Vishay Reports Results for Second Quarter 2007

Dr. Felix Zandman, Executive 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 fiscal quarter ended June 30, 2007 were $715.9 million, compared to $660.5 million for the fiscal quarter ended July 1, 2006. Net income from continuing operations for the fiscal quarter ended June 30, 2007 was $42.0 million, or $0.22 per diluted share, compared with net earnings for the fiscal quarter ended July 1, 2006 were $42.8 million, or $0.22 per diluted share. On April 1, 2007, Vishay acquired the Power Control Systems ("PCS”) business of International Rectifier Corporation. The Company intends to sell the automotive modules and subsystems business unit ("ASBU”) acquired as part of the PCS business. The operations of the ASBU have been classified as discontinued operations for the quarter ended June 30, 2007. The loss from discontinued operations for the quarter was $1.3 million, resulting in net earnings of $40.7 million, or $0.22 per diluted share. Net income from continuing operations of $42.0 million, or $0.22 per diluted share, for the second quarter of 2007 was impacted by pre-tax charges for restructuring and severance costs of $1.2 and related asset write-downs of $2.7 million. These items and their tax-related consequences, plus additional tax expense for changes in uncertain tax positions of $3.4 million, had a negative $0.04 per share effect on income from continuing operations. Net earnings of $42.8 million, or $0.22 per diluted share, for the second quarter of 2006 were impacted by pre-tax charges for restructuring and severance costs of $8.2 million, related asset write-downs of $3.8 million, losses resulting from adjustments to previously existing purchase commitments of $0.8 million for tantalum powder and wire, a loss on early extinguishment of debt of $2.9 million associated with the repurchase of the Company's Liquid Yield Option Notes, and an adjustment to increase the estimated cost of environmental remediation obligations associated with the 2001 General Semiconductor acquisition of $3.6 million. These items and their tax-related consequences had a negative $0.06 effect on earnings per share. Net revenues for the six fiscal months ended June 30, 2007 were $1,374.1 million, compared to $1,291.6 million for the six fiscal months ended July 1, 2006. Net income from continuing operations for the six fiscal months ended June 30, 2007 was $92.0 million, or $0.48 per diluted share, compared with net earnings for the six fiscal months ended July 1, 2006 of $81.0 million, or $0.41 per diluted share. Net income from continuing operations of $92.0 million, or $0.48 per diluted share, for the six fiscal months ended June 30, 2007 was impacted by pre-tax charges for restructuring and severance costs of $3.3 million and related asset write-downs of $2.7 million. These items and their tax-related consequences, plus additional tax expense for changes in uncertain tax positions of $3.4 million, had a negative $0.04 per share effect on income from continuing operations. Net earnings of $81.0 million, or $0.41 per diluted share, for the six fiscal months ended July 1, 2006 were impacted by pre-tax charges for restructuring and severance costs of $8.9 million, related asset write-downs of $3.9 million, write-downs of tantalum inventories to current market value of $8.2 million, losses resulting from adjustments to previously existing purchase commitments of $4.1 million, a loss on early extinguishment of debt of $2.9 million, and an adjustment to increase the estimated cost of environmental remediation obligations associated with the 2001 General Semiconductor acquisition of $3.6 million. These items and their tax-related consequences had a negative $0.12 effect on earnings per share. Commenting on the results for the second quarter 2007, Dr. Paul stated, "After a strong start into the year, the revenues for Vishay stabilized in the second quarter 2007 on a solid level. The PCS business that we acquired on April 1, 2007 from International Rectifier consists of two discrete semiconductor businesses and an automotive modules and subsystems business unit ("ASBU”). We concluded that ASBU would not satisfactorily complement Vishay’s strategy and operations. Consequently, we announced Vishay’s intent to sell ASBU. The discrete semiconductor businesses acquired as part of PCS contributed $51.8 million of sales in the second quarter and already were accretive to earnings. After a slow start in the first month after the acquisition, we expect the acquired semiconductor businesses to quickly reach a yearly run-rate of sales of $240 million. We project a contribution of approximately $11 million from the acquired semiconductor businesses to Vishay’s operating profit by the first quarter 2008.” Regarding the outlook for the third quarter 2007, Dr. Paul continued, "Our guidance for sales is in the range of $710 million to $730 million. We expect the acquired product lines to continue to grow, whereas our traditional business is expected to experience some softening due to seasonal market conditions in Europe.” Commenting on the Company's acquisition activities, Dr. Felix Zandman, Executive Chairman of the Board and Chief Technical and Business Development Officer, stated, "We are very pleased with the discrete semiconductor businesses acquired from International Rectifier. They are performing as expected. We believe that we can grow these businesses organically and that they will become a strong contributor to Vishay’s bottom line in the near future. We continue to see the semiconductor space as an area for organic growth and potential acquisitions.” Regarding the Company's R&D activities, Dr. Zandman noted, "Our R&D programs are on target. The share of new products released to the market continues to increase." A conference call to discuss second quarter financial results is scheduled for Thursday, August 2, 2007 at 10:00 a.m. (EDT). 