior written notification.

19.3 The Tenant hereby undertakes to pay any reasonable amount expended by the Company, as stipulated above, to the Company, with the addition of linkage differences and interest pursuant to the law, from the date of expenditure of the amounts and up to the date of payment thereof by the Tenant. The Company’s accounts regarding the amount of such expenditure will constitute decisive proof of the correctness of that stipulated therein and the Tenant undertakes to pay such immediately upon first demand.

20. Entry to the premises.

The Company’s employees and emissaries are permitted to enter the premises at any time during normal business hours, by prior coordination with the Tenant, in order to inspect such or to carry out repairs and other work that is required, in the opinion of the Company.

21. Transfer of Rights

21.1 The Tenant will not be entitled, without prior written consent, to transfer all rights or any part thereof granted pursuant to this agreement, to any other and / or to others, with the exception of subsidiary companies fully controlled by the Tenant, and subject to the tenant always being responsible vis-à-vis the Company for the upholding of the provisions of this agreement.

21.2 The Tenant undertakes to not hand over or give possession or to transfer or to let the premises, or any part thereof, or any of the lease rights the Tenant has in the premises, and to not allow anyone else to use the premises or part thereof or to share the use thereof with anyone, whether for payment or not for payment, unless the Tenant has obtained the prior written consent of the Company.

21.3 The Company will be entitled to transfer its rights and obligations pursuant to this agreement to another, as long as the rights of the tenant pursuant to this agreement will not be affected.

22. Evacuation

22.1 The Tenant will vacate the premises upon the termination of the rental period and will hand the premises back to the Company, it being empty of any person and object belonging to the Tenant, with the equipment in the premises as detailed in Appendix 8 being operational and in good working order and with the state of the premises being as it was handed over by the Company to the Tenant, with the exception of reasonable wear and tear. In any case where the Tenant will have to vacate the premises pursuant to this agreement, whether for the reason stipulated in this paragraph or for any other reason detailed in this agreement, the Tenant will have to hand the premises back together with the keys, it being totally vacant and in a good state and appropriate for immediate use, with the exception of reasonable wear and tear.

22.2 Furthermore, the Tenant will produce for the Company, upon the conclusion of the rental period, or the actual evacuation of the premises, authorization from the local authority that the Tenant does not have any debts of taxes and / or fees to the Local Authority vis-à-vis the premises, up to the end of the rental period or up to actual date of evacuation.

Without derogating from that stated below, should the Tenant not vacate the premises at stated above, the Tenant will pay the Company a predetermined fixed compensation amount (hereinafter: “The Compensation”) for each day of tardiness, of an amount equal to double the rental fee that will apply to the premises vis-à-vis one day’s rental during the last month of the last year of rent. The compensation will be linked to the Consumer Price Index and the calculation of the linkage difference will be done by the Company each month. The determined compensation with the addition of the linkage differences will be paid no later than 7 days from date of demand.

22.3 The above stated will not affect or derogate from any right of the Company and in particular its right to demand the vacating of the premises. In order to eliminate doubt, it is agreed that the debiting of the Tenant as detailed in this paragraph, will also apply after the end of the rental period and up to the actual vacating of the Tenant.

23. Section Cancelled

24. Breach of Contract and the Cancellation Thereof

Without derogating from any other provision of this agreement, it is agreed that each of the occurrences detailed below will be considered a fundamental breach of the contract on the part of the Tenant, which will grant the Company the right to cancel this agreement forthwith.

24.1 Should an attachment be applied to the full rights of occupation or use of the premises on the part of the Tenant, and / or on any of the Tenant’s moveable assets.

24.2 Should a verdict be handed down for the liquidation of the Tenant and / or if the Tenant commenced execution processes or if execution processes were commenced against the Tenant, that threaten the existence thereof, bankruptcy procedures or if a trustee or receiver has been appointed for the Tenant or for its assets.

24.3 Should the Tenant reach an agreement with its creditors or has lodged an application regarding an arrangement with its creditors and the stipulated orders have not been cancelled within 30 days of being issued.

24.4 Should the Tenant be late by more than 10 days with the settlement of any of the payments applicable to it pursuant to this agreement.

24.5 Should the Tenant breach the provisions of any of the following sections of this agreement: 3, 6.1, 7.4, 8, 9, 11, 12, 17, 18, 19, 22, 26 and it is agreed that any breach of one of these section constitutes a fundamental breach of this agreement and any fundamental breach of this agreement, as well as any other breach of this contract constitutes a fundamental breach thereof pursuant to the Contracts Law (Remedies Vis-à-vis Breach of Contract), 5731 – 1971.

24.6 In any case of a breach that is not a fundamental breach, listed under the provisions of the above stated paragraph, there will be an extension of 30 days from the date of issue of a written warning regarding the breach by the Company to the Tenant, a reasonable extension pursuant to the Contracts Law (Remedies Vis-à-vis Breach of Contract), 5731 – 1971. and should the Tenant not rectify the breach within the extension period, the Company will be entitled to cancel this contract forthwith.

24.7 In addition to any relief that the Company will be entitled to sue for pursuant to this agreement, and / or pursuant to the law and without derogating from the generality stipulated above, the Company will be entitled to bring about the immediate cancellation of this agreement, in the cases detailed below:

24.8 Use of the premises in contradiction of the objectives of the rental objectives as detailed in this agreement.

24.9 Transfer of the Tenant’s rights in the premises to another, in contradiction to the provisions of this contract.

24.10 Creation of a significant hazard in a manner that is liable to disturb the neighboring factories to the premises.

24.11 Executing a deed in contradiction of the provisions of Section 15 and / or 19 (a) of this agreement above.

24.12 Any other breach of the agreement that has not been rectified by the Tenant within 30 days of the Company issuing a written warning to the Tenant.

24.13 Should the Company notify of the cancellation of the agreement, the Tenant will evacuate the premises within 60 days from the date of receipt of the notification.

24.14 There is nothing in the directives of this section to derogate from the rights of the Company pursuant to this agreement or pursuant to the Law.

25. Settlement of the Tenant’s Debts

25.1 In a case where the Tenant breached its undertakings pursuant to this agreement and did not pay payments applicable to the Tenant, the Company will be entitled, should it so wish, to pay in lieu of the Tenant any amount regarding the premises, the payment of which applies to the Tenant pursuant to this agreement or pursuant to the law and this not before the date of payment thereof has passed. The Company will inform the Tenant of its intension to pay the amount as stated in lieu of the Tenant, seven days prior to the date of payment.

25.2 The Tenant will reimburse the Company with any amount paid by the Company as stated, within seven days from the date of be requested to do so, together with interest as stipulated in Section 30 below, from the date of demand and until the actual date of payment.

26. Taxes

All the Government and / or municipal and / or other taxes, fees and levies of any kind whatsoever, related to the conducting of the Tenant’s business and / or applicable to the Tenant vis-à-vis the rental of the premises and / or which will apply to the Tenant, will be paid by the Tenant.

27. Tenant protection Law

27.1 The parties hereby declare that vis-à-vis the rental pursuant to this agreement, the Tenant did not pay the Company key money whether directly or indirectly and the Tenant Protection Law (Combined Format) 5732 – 1972 and / or any part that will replace such (hereinafter: “The Tenant Protection Law”) will not apply. In the case that the Tenant will carry out work in the premises for the Tenant’s account, such work will not, under any circumstances, be considered as payment of key money and the Tenant will not be considered a protected tenant pursuant to the Tenant Protection Law.

27.2 The Tenant declares that it is clear to the Tenant that the intent of the parties is non protected rental and in any case of interpretation of this agreement, the agreement will be interpreted in light of this intent on the part of the parties.

28. Legal and Other Expenses

28.1 The parties agree and declare that in the case that the Tenant will not vacate the premises upon the termination of the rental period, or after a notification of the cancelation of the rental [agreement] pursuant to Section 24 of the this agreement above has been dispatched to the Tenant, then in addition to all the remedies laid down in this agreement and in the law, the Tenant will bear all the reasonable costs that will be ruled for the Company in all matters related to the legal handling against the Tenant regarding any hearing or legal claim or action at the Debt Collection Execution Bureau, and including the fees of the Company’s attorney to whom the matter has been handed over (hereinafter: “Legal Costs”).

