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Vishay Reports Results for Second Quarter 2014

Vishay Intertechnology, Inc. (NYSE: VSH), one of the world’s largest manufacturers of discrete semiconductors and passive components, today announced its results for the fiscal quarter and six fiscal months ended June 28, 2014.

Revenues for the fiscal quarter ended June 28, 2014 were $641.9 million, compared to $597.7 million for the fiscal quarter ended June 29, 2013. The net earnings attributable to Vishay stockholders for the fiscal quarter ended June 28, 2014 were $35.6 million, or $0.23 per diluted share, compared to $31.3 million, or $0.21 per diluted share for the fiscal quarter ended June 29, 2013.

Net earnings attributable to Vishay stockholders for the fiscal quarter ended June 28, 2014 include restructuring and severance costs of $9.0 million. Net earnings attributable to Vishay stockholders for the fiscal quarter ended June 29, 2013 include an adjustment of $1.8 million related to performance-based stock compensation for certain former executives, following a determination that achievement of the three-year performance targets was no longer probable. These costs had been originally reported as a separate line item upon cessation of employment of these executives in 2011, and accordingly, this adjustment is also reported as a separate line item. Adjusted net earnings per diluted share, which exclude these items, were $0.27 and $0.20 for the fiscal quarters ended June 28, 2014 and June 29, 2013, respectively.

Commenting on the results for the second quarter 2014, Dr. Gerald Paul, President and Chief Executive Officer, stated, “The revenues for the second quarter were at the anticipated level but at higher margins than expected. Industrial and automotive demand remained strong in all regions. Point of sale, the sales of Vishay products by its distributors to end customers, increased 1.5% quarter over quarter as did inventories of Vishay products at its distributors. Lead times continue to be under control.”

Dr. Paul continued, “We are following our Growth Plan:

  • Accelerating development of new products and technologies
  • Penetrating the Asian industrial markets
  • Expanding manufacturing capacities for strategic product lines to ensure short lead times.

Additionally, we are continuing our acquisition strategy to supplement our organic Growth Plan through targeted acquisitions. The recent acquisition of Holy Stone Polytech Co., Ltd., a tantalum capacitor company, represents for Vishay an entry point into the polymer tantalum market and also strengthens the Company’s position for tantalum capacitors in Japan.”

Commenting on Vishay’s Merger and Acquisition activity, Marc Zandman, Vishay’s Executive Chairman and Chief Business Development Officer, stated, “On July 11, 2014, we announced our tender offer for Taiwan based Capella Microsystems, Inc., a leading IC design company for optical sensors. Capella’s strong market position for optical sensors complements Vishay’s current capabilities in this high growth field very well. If the tender offer is successful, as we expect, Capella will continue to grow as a stand-alone business within Vishay while strengthening Vishay’s position for optical sensors by adding in-house IC design capability.”

Commenting on the outlook for the third quarter 2014 Dr. Paul stated, “We guide for revenues of $630 to $670 million at gross margins in line with this volume. If the Capella tender offer is completed during the quarter, we will provide some additional guidance regarding the impact of its inclusion in our consolidated results.”

A conference call to discuss second quarter financial results is scheduled for Tuesday, July 29, 2014 at 9:00 AM ET. The dial-in number for the conference call is 877-589-6174 (+1 706-643-1406 if calling from outside the United States or Canada) and the conference ID is 66287831.

There will be a replay of the conference call from 12:00 PM ET on Tuesday, July 29, 2014 through 11:59 PM ET on Monday, August 4, 2014. The telephone number for the replay is 800-585-8367 (+1 855-859-2056 or 404-537-3406 if calling from outside the United States or Canada) and the access code is 66287831.

There will also be a live audio webcast of the conference call. This can be accessed directly from the Investor Relations section of the Vishay website at http://ir.vishay.com.

