SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7416
VISHAY INTERTECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-1686453
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
63 Lincoln Highway, Malvern, Pennsylvania 19355
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 644-1300
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. Yes x No
As of May 7, 1997 registrant had 53,728,304 shares of its Common
Stock and 7,563,720 shares of its Class B Common Stock outstanding. <PAGE>
VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q MARCH 31, 1997
CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Balance Sheets - 3-4
March 31, 1997 and December 31, 1996
Consolidated Condensed Statements of 5
Operations - Three Months Ended
March 31, 1997 and 1996
Consolidated Condensed Statements of 6
Cash Flows - Three Months Ended
March 31, 1997 and 1996
Notes to Consolidated Condensed 7-8
Financial Statements
Item 2. Management's Discussion and Analysis 9-11
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 12
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited - In thousands)
March 31 December 31
ASSETS 1997 1996
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $36,329 $20,945
Accounts receivable 175,349 163,164
Inventories:
Finished goods 164,671 182,722
Work in process 78,075 73,606
Raw materials 89,398 100,418
Prepaid expenses and
other current assets 78,428 82,310
------------ ------------
TOTAL CURRENT ASSETS 622,250 623,165
PROPERTY AND EQUIPMENT - AT COST
Land 41,283 43,705
Buildings and improvements 218,756 222,743
Machinery and equipment 690,852 695,084
Construction in progress 56,729 57,891
Allowance for depreciation (315,038) (308,761)
------------ ------------
692,582 710,662
GOODWILL 194,509 201,574
OTHER ASSETS 19,099 20,646
------------ ------------
$1,528,440 $1,556,047
============ ============
LIABILITIES AND March 31 December 31
STOCKHOLDERS' EQUITY 1997 1996
------------ ------------
CURRENT LIABILITIES
Notes payable to banks $37,888 $31,212
Trade accounts payable 37,253 33,930
Payroll and related expenses 38,441 35,973
Other accrued expenses 52,359 55,381
Income taxes 11,140 7,076
Current portion of long-term debt 25,761 25,394
------------ ------------
TOTAL CURRENT LIABILITIES 202,842 188,966
LONG-TERM DEBT 202,683 229,885
DEFERRED INCOME TAXES 33,124 33,113
DEFERRED INCOME 58,672 58,570
OTHER LIABILITIES 28,837 30,534
ACCRUED RETIREMENT COSTS 64,607 69,749
STOCKHOLDERS' EQUITY
Common stock 5,373 5,373
Class B common stock 756 756
Capital in excess of par value 825,958 825,949
Retained earnings 127,420 107,762
Foreign currency
translation adjustment (18,428) 9,106
Unearned compensation (335) (370)
Pension adjustment (3,069) (3,346)
------------ ------------
937,675 945,230
------------ ------------
$1,528,440 $1,556,047
============ ============
See notes to consolidated condensed financial statements.
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited - In thousands except earnings per share)
Three Months Ended
March 31,
1997 1996
------------ -----------
Net sales $273,262 $310,660
Costs of products sold 207,658 225,579
------------ -----------
GROSS PROFIT 65,604 85,081
Selling, general, and
administrative expenses 33,919 40,374
Amortization of goodwill 1,517 1,632
------------ -----------
OPERATING INCOME 30,168 43,075
Other income (expense):
Interest expense (3,701) (4,293)
Other 547 (158)
------------ -----------
(3,154) (4,451)
------------ -----------
EARNINGS BEFORE INCOME TAXES 27,014 38,624
Income taxes 7,356 10,583
------------ -----------
NET EARNINGS $19,658 $28,041
============ ===========
Net earnings per share $0.32 $0.46
============ ===========
Weighted average shares outstanding 61,292 61,282
See notes to consolidated condensed financial statements.
