SEC Filing | Vishay Intertechnology, Inc.

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 March 31, 1999 /_/ 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 May 14, 1999 registrant had 59,377,186 shares of its Common Stock and 8,321,654 shares of its Class B Common Stock outstanding.

VISHAY INTERTECHNOLOGY, INC. FORM 10-Q MARCH 31, 1999 CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Consolidated Condensed Balance Sheets - 3-4 March 31, 1999 and December 31, 1998 Consolidated Condensed Statements of 5 Operations - Three Months Ended March 31, 1999 and 1998 Consolidated Condensed Statements of 6 Cash Flows - Three Months Ended March 31, 1999 and 1998 Notes to Consolidated Condensed 7-8 Financial Statements Item 2. Management's Discussion and Analysis 9-16 of Financial Condition and Results of Operations PART II. OTHER INFORMATION 17

VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited - In thousands) March 31 December 31 ASSETS 1999 1998 -------------------- -------------------- CURRENT ASSETS Cash and cash equivalents $ 91,808 $ 113,729 Accounts receivable 277,548 276,270 Inventories: Finished goods 180,062 196,551 Work in process 123,135 136,393 Raw materials 122,377 113,194 Deferred income taxes 36,370 53,389 Prepaid expenses and other current assets 77,550 67,045 -------------------- -------------------- TOTAL CURRENT ASSETS 908,850 956,571 PROPERTY AND EQUIPMENT - AT COST Land 56,240 59,146 Buildings and improvements 256,673 270,095 Machinery and equipment 1,021,343 1,039,050 Construction in progress 59,436 69,534 Allowance for depreciation (447,187) (440,758) -------------------- -------------------- 946,505 997,067 GOODWILL 418,108 432,558 OTHER ASSETS 87,574 76,548 -------------------- -------------------- $2,361,037 $2,462,744 ==================== ====================

March 31 December 31 LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 -------------------- -------------------- CURRENT LIABILITIES Notes payable to banks $ 26,455 $ 20,253 Trade accounts payable 75,410 92,656 Payroll and related expenses 69,915 70,490 Other accrued expenses 95,718 111,420 Income taxes 20,108 17,425 Current portion of long-term debt 3,421 4,544 -------------------- -------------------- TOTAL CURRENT LIABILITIES 291,027 316,788 LONG-TERM DEBT 790,580 814,838 DEFERRED INCOME TAXES 66,684 68,933 DEFERRED INCOME 55,757 59,264 MINORITY INTEREST 54,194 51,858 OTHER LIABILITIES 25,868 25,174 ACCRUED PENSION COSTS 115,082 123,370 STOCKHOLDERS' EQUITY Common stock 5,935 5,935 Class B common stock 832 832 Capital in excess of par value 990,561 990,328 Retained earnings 15,172 14,354 Accumulated other comprehensive income (49,414) (7,799) Unearned compensation (1,241) (1,131) -------------------- -------------------- 961,845 1,002,519 -------------------- -------------------- $2,361,037 $2,462,744 ==================== ==================== See notes to consolidated condensed financial statements.

VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations (Unaudited - In thousands except earnings per share) Three Months Ended March 31, 1999 1998 -------------------- -------------------- Net sales $423,058 $348,744 Costs of products sold 323,168 263,540 -------------------- -------------------- GROSS PROFIT 99,890 85,204 Selling, general, and administrative expenses 62,497 45,934 Amortization of goodwill 3,292 2,273 -------------------- -------------------- OPERATING INCOME 34,101 36,997 Other income (expense): Interest expense (12,880) (8,228) Loss on disposal of subsidiary (10,073) - Other (1,287) (5,479) -------------------- -------------------- (24,240) (13,707) -------------------- -------------------- EARNINGS BEFORE INCOME TAXES 9,861 23,290 Income taxes 9,043 6,754 -------------------- -------------------- NET EARNINGS $818 $16,536 ==================== ==================== Basic and diluted earnings per share $0.01 $0.24 ==================== ==================== Weighted average shares outstanding - assuming dilution 67,730 67,628