28.2 The Tenant will pay the company the legal costs immediately after the verdict is handed down against the Tenant and pursuant to what has been ruled and together with linkage and interest, from the date of the dispatch of the letter of demand and up the date of actual payment.

29. Changes to the Agreement

Any changes to the terms of this agreement or waiver of the rights of the Company pursuant to the agreement, will be done only in writing and with the signature of the signatories obligating the Company.

30. Linkage and Interest

The parties agree that regarding any amount that the Tenant will not pay on time (hereinafter: “The Arrears Amount”), the Tenant will be obligated to pay the Company current loan account interest at the maximum rate customary at the First International Bank on anomalous overdraft amounts.

31. Agreement Expenses

Each party will bear the costs of handling this agreement.

32. Value Added Tax

Any amount that the Tenant is obligated to pay will bear value added tax pursuant to the lawful rate on the day of payment. The parties agree that the Company will be entitled to round off the amounts that the Tenant owes as payments to the Company, pursuant to this agreement or pursuant to the law, to the nearest whole Shekel. The payment of value added tax will be at the date determined for the effecting of any of the payments detailed in this agreement.

33. Guarantees and Securities

33.1 As a guarantee for the payment of rental fees, the electricity consumption account the municipal taxes, should such not be paid by the Tenant on time, and all the Tenant’s debits pursuant to this agreement, the Tenant will lodge, with the Company, at the time of the signing of this agreement, a check totaling an amount equal to 4 month’s rent together with VAT that will be held in trust at Adv. Michael Meir Sela & Co. (hereinafter: “The Trustee”). The trustee will be entitled to transfer the deposit money in full or in part to the Company in the event that it has been proved to the trustee’s satisfaction that the Tenant breached the contract and did not rectify the breach despite a 14 day warning and the Company will be at liberty to use this money to settle the Tenant’s debts (hereinafter: “The Deposit”).

33.2 Any use of the deposit amount as stipulated above obligates the Company to dispatch a prior written warning notification to the Tenant and only if the Tenant has refrained from settling the debt applicable to the Tenant for a period of 14 days after receipt of the warning by the Tenant, the Company will be entitled to make use of the deposit. In the case the use of the deposit monies to settle the debts of the Tenant, the Tenant will supplement the balance of the deposit that has been realized immediately upon receipt of the notification regarding the realizing of the deposit.

33.3 The deposit monies will be invested by the Trustee in the trust account by means of an annual deposit at the International Bank.

33.4 Upon the termination of the rental period and subject to the completion of the debiting of the Tenant pursuant to this agreement, and insofar as no use has been made of the deposit amount, this amount will be refunded to the Tenant, or the balance amount in the case that use was made of the deposit, to which the interest accrued will be added, less the commission regarding handling the deposit.

34. Non Offsetting of Payments

The Tenant will not be entitled to offset, from the rental fee and / or from other payments owing by the Tenant to the Company, any amount whatsoever owing to the Tenant, insofar as such will be owing to the Tenant, by the Company.

35. Use of the Explosion Proof Room

In times of emergency, the Tenant is permitted to make emergency use of the bomb shelter located adjacent to the dining room for the protection of the Tenant’s employees.

36. Delivering Notifications

Any notification that the parties to this agreement must deliver one to the other, will be considered as having been delivered 72 hours after having been handed in for registered mail delivery at a post office in Israel, to the addresses of the parties as detailed in this agreement. The hand delivery of a notification at the premises to one of the managers will be considered as a legally binding delivery to the Tenant. In addition to the above stated, the parties will be entitled to dispatch notifications to each other by courier, and in such a case, the delivery of a notification will be considered to be the date appearing on the delivery note signed by the courier.

And in witness have the parties set their signatures:

[rubber stamp]	[round stamp]
Tefen Enterprises Ltd.	Vishay Advanced Technologies Ltd.
Association No. 511414898
( - signature - )	( - signature - )
__/s/ Arye Dahan____	_/s/_Ella Shomer___
The Company	The Tenant

Measurement Diagram – Appendix 1A

XXXX sq. m. [typical]

Appendix 2

Rental and Service Fees

1. The Tenant will pay the Company, in advance, on the first day of each month, of the rental period, commencing from June 1, 2014, rental fees totaling NIS 24 for each square meter of the floor space of the premises, and a service levy totaling NIS 6 for each square meter of the floor space of the premises. During the option period, 5% will be added to the principal of the rental fees and to the principal of the service levy over and above the rental fees and the service levy that will be paid in the last month of the rental period.

2. Linkage difference pursuant to paragraph no. 3 of the rental agreement will be added to the rental fees and service levy principal detailed above.

3. Value added tax at the rate that will be fixed pursuant to the law on the date of payment will apply to the rental fees and service levy principal with the addition of linkage differences.

4. In the case of the reduction of the floor space of the premises, rental fees and service levy will be paid in accordance with the floor area stipulated in Appendix 1A to this agreement that will remain occupied by the Tenant.

Appendix 3

Electrical Connection

1. The Company will supply the Tenant, for its account, a feed switch to which the Tenant will connect. The electricity supply line will suit, from an engineering point of view, the full electrical load of the premises.

2. The main electrical board will comply with the requirements of the standard.

3. The size of the electrical supply feed to the Tenant will be 3 * 600 Ampere.

4. In the event that the Tenant will require a larger electricity supply feed than that stipulated in Paragraph 2 above, the Tenant will bear the addition to the price between the expanded electricity supply line and that stipulated in paragraph 2 above, pursuant to the Israel Electric Corporation price list as will be valid at the time.

5. Changes to the existing electrical facility and the power and lighting electrical boards in the area of the premises will be carried out by the Tenant and for the Tenant’s account.

6. Prior to commencing changes in the execution of the existing electrical facility that the Tenant wishes to install in the premises, the Tenant will submit detailed electrical plans of the facility to the Company for approval. Only after obtaining authorization, can the Tenant commence carrying out the work in the premises.

7. Upon the completion of the execution of the Tenant’s electrical connection, the Tenant will order an inspection of the facilities by a qualified electrical inspector and will produce a report for the Company that confirms that the facility complies with the requirements of the Israel Electric Corporation and is free of defects and can be connected to the electricity supply.

Appendix 4

Authorization of Taking Out Work Insurance

Date: ______________

To:

Tefen Enterprises Ltd.

Company No. 51-141489-8

P. O. Box 1, Tefen 24959

(Hereinafter “The Company”)

Dear Sir / Ma’am,

Re: Our Insured: ______________________ (hereinafter: “The Contractor”)

Authorization of Taking out an Insurance Policy Pursuant to the Terms of

Contract No: ___________ of [Date] ___________ (hereinafter: “The Contract”)

We hereby confirm that as of [date] ___________ and up to [date] ____________ our company has drawn up contractor work insurance in the name of the Tenant, contractors and subcontractors, which secures the work carried out by the Tenant and / or anyone acting on behalf of the Tenant as detailed below, of a scope of cover that is not less than the cover pursuant to the wording of the policy known as “Bit” customary at the date of the commencement of the insurance period:

Name of the insured in all the insurance policies: The contractor and / or the Tenant and / or contractors and / or subcontractors.

1. Chapter 1 – “All Risks” insurance that covers loss or damage caused to the Tenant’s work, of full value, as well as loss or damage caused to the equipment used to carry out the work as stated. This chapter includes a clause regarding waiver of subrogation vis-à-vis the Company and the Management Company as well as vis-à-vis neighboring tenants and other rights holders in the industrial park, in whose insurance a parallel clause regarding waiver of subrogation vis-à-vis the Tenant was included, as long as the above stated regarding the waiver of the right of subrogation will not apply to a person who caused malicious damage.

The chapter includes an expansion regarding the property that is being worked upon and / or adjacent property, with a limit of liability totaling $ * __________ ( __________ thousand dollars).

2. Chapter 2 – Third party liability insurance of the limit of liability as detailed below. The stated chapter includes a cross liability clause by which the insurance is considered as having been taken out for each of the individuals of the insured.

