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SECURITIES AND EXCHANGE COMMISSION
Room 1004
450 Fifth Street, NW
Washington, DC 20549
RE: Quarterly Report on Form 10-Q
Gentlemen:
We are transmitting for filing the quarterly report of Vishay
Intertechnology, Inc., on Form 10-Q for the quarter ended
June 30, 1994.
Sincerely yours,
Vishay Intertechnology, Inc.
/s/ Richard N. Grubb
-----------------------
Richard N. Grubb
Vice President, Treasurer
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, 1994
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 August 12, 1994 registrant had 21,289,168 shares of its
Common Stock and 3,753,711 shares of its Class B Common Stock
outstanding.
VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q JUNE 30, 1994
CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Balance Sheets - 3-4
June 30, 1994 and December 31, 1993
Consolidated Condensed Statements of 5
Operations - Three Months Ended
June 30, 1994 and 1993
Consolidated Condensed Statements of 6
Operations - Six Months Ended June 30,
1994 and 1993
Consolidated Condensed Statements of 7
Cash Flows - Six Months Ended
June 30, 1994 and 1993
Notes to Consolidated Condensed 8-9
Financial Statements
Item 2. Management's Discussion and Analysis 10-12
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 13-14
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheet
(Unaudited)
June 30 December 31
1994 1993
ASSETS ------------- ------------
CURRENT ASSETS
Cash and cash equivalents $18,160,000 $10,931,000
Accounts receivable 159,319,000 125,284,000
Inventories:
Finished goods 92,012,000 85,783,000
Work in process 76,150,000 65,592,000
Raw materials 79,860,000 73,280,000
Prepaid expenses and other
current assets 38,964,000 33,365,000
------------- ------------
TOTAL CURRENT ASSETS 464,465,000 394,235,000
PROPERTY AND EQUIPMENT - AT COST
Land 36,285,000 33,791,000
Buildings and improvements 146,058,000 136,432,000
Machinery and equipment 443,512,000 398,885,000
Allowance for depreciation (174,954,000) (149,004,000)
------------ ------------
450,901,000 420,104,000
GOODWILL 122,684,000 118,286,000
OTHER ASSETS 13,570,000 15,481,000
------------ ------------
$1,051,620,000 $948,106,000
============ ============
June 30 December 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
------------- -----------
CURRENT LIABILITIES
Notes payable to banks $34,039,000 $22,695,000
Trade accounts payable 48,745,000 48,404,000
Payroll and related expenses 38,142,000 28,942,000
Other accrued expenses 48,385,000 54,112,000
Income taxes 6,528,000 3,740,000
Current portion of long-term debt 30,995,000 30,536,000
------------- -----------
TOTAL CURRENT LIABILITIES 206,834,000 188,429,000
LONG-TERM DEBT 306,607,000 266,999,000
DEFERRED INCOME TAXES 25,635,000 26,080,000
OTHER LIABILITIES 24,474,000 24,081,000
ACCRUED RETIREMENT COSTS 74,394,000 66,014,000
STOCKHOLDERS' EQUITY
Common stock 1,852,000 1,763,000
Class B common stock 377,000 359,000
Capital in excess of par value 330,212,000 288,980,000
Retained earnings 91,464,000 105,849,000
Foreign currency translation adjustment (2,888,000) (13,109,000)
Unearned compensation (62,000) (60,000)
Pension adjustment (7,279,000) (7,279,000)
-------------- ------------
413,676,000 376,503,000
-------------- ------------
$1,051,620,000 $948,106,000
============== ============
See notes to consolidated condensed financial statements.
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended
June 30
1994 1993
------------ ------------
Net sales $226,683,000 $224,653,000
Costs of products sold 171,231,000 174,453,000
------------ ------------
GROSS PROFIT 55,452,000 50,200,000
Selling, general, and
administrative expenses 31,451,000 30,442,000
Restructuring expense - 482,000
Unusual item - (1,000,000)
Amortization of goodwill 849,000 650,000
------------ ------------
OPERATING INCOME 23,152,000 19,626,000
Other income (expense):
Interest expense (5,396,000) (4,979,000)
Other (435,000) (439,000)
------------ ------------
(5,831,000) (5,418,000)
------------ ------------
EARNINGS BEFORE INCOME TAXES 17,321,000 14,208,000
Income taxes 3,095,000 2,126,000
------------ ------------
NET EARNINGS $14,226,000 $12,082,000
============ ============
Net earnings per share $0.64 $0.54
Weighted average shares outstanding 22,293,000 22,288,000
See notes to consolidated condensed financial statements.