About Vishay

Vishay Intertechnology, Inc., a Fortune 1000 Company listed on the NYSE (VSH), is one of the world's largest manufacturers of discrete semiconductors (diodes, MOSFETs, and infrared optoelectronics) and passive electronic components (resistors, inductors, and capacitors). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, power supplies, and medical markets. Vishay’s product innovations, successful acquisition strategy, and "one-stop shop" service have made it a global industry leader. Vishay can be found on the Internet at http://www.vishay.com.

This press release includes certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted net earnings; adjusted earnings per share; adjusted operating margin; earnings before interest, taxes, depreciation and amortization (“EBITDA”); adjusted EBITDA; and adjusted EBITDA margin; which are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission rules. These non-GAAP measures supplement our GAAP measures of performance or liquidity and should not be viewed as an alternative to GAAP measures of performance or liquidity. Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, adjusted operating margin, EBITDA, adjusted EBITDA; and adjusted EBITDA margin do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that such measures are meaningful to investors because they provide insight with respect to intrinsic operating results of the Company. Although the term "EBITDA" is not defined in GAAP, the measure is derived using various line items measured in accordance with GAAP. Reconciling items to arrive at adjusted net earnings and adjusted operating margin represent significant charges or credits that are important to understanding the Company's intrinsic operations. Reconciling items to calculate adjusted EBITDA represent those same items used in computing adjusted net earnings, as relevant. Furthermore, the presented calculation of adjusted EBITDA is substantially similar to, but not identical to, a measure used in the calculation of financial ratios required for covenant compliance under Vishay’s revolving credit facility. These reconciling items are indicated on the accompanying reconciliation schedules and are more fully described in the Company's financial statements presented in its annual report on Form 10-K and its quarterly reports presented on Forms 10-Q.

Statements contained herein that relate to the Company's future performance, including statements with respect to forecasted revenues, margins, cash generation, internal growth and acquisition activity and results, product lines, market share, cost reduction programs, and the general state of the Company, are forward-looking statements within the safe harbor provisions of Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,” “anticipate,” “plan,” “project,” “intend,” “could,” “should,” or other similar words or expressions often identify forward-looking statements. Such statements are based on current expectations only, and are subject to certain risks, uncertainties and assumptions, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; difficulties in implementing our cost reduction strategies; changes in foreign currency exchange rates; competition and technological changes in our industries; difficulties in new product development; difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider acceptable, and integration and performance of acquired businesses, including with respect to the pending Capella acquisition; uncertainty related to the effects of changes in foreign currency exchange rates; and other factors affecting our operations that are set forth in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

     
VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
 
Fiscal quarters ended
June 28, 2014 March 29, 2014 June 29, 2013
 
Net revenues $ 641,929 $ 602,378 $ 597,665
Costs of products sold   477,836     457,095     454,808  
Gross profit 164,093 145,283 142,857
Gross margin 25.6 % 24.1 % 23.9 %
 
Selling, general, and administrative expenses 97,156 96,307 92,745
Restructuring and severance costs 9,014 6,404 -
Executive compensation charge (credit)   -     -     (1,778 )
Operating income 57,923 42,572 51,890
Operating margin 9.0 % 7.1 % 8.7 %
 
Other income (expense):
Interest expense (5,821 ) (5,980 ) (5,824 )
Other   208     1,312     784  
Total other income (expense) - net   (5,613 )   (4,668 )   (5,040 )
 
Income before taxes 52,310 37,904 46,850
 
Income taxes   16,478     11,940     15,365  
 
Net earnings 35,832 25,964 31,485
 
Less: net earnings attributable to noncontrolling interests 190 154 176
     
Net earnings attributable to Vishay stockholders $ 35,642   $ 25,810   $ 31,309  
 
Basic earnings per share attributable to Vishay stockholders $ 0.24 $ 0.17 $ 0.22
 
Diluted earnings per share attributable to Vishay stockholders $ 0.23 $ 0.17 $ 0.21
 
Weighted average shares outstanding - basic 147,567 147,557 143,710
 
Weighted average shares outstanding - diluted 154,322 152,556 151,880
 
Cash dividends per share $ 0.06 $ 0.06 $ -
   
VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands, except per share amounts)
 