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 #6231732. There will be a replay of the conference call from 12:30 p.m. (EDT) on Thursday, August 2, 2007 through 11:59 p.m. (EDT) on Thursday, August 9, 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 #6231732. 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 forecasted revenues and the anticipated future benefits of the Company's acquisition and research and development programs, including the anticipated future benefits of the PCS business acquisition, are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from those anticipated. 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; competition and technological changes in our industries; difficulties in implementing our cost reduction strategies; difficulties in new product development; our ability to identify suitable acquisition targets and to successfully negotiate and consummate their acquisition, difficulties in integrating acquired companies, including the recently acquired PCS business; and otherwise realizing the anticipated benefits of their operations, our ability to attract and retain highly qualified personnel, particularly in respect of our acquired businesses; and other factors affecting our operations that are set forth in our Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Also, we can provide no assurance as to the timing of the disposition of ASBU or whether we can dispose of ABSU on terms we consider attractive or at all. 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, 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 June 30, July 1,   2007     2006     Net revenues $ 715,861 $ 660,523 Costs of products sold 537,946 479,808 Loss on purchase commitments   -     794   Gross profit 177,915 179,921 Gross margin 24.9 % 27.2 %   Selling, general, and administrative expenses (a) 113,114 104,317 Restructuring and severance costs 1,240 8,227 Asset write-downs   2,665     3,794   Operating income 60,896 63,583 Operating margin 8.5 % 9.6 %   Other income (expense): Interest expense (7,407 ) (8,407 ) Loss on early extinguishment of debt - (2,854 ) Minority interest (258 ) (381 ) Other   4,208     3,723   Total other income (expense) - net   (3,457 )   (7,919 )   Income from continuing operations, before taxes 57,439 55,664   Income taxes   15,394     12,822     Income from continuing operations 42,045 42,842   Loss from discontinued operations, net of tax (1,298 ) -     Net earnings $ 40,747   $ 42,842     Basic earnings (loss) per share:* Continuing operations $ 0.23 $ 0.23 Discontinued operations $ (0.01 ) $ - Net earnings $ 0.22 $ 0.23   Diluted earnings (loss) per share:* Continuing operations $ 0.22 $ 0.22 Discontinued operations $ (0.01 ) $ - Net earnings $ 0.22 $ 0.22   Weighted average shares outstanding - basic 185,422 184,419   Weighted average shares outstanding - diluted 192,578 217,803   * May not add due to rounding.   (a) The fiscal quarter ended July 1, 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. Summary of Operations (Unaudited - In thousands except earnings per share)   Six fiscal months ended June 30, July 1,   2007     2006     Net revenues $ 1,374,053 $ 1,291,609 Costs of products sold (b) 1,020,987 951,094 Loss on purchase commitments   -     4,097   Gross profit 353,066 336,418 Gross margin 25.7 % 26.0 %   Selling, general, and administrative expenses (c) 220,102 200,169 Restructuring and severance costs 3,266 8,925 Asset write-downs   2,665     3,874   Operating income 127,033 123,450 Operating margin 9.2 % 9.6 %   Other income (expense): Interest expense (14,598 ) (17,064 ) Loss on early extinguishment of debt - (2,854 ) Minority interest (547 ) (567 ) Other   11,293     8,004   Total other income (expense) - net   (3,852 )   (12,481 )   Income from continuing operations, before taxes 123,181 110,969   Income taxes   31,172     29,967     Income from continuing operations 92,009 81,002   Loss from discontinued operations, net of tax (1,298 ) -     Net earnings $ 90,711   $ 81,002     Basic earnings (loss) per share:* Continuing operations $ 0.50 $ 0.44 Discontinued operations $ (0.01 ) $ - Net earnings $ 0.49 $ 0.44   Diluted earnings (loss) per share:* Continuing operations $ 0.48 $ 0.41 Discontinued operations $ (0.01 ) $ - Net earnings $ 0.47 $ 0.41   Weighted average shares outstanding - basic 184,942 184,345   Weighted average shares outstanding - diluted 203,702 218,204   * May not add due to rounding.   (b) The six fiscal months ended July 1, 2006 includes write-downs of tantalum inventories of $8,228 within costs of products sold. (c) The six fiscal months ended July 1, 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)     June 30, December 31,   2007     2006   Assets (Unaudited) Current assets: Cash and cash equivalents $ 386,667 $ 671,586 Accounts receivable - net 454,404 351,656 Inventories: Finished goods 169,526 163,576 Work in process 222,105 194,734 Raw materials 173,442 178,543 Deferred income taxes 43,407 38,368 Prepaid expenses and other current assets 138,054 128,784 Assets held for sale   65,450     -   Total current assets 1,653,055 1,727,247   Property and equipment, at cost: Land 101,022 94,803 Buildings and improvements 460,215 441,659 Machinery and equipment 1,917,840 1,818,660 Construction in progress 88,071 85,288 Allowance for depreciation   (1,399,386 )   (1,316,045 ) Net property and equipment 1,167,762 1,124,365   Goodwill 1,622,528 1,463,992   Other intangible assets, net 198,452 168,263   Other assets   182,641     208,029   Total assets $ 4,824,438   $ 4,691,896   VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (continued) (In thousands) June 30, December 31,   2007   2006 (Unaudited) Liabilities and stockholders' equity Current liabilities: Notes payable to banks $ 4,551 $ 526 Trade accounts payable 139,432 145,919 Payroll and related expenses 129,855 132,922 Other accrued expenses 216,457 203,986 Income taxes 48,136 47,333 Current portion of long-term debt 1,901 3,728 Liabilities related to assets held for sale   13,085   - Total current liabilities 553,417 534,414   Long-term debt less current portion 607,528 608,434 Deferred income taxes 18,167 15,923 Deferred grant income 3,048 5,732 Other liabilities 133,422 155,963 Accrued pension and other postretirement costs 289,818 285,823   Minority interest 4,798 4,794   Stockholders' equity: Common stock 17,197 17,010 Class B common stock 1,435 1,436 Capital in excess of par value 2,251,143 2,229,972 Retained earnings (d) 885,522 796,902 Accumulated other comprehensive income   58,943   35,493 Total stockholders' equity   3,214,240   3,080,813 Total liabilities and stockholders' equity $ 4,824,438 $ 4,691,896 (d) Reflects adjustment of $2,091 to initially apply the provisions of FASB Interpretation No. 48, adopted January 1, 2007. VISHAY INTERTECHNOLOGY, INC. Reconciliation of Earnings Per Share (Unaudited - In thousands except earnings per share)   Fiscal quarter ended Six fiscal months ended June 30, 2007 July 1, 2006 June 30, 2007 July 1, 2006   Numerator:   Numerator for basic earnings per share: Income from continuing operations $ 42,045 $ 42,842 $ 92,009 $ 81,002 Loss from discontinued operations   (1,298 )   -   (1,298 )   - Net earnings $ 40,747   $ 42,842 $ 90,711   $ 81,002   Adjustment to the numerator for continuing operations and net earnings: Interest savings assuming conversion of dilutive convertible and exchangeable notes, net of tax (e)   913     4,678   4,918     9,476   Numerator for diluted earnings per share: Income from continuing operations $ 42,958 $ 47,520 $ 96,927 $ 90,478 Loss from discontinued operations   (1,298 )   -   (1,298 )   - Net earnings $ 41,660   $ 47,520 $ 95,629   $ 90,478   Denominator: Denominator for basic earnings per share: weighted average shares 185,422 184,419 184,942 184,345   Effect of dilutive securities Convertible and exchangeable notes (e) 6,177 32,351 17,925 32,916 Employee stock options 872 947 728 858 Other   107     86   107     85 Dilutive potential common shares   7,156     33,384   18,760     33,859   Denominator for diluted earnings per share: adjusted weighted average shares   192,578     217,803   203,702     218,204   Basic earnings (loss) per share:* Continuing operations $ 0.23 $ 0.23 $ 0.50 $ 0.44 Discontinued operations $ (0.01 ) $ - $ (0.01 ) $ - Net earnings $ 0.22 $ 0.23 $ 0.49 $ 0.44   Diluted earnings (loss) per share:* Continuing operations $ 0.22 $ 0.22 $ 0.48 $ 0.41 Discontinued operations $ (0.01 ) $ - $ (0.01 ) $ - Net earnings $ 0.22 $ 0.22 $ 0.47 $ 0.41   * May not add due to rounding. Diluted earnings per share for the periods presented do not reflect the following weighted-average potential common shares, as the effect would be antidilutive: Fiscal quarter ended Six fiscal months ended June 30, 2007 July 1, 2006 June 30, 2007 July 1, 2006 Convertible and exchangeable notes: Convertible Subordinated Notes, due 2023 (e) 23,496 - 11,748 - Exchangeable Unsecured Notes, due 2102 - - - - LYONs, due 2021 (f) - - - - Weighted average employee stock options 2,527 4,112 3,297 4,697 Weighted average warrants 8,824 8,824 8,824 8,824 (e) In June 2007, the Company’s Board of Directors adopted a resolution pursuant to which the Company intends to waive its rights to settle the principal amount of the notes in shares of Vishay common stock. In accordance with the resolution of its Board, in the future if notes are tendered for repurchase, Vishay will pay the repurchase price in cash, and if notes are submitted for conversion, Vishay will value the shares issuable upon conversion and will pay in cash an amount equal to the principal amount of the converted notes and will issue shares in respect of the conversion value in excess of the principal amount. Accordingly, for the second quarter of 2007 and future periods, the Company calculates the number of shares issuable under the terms of the notes based on the average market price of Vishay common stock during the period, and includes that number in the total diluted shares figure for the period. If the average market price is less than $21.28, no shares will be included in the diluted earnings per share computation, as the effect would be antidilutive. For periods prior to the second quarter of 2007, the notes were considered conventional convertible debt, and included in the earnings per share computation assuming they were converted into 23,496 shares of common stock if the effect of their inclusion was dilutive. (f) The LYONs were redeemed in June 2006. Prior to redemption, they were convertible into 3,809 shares of common stock.