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Three Months Ended
March 31,
1997 1996
----------- -----------
OPERATING ACTIVITIES
Net earnings $19,658 $28,041
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 19,650 19,345
Other 475 10,087
Changes in operating assets and
liabilities 8,764 (30,757)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 48,547 26,716
INVESTING ACTIVITIES
Purchases of property and equipment-net (18,477) (43,901)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (18,477) (43,901)
FINANCING ACTIVITIES
Net (payments) proceeds on revolving credit (17,728) 14,945
Proceeds from long-term borrowings 193 3,096
Payments on long-term borrowings (3,979) (3,072)
Net proceeds on short-term borrowings 9,322 4,487
----------- -----------
NET CASH (USED) PROVIDED BY
FINANCING ACTIVITIES (12,192) 19,456
Effect of exchange rate changes on cash (2,494) (274)
----------- -----------
INCREASE IN CASH AND
CASH EQUIVALENTS 15,384 1,997
Cash and cash equivalents at
beginning of period 20,945 19,584
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $36,329 $21,581
=========== ===========
See notes to consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
March 31, 1997
Note 1: Basis of Presentation
- -------------------------------
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes necessary for presentation of financial
position, results of operations, and cash flows required by generally accepted
accounting principles for complete financial statements. The information
furnished reflects all adjustments (consisting of 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. The financial statements should be read in conjunction with the
financial statements and notes thereto filed with Form 10-K for the year ended
December 31, 1996.
Note 2: Earnings Per Share
- ----------------------------
Earnings per share amounts for all periods reflect a 5% stock dividend paid on
June 7, 1996.
Note 3: Acquisitions
- --------------------
On April 25, 1997, the Company entered into agreements to acquire 65% of
Lite-On Power Semiconductor Corporation, a Republic of China (Taiwan) company
and a member of the Lite-On Group of the Republic of China ("LPSC"), for
$130 million and securities convertible into 1,625,000 shares of Vishay
common stock at $23 per share. LPSC produces diodes in the Far East with
manufacturing plants in Taipei, Taiwan; Shanghai, China; and Lee's Summit,
Missouri, USA. LPSC also owns approximately 40% of Diodes, Inc., located in
Westlake, California, which is a public company traded on the American Stock
Exchange.
Under the terms of the agreements, Vishay will initially purchase substantially
all of the shares of LPSC for $200 million from Silitek Corporation, Lite-On
Technology Corporation, Dyna Investment Co., Ltd., and certain other
shareholders, all Republic of China (Taiwan) companies and affiliates of the
Lite-On Group or individuals who are or were employees of LPSC. Immediately
thereafter, Vishay will contribute the shares of LPSC to a newly formed joint
venture holding company and will sell 35% of the shares of that joint venture
entity to a company ("Holdco.") formed and held by certain companies of the
Lite-On Group and individual shareholders of LPSC who elected to reinvest in
Holdco. for $70 million. In consideration for entering into the joint
venture, which will govern the relationship of the parties for the
international manufacture,marketing and sales of discrete semiconductor
components and certain other products, Vishay will grant Holdco. securities
convertible into 1,625,000 shares of Vishay common stock at $23.00 per share.
Diodes are discrete semiconductor components used to convert electrical currents
from AC to DC and are used in all electronic equipment that requires
conversion.
The cash portion of the purchase price will be funded from current availability
under the Company's credit facilities. The agreements are subject to certain
conditions including the completion of the Company's due diligence and receipt
of governmental approvals in the Republic of China and the U.S. The closing of
this transaction is expected to occur in mid-summer 1997.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Income statement captions as a percentage of sales and the effective tax rates
were as follows:
Three Months Ended
March 31
1997 1996
---- ----
Costs of products sold 76.0 % 72.6%
Gross profit 24.0 27.4
Selling, general and
administrative expenses 12.4 13.0
Operating income 11.0 13.9
Earnings before income taxes 9.9 12.4
Effective tax rate 27.2 27.4
Net earnings 7.2 9.0
Net sales for the quarter ended March 31, 1997 decreased $37,398,000 or 12.0%
from the comparable period of the prior year. The decrease in net sales is
related to a number of factors including price reductions in the Company's
"commodity" products (tantalum, ceramic and resistor chips). As a result of
competitive pressures, prices of these products have been reduced between 10%
and 20% in the past year. The decrease in net sales also relates to the
continuing economic downturn in Germany, where a significant portion of the
Company's products are sold. In addition, the strengthening of the U.S.
dollar against foreign currencies for the quarter ended March 31, 1997 in
comparison to the prior year's quarter, resulted in a decrease in reported
sales of $12,281,000.
Costs of products sold for the quarter ended March 31, 1997 was 76.0% of net
sales, as compared to 72.6% for the comparable prior year period. Gross profit
for the quarter ended March 31, 1997 was negatively affected by a difficult
pricing environment, and an under absorption of overhead costs caused by a
decrease of $13,360,000(net of foreign currency)in total inventory.