VISHAY INTERTECHNOLOGY, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (Unaudited - In thousands) Three Months Ended March 31, 1999 1998 ------------------- ------------------- OPERATING ACTIVITIES Net earnings $ 818 $ 16,536 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 35,735 27,739 Loss on sale of subsidiary 10,073 0 Other (7,298) (7,584) Changes in operating assets and liabilities (31,068) (28,797) ------------------- ------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 8,260 7,894 INVESTING ACTIVITIES Purchases of property and equipment (25,026) (35,001) Proceeds from sale of property and equipment 723 836 Proceeds from sale of subsidiary 9,118 0 Purchase of businesses, net of cash acquired 0 (479,079) ------------------- ------------------- NET CASH USED IN INVESTING ACTIVITIES (15,185) (513,244) FINANCING ACTIVITIES Net proceeds(payments) on revolving credit lines (16,735) 526,223 Proceeds from long-term borrowings 296 3,104 Payments on long-term borrowings (1,978) (1,081) Net proceeds on short-term borrowings 6,689 2,118 ------------------- ------------------- NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES (11,728) 530,364 Effect of exchange rate changes on cash (3,268) (345) ------------------- ------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (21,921) 24,669 Cash and cash equivalents at beginning of period 113,729 55,263 ------------------- ------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 91,808 $ 79,932 =================== =================== See notes to consolidated condensed financial statements.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) March 31, 1999 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 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, 1998. Note 2: Earnings Per Share The number of shares used in the calculation of basic earnings per common share were 67,558,000 and 67,545,000 for the quarters ended March 31, 1999 and 1998, respectively. The number of shares used in the calculation of diluted earnings per common share were 67,730,000 and 67,628,000 for the quarters ended March 31, 1999 and 1998, respectively. For the quarter ended March 31, 1999, options to purchase 3,474,000 shares at prices ranging from $20.42 to $41.14 per share were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares. Earnings per share amounts for all periods presented reflect the 5% stock dividend paid on June 11, 1998. 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 business segment operating income excluding amortization of intangibles. The corporate component of operating income represents corporate selling, general, and administrative expenses. Three Months Ended March 31, 1999 1998 ------------------------------ (In thousands) Business Segment Information Net Sales: Passives $251,532 $280,014 Actives 171,526 68,730 -------- -------- $423,058 $348,744 -------- --------

Operating Income: Passives $ 16,619 $ 37,292 Actives 23,338 5,402 Corporate (2,564) (3,424) Amortization of goodwill (3,292) (2,273) -------- -------- $ 34,101 $ 36,997 -------- -------- Note 4: Comprehensive Income Total comprehensive income (loss) includes the following components (in thousands): Three Months Ended March 31, 1999 1998 ------------------------------ Net Income $ 818 $ 16,536 Other comprehensive income (loss): Foreign currency translation adjustment (42,149) (11,395) Pension liability adjustment, net of tax 534 139 -------- -------- Total other comprehensive income (loss) (41,615) (11,256) -------- -------- Comprehensive income (loss) $(40,797) $ 5,280 -------- -------- Note 5: Income Taxes The effective tax rate for the quarter ended March 31, 1999 was 91.7% as compared to 29.0% for the quarter ended March 31, 1998. The unusual effective tax rate for the quarter ended March 31, 1999 was due to the following: (i) the non tax deductibility on the pre tax 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 quarter ended March 31, 1999 would have been 27%. Note 6: Sale of Subsidiary On March 26, 1999, the Company finalized the sale of Nicolitch, S.A., its French manufacturer of printed circuit boards to Leonische Drahtwerke AG. In connection with the sale, the Company received proceeds of $9,118,000 and recorded a non cash book loss of $11,489,000, including tax expense of $1,416,000. Note 7: Other Income For the quarter ended March 31, 1998, the Company recorded a pretax loss of $6,269,000 related to a forward exchange contract entered into to set the purchase price in connection with the TEMIC acquisition.