Six fiscal months ended
June 28, 2014 June 29, 2013
 
Net revenues $ 1,244,307 $ 1,151,919
Costs of products sold   934,931     872,328  
Gross profit 309,376 279,591
Gross margin 24.9 % 24.3 %
 
Selling, general, and administrative expenses 193,463 183,874
Restructuring and severance costs 15,418 -
Executive compensation charge (credit)   -     (1,778 )
Operating income 100,495 97,495
Operating margin 8.1 % 8.5 %
 
Other income (expense):
Interest expense (11,801 ) (11,310 )
Other   1,520     899  
Total other income (expense) - net   (10,281 )   (10,411 )
 
Income before taxes 90,214 87,084
 
Income taxes   28,418     26,458  
 
Net earnings 61,796 60,626
 
Less: net earnings attributable to noncontrolling interests 344 386
   
Net earnings attributable to Vishay stockholders $ 61,452   $ 60,240  
 
Basic earnings per share attributable to Vishay stockholders $ 0.42 $ 0.42
 
Diluted earnings per share attributable to Vishay stockholders $ 0.40 $ 0.40
 
Weighted average shares outstanding - basic 147,561 143,651
 
Weighted average shares outstanding - diluted 153,438 151,256
 
Cash dividends per share $ 0.12 $ -
   
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
 
June 28, 2014 December 31, 2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 659,593 $ 640,348
Short-term investments 514,397 511,231
Accounts receivable, net 305,395 274,083
Inventories:
Finished goods 127,263 109,617
Work in process 200,643 197,600
Raw materials   130,981     125,491  
Total inventories 458,887 432,708
 
Deferred income taxes 22,101 21,716
Prepaid expenses and other current assets   109,667     100,594  
Total current assets 2,070,040 1,980,680
 
Property and equipment, at cost:
Land 93,634 93,685
Buildings and improvements 568,303 560,418
Machinery and equipment 2,383,121 2,340,778
Construction in progress 71,868 95,278
Allowance for depreciation   (2,217,024 )   (2,163,540 )
899,902 926,619
 
Goodwill 52,581 43,132
 
Other intangible assets, net 126,720 129,951
 
Other assets   160,259     156,757  
Total assets $ 3,309,502   $ 3,237,139  
   
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
 
June 28, 2014 December 31, 2013
(unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks $ 19 $ 2
Trade accounts payable 161,377 163,894
Payroll and related expenses 128,229 120,997
Other accrued expenses 150,188 146,670
Income taxes   17,926     17,502  
Total current liabilities 457,739 449,065
 
Long-term debt less current portion 386,806 364,911
Deferred income taxes 159,110 157,640
Other liabilities 103,806 99,426
Accrued pension and other postretirement costs   283,416     287,901  
Total liabilities   1,390,877     1,358,943  
 
Equity:
Vishay stockholders' equity
Common stock 13,532 13,520
Class B convertible common stock 1,213 1,213
Capital in excess of par value 2,055,354 2,054,087
Retained earnings (accumulated deficit) (213,954 ) (257,698 )
Accumulated other comprehensive income (loss)   57,243     61,634  
Total Vishay stockholders' equity   1,913,388     1,872,756  
Noncontrolling interests   5,237     5,440  
Total equity   1,918,625     1,878,196  
Total liabilities and equity $ 3,309,502   $ 3,237,139  
   
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - in thousands)
 
Six fiscal months ended
June 28, 2014 June 29, 2013
 
Operating activities
Net earnings $ 61,796 $ 60,626

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 86,931 83,456
(Gain) loss on disposal of property and equipment 23 86
Accretion of interest on convertible debentures 1,933 1,787
Inventory write-offs for obsolescence 9,867 9,479
Other 1,312 (3,929 )

Changes in operating assets and liabilities, net of effects of businesses acquired

