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 June 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 August 14, 2000 registrant had 122,538,541 shares of its Common Stock and
15,525,246 shares of its Class B Common Stock outstanding.
<PAGE>
VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q
JUNE 30, 2000
CONTENTS
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Balance Sheets -
June 30, 2000 and December 31, 1999 3-4
Consolidated Condensed Statements of Operations -
Three Months Ended June 30, 2000 and 1999 5
Consolidated Condensed Statements of Operations -
Six Months Ended June 30, 2000 and 1999 6
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 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 16-17
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited - In thousands)
June 30 December 31
2000 1999
----------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 172,028 $ 105,193
Accounts receivable 412,901 320,978
Inventories:
Finished goods 150,631 144,645
Work in process 125,860 131,951
Raw materials 139,219 121,704
Deferred income taxes 39,148 35,119
Prepaid expenses and other current assets 78,058 67,159
----------- -----------
TOTAL CURRENT ASSETS 1,117,845 926,749
PROPERTY AND EQUIPMENT - AT COST
Land 48,327 51,453
Buildings and improvements 251,817 261,528
Machinery and equipment 1,038,589 1,073,556
Construction in progress 84,523 61,881
Allowance for depreciation (531,640) (517,873)
----------- -----------
891,616 930,545
GOODWILL 286,926 399,970
INVESTMENT IN LPSC 140,393 --
OTHER ASSETS 53,065 66,517
----------- -----------
$ 2,489,845 $ 2,323,781
=========== ===========
3
<PAGE>
June 30 December 31
2000 1999
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 7,037 $ 26,790
Trade accounts payable 103,905 101,613
Payroll and related expenses 87,544 77,209
Other accrued expenses 110,146 107,724
Income taxes 77,996 27,418
Current portion of long-term debt 76 4,445
----------- -----------
TOTAL CURRENT LIABILITIES 386,704 345,199
LONG-TERM DEBT 175,447 656,943
DEFERRED INCOME TAXES 64,082 62,712
DEFERRED INCOME 46,595 50,462
MINORITY INTEREST 53,064 61,637
OTHER LIABILITIES 23,252 24,715
ACCRUED PENSION COSTS 103,174 108,521
STOCKHOLDERS' EQUITY
Common Stock 12,254 11,146
Class B Common Stock 1,553 1,557
Capital in excess of par value 1,420,516 985,393
Retained earnings 303,715 97,591
Accumulated other comprehensive loss (98,965) (81,009)
Unearned compensation (1,546) (1,086)
----------- -----------
1,637,527 1,013,592
----------- -----------
$ 2,489,845 $ 2,323,781
=========== ===========
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)
Three Months Ended
June 30,
2000 1999
---------- ----------
Net sales $ 612,771 $ 425,323
Costs of products sold 358,675 316,642
--------- ---------
GROSS PROFIT 254,096 108,681
Selling, general, and administrative expenses 74,400 61,775
Amortization of goodwill 2,911 3,221
--------- ---------
OPERATING INCOME 176,785 43,685
Other income (expense):
Interest expense (7,905) (13,115)
Gain on termination of interest rate swap agreements 6,375 --
Other 2,714 (273)
--------- ---------
1,184 (13,388)
--------- ---------
EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST 177,969 30,297
Income taxes 39,385 7,464
Minority interest 6,731 2,652
--------- ---------
NET EARNINGS $ 131,853 $ 20,181
========= =========
Basic earnings per share $ 0.97 $ 0.16
Diluted earnings per share $ 0.96 $ 0.16
Weighted average shares outstanding - basic 135,574 126,723
Weighted average shares outstanding - diluted 137,919 127,923
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)
Six Months Ended
June 30,
2000 1999
----------- -----------
Net sales $ 1,151,665 $ 848,381
Costs of products sold 709,853 639,810
----------- -----------
GROSS PROFIT 441,812 208,571
Selling, general, and administrative expenses 142,344 124,272
Amortization of goodwill 6,047 6,513
----------- -----------
OPERATING INCOME 293,421 77,786
Other income (expense):
Interest expense (20,420) (25,995)
Loss on disposal of subsidiary -- (10,073)
Gain on termination of interest rate swap agreements 6,375 --
Other 2,540 959
----------- -----------
(11,505) (35,109)
----------- -----------
EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST 281,916 42,677
Income taxes 62,839 16,507
Minority interest 12,953 5,171
----------- -----------
NET EARNINGS $ 206,124 $ 20,999
=========== ===========
Basic earnings per share $ 1.55 $ 0.17
Diluted earnings per share $ 1.52 $ 0.16
Weighted average shares outstanding - basic 132,796 126,722
Weighted average shares outstanding - diluted 135,328 127,752
See notes to consolidated condensed financial statements.