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: Quarter ended March 31, 1999 1998 ---- ---- Cost of products sold 76.4% 75.6% Gross profit 23.6 24.4 Selling, general and administrative expenses 14.8 13.2 Operating income 8.1 10.6 Earnings before income taxes 2.3 6.7 Effective tax rate 91.7 29.0 Net earnings 0.2 4.7 Net Sales Net sales for the quarter ended March 31, 1999 increased $74,314,000 or 21.3% from the quarter ended March 31, 1998 and $11,400,000 or 2.8% from the quarter ended December 31, 1998. The increase in net sales for the quarter ended March 31, 1999 as compared to the prior year `s period relates to the acquisition of TEMIC, which became effective March 1, 1998. Net sales of TEMIC for the quarter ended March 31, 1999 were $154,778,000 as compared to $49,947,000 in the prior year quarter. The results of operations of TEMIC have been included in the Company's results from March 1, 1998. Exclusive of TEMIC in both periods, net sales would have decreased by $30,517,000 or 10.2%. The strengthening of the U.S. dollar against foreign currencies for the quarter ended March 31, 1999 in comparison to the prior year quarter, resulted in a decrease in reported sales of $5,213,000. The passive components business net sales were $251,532,000 for the quarter ended March 31, 1999 compared to $280,014,000 for the prior year period. Net sales of the passive components business were negatively affected by significant price erosion, which began in the second quarter 1998. Costs of Products Sold Costs of products sold for the quarter ended March 31, 1999 was 76.4% of net sales, as compared to 75.6% of net sales, for the quarter ended March 31, 1998 and 76.1% of net sales, for the quarter ended December 31, 1998. Gross profit, as a percentage of net sales, for the quarter ended March 31, 1999 decreased from the prior year's period mainly due to the passive components business. The passive components business gross profit margins were 19.8% for the quarter ended March 31, 1999 as compared to 24.5% for the prior year's period. Profitability for the passive components business was negatively affected by significant price erosion, which began in the

second quarter of 1998. The semiconductor components gross margins were 30.1% for the quarter ended March 31, 1999 as compared to 24.3% for the prior year's period. The increase in the gross margins of the semiconductor components business is due to the TEMIC acquisition, which recorded gross margins of 31.7% for the quarter ended March 31, 1999 as compared to a gross margin of 28.2% for the month ended March 31, 1998. Israeli government grants, recorded as a reduction of costs of products sold, were $3,422,000 for the quarter ended March 31, 1999, as compared to $3,043,000 for the prior year's period. 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 the Company's employees in Israel. Deferred income at March 31, 1999 relating to Israeli government grants was $55,757,000 as compared to $59,264,000 at December 31, 1998. Selling, General and Administrative Expenses Selling, general and administrative expenses for the quarter ended March 31, 1999 were 14.8% of net sales, as compared to 13.2% of net sales for the quarter ended March 31, 1998, and 15.0% of net sales for the quarter ended December 31, 1998. The increased selling, general and administrative expenses for the quarter ended March 31, 1999 as compared to the prior year's period, were primarily due to the acquisition of TEMIC, for which selling, general and administrative expenses were 17.0% for the quarter ended March 31, 1999. Interest Expense Interest costs increased by $4,652,000 for the quarter ended March 31, 1999, from the comparable prior year period, due to the increase in bank borrowings necessary to fund the TEMIC acquisition. The Company had net borrowings of $444,000,000 from a group of banks to finance the acquisition of TEMIC. Interest expense, for the quarter ended March 31, 1999, decreased by $1,065,000 from the quarter ended December 31, 1998, due to payments of long term debt in the fourth quarter of 1998 and also in the first quarter ended March 31, 1999. Other Income Included in other income for the quarter ended March 31, 1998 is a loss of $6,269,000 related to a forward exchange contract (entered into to set the purchase price in connection with the TEMIC acquisition). Other income also includes a charge for minority interest of $2,519,000 for the quarter ended March 31, 1999 and $371,000 for the quarter ended March 31, 1998. Loss on sale of subsidiary The Company recognized a pre-tax loss of $10,073,000 relating to the previously announced sale of Nicolitch, S.A., a French manufacturer of printed circuit boards to Leonische Drahwerke AG of Nuremberg, Germany, which was completed on March 26, 1999. Income Taxes

