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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): April 15, 2002
Vishay Intertechnology, Inc.
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Delaware 1-7416 38-1686453
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(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
63 Lincoln Highway, Malvern, Pennsylvania 19355-2120
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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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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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Vishay Intertechnology, Inc. (the "Company") issued a press release on
April 15, 2002 which is attached hereto as Exhibit 99.1 and by this reference
incorporated herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
Exhibit No. Description
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99.1 Press release issued by the Company dated April 15, 2002.
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.
By /s/ Avi D. Eden
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Avi D. Eden
Executive Vice President and
General Counsel
Date: April 15, 2002
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release issued by the Company dated April 15, 2002.
Exhibit 99.1
NEWS RELEASE
Contact: Richard N. Grubb, Executive
Vice President and Chief Financial
Officer or Robert A. Freece
Senior Vice President
610/644-1300
FOR IMMEDIATE RELEASE
VISHAY INTERTECHNOLOGY SUED BY CABOT CORPORATION FOR
ALLEGED BREACH OF TANTALUM SUPPLY AGREEMENTS
MALVERN, PENNSYLVANIA - April 15, 2002 - Vishay Intertechnology, Inc. (NYSE:VSH)
announced today that it has been sued by Cabot Corporation (NYSE: CBT) in the
Superior Court of the Commonwealth of Massachusetts (Suffolk Co. Civil Action
No. 02-1584-BLS) alleging that Vishay and/or its subsidiaries have breached
agreements for the supply by Cabot to Vishay of tantalum powder and wire. Vishay
uses tantalum products in the manufacture of its line of tantalum capacitors.
As described below, the complaint requests damages in an unspecified amount and
also various injunctive and declaratory relief requiring Vishay to purchase
products at regular periodic intervals throughout the year, to identify products
that it intends to purchase under one of the agreements that does not specify a
product mix and to inspect products when and as they are produced and tendered
by Cabot.
Commenting on the complaint, Dr. Felix Zandman, Vishay's chairman and chief
executive officer, stated: "While we have not yet had an opportunity to fully
analyze the allegations of Cabot's complaint, Vishay believes that its
subsidiary that is a party to the Cabot agreements has sound defenses to all of
the claims raised in the complaint and has complied fully with its obligations
under the agreements, as Vishay believes they should be properly interpreted.
Accordingly, the Vishay parties to the litigation intend to vigorously contest
the action and to explore all rights and remedies available to them under the
agreements and by law."
Dr. Zandman added: "We understand that Cabot has commenced similar actions
against other manufacturers of tantalum capacitors and that these manufacturers
also intend to contest Cabot's allegations."
A description of the complaint follows.
The action arises out of two tantalum supply agreements entered into between
Cabot and a Vishay subsidiary in July and November 2000. These agreements
require the subsidiary to purchase and Cabot to sell certain minimum amounts of
tantalum powder and tantalum wire in the years 2001 through 2005. The July
agreement specifies a variety of tantalum powder and wire products and their
associated year-by-year prices per pound, while the November agreement
does not identify the particular product mix but does specify an average price
per pound for all purchases.
The complaint alleges that Vishay commenced orders for tantalum products under
the July agreement in January 2001 and that through the first half of 2001
Vishay submitted orders on a quarterly basis, which Cabot filled.
Simultaneously, according to the complaint, Cabot commenced at considerable
expense an expansion project designed to increase tantalum output at its
Boyertown plant. The complaint further alleges that, in the middle of 2001,
Vishay notified Cabot that it had a greatly diminished need for additional
tantalum products from Cabot because of the general economic downturn and the
drop in the sales of Vishay's electronic capacitors. Further, according to the
complaint, Vishay subsequently told Cabot that it would purchase only 100 pounds
of tantalum products in the first quarter of 2002 and little if any tantalum
products in the second and third quarters of 2002. Also, the complaint alleges
that after announcing its intentions with respect to its 2002 purchases, Vishay
began rejecting various shipments of tantalum powder sold under the July
agreement for alleged non-conformance with specifications. According to the
complaint, analyses of the products rejected by Vishay cast doubt on Vishay's
claim of non-conformance, and, moreover, Vishay has allegedly rejected shipments
of replacement products that Cabot alleges that it is entitled to deliver under
the supply agreements. Cabot, according to the complaint, has objected to
Vishay's alleged decision to defer essentially all of its tantalum purchases to
the last quarter of 2002, to Vishay's alleged rejection of products delivered in
2001, to Vishay's alleged refusal to allow Cabot to substitute replacement
products and to Vishay's alleged refusal to identify or inspect tantalum
products that Cabot must produce to fulfill its obligations under the supply
agreements.
