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 September 30, 2000
[ ] 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 of (IRS employer
incorporation or organization) identification no.)
63 Lincoln Highway
Malvern, Pennsylvania 19355-2120
(Address of principal executive offices)
(610) 644-1300
(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. Yes x No
As of November 14, 2000 registrant had 122,397,598 shares of its Common Stock
and 15,518,546 shares of its Class B Common Stock outstanding.
<PAGE>
VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q
SEPTEMBER 30, 2000
CONTENTS
Page Number
-------------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Balance Sheets -
September 30, 2000 and December 31, 1999 3-4
Consolidated Condensed Statements of Operations -
Three Months Ended September 30, 2000 and 1999 5
Consolidated Condensed Statements of Operations -
Nine Months Ended September 30, 2000 and 1999 6
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 7
Notes to Consolidated Condensed Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-15
PART II. OTHER INFORMATION 16
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited - In thousands)
<TABLE>
<CAPTION>
September 30 December 31
ASSETS 2000 1999
------------------ --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $254,483 $105,193
Accounts receivable 423,745 320,978
Inventories:
Finished goods 158,403 144,645
Work in process 127,335 131,951
Raw materials 166,388 121,704
Deferred income taxes 38,698 35,119
Prepaid expenses and other current assets 96,689 67,159
------------------ --------------
TOTAL CURRENT ASSETS 1,265,741 926,749
PROPERTY AND EQUIPMENT - AT COST
Land 46,590 51,453
Buildings and improvements 247,733 261,528
Machinery and equipment 1,068,863 1,073,556
Construction in progress 91,919 61,881
Allowance for depreciation (556,997) (517,873)
------------------ --------------
898,108 930,545
GOODWILL 299,207 399,970
OTHER ASSETS 44,632 66,517
------------------ --------------
$2,507,688 $2,323,781
================== ==============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
September 30 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
-------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable to banks $3,702 $26,790
Trade accounts payable 100,173 101,613
Payroll and related expenses 97,940 77,209
Other accrued expenses 121,227 107,724
Income taxes 124,480 27,418
Current portion of long-term debt 97 4,445
-------------- ---------------
TOTAL CURRENT LIABILITIES 447,619 345,199
LONG-TERM DEBT 100,544 656,943
DEFERRED INCOME TAXES 65,868 62,712
DEFERRED INCOME 47,714 50,462
MINORITY INTEREST 58,814 61,637
OTHER LIABILITIES 21,481 24,715
ACCRUED PENSION COSTS 94,685 108,521
STOCKHOLDERS' EQUITY
Common Stock 12,254 11,146
Class B Common Stock 1,552 1,557
Capital in excess of par value 1,311,741 985,393
Retained earnings 474,826 97,591
Accumulated other comprehensive loss (128,066) (81,009)
Unearned compensation (1,344) (1,086)
-------------- ---------------
1,670,963 1,013,592
-------------- ---------------
$2,507,688 $2,323,781
============== ===============
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited - In thousands except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
------------ ------------
<S> <C> <C>
Net sales $669,784 $443,711
Costs of products sold 370,408 324,078
------------ ------------
GROSS PROFIT 299,376 119,633
Selling, general, and administrative expenses 76,010 64,320
Amortization of goodwill 2,553 3,214
------------ ------------
OPERATING INCOME 220,813 52,099
Other income (expense):
Interest expense (2,602) (13,664)
Gain on termination of interest rate swap agreements 2,544 -
Gain on sale of LPSC 8,401 -
Other 618 1,073
------------ ------------
8,961 (12,591)
------------ ------------
EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST 229,774 39,508
Income taxes 52,400 9,519
Minority interest 6,263 4,253
------------ ------------
NET EARNINGS $171,111 $25,736
============ ============
Basic earnings per share $1.24 $0.20
Diluted earnings per share $1.22 $0.20
Weighted average shares outstanding - basic 137,830 126,722
Weighted average shares outstanding - diluted 139,840 128,805
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited - In thousands except earnings per share)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
---------- -----------
<S> <C> <C>
Net sales $1,821,449 $1,292,092
Costs of products sold 1,080,261 963,888
---------- -----------
GROSS PROFIT 741,188 328,204
Selling, general, and administrative expenses 218,354 188,592
Amortization of goodwill 8,600 9,727
---------- -----------
OPERATING INCOME 514,234 129,885
Other income (expense):
Interest expense (23,022) (39,659)
Loss on disposal of subsidiary - (10,073)
Gain on termination of interest rate swap agreements 8,919 -
Gain on sale of LPSC 8,401 -
Other 3,158 2,032
---------- -----------
(2,544) (47,700)
---------- -----------
EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST 511,690 82,185
Income taxes 115,239 26,026
Minority interest 19,216 9,424
---------- -----------
NET EARNINGS $377,235 $46,735
========== ===========
Basic earnings per share $2.81 $0.37
Diluted earnings per share $2.74 $0.36
Weighted average shares outstanding - basic 134,486 126,723
Weighted average shares outstanding - diluted 137,485 128,307
See notes to consolidated condensed financial statements.
