UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 6, 2007
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Vishay Intertechnology, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-7416 38-1686453
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
63 Lancaster Avenue
Malvern, PA 19355 19355-2143
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 610-644-1300
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 - Results of Operations and Financial Condition
On February 6, 2007, Vishay Intertechnology, Inc. issued a press release
announcing its financial results for the fiscal quarter and year ended December
31, 2006. A copy of the press release is furnished as Exhibit 99 to this report.
Item 7.01 - Regulation FD Disclosure
Computational Guidance on Earnings Per Share Estimates
The Company frequently receives questions from analysts and shareholders
regarding its diluted earnings per share ("EPS") computation. The information
furnished in this Form 8-K provides additional information on the impact of key
variables on the EPS computation, particularly as they relate to the first
quarter of 2007.
Accounting principles require that EPS be computed based on the weighted average
shares outstanding ("basic"), and also assuming the issuance of potentially
issuable shares (such as those subject to stock options, warrants, convertible
notes, etc.) if those potentially issuable shares would reduce EPS ("diluted").
The number of shares related to options, warrants, and similar instruments
included in diluted EPS is based on the "Treasury Stock Method" prescribed in
Statement of Financial Accounting Standards ("SFAS") No. 128. This method
assumes a theoretical repurchase of shares using the proceeds of the respective
stock option or warrant exercise at a price equal to the issuer's average stock
price during the related earnings period. Accordingly, the number of shares
includable in the calculation of diluted EPS in respect of stock options,
warrants and similar instruments is dependent on this average stock price and
will increase as the average stock price increases.
The number of shares includable in the calculation of diluted EPS in respect of
convertible or exchangeable securities is based on the "If Converted" method
prescribed in SFAS No. 128. This method assumes the conversion or exchange of
these securities for shares of common stock. In determining if convertible or
exchangeable securities are dilutive, the interest savings (net of tax)
subsequent to an assumed conversion are added back to net earnings. The shares
related to a convertible or exchangeable security are included in diluted EPS
only if EPS as otherwise calculated is greater than the interest savings, net of
tax, divided by the shares issuable upon exercise or conversion of the
instrument ("incremental earnings per share"). Accordingly, the calculation of
diluted EPS for these instruments is dependent on the level of net earnings.
Each series of convertible or exchangeable securities is considered individually
and in sequence, starting with the series having the lowest incremental earnings
per share, to determine if its effect is dilutive or anti-dilutive. Changes in
the variable interest rate on the Company's Exchangeable Notes due 2102 could
change the order in which the convertible or exchangeable securities are
evaluated for dilution, and the earnings level at which the convertible or
exchangeable securities become dilutive.
The following estimates of shares consider the number of the Company's shares
currently outstanding and the Company's stock options, warrants and convertible
or exchangeable securities currently outstanding and their exercise and
conversion features currently in effect. Changes in these parameters could have
a material impact on the calculation of diluted EPS.
The following estimates of shares should be read in conjunction with the
information on earnings per share in the Company's filings on Form 10-Q and Form
10-K. These estimates are unaudited and are not indicative of the shares used in
the diluted EPS computation for any prior period. The estimates below are not
necessarily indicative of the shares to be used in the quarterly diluted EPS
computation for any period subsequent to the first quarter of 2007. The Company
assumes no duty to revise these estimates as a result of changes in the
parameters on which they are based or any changes in accounting principles.
Also, the presentation is not intended as a forecast of EPS values or share
prices of the Company's common stock for any period.
For the first quarter of 2007:
o The Company has approximately 185 million shares issued and
outstanding, including shares of common stock and class B common
stock.
o The number of shares included in diluted EPS related to options,
warrants, and similar instruments does not vary significantly and is
generally less than 1 million incremental shares.
o The Company's Convertible Subordinated Notes due 2023 are dilutive at
quarterly earnings levels in excess of approximately $24 million. The
Convertible Subordinated Notes are convertible into approximately 23
million shares. Quarterly interest, net of tax, is approximately $3.1
million. Accordingly, the weighted average shares used for earnings
per share computations at quarterly earnings levels greater than
approximately $24 million and less than approximately $28 million (see
below) is approximately 209 million shares, with an "if converted" net
interest savings of approximately $3.1 million.
o The Company's Exchangeable unsecured notes due 2102 are dilutive at
quarterly earnings levels in excess of approximately $28 million. The
Exchangeable unsecured notes are exchangeable for approximately 6
million shares. Quarterly interest, net of tax, is approximately $1.0
million. Accordingly, the weighted average shares used for the
earnings per share computation for the first quarter of 2007, at
quarterly earnings levels greater than approximately $28 million, is
approximately 215 million shares, with an aggregate "if converted" net
interest savings of approximately $4.1 million.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
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99 Press release dated February 6, 2007
Signature
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 hereunto duly authorized.