6
<PAGE>
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Six Months Ended
June 30 June 30
2000 1999
---------- ----------
OPERATING ACTIVITIES
Net earnings $ 206,124 $ 20,999
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 71,396 73,009
Loss on sale of subsidiary -- 10,073
Loss on disposal of property and equipment 1,565 --
Minority interest in net earnings of
consolidated subsidiaries 12,953 5,171
Other (2,756) 13,647
Changes in operating assets and liabilities (90,182) (59,423)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 199,100 63,476
INVESTING ACTIVITIES
Purchases of property and equipment (89,616) (60,504)
Proceeds from sale of subsidiary -- 9,118
Proceeds from sale of property and equipment 3,868 1,149
Deconsolidation of LPSC (7,574) --
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (93,322) (50,237)
FINANCING ACTIVITIES
Proceeds from long-term borrowings -- 3,316
Principal payments on long-term debt (97) (5,947)
Net payments on revolving credit lines (471,155) (40,189)
Net changes in short-term borrowings (1,147) 13,488
Proceeds from sale of common stock 395,747 --
Proceeds from stock options exercised 39,617 --
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (37,035) (29,332)
Effect of exchange rate changes on cash (1,908) (3,781)
--------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 74,409 (19,874)
Cash and cash equivalents at beginning of period 97,619 113,729
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 172,028 $ 93,855
========= =========
See notes to consolidated condensed financial statements.
7
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
June 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 Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 131,853 $ 20,181 $ 206,124 $ 20,999
---------------- ------------- ------------- -------------
Denominator:
Denominator for basic earnings per share -
weighted average shares 135,574 126,723 132,796 126,722
Effect of dilutive securities:
Stock appreciation rights - 530 290 530
Employee stock options 2,141 588 2,042 418
Other 204 82 200 82
---------------- ------------- ------------- -------------
Dilutive potential common shares 2,345 1,200 2,532 1,030
Denominator for diluted earnings per
share - adjusted weighted average shares 137,919 127,923 135,328 127,752
Basic earnings per share $ 0.97 $ 0.16 $ 1.55 $ 0.17
================ ============= ============= =============
Diluted earnings per share $ 0.96 $ 0.16 $ 1.52 $ 0.16
================ ============= ============= =============
</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>
In connection with the Company's acquisition of 65% of Lite-On Power
Semiconductor Corporation ("LPSC") in July 1997, the Company issued stock
appreciation rights ("SARs") to the former owners of LPSC. The SARs represented
the right to receive, in stock, the increase in value on the equivalent of
3,200,000 shares of the Company's Common Stock, above $11.68 per share. On
January 24, 2000, the Company exercised its right to call the SARs. Based on the
call price of $26.43 per share and the average closing price of Vishay shares
for the thirty days prior to January 24, 2000, the Company would have had to
issue 2,294,000 shares of Vishay Common Stock to settle the SARs. For the
quarter and six months ended June 30, 2000, 1,537,000 and 1,625,000 shares were
included in the calculation of basic earnings per share, respectively, and
1,537,000 and 1,915,000 shares were included in the calculation of diluted
earnings per share, respectively. See Note 6 with respect to the sale of the
Company's interest in LPSC for consideration including transfer to the Company
of the rights under the SARs.
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, of which 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 Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------------- --------------- ---------------- -------------
Business Segment Information
(in thousands)
<S> <C> <C> <C> <C>
Net Sales:
Passives $ 394,297 $ 246,440 $ 719,807 $ 497,972
Actives 218,474 178,883 431,858 350,409
-------------- --------------- ---------------- -------------
$ 612,771 $ 425,323 $ 1,151,665 $ 848,381
-------------- --------------- ---------------- -------------
Operating Income:
Passives $ 135,103 $ 23,202 $ 213,077 $ 39,821
Actives 55,944 25,991 104,610 49,329
Corporate (11,351) (2,287) (18,219) (4,851)
Amortization of Goodwill (2,911) (3,221) (6,047) (6,513)
-------------- --------------- ---------------- -------------
$ 176,785 $ 43,685 $293,421 $ 77,786
-------------- --------------- ---------------- -------------
</TABLE>
9
<PAGE>
Note 4: Comprehensive Income
Total comprehensive income (loss) includes the following components (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Net Income $ 131,853 $ 20,181 $ 206,124 $ 20,999
Other comprehensive income (loss):
Foreign currency translation adjustment (4,226) (10,292) (18,233) (52,441)
Pension liability adjustment, net of tax 46 1,433 277 1,967
-------------- -------------- -------------- --------------
Total other comprehensive income (loss) (4,180) (8,859) (17,956) (50,474)
-------------- -------------- -------------- --------------
Comprehensive income (loss) $ 127,673 $ 11,322 $ 188,168 $ (29,475)
============== ============== ============== ==============
</TABLE>
Note 5: Income Taxes
The effective tax rate for the six months ended June 30, 2000 was 22.3%
as compared to 38.7% for the six months ended June 30, 1999. The unusually high
effective tax rate for the six months ended June 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 six
months ended June 30, 1999 would have been 24.9%.