Limit of liability ** $ ______________.per event and accumulative for the insurance period.

The chapter as stated will include an expansion regarding: Subrogation claims of the National Insurance Institute; physical injury resulting from the use of motor vehicles that it is not obligatory to insure under compulsory insurance (should such be relevant); Tremors and foundation weakening up to an amount of at least $ 100,000 per event.

The name of the insured in this chapter includes the Company and / or the Management Company subject to a cross liability clause.

In order to eliminate doubt, damage to the property of the Tenant and / or the management company will be considered damage to third party property pursuant to this chapter.

3. Chapter 3 – Employers liability insurance vis-à-vis liability for all the workers employed in carrying out the work of a limit of liability of $ 5,000,000 per claimant per case and total for the insurance period.

The insurance does not include any limitation regarding working at heights and at depths, work hours, bait and toxins, contractors, subcontractors and their employees as well as matters of employing youth legally.

The name of the insured in this chapter includes the Company and / or the Management Company subject to a cross liability clause.

General

• The above stated insurances include a specific condition by which they take preference over any insurance taken out by the Company and / or the Management Company and that we waive any demand or claim regarding sharing the insurance of the Company and / or of the Management Company.

• We undertake that the above stated insurance will not be reduced and will not be cancelled during the insurance period, unless a written notification, dispatched by registered mail, is handed to the Company 30 days in advance.

• We confirm that the Tenant is solely responsible for the payment of insurance fees and the deductible amount vis-à-vis the insurance as stipulated above.

Subject to the terms and reservations of the original policies insofar as such were not specifically altered pursuant to the above stated.

Sincerely

_______________	_______________	_______________	_______________
(Signature of the Insured)	(Signature of the Insurer)	(Name of the signer)	(Position of the signer)

Appendix 5

Authorization of Taking Out Work Insurance

Date: January 23, 2014

To:

Tefen Enterprises Ltd.

Company No. 51-141489-8                    

P. O. Box 1, Tefen 24959            For purposes of a rental agreement

(Hereinafter “The Company”)

Dear Sir / Ma’am,

Re: Authorization of Drawing up Insurance Regarding the Rental Agreement between the Company and Vishay (hereinafter: “The Tenant”) of [date] _______ (hereinafter: “The Agreement”) Regarding the _____________Premises at the Omer Industrial Park

We hereby confirm that as of July 6, 2013 and up to July 5, 2014, our company has issued the insurances listed below, in the name of the Tenant (hereinafter: “The Tenant’s Insurance”).

1. Property Insurance – Insurance that insures the content of the premises owned or under the responsibility of the Company as well as property inventory and equipment serving the premises owned or under the responsibility of the Company and which is located outside of the premises within the boundaries of the Industrial Park, at replacement value, as well as any change and addition to the premises carried out and / or which will be carried out by the Tenant and / or anyone acting on behalf of the Tenant, against loss or damage in the wake of the customary risks incorporated in “Expanded Fire” insurance including fire, smoke, lightening, explosion, earthquake, storm, hurricane, flood, damages from liquid and burst pipes, damage caused by vehicles, damage caused by aircraft, strikes, riots, malicious damage, glass breakage, as well as break in. The insurance includes an explicit condition whereby the insurer waives any right of subrogation vis-à-vis the Company and the Management Company and those acting on behalf of the above stated, as well as vis-à-vis other renters, other tenants and other rights holders at the Industrial Park, (all together will be hereinafter called: “Other Rights Holders at the Industrial Park”), whose property insurance includes a parallel clause regarding waiver of subrogation vis-à-vis the Tenant, as long as the above stated regarding the waiver of the right of subrogation will not apply in favor of a person who caused malicious damage.

2. Third Party Liability Insurance, that insures the liability of the Tenant pursuant to the law vis-à-vis injury to body and / or damage to property of any person or / or body whatsoever within the ambit of the activities of the Tenant and / or the Tenant’ employees and / or the Tenant’s managers pursuant to the agreement, of the limit of liability as detailed below the insurance is not limited to any limitation regarding liability resulting from fire, explosion, panic, lifting, loading and offloading devices, defective sanitary facilities, poisoning, any damaging thing in food or drink, liability regarding and vis-à-vis contractors, subcontractors and their employees, strikes and shut downs as well as subrogation claims on the part of the National Insurance Institute. The insurance is expanded to indemnify the Company and / or the Management Company vis-à-vis their responsibility for the deeds and / or blunders of the Tenant and of those acting on behalf of the Tenant, and this subject to a cross liability clause by which the insurance will be considered as having been drawn up separately for each of the individuals of the insured.

The limit of liability of $ 983,370 per event and accumulative for the annual insurance period.

3. Employers Liability Insurance vis-avis the Tenant’s liability to all the workers employed by the Tenant, regarding physical injury or disease caused to any of them, during and in the wake of their employment in the premises and the surroundings, of a limit of liability of $ 5,000,000 per claimant per case and in total for the insurance period. This insurance does not include any limitation regarding work at heights and depths, hours of work, bait and toxins as well as regarding the legal employment of youth.

The stated insurance is expanded to indemnify the Company and the Management Company should it be claimed in the matter of the occurrence of any work accident whatsoever that bear employer’s liability vis-à-vis any of the their employers.

4. Consequential Loss Insurance that will insure consequential loss caused to the Tenant in the case of the loss or damage to the premises and / or to the content thereof and / or to property covered pursuant to the insurance issued pursuant to paragraph 1 above and / or in the wake of preventing access to the premises and surrounding area, in the wake of the risk detailed in paragraph 1 above , for a indemnity period of at least 12 months. The insurance includes a specific condition by which the insurer waives any right of subrogation vis-à-vis the Company, the Management Company and those acting on behalf of the above stated, as well as vis-à-vis other rights holders at the industrial park (regarding which the consequential loss insurance of the other rights holders in the industrial park includes a parallel clause regarding a waiver of subrogation vis-à-vis the Tenant) as long as the above stated regarding the waiver of the right of subrogation will not apply in favor of a person who caused malicious damage.

[rubber stamp]

The limits of liability / insurance amounts incorporated in the authorization of this insurance will apply to all the work / activities (in total) of all those insured under the above stated policy, (together) including the work that is the subject of this authorization. The authorization is issued subject to the rest of the terms and anomalies of the original policy

General

• The above stated insurances include a specific condition by which they take preference over any insurance taken out by the Company and / or the Management Company and that we waive any demand or claim regarding sharing the insurance of the Company and / or of the Management Company.

• We undertake that the above stated insurance will not be reduced and will not be cancelled during the insurance period, unless a written notification, dispatched by registered mail, is handed to the Company 30 days in advance.

• We confirm that the Tenant is solely responsible for the payment of insurance fees and the deductible amount vis-à-vis the insurance as stipulated above.

Subject to the terms and reservations of the original policies insofar as such were not specifically altered pursuant to the above stated.

Sincerely

		( - signature - )
_______________	_______________	_______________	_______________
(Name of the signer)	(Position of the signer)	(Signature of the Insurer)	(Stamp of the Insurer)
		[rubber stamp]
		Harel Insurance Company Ltd.

Appendix 6

Fire Detection and Extinguishing

1. The Tenant is to install, in parallel to preparing the dedicated electricity and electrical boards, a fire detection and gas extinguishing system pursuant to the requirements of the Fire Fighting Services. The system will be connected to the main switchboard that will also be installed by the Tenant in the guard hut that is manned 24 hours a day. Upon the completion of the work, the Tenant will produce a standards authorization issued by the Institute of Standards for the fire detection and extinguishing system at the premises, which will be a condition for connecting the electricity supply to the premises.

2. Once a year, the Tenant will produce an authorization stipulating that the fire detection and extinguishing system is under annual service and is maintained pursuant to the standard.

Air Conditioning

1. The Tenant will bear the annual warranty and insurance for the air conditioning systems belonging to Tefen Enterprises Ltd. installed in the buildings.

2. Tefen Enterprises Ltd. will draw up an annual service contract with the Electra Company, the supplier of the air conditioning systems and will debit the Tenant with the cost of the insurance through a stop order once a year.