Date: February 6, 2007
VISHAY INTERTECHNOLOGY, INC.
By: /s/ Richard N. Grubb
--------------------
Name: Richard N. Grubb
Title: Executive Vice President and
Chief Financial Officer
Exhibit 99
Vishay Reports Results for Year and Fourth Quarter 2006
MALVERN, Pa.--(BUSINESS WIRE)--Feb. 6, 2007--Vishay Intertechnology, Inc.
(NYSE:VSH):
-- Revenues for 2006 were an all-time record.
-- Revenues for 2006 increased 12% over 2005.
-- Net earnings of $0.73 per diluted share for year 2006 have been
negatively affected by the after tax impact of certain items
(enumerated below) of $0.26 per share for adjusted earnings per share
of $0.99, as compared to year 2005 net earnings of $0.34 per diluted
share, which were negatively affected by the after tax impact of
certain items of $0.17 per share for adjusted earnings per share of
$0.51.
-- Net earnings per diluted share for 2006 increased 115% over 2005.
-- Cash generated from operations for fourth quarter 2006 was $121
million and $349 million for year 2006.
-- Cash generated from operations for 2006 increased 73% over 2005.
-- Confident for year 2007.
Dr. Felix Zandman, Chairman of the Board, and Dr. Gerald Paul, President
and Chief Executive Officer of Vishay Intertechnology, Inc. (NYSE:VSH),
announced today that net revenues for the year ended December 31, 2006 were
$2,581.5 million compared to $2,296.5 million for the year ended December 31,
2005. Net earnings for the year ended December 31, 2006 were $139.7 million, or
$0.73 per diluted share, compared with net earnings for the year ended December
31, 2005 of $62.3 million, or $0.34 per diluted share.
Net revenues for the fiscal quarter ended December 31, 2006 were $635.5
million, as compared to revenues of $593.7 million, for the fiscal quarter ended
December 31, 2005. Net earnings for the fiscal quarter ended December 31, 2006
were $26.3 million, or $0.14 per diluted share, compared with net earnings of
$26.9 million, or $0.14 per diluted share, for the quarter ended December 31,
2005.
Net earnings of $139.7 million, or $0.73 per diluted share, for the year
ended December 31, 2006 were impacted by pre-tax charges for restructuring and
severance costs of $40.2 million, related asset write-downs of $6.7 million,
write-downs and write-offs of tantalum inventories totaling $9.6 million, losses
resulting from adjustments to previously existing purchase commitments of $5.7
million, a loss on early extinguishment of debt of $2.9 million, an adjustment
to increase the estimated cost of environmental remediation obligations
associated with the 2001 General Semiconductor acquisition of $3.6 million, and
charges totaling $2.9 million to settle past product quality issues. These items
and their tax-related consequences had a negative $0.26 effect on earnings per
share.
Net earnings of $62.3 million or $0.34 per diluted share for the year ended
December 31, 2005 were impacted by pre-tax charges for restructuring and
severance costs of $29.8 million, related asset write-downs of $11.4 million,
purchased in-process research and development (IPR&D) of $9.7 million, and
Siliconix transaction-related expenses of $3.8 million. These items were
partially offset by a gain on sale of land of $2.1 million and a gain from
adjustments to previously existing purchase commitments of $1.0 million. In
addition, tax expense includes a $9.0 million benefit, primarily due to
favorable foreign tax rulings. These items and their tax-related consequences
had a negative $0.17 effect on earnings per share.
Net earnings of $26.3 million or $0.14 per diluted share for the fourth
quarter of 2006 were impacted by pre-tax charges for restructuring and severance
costs of $12.1 million, related asset write-downs of $0.1 million, and losses
resulting from adjustments to previously existing purchase commitments of $0.8
million. These items and their tax-related consequences had a negative $0.05
effect on earnings per share.