The effective tax rate for the quarter ended March 31, 1999 was 91.7% as compared to 29.0% for the comparable prior year period. The higher tax rate for the quarter ended March 31,1999 was primarily due to 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 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 for the quarter ended March 31, 1999 would have been 27.0%. The continuing effect of low tax rates in Israel, as compared to the statutory rate in the United States, resulted in increases in net earnings of $2,998,000 and $3,370,000 for the quarters ended March 31, 1999 and 1998, respectively. The more favorable Israeli tax rates are applied to specific approved projects and normally continue to be available for a period of ten years or fifteen years. Financial Condition and Liquidity Cash flows from operations were $8,260,000 for the quarter ended March 31, 1999 compared to $7,894,000 for the comparable prior year period. Net purchases of property and equipment for the quarter ended March 31, 1999 were $25,026,000 compared to $35,001,000 in the prior year's period. Net cash provided by financing activities of $530,364,000 for the quarter ended March 31, 1998 included approximately $479,000,000 used to finance the acquisition of TEMIC, net of cash acquired. The Company incurred restructuring expense of $12,605,000 for the year ended December 31, 1997. Approximately $10,357,000 of this expense related to employee termination costs covering approximately 324 employees located in Germany and France. As of March 31, 1999, approximately 275 of such employees have been terminated and $9,124,000 of the termination costs have been paid. The restructuring plan is expected to be completed by December 31, 1999. The Company incurred restructuring expense of $5,694,000 for the year ended December 31, 1998. The expense consisted of employee termination costs covering approximately 182 technical, production, administrative and support employees located in Germany and the United Kingdom. As of March 31, 1999, approximately 136 employees had been terminated and $2,602,000 of this severance had been paid. The restructuring plan is expected to be completed by December 31, 1999. In connection with the acquisition of TEMIC, Vishay recorded restructuring liabilities of $30,471,000. Approximately $25,197,000 of this liability relates to employee termination costs covering approximately 498 technical, production, administrative and support employees located in the United States, Europe, and the Far East. The remaining $5,274,000 relates to provisions for certain assets, contract cancellations, and other costs and $960,000 relates to other costs. As of March 31, 1999, approximately 93 of such employees have been terminated and $12,527,000 of the termination costs have been paid. The balance of $16,984,000 is reflected in the consolidated financial statements in other accrued expenses and is expected to be paid out by December 31, 1999. The Company's financial condition at March 31, 1999 is strong, with a current ratio of 3.1 to 1. The Company's ratio of long-term debt (less current portion) to stockholders' equity was .82 to 1 at March 31, 1999 and .81 at December 31, 1998. Year 2000 Many existing computer systems and software products, including hardware platforms and software applications used by the Company in its various divisions world-wide (a portion of which