Israeli government grants, recorded as a reduction of costs of products sold,
were $2,624,000 for the quarter ended March 31, 1997 as compared to $2,140,000
for the comparable prior year period. Future grants and other incentive
programs offered to the Company by the Israeli government will likely depend
on the Company's continuing to increase capital investment and the number of
the Company's employees in Israel. Deferred income at March 31, 1997 relating
to Israeli government grants was $58,672,000 as compared to $58,570,000 at
December 31, 1996.
Selling, general, and administrative expenses for the quarter ended March 31,
1997 were 12.4% of net sales, as compared to 13.0% for the comparable prior
year period. Selling, general and administrative expenses decreased by
$6,455,000, as compared to the prior year period, as a result of the cost
reduction program instituted in 1996.
Interest costs decreased by $592,000 for the quarter ended March 31, 1997 from
the comparable prior year period primarily as a result of reductions of bank
indebtedness using cash generated from operating activities.
Other income(expense) increased by $705,000 for the quarter ended March 31,
1997 as compared to the prior year period. The increase is due primarily to
interest income of $828,000 for the quarter ended March 31, 1997 as
compared to $191,000 for the comparable prior year period.
The effective tax rate for the quarter ended March 31, 1997 was 27.2% as
compared to 27.4% for the comparable prior year period. The effective tax rate
for calendar year 1996 was 25.2%.
The continuing effect of low tax rates in Israel (as compared to the statutory
rate in the United States) has been to increase net earnings by $1,520,000 and
$4,373,000 for the quarters ended March 31, 1997 and 1996, respectively. The
more favorable Israeli tax rates are applied to specific approved projects and
normally continue to be available for a period of ten years.
Financial Condition
- -------------------
Cash flows from operations were $48,547,000 for the quarter ended March 31,
1997 compared to $26,716,000 for the prior year's period. Net purchases of
property and equipment for three months ended March 31, 1997 were $18,477,000
compared to $43,901,000 in the prior year's period. This decrease reflects
the fact that the Company has substantially completed its current
restructuring/expansion program.Net cash used by financing activities of
$12,192,000 for the three months ended March 31, 1997 includes $21,514,000
used to pay down bank indebtedness.
The Company incurred a pretax restructuring charge of $38,030,000 for the year
ended December 31, 1996. Approximately $28,953,000 of these charges relate to
employee termination costs covering approximately 2,600 technical, production,
administrative and support employees located in the United States, Canada,
France and Germany. As of March 31, 1997, approximately 2,067 employees have
been terminated and $16,438,000 of the termination costs have been paid. The
restructuring plan is expected to be completed by the end of 1997.
The Company's financial condition at March 31, 1997 is strong, with a current
ratio of 3.07 to 1. The Company's ratio of long-term debt (less current portion)
to stockholders' equity was .22 to 1 at March 31, 1997 and .24 to 1 at December
31, 1996.
As discussed in Note 3 to the financial statements, the Company intends to
finance the cash portion ($130 million) of the Lite-On acquisition from current
availability under the Company's credit facilities.
Management believes that available sources of credit, together with cash
expected to be generated from operations, will be sufficient to satisfy the
Company's anticipated financing needs for working capital and capital
expenditures during the next twelve months.
Inflation
- ---------
Normally, inflation does not have a significant impact on the Company's
operations. The Company's products are not generally sold on long-term
contracts. Consequently, selling prices, to the extent permitted by
competition, can be adjusted to reflect cost increases caused by inflation.
Safe Harbor Statement
- ---------------------
From time to time, information provided by the Company, including but not
limited to statements in this report, or other statements made by or on
behalf of the Company, may contain "forward-looking" information within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such statements involve a number of risks
and uncertainties. The Company's actual results could differ materially
from those discussed in the forward-looking statements. Factors that could
result in such differences primarily include decline in demand for the
Company's products, competitive pressures, recessionary trends, currency
fluctuations, changes in laws, cancellation of government grants or tax
benefits, labor unrest, factory under-utilization and capacity constraints.
Please see the Company's December 31, 1996 Report on Form 10-K filed with
the Securities and Exchange Commission for a more comprehensive list of these
factors.
<PAGE>
VISHAY INTERTECHNOLOGY, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Not applicable
(b) Reports on Form 8-K
Not applicable
<PAGE>
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 INTERTECHNOLOGY, INC.
/s/ Richard N. Grubb
----------------------------------
Richard N. Grubb
Executive Vice President, Treasurer
(Duly Authorized and Chief Financial Officer)
Date: May 8, 1997
-----------
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