</TABLE>
6
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
2000 1999
------------------- -------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $377,235 $46,735
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 108,376 107,428
Gain on sale of investment (8,401) -
Loss on sale of subsidiary - 10,073
Loss on disposal of property and equipment 1,928 -
Minority interest in net earnings of consolidated subsidiaries 19,216 9,124
Other 11,893 (2,892)
Changes in operating assets and liabilities (90,385) (39,742)
------------------- -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 419,862 130,726
INVESTING ACTIVITIES
Purchases of property and equipment (148,133) (83,207)
Net cash proceeds from sale of subsidiaries 33,162 9,118
Proceeds from sale of property and equipment 8,090 5,147
Purchase of businesses (42,384) -
------------------- -------------------
NET CASH USED IN INVESTING ACTIVITIES (149,265) (68,942)
FINANCING ACTIVITIES
Proceeds from long-term borrowings - 3,375
Principal payments on long-term debt (345) (6,545)
Net payments on revolving credit lines (546,262) (78,870)
Net changes in short-term borrowings (4,309) 11,441
Proceeds from sale of common stock 395,449 -
Proceeds from stock options exercised 39,635 -
------------------- -------------------
NET CASH USED IN FINANCING ACTIVITIES (115,832) (70,599)
Effect of exchange rate changes on cash (5,475) (2,859)
------------------- -------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 149,290 (11,674)
Cash and cash equivalents at beginning of period 105,193 113,729
------------------- -------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $254,483 $102,055
=================== ===================
</TABLE>
See notes to consolidated condensed financial statements.
7
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
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 accruals) 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 period 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, 1999.
Note 2: Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except earnings per share):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net income $171,111 $25,736 $377,235 $46,735
-------- -------- -------- --------
Denominator:
Denominator for basic earnings per share -
weighted average shares 137,830 126,722 134,486 126,723
Effect of dilutive securities:
Stock appreciation rights -- 839 835 839
Employee stock options 1,811 1,135 1,965 636
Other 199 109 199 109
-------- -------- -------- --------
Dilutive potential common shares 2,010 2,083 2,999 1,584
Denominator for diluted earnings per
share - adjusted weighted average shares 139,840 128,805 137,485 128,307
Basic earnings per share $1.24 $0.20 $2.81 $0.37
======== ======== ======== ========
Diluted earnings per share $1.22 $0.20 $2.74 $0.36
======== ======== ======== ========
</TABLE>
All share and per share amounts for all periods presented reflect a
three-for-two stock split paid on June 9, 2000.
8
<PAGE>
Note 3: Business Segment Information
The Company designs, manufactures, and markets electronic components
that cover a wide range of products and technologies. The Company has two
reportable segments: Passive Electronic Components (Passives) and Active
Electronic Components (Actives). The Company evaluates performance and allocates
resources based on several factors. The primary financial measure is the
computation of business segment operating income excluding amortization of
intangibles. The corporate component of operating income represents corporate
selling, general, and administrative expenses.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Business Segment Information
(in thousands)
Net Sales:
Passives $ 457,183 $ 248,487 $ 1,176,990 $ 746,459
Actives 212,601 195,224 644,459 545,633
----------- ----------- ----------- -----------
$ 669,784 $ 443,711 $ 1,821,449 $ 1,292,092
----------- ----------- ----------- -----------
Operating Income:
Passives $ 174,652 $ 25,946 $ 387,729 $ 65,767
Actives 59,761 31,833 164,371 81,162
Corporate (11,047) (2,466) (29,266) (7,317)
Amortization of Goodwill (2,553) (3,214) (8,600) (9,727)
----------- ----------- ----------- -----------
$ 220,813 $ 52,099 $ 514,234 $ 129,885
----------- ----------- ----------- -----------
</TABLE>
Note 4: Comprehensive Income
Total comprehensive income (loss) includes the following components (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Income $ 171,111 $ 25,736 $ 377,235 $ 46,735
Other comprehensive income (loss):
Foreign currency translation adjustment (29,464) 11,317 (47,696) (41,124)
Pension liability adjustment, net of tax 362 (1,416) 639 551
--------- --------- --------- ---------
Total other comprehensive income (loss) (29,102) 9,901 (47,057) (40,573)
--------- --------- --------- ---------
Comprehensive income $ 142,009 $ 35,637 $ 330,178 $ 6,162
========= ========= ========= =========
</TABLE>
9
<PAGE>
Note 5: Income Taxes
The effective tax rate for the nine months ended September 30, 2000 was
22.5% as compared to 31.7% for the nine months ended September 30, 1999. The
unusually high effective tax rate for the nine months ended September 30, 1999
was due to the following: (i) the non-tax deductibility of the pretax loss on
the sale of Nicolitch, S.A. ($10,073,000); (ii) the tax expense recorded on the
sale of Nicolitch, S.A. ($1,416,000); and (iii) the change in the tax rate in
Germany ($1,939,000). Exclusive of these items, the effective tax rate for the
nine months ended September 30, 1999 would have been 24.6%.