are provided by outside suppliers), accept only two digit entries in the date code field. As a result, computer programs or hardware that have date-sensitive software or embedded chips may not properly distinguish 21st century dates from the 20th century dates. This could result in system failure or miscalculations causing disruption of operations. The Company has accorded to each of its divisions, including those in its U.S., Asian, Israeli and European facilities, responsibility for (i) assessment of each division's business information systems and related business processes used in its operations for year 2000 readiness and (ii) implementation of remediation in those areas where year 2000 issues exist. Since each of the Company's divisions has its own unique hardware and software applications, different approaches to the year 2000 issue have been required based upon the circumstances and requirements of each specific division. In some instances, for example, specific divisions have hired external contractors to assist in addressing the year 2000 issues while in other instances, internal staff have focused on remediation of the systems. Where necessary, upgrades to year 2000 compliant versions of third party software have been purchased. In addition, the Company has begun to use the business application software of SAP for its Roederstein (U.S.) operations and for TELEFUNKEN's operations to address some of the issues of year 2000 compliance. While the Company has not yet fully tested all its systems to determine whether they are year 2000 compliant, each division is on track in bringing its systems into compliance. The Company is also well underway in bringing its Asian and Israeli computer systems into year 2000 compliance. Management does not believe the Company will suffer any material loss of customers or other material adverse effects as a result of any modifications that are being implemented to make its systems year 2000 compliant. The Company is also assessing the possible affect on its operations of the year 2000 readiness of critical suppliers of products and services. The Company's reliance on its key suppliers, and therefore on the proper functioning of their information systems and software, is increasing, and there can be no assurance that another company's failure to address year 2000 issues could not have an adverse effect on the Company. The Company currently estimates the total cost of its Year 2000 project to be $1,400,000. At March 31, 1999, the Company has incurred approximately $1,000,000 of costs in connection with its Year 2000 project. The Company believes that it is unlikely to experience a material adverse impact on its financial condition or results of operations due to year 2000 compliance issues. However, since the assessment process is ongoing, year 2000 complications are not fully known, and potential liability issues are not clear, the full potential impact of the year 2000 on the Company is not known at this time. Management of the Company believes it has an effective program in place to resolve the year 2000 issues in a timely manner. As noted above, the Company has not yet completed all necessary phases of the year 2000 program. In the event that the Company's systems are not rendered year 2000 compliant in a timely manner, the Company may experience significant disruptions in its operations including taking customer orders, manufacturing and shipping products, invoicing customers or collecting payments. In addition, disruptions in the economy generally resulting from year 2000 issues could also materially affect the Company. The Company could be subject to litigation for computer systems product failure, for example, equipment shutdown or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time.

The Company has contingency plans for certain critical applications and is working on such plans for others. These contingency plans involve, among other actions, manual workarounds and adjusting staffing strategies. 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 cautionary statements set forth below 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. The Company offers a broad variety of products and services to its customers. Changes in demand for, or in the mix of, products and services comprising revenues could cause actual operating results to vary from those expected. The Company's future operating results are dependent, in part, on its ability to develop, produce and market new and innovative products, to convert existing products to surface mount devices and to customize certain products to meet customer requirements. There are numerous risks inherent in this complex process, including the need for the Company to timely bring to market new products and applications to meet customer's changing needs. The Company operates in a highly competitive environment, which includes significant competitive pricing pressures and intense competition for entry into new markets. A slowdown in demand for passive electronic components or recessionary trends in the global economy in general or in specific countries or regions where the Company sells the bulk of its products, such as the U.S., Germany, France or the Pacific Rim, could adversely impact the Company's results of operations. This factor was particularly evident in 1998 and appears to be continuing in early 1999. Many of the orders in the Company's backlog may be canceled by its customers without penalty. Customers may on occasion double and triple order components from multiple sources to ensure timely delivery when backlog is particularly long.

The Company's results of operations may be adversely impacted if customers were to cancel a material portion of such orders. Approximately 67% of the Company's revenues are derived from operations and sales outside the United States. As a result, currency exchange rate fluctuations, inflation, changes in monetary policy and tariffs, potential changes in laws and regulations affecting the Company's business in foreign jurisdictions, trade restrictions or prohibitions, intergovernmental disputes, increased labor costs and reduction or cancellation of government grants, tax benefits or other incentives could impact the Company's results of operations. Specifically, as a result of the increased production by the Company's operations in Israel over the past several years, the low tax rates in Israel, as compared to the statutory rates in the U.S., have had the effect of increasing the Company's net earnings. In addition, the Company takes advantage of certain incentive programs in Israel in the form of grants designed to increase employment in Israel. Any significant increase in the Israeli tax rates or reduction or elimination of any of the Israeli grant programs could have an adverse impact on the Company's results of operations. The Company may experience underutilization of certain plants and factories in high labor cost regions and capacity constraints in plants and factories located in low labor cost regions, resulting initially in production inefficiencies and higher costs. Such costs include those associated with work force reductions and plant closings in the higher labor cost regions, as described in the Introduction and Background to this Item, and start-up expenses, manufacturing and construction delays, and increased depreciation costs in connection with the start of production in new plants and expansions in lower labor cost regions. Moreover, capacity constraints may limit the Company's ability to continue to meet demand for any of the Company's products. During 1998, restructuring costs were particularly high as a result of the Company's accelerated effort to streamline operations in response to the continued weakness in the internal electronic components market. When the Company restructures its operations in response to changing economic conditions, particularly in Europe, labor unrest may occur, which could have an adverse effect on the Company. The Company's results of operations may be adversely impacted by: 1. difficulties in obtaining raw materials, supplies, power, natural resources and any other items needed for the production of the Company's products; 2. the effects of quality deviations in raw materials, particularly tantalum powder, palladium and ceramic dielectric materials; and 3. the effects of significant price increases for tantalum or palladium, or an inability to obtain adequate supplies of tantalum or palladium from the limited number of suppliers.