The complaint further alleges that Cabot has attempted to obtain from Vishay the
specific mix of products that Vishay intends to purchase in 2002 under the
supply agreements, that Vishay has refused to provide any meaningful forecast to
Cabot, that Cabot has nonetheless commenced manufacturing selected tantalum
products for Vishay on the basis of the product mix in the July agreement, and
that Cabot has tendered these products to Vishay for inspection and delivery but
that Vishay has indicated that it will not accept Cabot's tender or inspect or
take delivery of the products or otherwise confirm that it will purchase the
products that Cabot is producing.
According to Cabot's complaint, the alleged action of Vishay violates the letter
and spirit of the supply agreements and is not commercially reasonable. The
complaint adds that Vishay allegedly knows that Cabot does not have
manufacturing capacity to produce Vishay's total annual allotment of tantalum
products and fulfill Cabot's obligations to other customers unless Cabot
manufactures continuously throughout the year, and also states that Cabot lacks
the capacity to preserve and store all of the tantalum products that Cabot must
produce throughout the year in order to meet Vishay's alleged delivery schedule.
The complaint also alleges that Cabot must know on an ongoing basis whether
tantalum products meet Vishay's specifications, so that Cabot can have an
adequate opportunity to manufacture replacement products if necessary and that
Cabot will be deprived of its right of replacement if Vishay is permitted to
wait until Cabot has manufactured an entire year's supply before deciding to
accept or to reject for non-conformity. Also, according to the complaint, by
refusing to take delivery of products at regular intervals, Vishay is depriving
Cabot of the benefit of a stable stream of revenues that the supply agreements
were allegedly intended to provide to Cabot and is imposing upon Cabot a
collection risk not contemplated by the supply agreements.
Cabot also alleges in the complaint that Vishay's purported plan to make
essentially all of its tantalum purchases in the last quarter of 2002, its
refusal to bind itself in advance to a specific mix of products and its refusal
to inspect tantalum products that Cabot manufactures are designed to maximize
the chances that Vishay will be able to assert in the future that Cabot has
breached one or another of its obligations under the supply agreements.
According to the complaint Vishay has breached the July agreement by failing to
fulfill its minimum purchase obligations as a result of which Cabot has suffered
harm, including monetary damages.
Also, according to the complaint, Vishay is obligated under the November
agreement and, to the extent that it remains in force, the July agreement, and
by law irrespective of the terms of the supply agreements, to establish a
reasonable delivery schedule pursuant to which Vishay makes regular, periodic
purchases of products from Cabot throughout the year; and Vishay is obligated
under the November agreement, and by law irrespective of the terms of the
November agreement, to identify the particular products that Vishay intends to
purchase at appropriate intervals throughout the year so that Cabot can
manufacture and deliver those products in a timely manner. Further, according to
the complaint, the November agreement and, to the extent that it remains in
force, the July agreement obligate Vishay to inspect the tantalum products that
Cabot manufactures when and as they are produced in order to confirm that they
meet specifications; that by failing to make such an inspection Vishay has
waived and will waive any rights it may have to reject the products produced and
tendered; and that by refusing to inspect the tantalum products that Cabot
manufactures for Vishay when and as they are produced and tendered Vishay
threatens Cabot with irreparable harm.
In its request for relief, Cabot asks the court to (i) preliminarily enjoin
Vishay from refusing to provide Cabot with identification of the particular
tantalum products that Vishay intends to purchase under the November agreement
at appropriate intervals during the year; (ii) preliminarily enjoin Vishay from
refusing to inspect tantalum products that Cabot manufactures for Vishay when
and as they are produced and tendered by Cabot in order to confirm that they
meet specifications; (iii) enter a final judgment in favor of Cabot in an amount
to be determined for breach of the July agreement; (iv) enter a final judgment
that Vishay's breach of the July agreement was material, entitling Cabot to
cancel that agreement; (v) enter a final judgment declaring that the November
agreement and, to the extent that it remains in force, the July agreement
require Vishay to purchase the annual minimum quantities of tantalum products at
regular periodic intervals throughout the year; (vi) enter a final judgment
declaring that the November agreement requires Vishay to identify the particular
tantalum products that Vishay intends to purchase at appropriate intervals
during the year; and (vii) enter a final judgment declaring that the November
agreement and, to the extent that it remains in force, the July agreement
require Vishay to inspect the tantalum products that Cabot manufactures for
Vishay's account when and as they are produced and tendered, and declaring that
any failure by Vishay to inspect such products when and as they are manufactured
and tendered constitutes a waiver of Vishay's right of rejection of such
products. The complaint also requests additional unspecified declarations of
rights and obligations of the parties and other relief, as the court deems
appropriate.
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Vishay, a Fortune 1,000 Company listed on the NYSE, is the largest U.S. and
European manufacturer of passive electronic components (resistors, capacitors,
inductors) and is the #2 manufacturer of discrete semiconductors worldwide. The
Company's components can be found in products manufactured in a very broad range
of industries worldwide. With headquarters in Malvern, Pennsylvania, Vishay
employs over 20,000 people in more than 68 plants located in 14 countries.
Vishay can be found on the Internet at http://www.vishay.com.
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