Note 6: Lite-On Power Semiconductor Corporation
On May 31, 2000, the Company entered into a definitive agreement for
the sale of its 65% interest in LPSC to the Lite-On Group for $40,736,000 in
cash ( $33,162,000 net of cash sold), and the transfer to the Company of the
rights under the SARs issued to the Lite-On Group in July 1997 when the Company
acquired its interest in LPSC. Under this agreement, the Company surrendered
control of LPSC. LPSC was deconsolidated and accounted for by the Company under
the equity method beginning May 31, 2000.
The sale of the Company's interest in LPSC was completed on July 12,
2000 and resulted in a pretax gain of $8,401,000. The Company used the cash
proceeds to repay a portion of the debt outstanding under its long-term
revolving credit facility during the third quarter of 2000.
Note 7: Sale of Subsidiary
On March 26, 1999, the Company finalized the sale of Nicolitch, S.A.,
its French manufacturer of printed circuit boards, to Leonische Drahtwerke AG.
In connection with the sale, the Company received proceeds of $9,118,000 and
recorded a non-cash book loss of $11,489,000, including tax expense of
$1,416,000.
Note 8: Common Stock Offering and Termination of Interest Rate Swap Agreements
The Company completed a public offering of its Common Stock on May 15,
2000, selling 5,595,000 shares at a price of $73.50 per share ($49.00 adjusted
for the June 9, 2000 three - for - two stock split). The total net proceeds to
the Company from the offering, after deducting the underwriting discount and
estimated expenses, were approximately $395,449,000. These proceeds were used to
repay a portion of the debt outstanding under its long-term revolving credit
facility. In connection with this repayment of debt, the Company terminated
$125,000,000 notional amount of interest rate swap agreements and recognized a
pretax gain of $6,375,000, which is reflected in other income (expense). In the
third quarter of 2000, the Company terminated an additional $75,000,000 notional
amount of interest rate swap agreements and recognized a pretax gain of
$2,544,000.
10
<PAGE>
Note 9: Stock Repurchase Plan
On August 9, 2000, the Board of Directors of the Company authorized the
officers of the Company to take the appropriate actions to enable the repurchase
of up to 5,000,000 shares of the Company's Common Stock from time to time in the
open market, subject to bank approval. In October 2000, 200,000 shares of the
Company's Common Stock were repurchased for $5,775,000.
Note 10: Accounting Pronouncements Pending Adoption
In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133." This statement defers the effective date of the
implementation of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," dealing with the accounting and reporting standards for
derivative instruments and hedging activities, to January 1, 2001 for Vishay.
The Company does not expect SFAS No. 133 to have a significant effect on its
financial statements.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition, which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosures
related to revenue recognition policies. Any changes to the Company's revenue
recognition policy resulting from the implementation of SAB 101 would be
reported as a change in accounting principles in the quarter ending December 31,
2000. To the extent that SAB 101 is relevant to the recognition of revenue on
the Company's future shipments, the Company would adopt the new accounting
principle effective January 1, 2001. Accordingly, any shipments previously
reported as revenue that do not meet SAB 101 revenue recognition guidance would
be recorded as revenue in future periods. The Company is still in the process of
assessing the impact of SAB 101 on its financial statements. Management believes
that SAB 101 will not affect the underlying strength of its business operations
as measured by the dollar value of its products shipped and cash flows from
operations.