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 $41,000,000 in
cash, 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 $8,991,000, which will be included in the
Company's results for the third quarter of 2000. The Company used the cash
proceeds to repay a portion of the debt outstanding under its long-term
revolving credit facility during July 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.
10
<PAGE>
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 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 $395,747,000. 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).
Note 9: Accounting Pronouncement 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 all fiscal quarters of fiscal
years beginning after June 15, 2000. The Company continues its process of
assessing the impact of SFAS No. 133 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 not
involve any restatement of prior periods, but 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 Six Months ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Costs of products sold 58.5 % 74.4 % 61.6 % 75.4 %
Gross profit 41.5 25.6 38.4 24.6
Selling, general and administrative
expenses 12.1 14.5 12.4 14.6
Operating income 28.9 10.3 25.5 9.2
Earnings before income taxes and minority
interest 29.0 7.1 24.5 5.0
Net earnings 21.5 4.7 17.9 2.5
Effective tax rate 22.1 24.6 22.3 38.7
</TABLE>
Net Sales
Net sales for the quarter and six months ended June 30, 2000 increased
$187,448,000, or 44.1%, and $303,284,000, or 35.7%, from the comparable periods
in 1999. Both the passive and active components businesses contributed to these
increases. The passive components business net sales were $394,297,000 for the
second quarter of 2000 as compared to $246,440,000 for the second quarter of
1999, a 60.0% increase. For the six months ended June 30, 2000, passive net
sales were $719,807,000 as compared to $497,972,000 for the comparable period in
1999, a 44.5% increase. The active components business net sales for the second
quarter of 2000 were $218,474,000 as compared to $178,883,000 for the second
quarter of 1999, a 22.1% increase. For the six months ended June 30, 2000, net
sales were $431,858,000 as compared to $350,409,000 for the comparable period in
1999, a 23.2% increase. The sales increases reflected continued strong demand
for the Company's products and increases in average selling prices. The
strengthening of the U.S. dollar against foreign currencies had the effect of
decreasing reported net sales by $22,606,000 and $45,479,000 for the quarter and
the six months ended June 30, 2000, respectively.
Costs of Products Sold
Costs of products sold for the quarter and the six months ended June
30, 2000 were 58.5% and 61.6% of net sales, respectively, as compared to 74.4%
and 75.4% for the comparable prior year periods. Gross profit as a percentage of
net sales for the quarter and six months ended June 30, 2000
12
<PAGE>
was 41.5% and 38.4% as compared to 25.6% and 24.6% 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 six
months ended June 30, 2000 were 42.5% and 38.4%, respectively, as compared to
21.9% and 20.8% 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 six
months ended June 30, 2000 were 39.6% and 38.3%, respectively, as compared to
30.6% and 30.4% for the comparable prior year periods. Strong demand, continued
cost reductions, increased manufacturing efficiencies and price increases in
some product lines all contributed to the improved gross margins.
Israeli government grants, recorded as a reduction of costs of products
sold, for the second quarter and six months ended June 30, 2000 were $3,740,000
and $7,417,000, respectively, as compared to $3,544,000 and $7,008,000 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 June 30, 2000 relating to Israeli
government grants was $46,595,000, as compared to $50,462,000 at December 31,
1999.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses for the second quarter
and six months ended June 30, 2000 were 12.1% and 12.4% of net sales,
respectively, as compared to 14.5% and 14.6% of net sales for the comparable
prior year periods. The decrease in selling, general and administrative
expenses, as a percentage of net sales, was the 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 six months ended June 30, 2000
decreased by $5,210,000 and $5,575,000, 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 $395,747,000 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 second quarter of 2000 increased by $2,987,000 as
compared to the second quarter of 1999. This was attributable to increases in
foreign exchange gains, interest income and income recognized under the equity
method, partially offset by losses on the sale of fixed assets. Other income for
the six months ended June 30, 2000 increased by $1,580,000 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
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.