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
Six Months Ended
June 30
1994 1993
------------ ------------
Net sales $452,698,000 $452,153,000
Costs of products sold 346,446,000 352,019,000
------------ ------------
GROSS PROFIT 106,252,000 100,134,000
Selling, general, and
administrative expenses 61,627,000 61,050,000
Restructuring expense - 1,992,000
Unusual item - (3,000,000)
Amortization of goodwill 1,650,000 1,260,000
------------ ------------
OPERATING INCOME 42,975,000 38,832,000
Other income (expense):
Interest expense (10,436,000) (10,864,000)
Other 33,000 (461,000)
------------ ------------
(10,403,000) (11,325,000)
EARNINGS BEFORE INCOME TAXES AND ------------ ------------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 32,572,000 27,507,000
Income taxes 5,688,000 4,387,000
------------ -----------
EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 26,884,000 23,120,000
Cumulative effect of accounting change
for income taxes - 1,427,000
----------- -----------
NET EARNINGS $26,884,000 $24,547,000
=========== ===========
Earnings per share:
Before cumulative effect of
accounting change $1.21 $1.03
Accounting change for income taxes - $0.07
---------- ----------
Net earnings $1.21 $1.10
========== ==========
Weighted average shares outstanding 22,292,000 22,287,000
See notes to consolidated condensed financial statements.
VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30
1994 1993
----------- -----------
OPERATING ACTIVITIES
Net earnings $26,884,000 $24,547,000
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 26,034,000 23,763,000
Other, including cumulative
effect of accounting change 3,140,000 1,812,000
Changes in operating assets and
liabilities (45,780,000) (30,977,000)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,278,000 19,145,000
INVESTING ACTIVITIES
Purchases of property and
equipment-net (42,941,000) (29,968,000)
Purchase of businesses, net of
cash acquired - (1,681,000)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (42,941,000) (31,649,000)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 118,562,000 179,280,000
Payments on long-term borrowings (88,976,000) (169,014,000)
Net increase in short-term borrowings 10,029,000 2,250,000
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 39,615,000 12,516,000
Effect of exchange rate changes on cash 277,000 (347,000)
---------- ----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 7,229,000 (335,000)
Cash and cash equivalents at beginning
of period 10,931,000 15,977,000
CASH AND CASH EQUIVALENTS AT END ---------- ----------
OF PERIOD $18,160,000 $15,642,000
========== ==========
See notes to consolidated condensed financial statements.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
June 30, 1994
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 cashflows
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, 1993.
Note 2: Earnings Per Share
Earnings per share amounts for all periods presented reflect a 5% stock
dividend paid on June 13, 1994.
Note 3: Restructuring Charge and Unusual Item
The operating results for the quarter and six months ended June 30,1993
include restructuring expenses of $482,000 and $1,992,000, respectively,
relating to the downsizing of the Company's French operations and income
from unusual items of $1,000,000 and $3,000,000, respectively, for a
business interruption insurance recovery.
Note 4: Income Taxes
Effective January 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method
required by FASB Statement No. 109, "Accounting for Income Taxes". The
cumulative effect of adopting Statement No. 109 as of January 1, 1993 was to
increase net earnings by $1,427,000, or $.07 per share.
Note 5: Subsequent Event
On July 18, 1994, the Company purchased all of the capital stock of
Vitramon, Inc. and Vitramon Limited U.K. (collectively, "Vitramon") from
Thomas & Betts Corporation for $184,000,000 in cash. Vitramon is a
leading producer of multi-layer ceramic chip capacitors with
manufacturing facilities primarily in the United States, France, Germany
and the United Kingdom. For the year ended January 1, 1994 Vitramon
reported net sales of approximately $118.4 million and net income of
approximately $4.7 million.
To finance the acquisition of Vitramon, the Company borrowed an aggregate
of $200 million from a syndicate of banks, of which $100 million (the
"Bridge Facility") is due on July 18, 1996 and $100 million (non-
amortizing term loan) is due on July 18, 2001. The Company also amended
the terms of its existing bank agreements, which resulted in the loans
becoming unsecured, a reduction in the number of financial and
restrictive covenants and a decrease in interest rates, and which will
result in the release of all collateral held by the Banks. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Financial Condition".