3. In the case of a malfunction in the air conditioning system the Omer Industrial Park Administration is to be informed on (08) 649-2692, to call out a technician.

4. The cost of the insurance for the central air conditioning system in Buildings 1 to 8 [sic] is NIS 4,150 + VAT, linked to the Consumer Price Index per unit per annum (the Tenant has 4 operating units). The total cost of the insurance is NIS 16,600 per annum, including spare parts for the first two tears and after two years the insurance will include spare parts with the exception of the compressor and the condenser coil. The Tenant has the option to insure air conditioning units independently and to hand them back to the Company in good working order at the end of the agreement period.

In addition to the central air conditioning, there are 5 mini central air conditioning units at the premises that will be handed over to the tenant in good work order. From the date of signing the contract, the responsibility for the air conditioners will be that of the Tenant and the Tenant undertakes to hand them back to the Company in good working order.

1660/11/3/19/13

Appendix 7

Bank Authorization

To	Account No.	Type of Account	Clearing Code
Tefen Enterprises	116215		Branch	No.
P. O. Box 1			461
Migdal Tefen
	Institute Code	Reference / Identifying No. of the Customer at the Company
	26176	512868142

We received Instruction No. ________________ to honor debits of the amounts and at the dates that will appear on magnetic means and on lists that were submitted to us from time to time and in which the account number / s at the bank will be stipulated and all pursuant to that detailed in the letter of authorization.

We have recorded the instruction and will act accordingly as long as the state of the account will facilitate such, as long as there will not be any legal or other preclusion to execute such, as long as we have not received a written instruction for cancellation from the account holder / s, or as long as the account holders were not excluded, or as long as the account holders were not excluded [sic] from the arrangement, this authorization will not impact upon your undertakings towards us, pursuant to the letter of indemnification signed by you.

Sincerely

	[round stamp] Bank Mizrahi Tefachot Ltd. Main Business Center Tel Aviv ( - signature - )
Date: January 27, 2014	Bank ____________________
Both parts of this form will be	Branch ____________________
dispatched to the Bank branch	Signature and Stamp of the Branch

Appendix 8

List of Facilities and Equipment Existing at the Premises

1. 2 ea. 60 liter Amcor hot water boilers in Units C 1 and D1.

2. 2 ea. 150 liter Chromagen hot water boilers in Units A 1 and B1.

3. 3 ea. Air extraction fans in the toilets.

4. 1 ea. BDOOEA250 TCH, serial no. M37101867d

5. 1 ea. BDOOEA250 TCH, serial no. M38100489d

6. 1 ea. BDOOEA250 TCH, serial no. M37102493d

7. 1 ea. BDOOEA250 TCH, serial no. M38100488d

8. Tadiran mini central air conditioning unit ANL85 M installed on the roof of building B1.

9. Tadiran mini central air conditioning unit ANL85 M installed on the roof of building B1.

10. Tadiran mini central air conditioning unit ANL35 M installed on the roof of building C1.

11. Tadiran mini central air conditioning unit ANL50 M installed on the roof of building C1.

12. Tadiran mini central air conditioning unit TCL30 S installed on the roof of building C1, serial no. 51302515198.

13. Tadiran mini central air conditioning unit ANL 603 M installed on the roof of building D1, serial no. 51302515168 A.

14. Tadiran mini central air conditioning unit ANL35 M installed on the roof of building D1, serial no. 51302515117 B.

15. 9 ea. Metal Hyde 400 W light fittings installed in store rooms A1 + B1.

16. Electric motor for a roll up door for the store room in B1.

17. Electric motor for a roll up door for the hall in building D1.

18. Fluorescent light fittings pursuant to that existing in the premises.

19. 8 ea. fire extinguishing cupboards which include, at each station, a 6kg. powder fire extinguisher, a hose reel, two fire hoses and a nozzle.

20. A Pima alarm system.

21. A sprinkler system pursuant to that existing in the premises.

22. a partial fire detection system, not including a switchboard pursuant to that existing in the premises.

23. Main and secondary electrical boards pursuant to that existing in the premises.

24. A communications board pursuant to that existing in the premises.

25. Lighting and power and communications in the offices and in the production hall pursuant to that existing in the premises

Appendix 7

Bank Debit Authorization

Date: _________________

To	Account No.	Type of Account	Clearing Code
Bank __________________________			Branch	No.
Branch _________________________
Branch Address __________________
	Institute Code	Reference / Identifying No. of the Customer at the Company
	26176

1. I, the undersigned, _______________________________________________

Name of the Account Holders Appearing in the Bank Books      I. D. No. / Pr. Co. No.

Address: ______________________________________________________

Street         No.        Town             Postal Code

Hereby give you an instruction to debit my / our above stated account at your branch for     Rental fees, electricity + water and sundries             

Of the amounts and at the dates that will be submitted to you from time to time on magnetic media or by lists on the part of     Tefen Enterprises Ltd.     

As detailed below in the Main Points of Authorization

2. I / we are aware of the fact that:

a. This instruction may be cancelled by means of a notification from me / us in writing to the bank and to Tefen Enterprises Ltd., that will come into effect one business day after the instruction is issued to the bank and can also be cancelled by the directive of any law.

b. I / we will be entitled to cancel a specific debit in advance as long as the notification to this end will be extracted [sic] by me / us to the bank in writing one business day prior to the date of debiting.

3. I / we are aware of the fact that the details provided in the letter of authorization and verbally are matters that I / we must settle with the beneficiary.

4. I / we are aware of the fact that the debit amounts pursuant to this authorization will appear on the account printouts and that no special notification regarding these debits will be dispatched to me / us by the bank.

5. The bank will act pursuant to the written instructions in this letter of authorization, as long as the state of the account will facilitate such, and as long as there will not be any legal or other preclusion for the execution thereof.

6. The bank is at liberty to extract me / us from the arrangement detailed in this letter of authorization should it have a reasonable reason for this and will inform me / us of this immediately after taking its decision, stipulating the reason.

7. Please confirm to _________________ by means of the voucher attached hereto, your receipt of these instructions from me / us.

Details of the Authorization

The designated debit amount will be determined from time to time by Tefen Enterprises Ltd.

Pursuant to the principles determined: Service Agreement

__________________________

Signature of the Account Holders

Bank Authorization

To	Account No.	Type of Account	Clearing Code
Tefen Enterprises			Branch	No.
P. O. Box 1
Migdal Tefen
	Institute Code	Reference / Identifying No. of the Customer at the Company
	26176

We received Instruction No. ________________ to honor debits of the amounts and at the dates that will appear on magnetic means and on lists that were submitted to us from time to time and in which the account number / s at the bank will be stipulated and all pursuant to that detailed in the letter of authorization.

We have recorded the instruction and will act accordingly as long as the state of the account will facilitate such, as long as there will not be any legal or other preclusion to execute such, as long as we have not received a written instruction for cancellation from the account holder / s, or as long as the account holders were not excluded, or as long as the account holders were not excluded [sic] from the arrangement, this authorization will not impact upon your undertakings towards us, pursuant to the letter of indemnification signed by you.