11
<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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Costs of products sold 55.3 % 73.0 % 59.3 % 74.6 %
Gross profit 44.7 27.0 40.7 25.4
Selling, general and administrative
expenses 11.3 14.5 12.0 14.6
Operating income 33.0 11.7 28.2 10.1
Earnings before income taxes and minority
interest 34.3 8.9 28.1 6.4
Net earnings 25.5 5.8 20.7 3.6
Effective tax rate 22.8 24.1 22.5 31.7
</TABLE>
Net Sales
Net sales for the quarter and nine months ended September 30, 2000
increased $226,073,000, or 51.0%, and $529,357,000, or 41.0%, from the
comparable periods in 1999. Both the passive and active components businesses
contributed to these increases. The passive components business net sales were
$457,183,000 for the third quarter of 2000 as compared to $248,487,000 for the
third quarter of 1999, an 84.0% increase. For the nine months ended September
30, 2000, the passive components business net sales were $1,176,990,000 as
compared to $746,459,000 for the comparable period in 1999, a 57.7% increase.
The active components business net sales for the third quarter of 2000 were
$212,601,000 as compared to $195,224,000 for the third quarter of 1999, an 8.9%
increase. For the nine months ended September 30, 2000, the active components
business net sales were $644,459,000 as compared to $545,633,000 for the
comparable period in 1999, an 18.1% increase. Strong demand for the Company's
products and increased average selling prices contributed to the sales growth.
The strengthening of the U.S. dollar against foreign currencies had the effect
of decreasing reported net sales by $29,457,000 and $74,935,000 for the quarter
and the nine months ended September 30, 2000, respectively.
Costs of Products Sold
Costs of products sold for the quarter and the nine months ended
September 30, 2000 were 55.3% and 59.3% of net sales, respectively, as compared
to 73.0% and 74.6% for the comparable
12
<PAGE>
prior year periods. Gross profit as a percentage of net sales for the quarter
and nine months ended September 30, 2000 was 44.7% and 40.7% as compared to
27.0% and 25.4% for the comparable prior year periods. Both the passive and
active components businesses contributed to the improved gross margins.
The passive components business gross margins for the quarter and nine
months ended September 30, 2000 were 46.2% and 41.4%, respectively, as compared
to 23.5% and 21.5% for the comparable prior year periods. Price and volume
increases in the resistor, tantalum capacitor, and multi-layer ceramic chip
capacitor product lines were primarily responsible for this improvement in gross
margins.
The active components business gross margins for the quarter and nine
months ended September 30, 2000 were 41.4% and 39.4%, respectively, as compared
to 31.3% and 30.7% for the comparable prior year periods. Continued cost
reductions, increased manufacturing efficiencies and an improved product mix
contributed to the improved gross margins.
Israeli government grants, recorded as a reduction of costs of products
sold, for the quarter and nine months ended September 30, 2000 were $3,987,000
and $11,404,000, respectively, as compared to $3,576,000 and $10,585,000 for the
comparable prior year periods. 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 Company
employees in Israel. Deferred income at September 30, 2000 relating to Israeli
government grants was $47,714,000, as compared to $50,462,000 at December 31,
1999.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses for the quarter and nine
months ended September 30, 2000 were 11.3% and 12.0% of net sales, respectively,
as compared to 14.5% and 14.6% of net sales for the comparable prior year
periods. This reduction was a result of higher net sales in 2000 as compared to
1999 and company-wide cost reduction initiatives, particularly the reduction of
headcount in high labor cost countries.
Interest Expense
Interest costs for the quarter and nine months ended September 30, 2000
decreased by $11,062,000 and $16,637,000, respectively, from the comparable
prior year periods. This decrease was a result of lower outstanding bank
borrowings during both periods of 2000 as compared to the prior year periods.
The Company received net proceeds of approximately $395,449,000 from a Common
Stock offering consummated in May 2000, which were used to pay down long-term
debt (see Note 8).
Other Income
Other income for the third quarter of 2000 decreased by $455,000 as
compared to the third quarter of 1999. An increase in interest income and income
recognized under the equity method was offset by higher foreign exchange losses,
resulting in this decrease. Other income for the nine months ended September 30,
2000 increased by $1,126,000 as compared to the comparable prior year period.
Increases in interest income and income recognized under the equity method,
partially offset by losses on the sale of fixed assets and foreign exchange
losses contributed to this increase.
13
<PAGE>
Gain on Termination of Interest Rate Swap Agreements
Proceeds received from the May 2000 Common Stock offering (see Note 8)
were used to pay down a portion of the debt outstanding under the Company's
long-term revolving credit agreement. In connection with this repayment of debt,
the Company terminated $125,000,000 notional amount of interest rate swap
agreements and recognized a pretax gain of $6,375,000. In the third quarter of
2000, the Company terminated an additional $75,000,000 notional amount of
interest rate swap agreements and recognized a pretax gain of $2,544,000.