Note 6: Public Stock Offering
On August 12, 1994, the Company announced the completion of its common
stock offering of 2,750,000 shares and received net proceeds of
$108,748,750. The proceeds will be used to prepay the Bridge Facility and
reduce revolving credit borrowings. Bear Stearns & Co. Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Lehman Brothers, Merrill Lynch
& Co. and Salomon Brothers Inc were managing underwriters of the
offering.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net sales for the quarter and six months ended June 30, 1994 increased
$2,030,000 and $545,000, respectively, from the comparable periods of the
prior year. Net sales increased slightly even though the strengthening of
the U.S. dollar against foreign currencies in comparison to the prior
year has resulted in decreases of $3,055,000 and $8,455,000,
respectively, in reported sales for the quarter and six months ended
June 30, 1994. Management believes that the U.S. and European economies
are continuing to show signs of recovery. Net bookings for the quarter
and six months ended June 30, 1994 increased by 10.5% and 7.9%,
respectively, over the comparable periods of the prior year.
Costs of products sold for the quarter and six months ended June 30, 1994
were 75.5% and 76.5% of net sales, respectively, as compared to 77.7% and
77.9%, respectively, for the comparable periods of the prior year. Costs
of products sold have been reduced by Israeli government grants of
$2,336,000 and $4,157,000 for the quarter and six months ended June 30,
1994, respectively, as compared to $747,000 and $1,043,000, respectively,
for the comparable periods of the prior year. This period to period
increase in grants is primarily a result of an increase in the Company's
work force in Israel. The majority of the incentive programs participated
in by the Company resulted from, and will likely continue to depend on,
increasing the number of the Company's employees in Israel. Exclusive of
government grants, costs of products sold were 76.6% and 77.4% of sales
for the quarter and six months ended June 30, 1994, respectively,
compared to 78.0% and 78.1% for the comparable periods of the prior year.
The continued improvement in costs of products sold is a result of lower
labor costs in Israel.
Selling, general, and administrative expenses for the quarter and
six months ended June 30, 1994 were 13.9% and 13.6% of net sales,
respectively, compared to 13.5% for the comparable periods of the prior
year. While we believe these percentages to be acceptable, we are
continuing to explore additional cost saving opportunities.
Restructuring charges of $482,000 and $1,992,000 incurred during the
quarter and six months ended June 30, 1993 related to the Company's
decision to downsize its French operations as a result of that country's
business climate. The Company recognized as income during the quarter and
six months ended June 30, 1993 $1,000,000 and $3,000,000, respectively,
for an insurance recovery for lost profits from a business interruption
insurance claim. Such recoveries ultimately amounted to $7,221,000 for
the entire 1993 calendar year.
Interest costs increased by $417,000 for the quarter ended June 30,1994
due to additional bank borrowings. Interest costs decreased by $428,000
for the six months ended June 30, 1994 as a result of a lower average
borrowing rate resulting from a change in the Company's mix of borrowings
throughout the U.S. and Europe as compared to the prior year's period.
The effective tax rates for the quarter and six months ended June 30,
1994 were 17.9% and 17.5%, respectively, compared to 15.0% and 15.9% for
the comparable periods of the prior year. The effective tax rate for
calendar year 1993, exclusive of the effect of nontaxable insurance
proceeds, was 18.6%. The estimated 1994 rate anticipates the effect of
doing increased business in lower tax rate jurisdictions (especially
Israel).
The effect of the low tax rates in Israel (as compared to the statutory
rate in the United States) has been to increase net earnings by
$3,421,000 and $2,210,000 for the quarters ended June 30, 1994 and 1993,
respectively, and $5,942,000 and $3,897,000 for the six months ended June
30, 1994 and 1993, respectively. This period to period increase in net
earnings is primarily a result of increased earnings for the Israel
operations. The more favorable Israeli tax rates are applied to specific
approved projects and normally continue to be available for a period of
ten years. New projects are continually being introduced.
Included in net earnings for the six months ended 1993 is a one-time tax
benefit of $1,427,000 resulting from the adoption of FASB Statement No.
109, "Accounting for Income Taxes".
Financial Condition
Cash flows from operations were $10,278,000 for the six months ended June
30, 1994 compared to $19,145,000 for the prior year's period. The
decrease in net cash provided by operating activities in comparison to
the prior year's period resulted primarily from $7,645,000 of cash
payments made in the first six months of 1994 for accruals the Company
established in connection with the Sprague and Roederstein acquisitions.
Purchases of property and equipment for the six months ended June 30,
1994 were $42,941,000 compared to $29,968,000 in the prior year's period.
This increase reflects the Company's on-going program to purchase
additional equipment to meet growing customer demand for surface mount
components. Net cash provided by financing activities of $39,615,000 for
the six months ended June 30, 1994 was used primarily to finance the
additions to property and equipment.