  (62,789 )   (57,437 )
Net cash provided by operating activities 99,073 94,068
 
Investing activities
Purchase of property and equipment (53,336 ) (47,173 )
Proceeds from sale of property and equipment 1,741 3,252
Purchase of businesses, net of cash acquired or refunded (20,776 ) (23,034 )
Purchase of short-term investments (243,975 ) (361,940 )
Maturity of short-term investments 236,624 190,602
Other investing activities   927     934  
Net cash used in investing activities (78,795 ) (237,359 )
 
Financing activities
Principal payments on long-term debt and capital lease obligations (11 ) (14 )
Net proceeds (payments) on revolving credit lines 20,000 11,000
Net changes in short-term borrowings 16 698
Excess tax benefit from RSUs vested - 456
Dividends paid to common stockholders (16,238 ) -
Dividends paid to Class B common stockholders (1,456 ) -
Distributions to noncontrolling interests   (547 )   -  
Net cash provided by financing activities 1,764 12,140
Effect of exchange rate changes on cash and cash equivalents   (2,797 )   (5,245 )
 
Net increase (decrease) in cash and cash equivalents 19,245 (136,396 )
 
Cash and cash equivalents at beginning of period   640,348     697,595  
Cash and cash equivalents at end of period $ 659,593   $ 561,199  
         
VISHAY INTERTECHNOLOGY, INC.
Reconciliation of Adjusted Earnings Per Share
(Unaudited - In thousands, except per share amounts)
 
Fiscal quarters ended Six fiscal months ended
June 28, 2014 March 29, 2014 June 29, 2013 June 28, 2014 June 29, 2013
 
GAAP net earnings attributable to Vishay stockholders $ 35,642 $ 25,810 $ 31,309 $ 61,452 $ 60,240
 

Reconciling items affecting operating margin:

Restructuring and severance costs $ 9,014 $ 6,404 $ - $ 15,418 $ -
Executive compensation charge (credit) - - (1,778 ) - (1,778 )
 

Reconciling items affecting tax expense (benefit):

Tax effects of items above and other one-time tax expense (benefit) $ (2,747 ) $ (2,097 ) $ 633 $ (4,844 ) $ (697 )
         
Adjusted net earnings $ 41,909   $ 30,117   $ 30,164   $ 72,026   $ 57,765  
 
Adjusted weighted average diluted shares outstanding 154,322 152,556 151,880 153,438 151,256
 
Adjusted earnings per diluted share* $ 0.27 $ 0.20 $ 0.20 $ 0.47 $ 0.38
 
* Includes add-back of interest on exchangeable notes in periods where the notes are dilutive.
         
VISHAY INTERTECHNOLOGY, INC.
Reconciliation of EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
Fiscal quarters ended Six fiscal months ended
June 28, 2014 March 29, 2014 June 29, 2013 June 28, 2014 June 29, 2013
 
GAAP net earnings attributable to Vishay stockholders $ 35,642 $ 25,810 $ 31,309 $ 61,452 $ 60,240
Net earnings attributable to noncontrolling interests   190     154     176     344     386  
Net earnings $ 35,832 $ 25,964 $ 31,485 $ 61,796 $ 60,626
 
Interest expense $ 5,821 $ 5,980 $ 5,824 $ 11,801 $ 11,310
Interest income (1,261 ) (1,223 ) (1,073 ) (2,484 ) (2,307 )
Income taxes 16,478 11,940 15,365 28,418 26,458
Depreciation and amortization   43,576     43,355     42,110     86,931     83,456  
EBITDA $ 100,446 $ 86,016 $ 93,711 $ 186,462 $ 179,543
 

Reconciling items

Restructuring and severance costs $ 9,014 $ 6,404 $ - $ 15,418 $ -
Executive compensation charge (credit) - - (1,778 ) - (1,778 )
         
Adjusted EBITDA $ 109,460   $ 92,420   $ 91,933   $ 201,880   $ 177,765  
 
Adjusted EBITDA margin** 17.1 % 15.3 % 15.4 % 16.2 % 15.4 %
 
** Adjusted EBITDA as a percentage of net revenues

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