Net earnings of $26.9 million or $0.14 per diluted share for the fourth
quarter of 2005 were impacted by pre-tax charges for restructuring and severance
costs of $11.6 million, related asset write-downs of $6.6 million, and a
write-off of purchased IPR&D of $0.5 million. These items were partially offset
by gains resulting from adjustments to previously existing purchase commitments
of $3.4 million. In addition, tax expense includes a $5.3 million benefit,
primarily due to favorable foreign tax rulings. These items and their
tax-related consequences had a negative $0.03 effect on earnings per share.
Commenting on the results for the fourth quarter and year 2006, Dr. Paul
stated, "2006 proved to be an exceptional year for Vishay. We reached the
highest revenues in our history and the operational performance was second only
to the bubble year of 2000, which was impacted for the most part by very
temporary price increases. Revenues for the fourth quarter were well within our
guidance due to lower shipments to distribution as anticipated. Margins for the
quarter were burdened by some one-time increases of fixed costs, and by a less
profitable product mix. Despite our expansion activities, we generated free cash
of $175 million in 2006, which compares to $81 million in 2005."
Commenting on the outlook for the first quarter 2007, Dr. Paul continued,
"We are guiding to revenues of $625 million to $645 million for the first
quarter 2007. After the decline in orders has virtually come to an end,
comparing the fourth quarter 2006 to the previous quarter, our book-to-bill
ratio has recovered to 1.01 for January."
Commenting on the year 2007, Dr. Paul continued, "We are confident for the
current year. Our restructuring plans are winding down and for 2007 we expect
restructuring charges of less than $10 million. We also anticipate the
continuation of a strong cash generation, which will benefit from the expiration
of our long-term purchase commitment for tantalum. We expect an additional
positive impact of $100 million on cash flow over the next three years as we
utilize the tantalum we have on-hand."
Commenting on the Company's acquisition activities, Dr. Zandman stated, "We
are excited about the acquisition of International Rectifier's Power Control
Systems (PCS) business. The finalization of the service and supply arrangements
are on track for the closing expected by April 1, 2007. With a run-rate per year
of about $320 million in revenues the PCS business already is at a level that we
anticipated for only some time after the closing. We expect PCS to be accretive
to earnings from the first quarter after the closing and to be at an annual
run-rate of $40 million net profit after tax by the fourth quarter after the
closing."
Commenting on the Company's R&D activities, Dr. Zandman continued, "Our R&D
programs are on target. New products released to the market during the last
three years contributed 13% to our 2006 revenues."
A conference call to discuss fourth quarter and year ending financial
results is scheduled for Tuesday, February 6, 2007 at 10:00 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 #5973027.
There will be a replay of the conference call from 12:30 PM (ET) on
Tuesday, February 6, 2007 through 11:59 PM (ET) on Sunday, February 11, 2007.
The telephone number for the replay is 800-642-1687 (+1 706-645-9291 if calling
from outside the United States or Canada) and the access code is #5973027.
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.
Vishay Intertechnology, Inc., a Fortune 1,000 Company listed on the NYSE
(VSH), is one of the world's largest manufacturers of discrete semiconductors
(diodes, rectifiers, transistors, and optoelectronics and selected ICs) and
passive electronic components (resistors, capacitors, inductors, sensors, and
transducers). These components are used in virtually all types of electronic
devices and equipment, in the industrial, computing, automotive, consumer,
telecommunications, military, aerospace, and medical markets. Its product
innovations, successful acquisition strategy, and ability to provide "one-stop
shop" service have made Vishay a global industry leader. Vishay can be found on
the Internet at http://www.vishay.com.
Statements contained herein that relate to the Company's future
performance, including statements with respect to trends in revenues and
bookings, and the anticipated future benefits of the Company's product,
acquisition, and research and development strategies are forward-looking
statements within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on current expectations
only, and are subject to certain risks, uncertainties, and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected. Among the factors that could cause actual
results to materially differ include: general business and economic conditions,
particularly in the markets that we serve, the availability of appropriate
acquisition opportunities on terms that the Company considers attractive,
difficulties in integrating acquired companies including the PCS business of
International Rectifier, difficulties in new product development, and other
factors affecting the Company's operations, markets, products, services, and
prices that are set forth in its Annual Report on Form 10-K for the year ended
December 31, 2005 filed with the Securities and Exchange Commission. You are
urged to refer to the Company's Form 10-K for a detailed discussion of these
factors. Vishay does not undertake any obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Management believes that stating the impact on net earnings of items such
as restructuring and severance, asset write-downs, charges for in-process
research and development, gains or losses on purchase commitments, losses on
early extinguishment of debt, special tax items and other items not reflecting
on-going operating activities is meaningful to investors because it provides
insight with respect to intrinsic operating results of the Company and,
management believes, is a common measure of performance in the industries in
which the Company competes. Investors should be aware, however, that this is a
non-GAAP measure of performance and should not be considered as a substitute for
the comparable GAAP measure.
VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands except earnings per share)
Fiscal quarter ended December 31,
2006 2005
---------------- ----------------
Net revenues $ 635,487 $ 593,690
Cost of products sold 479,512 454,260
Loss (gain) on purchase commitments 849 (3,417)
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Gross profit 155,126 142,847
Gross margin 24.4% 24.1%
Selling, general and administrative
expenses 104,913 90,560
Purchased in-process research and
development - 493
Restructuring and severance costs 12,135 11,594
Asset write-offs 102 6,603
---------------- ----------------
Operating income 37,976 33,597
6.0% 5.7%
Other income (expense):
Interest expense (7,387) (8,905)
Minority interest (196) 157
Other 4,722 1,713
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Total other income (expense) -
net (2,861) (7,035)
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Earnings before taxes 35,115 26,562
Income tax expense (benefit) 8,863 (328)
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Net earnings $ 26,252 $ 26,890
================ ================
Basic earnings per share $ 0.14 $ 0.15
Diluted earnings per share $ 0.14 $ 0.14
Weighted average shares outstanding
- basic 184,459 184,130
Weighted average shares outstanding
- diluted 208,550 219,522
VISHAY INTERTECHNOLOGY, INC.
Summary of Operations
(Unaudited - In thousands except earnings per share)
Year ended December 31,
2006 2005
---------------- ----------------
Net revenues $ 2,581,477 $ 2,296,521
Cost of products sold (a) 1,916,658 1,769,978
Loss (gain) on purchase commitments 5,687 (963)
---------------- ----------------
Gross profit 659,132 527,506
Gross margin 25.5% 23.0%
Selling, general and administrative
expenses (b) 403,999 376,912
Purchased in-process research and
development - 9,694
Siliconix transaction-related
expenses - 3,751
Restructuring and severance costs 40,220 29,772
Asset write-offs 6,685 11,416
---------------- ----------------
Operating income 208,228 95,961
8.1% 4.2%
Other income (expense):
Interest expense (32,215) (33,590)
Loss on early extinguishment of
debt (2,854) -
Minority interest (978) (3,761)
Other 18,391 15,401
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Total other income (expense) -
net (17,656) (21,950)
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Earnings before taxes 190,572 74,011
Income taxes 50,836 11,737
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Net earnings $ 139,736 $ 62,274
================ ================
Basic earnings per share $ 0.76 $ 0.35
Diluted earnings per share $ 0.73 $ 0.34
Weighted average shares outstanding
- basic 184,400 177,606
Weighted average shares outstanding
- diluted 210,316 189,321
(a) The year ended December 31, 2006 includes write-downs and write-offs of
tantalum inventories of $9,602 and charges to settle past product quality issues
of $2,885 within costs of products sold.
(b) The year ended December 31, 2006 includes $3,600 of expenses within
selling, general and administrative expenses to increase the estimated cost of
environmental obligations associated with the 2001 General Semiconductor
acquisition.