Sincerely

Date: ______________________	Bank ____________________
Both parts of this form will be	Branch ____________________
dispatched to the Bank branch	Signature and Stamp of the Branch

1

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Ziv Shoshani, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Vishay Precision Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2014

/s/ Ziv Shoshani

Ziv Shoshani

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, William M. Clancy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Vishay Precision Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2014

/s/ William M. Clancy

William M. Clancy

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vishay Precision Group, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 29, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ziv Shoshani, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ziv Shoshani

Ziv Shoshani

Chief Executive Officer

May 7, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Vishay Precision Group, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 29, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William M. Clancy, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ William M. Clancy

William M. Clancy

Chief Financial Officer

May 7, 2014

XML

Segment Information (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Segment Reporting Information [Line Items]
Net revenues	$ 61,041	$ 57,461
Foil Technology Products
Segment Reporting Information [Line Items]
Net revenues	26,007	24,352
Foil Technology Products | Intersegment Eliminations
Segment Reporting Information [Line Items]
Net revenues	500	400
Force Sensors
Segment Reporting Information [Line Items]
Net revenues	16,432	16,396
Force Sensors | Intersegment Eliminations
Segment Reporting Information [Line Items]
Net revenues	400	700
Weighing and Control Systems
Segment Reporting Information [Line Items]
Net revenues	18,602	16,713
Weighing and Control Systems | Intersegment Eliminations
Segment Reporting Information [Line Items]
Net revenues	$ 300	$ 400

XML

Share-Based Compensation (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended		3 Months Ended
	Jan. 29, 2014	Jan. 16, 2013	Mar. 29, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)			1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)			607,238
Share price			$ 17.11
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Precentage Of Performance Based Units On Total Units Approved	75.00%
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Weighted Average Grant Date Fair Value (in dollars)	$ 1.2
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period (in shares)	79,453		79,000
Vesting percentage by January 1, 2017	25.00%
Share-based compensation arrangement bye share-based payment award, award vesting period		3 years

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 29, 2014

Earnings Per Share [Abstract]

Computation of Basic and Diluted 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
	March 29, 2014		March 30, 2013
Numerator:
Numerator for basic earnings per share:
Net earnings attributable to VPG stockholders	$	1,706	$	387
Adjustment to the numerator for net earnings:
Interest savings assuming conversion of dilutive exchangeable notes, net of tax	2		5
Numerator for diluted earnings per share:
Net earnings attributable to VPG stockholders	$	1,708	$	392
Denominator:
Denominator for basic earnings per share:
Weighted average shares	13,752		13,387
Effect of dilutive securities:
Exchangeable notes	181		441
Employee stock options	1		—
Restricted stock units	24		100
Dilutive potential common shares	206		541
Denominator for diluted earnings per share:
Adjusted weighted average shares	13,958		13,928
Basic earnings per share attributable to VPG stockholders	$	0.12	$	0.03
Diluted earnings per share attributable to VPG stockholders	$	0.12	$	0.03

Schedule of Antidilutive Effects

Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares, as the effect would be antidilutive (in thousands):

	Fiscal quarter ended
	March 29, 2014	March 30, 2013
Weighted average employee stock options	23	28

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Additional Financial Statement Information (Schedule of Other Items in Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Foreign exchange loss	$ (531)	$ (386)
Interest income	38	73
Other	(49)	(63)
Other Nonoperating Income (Expense)	$ (542)	$ (376)

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Share-Based Compensation (Schedule of Share-based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Share-based Compensation [Abstract]
Stock options	$ 0	$ 1
Restricted stock units	222	334
Total	$ 222	$ 335

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Restructuring Costs

3 Months Ended

Mar. 29, 2014

Restructuring and Related Activities [Abstract]

Restructuring Costs

Restructuring Costs

Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges.

The Company recorded restructuring costs of $0.3 million during the fiscal quarter ended March 29, 2014. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at the Company's subsidiary in Canada, and were incurred in connection with a cost reduction program. As of March 29, 2014, $0.1 million of the restructuring costs have been paid. The remaining costs are expected to be paid during the remainder of 2014 and the first quarter of 2015.

The Company recorded restructuring costs of $0.1 million during the fourth quarter of 2013. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance at the Company's subsidiary in Canada and were incurred in connection with a cost reduction in one of the manufacturing areas. As of March 29, 2014, these costs have been paid.

The Company recorded restructuring costs of $0.4 million during the fiscal quarter ended March 30, 2013. These costs were comprised of employee termination costs, including severance and a statutory retirement allowance, covering 16 technical, production and administrative employees at one of the Company’s subsidiaries in Japan. The restructuring was undertaken primarily in response to the declining business conditions in Japan. The restructuring costs were fully paid during 2013.

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Fair Value Measurements (Schedule of Assets and Liabilities at Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 29, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets held in rabbi trusts	$ 4,569	$ 4,678
Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets held in rabbi trusts	950	1,087
Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets held in rabbi trusts	3,619	3,591
Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets held in rabbi trusts	$ 0	$ 0

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Income Tax Disclosure [Abstract]
Effective tax rate	21.90%	39.80%
Anticipated change in unrecognized tax benefits, lower bound	$ 0.1
Anticipated change in unrecognized tax benefits, upper bound	$ 0.3

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Restructuring Costs (Details) (USD $)	3 Months Ended
	Mar. 29, 2014	Dec. 31, 2013	Mar. 30, 2013 people
Restructuring and Related Activities [Abstract]
Restructuring costs	$ 324,000	$ 100,000	$ 388,000
Restructuring costs paid	$ 100,000
Restructuring chargers, statutory retirement allowance, number of employees covered			16

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Fair Value Measurements (Narrative) (Details) (USD $)	Mar. 29, 2014	Dec. 31, 2013
Fair Value Disclosures [Abstract]
Long-term debt, fair value	$ 24,900,000	$ 25,500,000
Long-term debt, carrying value	$ 26,066,000	$ 27,073,000

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Long-Term Debt (Schedule of Long-term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 29, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Exchangeable unsecured notes, due 2102	$ 4,097	$ 4,097
Other debt	969	976
Long-Term Debt	26,066	27,073
Less current portion	4,391	4,137
Long-term debt, less current portion	21,675	22,936
2013 credit agreement - revolving facility
Debt Instrument [Line Items]
Secured debt	0	0
2013 credit agreement - U.S. term facility
Debt Instrument [Line Items]
Secured debt	7,500	8,000
2013 credit agreement - Canadian term facility
Debt Instrument [Line Items]
Secured debt	13,500	14,000
Israeli credit facility - revolving debt
Debt Instrument [Line Items]
Secured debt	$ 0	$ 0

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Increase (Decrease) in Accumulated Other Comprehensive Income [Roll Forward]
Balance, beginning	$ (19,027)	$ (14,983)
Other comprehensive income (loss) before reclassifications	(224)	(3,263)
Amounts reclassified from accumulated other comprehensive income (loss)	5	195
Balance, ending	(19,246)	(18,051)
Foreign Currency Translation Adjustment
Increase (Decrease) in Accumulated Other Comprehensive Income [Roll Forward]
Balance, beginning	(16,761)	(11,044)
Other comprehensive income (loss) before reclassifications	(224)	(3,263)
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Balance, ending	(16,985)	(14,307)
Pension and Other Postretirement Actuarial Items
Increase (Decrease) in Accumulated Other Comprehensive Income [Roll Forward]
Balance, beginning	(2,266)	(3,939)
Other comprehensive income (loss) before reclassifications	0	0
Amounts reclassified from accumulated other comprehensive income (loss)	5	195
Balance, ending	$ (2,261)	$ (3,744)

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Basis of Presentation

3 Months Ended

Mar. 29, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Background

Vishay Precision Group, Inc. (“VPG” or the “Company”) is an internationally recognized designer, manufacturer and marketer of components based on resistive foil technology, sensors, and sensor-based systems specializing in the growing markets of stress, force, weight, pressure, and current measurements. The Company provides vertically integrated products and solutions that are primarily based upon its proprietary foil technology. These products are marketed under a variety of brand names that the Company believes are characterized as having a very high level of precision and quality. VPG’s global operations enable it to produce a wide variety of products in strategically effective geographical locations that also optimize its resources for specific technologies, sensors, assemblies and systems.