On July 18, 1994, the Company and certain of its subsidiaries entered
into agreements (the "Bank Agreements") with a group of banks, including
Comerica Bank, as agent for the banks ("Banks"). The Bank Agreements
amended and restated the Company's previously-existing revolving credit
and term loan agreements and added two new facilities that were used to
finance the acquisition of Vitramon.
After giving effect to the Bank Agreements, the Company's domestic
credit facilities consist of a $200,000,000 revolving credit facility that
matures on December 31, 1997, subject to the Company's right to request
year-to-year renewals thereafter, a $102,500,000 term loan that matures
on December 31, 2000, a $100,000,000 Bridge Facility, due on July 18,
1996 and a $100,000,000 non-amortizing term loan due July 18, 2001.
Borrowings under these facilities bear interest at variable rates based
on the prime rate or, at the Company's option, LIBOR.
The Banks also provided Deutsche Mark ("DM") denominated revolving credit
and term loan facilities for certain of the Company's German
subsidiaries, which permit borrowings, in the aggregate, of
DM153,821,990, including a DM 40,000,000 revolving credit facility that
matures on December 31, 1997, subject to the borrower's right to request
year-to-year renewals thereafter, a DM 9,506,000 term loan that matures
on December 31, 1994 and a DM 104,315,990 term loan that matures on
December 31, 1997. Borrowings bear interest at variable rates based on
LIBOR.
As a result of the amendments contained in the Bank Agreements, all of
the Company's bank facilities are unsecured and all collateral currently
held by the Banks will be released. However, the facilities are cross-
guaranteed by the Company and certain of its subsidiaries. The Bank
Agreements also resulted in a decrease in interest rates from those
previously in effect as well as a reduction in the number of financial
and restrictive covenants. Financial covenants are currently limited to
requirements regarding leverage and fixed charge coverage ratios and
minimum tangible net worth. Other restrictive covenants include
limitations on the payment of cash dividends, guarantees and liens.
The Company's financial condition at June 30, 1994 is strong, with a
current ratio of 2.2 to 1. The Company's ratio of long-term debt (less
current portion) to stockholders' equity was .7 to 1 at June 30,1994 and
December 31, 1993. On a pro forma basis, after giving effect to the
acquisition of Vitramon and related financing as discussed in Note5 and
the public stock offering as discussed in Note 6, the ratio of long-term
debt (less current portion) to stockholders' equity at June 30, 1994
would be .7 to 1.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting ofStockholders
on May 19, 1994.
(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 18,
1994, 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
13,137,700.
Broker
For Against Abstain Non-Votes
Felix Zandman 13,111,574 26,126 0 0
Donald G. Alfson 13,111,624 26,076 0 0
Guy Brana 13,064,662 73,038 0 0
Robert A. Freece 13,111,474 26,226 0 0
Richard N. Grubb 13,110,417 27,283 0 0
Gerald Paul 13,111,624 26,076 0 0
Edward Shils 13,108,441 29,259 0 0
Luella B. Slaner 13,107,284 30,416 0 0
Mark I. Solomon 13,099,200 38,500 0 0
Jean-Claude Tine 13,094,360 43,340 0 0
Total Class B Common Stock voted was 3,477,617
in favor, 0 against, 0 abstained, and 0 broker non-
votes.
(ii) Ratification of the appointment of Ernst &
Young, independent certified public accountants, to
audit the books and accounts of the Company for the
calendar year ending December 31, 1994. Total Class
A Common Stock voted was 13,090,873 in favor, 18,944
against, 27,368 abstained, and 0 broker non-votes.
Total Class B Common Stock voted was 3,477,617 in
favor, 0 against, 0 abstained, and 0 broker non-
votes.
(iii) Approval of proposal to adopt the performance-
based compensation plan for the Chief Executive
Officer. Total Class A Common Stock voted was
12,347,297 in favor, 660,999 against, 129,404
abstained, and 0 broker non-votes. Total Class B
Common Stock voted was 3,477,107 in favor, 0
against, 105 abstained and 0 broker non-votes.
(iv) Approval of proposal to amend the Dale
Electronics, Inc. Employee Stock Plan. Total Class A
Common Stock voted was 12,588,315 in favor,
406,759 against, 142,626 abstained, and 0 broker
non-votes.
Total Class B Common Stock voted was 3,477,107 in
favor, 0 against, 105 abstained and 0 broker non-
votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of1934, the
registrant has duly caused this report to be signed on its behalfby the
undersigned thereunto duly authorized.
VISHAY INTERTECHNOLOGY, INC.
/s/ Richard N. Grubb
-----------------------------
Richard N. Grubb
Vice President, Treasurer
(Duly Authorized and Chief Financial
Officer)
Date: August 12, 1994