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
December 31, December 31,
2006 2005
---------------- ----------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 671,586 $ 622,577
Short-term investments - 9,925
Accounts receivable - net 351,656 350,850
Inventories:
Finished goods 163,576 149,709
Work in process 194,734 181,125
Raw materials 178,543 157,036
Deferred income taxes 34,879 39,115
Prepaid expenses and other
current assets 128,784 96,295
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Total current assets 1,723,758 1,606,632
Property and equipment, at cost:
Land 94,803 92,650
Buildings and improvements 441,659 406,798
Machinery and equipment 1,818,660 1,684,736
Construction in progress 85,288 67,229
Allowance for depreciation (1,316,045) (1,160,821)
---------------- ----------------
Total property and equipment,
net 1,124,365 1,090,592
Goodwill 1,463,992 1,434,901
Other intangible assets, net 168,263 174,220
Other assets 223,251 221,246
---------------- ----------------
Total assets $ 4,703,629 $ 4,527,591
================ ================
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
December 31, December 31,
2006 2005
---------------- ----------------
(Unaudited)
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks $ 526 $ 3,473
Trade accounts payable 145,919 142,709
Payroll and related expenses 132,922 118,814
Other accrued expenses 203,986 173,982
Income taxes 46,109 29,655
Current portion of long-term debt 3,728 1,533
---------------- ----------------
Total current liabilities 533,190 470,166
Long-term debt less current portion 608,434 751,553
Deferred income taxes 28,880 27,091
Deferred grant income 5,732 11,896
Other liabilities 155,963 149,938
Accrued pension and other
postretirement costs 285,823 256,986
Minority interest 4,794 4,109
Stockholders' equity:
Common stock 17,010 16,946
Class B common stock 1,436 1,468
Capital in excess of par value 2,229,972 2,225,966
Retained earnings 796,902 657,166
Unearned compensation - (95)
Accumulated other comprehensive
income (loss) 35,493 (45,599)
---------------- ----------------
Total stockholders' equity 3,080,813 2,855,852
---------------- ----------------
Total liabilities and
stockholders' equity $ 4,703,629 $ 4,527,591
================ ================
VISHAY INTERTECHNOLOGY, INC.
Computation of Earnings Per Share
(Unaudited - In thousands except earnings per share)
Fiscal quarter ended Year ended
December 31, December 31,
2006 2005 2006 2005
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Numerator:
Numerator for basic earnings
per share - net earnings $ 26,252 $ 26,890 $139,736 $ 62,274
Interest savings assuming
conversion of dilutive
convertible and
exchangeable notes, net of
tax 3,090 3,778 13,518 2,722
---------- ---------- --------- ---------
Numerator for diluted
earnings per share -
adjusted net earnings $ 29,342 $ 30,668 $153,254 $ 64,996
========== ========== ========= =========
Denominator:
Denominator for basic
earnings per share -
weighted average shares 184,459 184,130 184,400 177,606
Effect of dilutive
securities
Convertible and
exchangeable notes (c) 23,496 34,445 25,114 10,737
Employee stock options 515 876 722 907
Other 80 71 80 71
---------- ---------- --------- ---------
Dilutive potential
common shares 24,091 35,392 25,916 11,715
---------- ---------- --------- ---------
Denominator for diluted
earnings per share -
adjusted weighted average
shares 208,550 219,522 210,316 189,321
========== ========== ========= =========
Basic earnings per share $ 0.14 $ 0.15 $ 0.76 $ 0.35
========== ========== ========= =========
Diluted earnings per share $ 0.14 $ 0.14 $ 0.73 $ 0.34
========== ========== ========= =========
Diluted earnings per share for the periods
presented do not reflect the following weighted-
average potential common shares, as the effect
would be antidilutive (in thousands):
Fiscal quarter ended Year ended
December 31, December 31,
2006 2005 2006 2005
---------- ---------- --------- ---------
Convertible and exchangeable
notes:
Convertible Subordinated
Notes, due 2023 - - - 23,496
Exchangeable Unsecured
Notes, due 2102 6,176 6,176 6,176 6,176
Weighted average employee
stock options 5,108 6,475 4,936 6,300
Weighted average warrants 8,824 8,824 8,824 8,824
(c) The Company made a cash repurchase of all outstanding LYONs pursuant to
the option of the holders to require the Company to repurchase the LYONs on June
4, 2006. In 2005, based on its action to settle the holders' purchase option on
the June 4, 2004 purchase date in common stock, the Company assumed for purposes
of the earnings per share computation that all future purchase options for the
LYONs would be settled in stock based on the settlement formula set forth in the
indenture governing the LYONs. Due to the decision to utilize cash to repurchase
the notes on the June 4, 2006, purchase date, the earnings per share computation
for the year-to-date 2006 period is based on the 3,809 shares that would have
been issued in a normal conversion, weighted for the period they were
outstanding. The LYONs were dilutive for year ended December 31, 2006, as well
as the quarter and year ended December 31, 2005.
CONTACT: Vishay Intertechnology, Inc.
Richard N. Grubb, +1-610-644-1300
or
Peter G. Henrici, +1-610-644-1300