Minority Interest
Minority interest for the quarter and nine months ended September 30,
2000 increased by $2,010,000 and $9,792,000 respectively, as compared to the
comparable prior year periods. This increase was primarily due to the increase
in net earnings of Siliconix, of which Vishay owns 80.4%.
Income Taxes
The effective tax rate for the nine months ended September 30, 2000 was
22.5% as compared to 31.7% for the comparable prior year period. The higher tax
rate for the nine months ended September 30, 1999 primarily reflected the
non-tax deductibility of the loss on the sale of Nicolitch, S.A. Tax expense on
the sale of Nicolitch, S.A. was $1,416,000. Also, a tax rate change in Germany
resulted in a decrease in German deferred tax assets which increased 1999 tax
expense by $1,939,000. Exclusive of the effect of the sale of Nicolitch, S.A.
and the tax rate change in Germany, the effective tax rate on earnings before
minority interest for the nine months ended September 30, 1999 would have been
24.6%. The continuing effect of low tax rates in Israel applicable to the
Company, as compared to the statutory rate in the United States, resulted in
increases in net earnings of $25,911,000 and $4,194,000 for the quarters ended
September 30, 2000 and 1999, respectively, and $62,490,000 and $11,419,000 for
the nine months ended September 30, 2000 and 1999, respectively. The favorable
Israeli tax rates are applied to specific government approved projects and are
normally available for a period of ten or fifteen years.
Financial Condition and Liquidity
Cash flows from operations for the nine months ended September 30, 2000
were $419,862,000 compared to $130,726,000 for the nine months ended September
30, 1999. The increase in cash generated from operations was primarily
attributable to increased earnings. Net purchases of property and equipment were
$148,133,000 for the nine months ended September 30, 2000 compared to
$83,207,000 in the comparable prior year period, reflecting the Company's
efforts toward increasing capacity. The Company paid down $546,262,000 on its
revolving credit lines during the first nine months of 2000. These payments were
partially funded by $395,449,000 of proceeds from the May 2000 Common Stock
offering and $39,635,000 of proceeds from the exercise of stock options. On July
12, 2000, the Company completed the sale of its 65% interest in LPSC to the
Lite-On Group. The $40,736,000 cash proceeds ($33,162,000, net of cash sold)
were used to further pay down the Company's long-term debt. The Company's
financial condition at September 30, 2000 was strong, with a current ratio of
2.83 to 1. The Company's ratio of long-term debt, less
14
<PAGE>
current portion, to stockholders' equity was .06 to 1 at September 30, 2000 as
compared to .72 to 1 at September 30, 1999 and .65 to 1 at December 31, 1999.
On August 9, 2000, the Board of Directors of the Company authorized the
officers of the Company to take the appropriate actions to enable the repurchase
of up to 5,000,000 shares of the Company's Common Stock from time to time in the
open market, subject to bank approval. In October 2000, 200,000 shares of the
Company's Common Stock were repurchased for $5,775,000.
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. The Company's 1999 Annual Report on
Form 10-K contains cautionary statements that identify important factors that
could cause actual results to differ materially from those in any
forward-looking statements made by or on behalf of the Company.
Market Risk Disclosure
The Company's cash flows and earnings are subject to fluctuations
resulting from changes in foreign currency exchange rates and interest rates.
The Company manages its exposure to these market risks through internally
established policies and procedures and, when deemed appropriate, through the
use of derivative financial instruments. The Company does not speculate in
derivative instruments for profit or execute derivative instrument contracts for
which there are no underlying exposures. The Company does not use financial
instruments for trading purposes and is not a party to any leveraged
derivatives. The Company monitors its underlying market risk exposures on an
ongoing basis and believes that it can modify or adapt its hedging strategies as
needed.
The Company is exposed to changes in U.S. dollar LIBOR interest rates
on its floating rate revolving credit facility. At September 30, 2000, the
outstanding balance under this facility was $100,000,000. On a selective basis,
the Company from time to time enters into interest rate swap or cap agreements
to reduce the potential negative impact that increases in interest rates could
have on its outstanding variable rate debt. At September 30, 2000, a fixed rate
swap was in place on the entire balance of the Company's revolving credit
facility. The impact of interest rate instruments on the Company's results of
operations was not significant.
15
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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
27 - Financial Data Schedule
(b) Not applicable
16
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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 INTERTECHNOLOGY, INC.
/s/ Richard N. Grubb
-------------------------------------
Richard N. Grubb
Executive Vice President, Treasurer
(Duly Authorized and Chief Financial Officer)
Date: November 14, 2000