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, 2013 and 2012 and for each of the three years in the period ended December 31, 2013, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 12, 2014. The results of operations for the fiscal quarter ended March 29, 2014 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 2014 and 2013 end on the following dates: 

	2014	2013
Quarter 1	March 29,	March 30,
Quarter 2	June 28,	June 29,
Quarter 3	September 27,	September 28,
Quarter 4	December 31,	December 31,

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Pensions and Other Postretirement Benefits (Schedule of Net Pension and Other Retirement Plan Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Net service cost	$ 105	$ 116
Interest cost	235	216
Expected return on plan assets	(198)	(151)
Amortization of actuarial losses	7	43
Net periodic benefit cost	149	224
Other Postretirement Benefit Plan
Defined Benefit Plan Disclosure [Line Items]
Net service cost	21	18
Interest cost	31	24
Expected return on plan assets	0	0
Amortization of actuarial losses	9	7
Net periodic benefit cost	$ 61	$ 49

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Earnings Per Share (Computation of Basic and Diluted Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Numerator:
Net earnings attributable to VPG stockholders	$ 1,706	$ 387
Adjustment to the numerator for net earnings:
Interest savings assuming conversion of dilutive exchangeable notes, net of tax	2	5
Numerator for diluted earnings per share:
Net earnings attributable to VPG stockholders	$ 1,708	$ 392
Denominator:
Weighted average shares	13,752	13,387
Effect of dilutive securities:
Exchangeable notes	181	441
Employee stock options	1	0
Restricted stock units	24	100
Dilutive potential common shares	206	541
Denominator for diluted earnings per share:
Adjusted weighted average shares	13,958	13,928
Basic earnings per share attributable to VPG stockholders	$ 0.12	$ 0.03
Diluted earnings per share attributable to VPG stockholders	$ 0.12	$ 0.03

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Consolidated Condensed Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 29, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents	$ 72,041	$ 72,785
Accounts receivable, net	41,897	40,500
Inventories:
Raw materials	15,148	15,223
Work in process	20,436	19,962
Finished goods	19,319	19,788
Inventories, net	54,903	54,973
Deferred income taxes	4,190	4,784
Prepaid expenses and other current assets	10,836	10,500
Total current assets	183,867	183,542
Property and equipment, at cost:
Land	2,003	1,993
Buildings and improvements	48,226	47,793
Machinery and equipment	78,034	75,644
Software	6,537	6,333
Construction in progress	772	1,252
Accumulated depreciation	(86,125)	(83,692)
Property and equipment, net	49,447	49,323
Goodwill	18,153	18,880
Intangible assets, net	21,182	22,458
Other assets	18,266	17,901
Total assets	290,915	292,104
Liabilities and equity
Trade accounts payable	10,521	10,258
Payroll and related expenses	14,553	15,016
Other accrued expenses	14,172	15,814
Income taxes	626	615
Current portion of long-term debt	4,391	4,137
Total current liabilities	44,263	45,840
Long-term debt, less current portion	21,675	22,936
Deferred income taxes	1,025	1,259
Other liabilities	7,751	7,738
Accrued pension and other postretirement costs	10,679	10,780
Total liabilities	85,393	88,553
Commitments and contingencies
Equity:
Common stock	1,273	1,271
Capital in excess of par value	188,857	188,424
Retained earnings	34,353	32,647
Accumulated other comprehensive income (loss)	(19,246)	(19,027)
Total Vishay Precision Group, Inc. stockholders' equity	205,340	203,418
Noncontrolling interests	182	133
Total equity	205,522	203,551
Total liabilities and equity	290,915	292,104
Class B Convertible Common Stock
Equity:
Common stock	$ 103	$ 103

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Consolidated Condensed Statement of Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Class B Convertible Common Stock	Capital In Excess Of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total VPG Inc. Stockholders' Equity	Noncontrolling Interests
Balance, beginning at Dec. 31, 2013	$ 203,551	$ 1,271	$ 103	$ 188,424	$ 32,647	$ (19,027)	$ 203,418	$ 133
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	1,773	0	0	0	1,706	0	1,706	67
Other comprehensive loss	(219)	0	0	0	0	(219)	(219)	0
Share-based compensation expense	186	0	0	186	0	0	186	0
Restricted stock issuances (15,344 shares)	249	2	0	247	0	0	249	0
Distributions to noncontrolling interests	(18)	0	0	0	0	0	0	(18)
Balance, ending at Mar. 29, 2014	$ 205,522	$ 1,273	$ 103	$ 188,857	$ 34,353	$ (19,246)	$ 205,340	$ 182

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Share-Based Compensation (Schedule of RSU Activity) (Details) (Restricted Stock Units (RSUs), USD $)	0 Months Ended	3 Months Ended
	Jan. 29, 2014	Mar. 29, 2014
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of RSUs Balance, beginning		146,000
Number of RSUs Granted	79,453	79,000
Number of RSUs Vested		(18,000)
Number of RSUs Balance, ending		207,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant-date Fair Value Balance, beginning		$ 14.72
Weighted Average Grant-date Fair Value Granted		$ 15.06
Weighted Average Grant-date Fair Value Vested & issued		$ 16.21
Weighted Average Grant-date Fair Value Balance, ending		$ 14.72

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Pensions and Other Postretirement Benefits (Tables)

3 Months Ended

Mar. 29, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Pension and Other Retirement Plan Costs

The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and other postretirement benefit plans (in thousands):

	Fiscal quarter ended   March 29, 2014					Fiscal quarter ended   March 30, 2013
	Pension Plans			OPEB Plans		Pension Plans			OPEB Plans
Net service cost	$	105		$	21	$	116		$	18
Interest cost	235			31		216			24
Expected return on plan assets	(198		)	—		(151		)	—
Amortization of actuarial losses	7			9		43			7
Net periodic benefit cost	$	149		$	61	$	224		$	49

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Share-Based Compensation (Schedule of RSUs with Performance-based Vesting) (Details) (Performance Based Restricted Stock Units) In Thousands, unless otherwise specified	Mar. 29, 2014
Vesting on January 1, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected to Vest	9
Not Expected to Vest	29
Total	38
Vesting on January 1, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected to Vest	23
Not Expected to Vest	24
Total	47
Vesting on January 1, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected to Vest	60
Not Expected to Vest	0
Total	60

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Segment Information (Tables)

3 Months Ended

Mar. 29, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting

The following table sets forth reporting segment information (in thousands):

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net third-party revenues:
Foil Technology Products	$	26,007		$	24,352
Force Sensors	16,432			16,396
Weighing & Control Systems	18,602			16,713
Total	$	61,041		$	57,461
Gross profit:
Foil Technology Products	$	9,856		$	9,145
Force Sensors	3,507			4,399
Weighing & Control Systems	8,684			6,425
Total	$	22,047		$	19,969
Reconciliation of segment operating income to consolidated results:
Foil Technology Products	$	5,200		$	4,767
Force Sensors	1,141			2,229
Weighing & Control Systems	3,025			1,725
Unallocated G&A expenses	(6,019		)	(6,549		)
Acquisition costs	—			(487		)
Restructuring costs	(324		)	(388		)
Consolidated condensed operating income	$	3,023		$	1,297
Acquisition costs:
Weighing & Control Systems	$	—		$	487
Restructuring costs:
Foil Technology Products	$	—		$	388
Weighing & Control Systems	324			—
	$	324		$	388

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Consolidated Condensed Statement of Equity (Parenthetical) (Common Stock)	3 Months Ended
	Mar. 29, 2014
Common Stock
Restricted stock issuances, shares	15,344

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Consolidated Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Income Statement [Abstract]
Net revenues	$ 61,041	$ 57,461
Costs of products sold	38,994	37,492
Gross profit	22,047	19,969
Selling, general, and administrative expenses	18,700	17,797
Acquisition costs	0	487
Restructuring costs	324	388
Operating income	3,023	1,297
Other income (expense):
Interest expense	(212)	(197)
Other	(542)	(376)
Other income (expense) - net	(754)	(573)
Income before taxes	2,269	724
Income tax expense	496	288
Net earnings	1,773	436
Less: net earnings attributable to noncontrolling interests	67	49
Net earnings attributable to VPG stockholders	$ 1,706	$ 387
Basic earnings per share attributable to VPG stockholders	$ 0.12	$ 0.03
Diluted earnings per share attributable to VPG stockholders	$ 0.12	$ 0.03
Weighted average shares outstanding - basic	13,752	13,387
Weighted average shares outstanding - diluted	13,958	13,928

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Additional Financial Statement Information

3 Months Ended

Mar. 29, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Additional Financial Statement Information

Note 10 – Additional Financial Statement Information

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Foreign exchange loss	$	(531	)	$	(386	)
Interest income	38			73
Other	(49		)	(63		)
	$	(542	)	$	(376	)

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Document and Entity Information	3 Months Ended
	Mar. 29, 2014	May 07, 2014 Common Stock	May 07, 2014 Class B Convertible Common Stock
Entity Registrant Name	Vishay Precision Group, Inc.
Entity Central Index Key	0001487952
Current Fiscal Year End Date	--12-31
Trading Symbol	VPG
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 29, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		12,727,036	1,025,176

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Fair Value Measurements

3 Months Ended

Mar. 29, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Accounting Standards Codification (“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 tables provide the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands):

			Fair value measurements at reporting date using:
	Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
March 29, 2014
Assets
Assets held in rabbi trusts	$	4,569	$	950	$	3,619	$	—
December 31, 2013
Assets
Assets held in rabbi trusts	$	4,678	$	1,087	$	3,591	$	—

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 March 29, 2014 and December 31, 2013, 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 marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.