The Company's historic growth in revenues and net earnings have resulted in large part from its strategy to expand through acquisitions. However, there is no assurance that the Company will find or consummate transactions with suitable acquisition candidates in the future. From time to time, when the Company is in the process of pursuing a strategic acquisition, the Company or the acquisition target may feel compelled for securities and other legal reasons to announce the potential acquisition or the Company's desire to enter a certain market prior to entering into informal agreements. As a result, there can be no assurance that the Company will consummate any such acquisition. The Company's strategy also focuses on the reduction of selling, general and administrative expenses through the integration or elimination of redundant sales offices and administrative functions at acquired companies and achievement of significant production cost savings through the transfer and expansion of manufacturing operations to lower cost regions such as Israel, Mexico, Portugal, the Czech Republic, Taiwan and the People's Republic of China. The Company's inability to achieve any of these goals could have as adverse effect on the Company's results of operations. The Company may be adversely affected by the costs and other effects associated with 1. legal and administrative cases and proceedings, whether civil, such as environmental and product-related, or criminal; 2. settlements, investigations, claims, and changes in those items; 3. developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses; and 4. adoption of new, or changes in, accounting policies and practices and the application of such policies and practices. The Company's results of operations may also be affected by: 1. changes within the Company's organization, particularly at the executive officer level, or in compensation and benefit plans; and 2. the amount, type and cost of the financing which the Company maintains, and any changes to the financing. The inherent risk of environmental liability and remediation costs associated with the Company's manufacturing operations may result in large and unforeseen liabilities. The Company's operations may be adversely impacted by:

1. the effects of war or severe weather or other acts of God on the Company's operations, including disruptions at manufacturing facilities; 2. the effects of a disruption in the Company's computerized ordering systems; and 3. the effects of a disruption in the Company's communications systems. Management of the Company believes it has an effective program in place to resolve the year 2000 issues in a timely manner. As noted above, the Company has not yet completed all necessary phases of the year 2000 program. In the event that the Company's systems are not rendered year 2000 compliant in a timely manner, the Company may experience significant disruptions in its operations including taking customer orders, manufacturing and shipping products, invoicing customers or collecting payments. In additions, disruptions in the economy generally resulting from year 2000 issues could also materially affect the company. The Company could be subject to litigation for computer systems product failure, for example, equipment shutdown or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. Market Risk Disclosure There has been no material change in the Company's exposure to market risk since December 31, 1998. 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's policy does not allow speculation in derivative instruments for profit or execution of 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.

VISHAY INTERTECHNOLOGY, INC. PART II - OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities Not applicable Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 - Financial Data Schedule (b) Not applicable

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: May 14, 1999

5 1,000 3-MOS DEC-31-1999 MAR-31-1999 91,808 0 289,907 (12,359) 425,574 908,850 1,393,692 (447,187) 2,361,037 291,027 790,580 0 0 5,935 955,910 2,361,037 423,058 423,058 323,168 323,168 77,149 0 12,880 9,861 9,043 818 0 0 0 818 .01 .01