Minority Interest
Minority interest for the second quarter and six months ended June 30,
2000 increased by $4,079,000 and $7,782,000 respectively, as compared to the
comparable prior year periods. This increase was due to the increase in net
earnings of Siliconix, of which Vishay owns 80.4%.
Income Taxes
The effective tax rate for the six months ended June 30, 2000 was 22.3%
as compared to 38.7% for the comparable prior year period. The higher tax rate
for the six months ended June 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 six months ended June 30, 1999 would have been 24.9%. 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 $23,077,000 and $4,228,000 for the quarters ended June 30, 2000
and 1999, respectively, and $37,009,000 and $7,225,000 for the six months ended
June 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 six months ended June 30, 2000 were
$199,100,000 compared to $63,476,000 for the six months ended June 30, 1999. The
increase in cash generated from operations was primarily attributable to
increased earnings. Net purchases of property and equipment were $89,616,000 for
the six months ended June 30, 2000 compared to $60,504,000 in the comparable
prior year period, reflecting the Company's efforts toward increasing capacity.
The Company paid down $471,155,000 on its revolving credit lines during the
first half of 2000. These payments were partially funded by $395,747,000 of
proceeds from the sale of Common Stock in the May 2000 Common Stock offering and
$39,617,000 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
for $41,000,000 in cash and the transfer to the Company of the rights under the
SARs. The cash proceeds were used to further pay down the Company's long-term
debt. The Company's financial condition at June 30, 2000 was strong, with a
current ratio of 2.89 to 1. The Company's ratio of long-term debt, less current
portion, to stockholders' equity was .11 to 1 at June 30, 2000 as compared to
.77 to 1 at June 30, 1999 and .65 to 1 at December 31, 1999.
14
<PAGE>
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.
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 June 30, 2000, the
outstanding balance under this facility was $175,000,000. 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 June 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
<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
(a) The Company held its Annual Meeting of Stockholders on May
18, 2000.
(b) Proxies for the meeting were solicited pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as
amended. There was no solicitation in opposition to
management's nominees for the directors as listed in the
definitive proxy statement of the Company dated April 17,
2000, and all such nominees were elected.
(c) Briefly described below is each matter voted upon at the
Annual Meeting of Stockholders.
(i) Election of the following individuals to hold
office as Directors of the Company until the next
Annual Meeting of Stockholders.
Total Class A Common Stock voted was 65,193,094.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
Felix Zandman 64,213,776 979,318 0 0
Avi D. Eden 64,215,286 977,808 0 0
Robert A. Freece 64,215,286 977,808 0 0
Richard N. Grubb 64,215,286 977,808 0 0
Eliyahu Hurvitz 62,173,948 3,019,146 0 0
Gerald Paul 64,215,286 977,808 0 0
Edward Shils 64,210,934 982,160 0 0
Luella B. Slaner 64,208,793 984,301 0 0
Mark I. Solomon 64,212,111 980,983 0 0
Jean-Claude Tine 64,211,359 981,735 0 0
</TABLE>
Total Class B Common Stock voted was 10,475,546 in
favor, 0 against, 0 abstained and 0 broker
non-votes.
(ii) Approval of an increase in the number of shares of
Common Stock in respect of which grants may be made
under the Company's 1998 Stock Option Program.
Total Class A Common Stock voted was 34,445,440 in
favor, 30,596,367 against, 151,287 abstained, and 0
broker non-votes. Total Class B Common Stock voted
was 10,475,546 in favor, 0 against, 0 abstained,
and 0 broker non-votes.
16
<PAGE>
(iii) Approval of the Company's amended performance-based
compensation plan for its Chief Executive Officer.
Total Class A Common Stock voted was 59,440,726 in
favor, 5,444,336 against, 308,031 abstained, and 1
broker non-vote. Total Class B Common Stock voted
was 10,475,546 in favor, 0 against, 0 abstained and
0 broker non-votes.
(iv) Ratification of the appointment of Ernst & Young
LLP, independent certified public accountants, to
audit the books and accounts of the Company for the
calendar year ending December 31, 2000. Total Class
A Common Stock voted was 64,473,391 in favor,
77,438 against, 642,265 abstained and 0 broker
non-votes. Total Class B Common Stock voted was
10,475,546 in favor, 0 against, 0 abstained and 0
broker non-votes.
Each share of Class A Common Stock is entitled to one vote and each share
of Class B Common Stock is entitled to 10 votes on matters voted upon by
stockholders.
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Not applicable
17
<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: August 14, 2000