The fair value of the long-term debt at March 29, 2014 and December 31, 2013 is approximately $24.9 million and $25.5 million, respectively, compared to its carrying value of $26.1 million and $27.1 million, respectively. The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates. The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy.

The Company’s financial instruments include cash and cash equivalents whose carrying amounts reported in the consolidated condensed balance sheets approximate their fair values.

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Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Statement of Comprehensive Income [Abstract]
Net earnings	$ 1,773	$ 436
Other comprehensive income (loss):
Foreign currency translation adjustment	(224)	(3,263)
Pension and other postretirement actuarial items, net of tax	5	195
Other comprehensive loss	(219)	(3,068)
Total comprehensive income (loss)	1,554	(2,632)
Less: net earnings attributable to noncontrolling interests	67	49
Comprehensive income (loss) attributable to VPG stockholders	$ 1,487	$ (2,681)

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 29, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

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
Balance at January 1, 2014	$	(16,761	)	$	(2,266	)	$	(19,027	)
Other comprehensive income (loss) before reclassifications	(224		)	—			(224		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			5			5
Balance at March 29, 2014	$	(16,985	)	$	(2,261	)	$	(19,246	)

	Foreign Currency Translation Adjustment			Pension and Other Postretirement Actuarial Items			Total
Balance at January 1, 2013	$	(11,044	)	$	(3,939	)	$	(14,983	)
Other comprehensive income (loss) before reclassifications	(3,263		)	—			(3,263		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			195			195
Balance at March 30, 2013	$	(14,307	)	$	(3,744	)	$	(18,051	)

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 6).

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Long-Term Debt

3 Months Ended

Mar. 29, 2014

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

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

	March 29, 2014		December 31, 2013
2013 Credit Agreement - revolving facility	$	—	$	—
2013 Credit Agreement - U.S. term facility	7,500		8,000
2013 Credit Agreement - Canadian term facility	13,500		14,000
Israeli Credit Agreement - revolving facility	—		—
Exchangeable unsecured notes, due 2102	4,097		4,097
Other debt	969		976
	26,066		27,073
Less: current portion	4,391		4,137
	$	21,675	$	22,936

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 29, 2014

Share-based Compensation [Abstract]

Schedule of Stock Option Activity

The following table summarizes the Company’s 2014 stock option activity (number of options in thousands):

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (yrs)
Outstanding:
Balance at January 1, 2014	27	$	18.06
Granted	—	—
Exercised	—	—
Expired	—	—
Balance at March 29, 2014	27	$	18.06	2.72
Exercisable:
End of period	27	$	18.23

Schedule of RSU Activity

RSU activity for 2014 is presented below (number of RSUs in thousands):

	Number of RSUs		Weighted Average Grant-date Fair Value
Outstanding:
Balance at January 1, 2014	146		$	14.72
Granted	79		15.06
Vested	(18	)	16.21
Balance at March 29, 2014	207		$	14.72

Schedule of RSUs with Performance-based Vesting

RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest	Not Expected to Vest	Total
January 1, 2015	9	29	38
January 1, 2016	23	24	47
January 1, 2017	60	—	60

Schedule of Share-based Compensation Expense

The following table summarizes share-based compensation expense recognized (in thousands):

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Stock options	$	—	$	1
Restricted stock units	222		334
Total	$	222	$	335

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Basis of Presentation (Tables)

3 Months Ended

Mar. 29, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Fiscal Quarters

The four fiscal quarters in 2014 and 2013 end on the following dates: 

	2014	2013
Quarter 1	March 29,	March 30,
Quarter 2	June 28,	June 29,
Quarter 3	September 27,	September 28,
Quarter 4	December 31,	December 31,

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Segment Information

3 Months Ended

Mar. 29, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

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

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Net third-party revenues:
Foil Technology Products	$	26,007		$	24,352
Force Sensors	16,432			16,396
Weighing & Control Systems	18,602			16,713
Total	$	61,041		$	57,461
Gross profit:
Foil Technology Products	$	9,856		$	9,145
Force Sensors	3,507			4,399
Weighing & Control Systems	8,684			6,425
Total	$	22,047		$	19,969
Reconciliation of segment operating income to consolidated results:
Foil Technology Products	$	5,200		$	4,767
Force Sensors	1,141			2,229
Weighing & Control Systems	3,025			1,725
Unallocated G&A expenses	(6,019		)	(6,549		)
Acquisition costs	—			(487		)
Restructuring costs	(324		)	(388		)
Consolidated condensed operating income	$	3,023		$	1,297
Acquisition costs:
Weighing & Control Systems	$	—		$	487
Restructuring costs:
Foil Technology Products	$	—		$	388
Weighing & Control Systems	324			—
	$	324		$	388

Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. Intersegment sales from the Foil Technology Products segment to the Force Sensors segment and Weighing and Control Systems segment were $0.5 million and $0.4 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively. Intersegment sales from the Force Sensors segment to the Foil Technology Products segment and Weighing and Control Systems segment were $0.4 million and $0.7 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively. Intersegment sales from the Weighing and Control Systems segment to the Force Sensors segment were $0.3 million and $0.4 million during the fiscal quarters ended March 29, 2014 and March 30, 2013, respectively.

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Pensions and Other Postretirement Benefits

3 Months Ended

Mar. 29, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits

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 other postretirement benefit plans (in thousands):

	Fiscal quarter ended   March 29, 2014					Fiscal quarter ended   March 30, 2013
	Pension Plans			OPEB Plans		Pension Plans			OPEB Plans
Net service cost	$	105		$	21	$	116		$	18
Interest cost	235			31		216			24
Expected return on plan assets	(198		)	—		(151		)	—
Amortization of actuarial losses	7			9		43			7
Net periodic benefit cost	$	149		$	61	$	224		$	49

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Share-Based Compensation

3 Months Ended

Mar. 29, 2014

Share-based Compensation [Abstract]

Share-Based Compensation

Share-Based Compensation

The Amended and Restated Vishay Precision Group, Inc. Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At March 29, 2014, the Company had reserved 607,238 shares of common stock for future grant of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the Plan. If any outstanding awards are forfeited by the holder or cancelled by the Company, the underlying shares would be available for regrant to others.

Stock Options

The following table summarizes the Company’s 2014 stock option activity (number of options in thousands):

	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (yrs)
Outstanding:
Balance at January 1, 2014	27	$	18.06
Granted	—	—
Exercised	—	—
Expired	—	—
Balance at March 29, 2014	27	$	18.06	2.72
Exercisable:
End of period	27	$	18.23

The pretax intrinsic value (the difference between the closing stock price of VPG’s common stock on the last trading day of the fiscal quarter of $17.11 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the options holders had all option holders exercised their options on March 29, 2014 is not material.

Restricted Stock Units

On January 29, 2014, VPG’s three executive officers were granted annual equity awards in the form of RSUs, of which 75% are performance-based. The awards have an aggregate grant-date fair value of $1.2 million and were comprised of 79,453 RSUs. Twenty-five percent of these awards will vest on January 1, 2017, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2017, subject to the satisfaction of certain performance objectives relating to three year cumulative “free cash” and net earnings goals, and their continued employment. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met.

RSU activity for 2014 is presented below (number of RSUs in thousands):

	Number of RSUs		Weighted Average Grant-date Fair Value
Outstanding:
Balance at January 1, 2014	146		$	14.72
Granted	79		15.06
Vested	(18	)	16.21
Balance at March 29, 2014	207		$	14.72

The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. Compensation cost is recognized over the period that the participant provides service in exchange for the award. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date	Expected to Vest	Not Expected to Vest	Total
January 1, 2015	9	29	38
January 1, 2016	23	24	47
January 1, 2017	60	—	60

Share-Based Compensation Expense

The following table summarizes share-based compensation expense recognized (in thousands):

	Fiscal quarter ended
	March 29, 2014		March 30, 2013
Stock options	$	—	$	1
Restricted stock units	222		334
Total	$	222	$	335

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Earnings Per Share

3 Months Ended

Mar. 29, 2014

Earnings Per Share [Abstract]

Earnings Per Share

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
	March 29, 2014		March 30, 2013
Numerator:
Numerator for basic earnings per share:
Net earnings attributable to VPG stockholders	$	1,706	$	387
Adjustment to the numerator for net earnings:
Interest savings assuming conversion of dilutive exchangeable notes, net of tax	2		5
Numerator for diluted earnings per share:
Net earnings attributable to VPG stockholders	$	1,708	$	392
Denominator:
Denominator for basic earnings per share:
Weighted average shares	13,752		13,387
Effect of dilutive securities:
Exchangeable notes	181		441
Employee stock options	1		—
Restricted stock units	24		100
Dilutive potential common shares	206		541
Denominator for diluted earnings per share:
Adjusted weighted average shares	13,958		13,928
Basic earnings per share attributable to VPG stockholders	$	0.12	$	0.03
Diluted earnings per share attributable to VPG stockholders	$	0.12	$	0.03

Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares, as the effect would be antidilutive (in thousands):

	Fiscal quarter ended
	March 29, 2014	March 30, 2013
Weighted average employee stock options	23	28

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Share-Based Compensation (Schedule of Stock Option Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 29, 2014
Number of Options
Balance, beginning	27
Granted	0
Exercised	0
Expired	0
Balance, ending	27
Exercisable	27
Weighted Average Exercise Price
Balance, beginning	$ 18.06
Granted	$ 0.00
Exercised	$ 0.00
Expired	$ 0.00
Balance, ending	$ 18.06
Exercisable	$ 18.23
Weighted Average Remaining Contractual Life
Weighted average remaining contractual life (in years)	2 years 8 months 19 days

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 29, 2014

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of 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
Balance at January 1, 2014	$	(16,761	)	$	(2,266	)	$	(19,027	)
Other comprehensive income (loss) before reclassifications	(224		)	—			(224		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			5			5
Balance at March 29, 2014	$	(16,985	)	$	(2,261	)	$	(19,246	)

	Foreign Currency Translation Adjustment			Pension and Other Postretirement Actuarial Items			Total
Balance at January 1, 2013	$	(11,044	)	$	(3,939	)	$	(14,983	)
Other comprehensive income (loss) before reclassifications	(3,263		)	—			(3,263		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			195			195
Balance at March 30, 2013	$	(14,307	)	$	(3,744	)	$	(18,051	)

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Additional Financial Statement Information (Tables)

3 Months Ended

Mar. 29, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Other Income in Operations

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

	Fiscal quarter ended
	March 29, 2014			March 30, 2013
Foreign exchange loss	$	(531	)	$	(386	)
Interest income	38			73
Other	(49		)	(63		)
	$	(542	)	$	(376	)

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Earnings Per Share (Schedule of Antidilutive Effects) (Details) (Stock Options) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average employee stock options	23	28

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Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Mar. 30, 2013
Operating activities
Net earnings	$ 1,773	$ 436
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	2,849	3,007
Gain on disposal of property and equipment	(3)	(5)
Share-based compensation expense	222	335
Inventory write-offs for obsolescence	438	187
Other	486	(631)
Net changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(1,506)	(1,890)
Inventories	(286)	(237)
Prepaid expenses and other current assets	(316)	(2,560)
Trade accounts payable	237	373
Other current liabilities	(1,855)	(397)
Net cash provided by (used in) operating activities	2,039	(1,382)
Investing activities
Capital expenditures	(1,878)	(818)
Proceeds from sale of property and equipment	3	13
Purchase of business	0	(49,888)
Net cash used in investing activities	(1,875)	(50,693)
Financing activities
Proceeds from long-term debt	0	25,000
Principal payments on long-term debt and capital leases	(1,035)	(789)
Debt issuance costs	0	(384)
Distributions to noncontrolling interests	(18)	(13)
Net cash (used in) provided by financing activities	(1,053)	23,814
Effect of exchange rate changes on cash and cash equivalents	145	(930)
Decrease in cash and cash equivalents	(744)	(29,191)
Cash and cash equivalents at beginning of period	72,785	93,881
Cash and cash equivalents at end of period	$ 72,041	$ 64,690

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Income Taxes

3 Months Ended

Mar. 29, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology which is based on a current projection of full-year earnings before taxes amongst different taxing jurisdictions and adjusted for the impact of discrete quarterly items. The effective tax rate for the fiscal quarter ended March 29, 2014 was 21.9% versus 39.8% for the fiscal quarter ended March 30, 2013. The primary change in the effective tax rate for both periods presented is the result of changes in the geographic mix of pretax earnings, and the recording of net tax benefits associated with foreign exchange variations.

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the fiscal quarters ended March 29, 2014 and March 30, 2013 reflect VPG’s expected tax rate on reported income before income tax and tax adjustments. VPG operates in an international environment with significant operations in various locations outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting VPG’s earnings and the applicable tax rates in the various locations in which VPG operates.

The Company and its subsidiaries are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining the provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. VPG establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when VPG believes that certain positions might be challenged despite its belief that the tax return positions are supportable. VPG adjusts these reserves in light of changing facts and circumstances and the provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Penalties and tax-related interest expense are reported as a component of income tax expense. The Company anticipates $0.1 million to $0.3 million of unrecognized tax benefits to be reversed within the next twelve months of the reporting date, due to the expiration of statute of limitations in certain jurisdictions.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 29, 2014

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities at Fair Value

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

			Fair value measurements at reporting date using:
	Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
March 29, 2014
Assets
Assets held in rabbi trusts	$	4,569	$	950	$	3,619	$	—
December 31, 2013
Assets
Assets held in rabbi trusts	$	4,678	$	1,087	$	3,591	$	—

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Segment Information (Schedule of Segment Reporting) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 29, 2014	Dec. 31, 2013	Mar. 30, 2013
Segment Reporting Information [Line Items]
Net third-party revenues	$ 61,041		$ 57,461
Gross profit	22,047		19,969
Segment operating income (loss)	3,023		1,297
Unallocated G&A expenses	(6,019)		(6,549)
Acquisition costs	0		(487)
Restructuring costs	(324)	(100)	(388)
Foil Technology Products
Segment Reporting Information [Line Items]
Net third-party revenues	26,007		24,352
Gross profit	9,856		9,145
Segment operating income (loss)	5,200		4,767
Restructuring costs	0		(388)
Force Sensors
Segment Reporting Information [Line Items]
Net third-party revenues	16,432		16,396
Gross profit	3,507		4,399
Segment operating income (loss)	1,141		2,229
Weighing and Control Systems
Segment Reporting Information [Line Items]
Net third-party revenues	18,602		16,713
Gross profit	8,684		6,425
Segment operating income (loss)	3,025		1,725
Acquisition costs	0		(487)
Restructuring costs	$ (324)		$ 0

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Long-Term Debt (Tables)

3 Months Ended

Mar. 29, 2014

Debt Disclosure [Abstract]

Schedule of Long-term Debt

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

	March 29, 2014		December 31, 2013
2013 Credit Agreement - revolving facility	$	—	$	—
2013 Credit Agreement - U.S. term facility	7,500		8,000
2013 Credit Agreement - Canadian term facility	13,500		14,000
Israeli Credit Agreement - revolving facility	—		—
Exchangeable unsecured notes, due 2102	4,097		4,097
Other debt	969		976
	26,066		27,073
Less: current portion	4,391		4,137
	$	21,675	$	22,936