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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 of (I.R.S. employer
incorporation or organization) identification no.)
63 LINCOLN HIGHWAY
MALVERN, PENNSYLVANIA 19355-2120
- --------------------------------------- --------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (610) 644-1300
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE
---------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant as of March 25, 1997, assuming conversion of all its Class B
Common Stock held by non-affiliates into Common Stock of the registrant was
$1,193,526,000.
As of March 25, 1997, registrant had 53,728,304 shares of its Common
Stock and 7,563,720 shares of its Class B Common Stock outstanding.
Portions of the registrant's definitive proxy statement, which will be
filed within 120 days of December 31, 1996, are incorporated by reference into
Part III.
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Vishay Intertechnology, Inc. (together with its consolidated
subsidiaries, "Vishay" or the "Company") is a leading international manufacturer
and supplier of passive electronic components, particularly resistors,
capacitors and inductors, offering its customers "one-stop" access to one of the
most comprehensive passive electronic component lines of any manufacturer in the
United States or Europe. Passive electronic components, together with
semiconductors (integrated circuits), which the Company does not produce, are
the primary elements of every electronic circuit. The Company manufactures one
of the broadest lines of surface mount devices, a format for passive electronic
components that is being increasingly demanded by customers. In addition, the
Company continues to produce components in the traditional leaded form.
Components manufactured by the Company are used in virtually all types of
electronic products, including those in the computer, telecommunications,
military/aerospace, instrument, automotive, medical and consumer electronics
industries.
Since early 1985, the Company has pursued a business strategy that
principally consists of the following elements: (i) expansion within the passive
electronic components industry, primarily through the acquisition of other
manufacturers with established positions in major markets, reputations for
product quality and reliability and product lines with which the Company has
substantial marketing and technical expertise; (ii) reduction of selling,
general and administrative expenses through the integration or elimination of
redundant sales offices and administrative functions at acquired companies;
(iii) achievement of significant production cost savings through the transfer
and expansion of manufacturing operations to regions, such as Israel, Mexico,
Portugal and the Czech Republic, where the Company can take advantage of lower
labor costs and available tax and other government-sponsored incentives; and
(iv) maintaining significant production facilities in those regions where the
Company markets the bulk of its products in order to enhance customer service
and responsiveness.
As a result of this strategy, the Company has grown during the past
eleven years from a small manufacturer of precision resistors and strain gages
to one of the world's largest manufacturers and suppliers of a broad line of
passive electronic components.
As part of a restructuring plan implemented in 1996, the Company
consolidated its Vishay Electronic Components operations in the United States,
Europe and Asia into one entity. The Company's intention is to (i) create a
single worldwide organization under one management team, (ii) create further
opportunities for synergies among its divisions and (iii) position the Company
for stronger growth by creating for Vishay a more streamlined ability to
penetrate and create new markets.
Vishay was incorporated in Delaware in 1962 and maintains its principal
executive offices at 63 Lincoln Highway, Malvern, Pennsylvania 19355-2120. The
telephone number is (610) 644-1300.
PRODUCTS
Vishay designs, manufactures and markets electronic components that
cover a wide range of products and technologies. The products primarily consist
of fixed resistors, tantalum, multi- layer ceramic chip ("MLCC") and film
capacitors; and, to a lesser extent, inductors; aluminum and specialty ceramic
capacitors; transformers; potentiometers; plasma displays and thermistors. The
Company offers most of its product types in the increasingly demanded surface
mount device form and in the traditional leaded device form. The Company
believes it produces one of the broadest lines of passive electronic components
available from any single manufacturer.
Resistors are basic components used in all forms of electronic
circuitry to adjust and regulate levels of voltage and current. They vary widely
in precision and cost, and are manufactured in numerous materials and forms.
Resistive components may be either fixed or variable, the distinction being
whether the resistance is adjustable (variable) or not (fixed). Resistors can
also be used as measuring devices, such as Vishay's resistive sensors. Resistive
sensors or strain gages are used in experimental stress analysis systems as well
as in transducers for electronic measurement loads (scales), acceleration and
fluid pressure.
Vishay manufactures virtually all types of fixed resistors, both in
discrete and network forms. These resistors are produced for virtually every
segment of the resistive product market, from resistors used in the highest
quality precision instruments for which the performance of the resistors is the
most important requirement, to resistors for which price is the most important
factor.
Capacitors perform energy storage, frequency control, timing and
filtering functions in most types of electronic equipment. The more important
applications for capacitors are (i) electronic filtering for linear and
switching power supplies, (ii) decoupling and bypass of electronic signals or
integrated circuits and circuit boards, and (iii) frequency control, timing and
conditioning of electronic signals for a broad range of applications. The
Company's capacitor products primarily consist of solid tantalum surface mount
chip capacitors, solid tantalum leaded capacitors, wet/foil tantalum capacitors,
MLCC capacitors, and film capacitors. Each capacitor product has unique physical
and electrical performance characteristics that make each type of capacitor
useful for specific applications. Tantalum and MLCC capacitors are generally
used in conjunction with integrated
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circuits in applications requiring low to medium capacitance values
("capacitance" being the measure of the capacitor's ability to store energy).
The tantalum capacitor is the smallest and most stable type of capacitor for its
range of capacitance and is best suited for applications requiring medium
capacitance values. MLCC capacitors, on the other hand, are more cost-effective
for applications requiring lower capacitance values. The Company's MLCC
capacitors are known for their particularly high reliability.
Management believes that surface mounted MLCC chip capacitors, tantalum
chip capacitors, and thick film resistor chips represent the fastest growing
segments of the passive electronic component industry.
The Company believes it has taken advantage of the growth of the
surface mount component market and is an industry leader in designing and
marketing surface mount devices. The Company also believes that in the United
States and Europe it is a market leader in the development and production of a
wide range of these devices, including thick film chip resistors, thick film
resistor networks and arrays, metal film leadless resistors (MELFs), molded
tantalum chip capacitors, coated tantalum chip capacitors, film capacitors,
multi-layer ceramic chip capacitors, thin film chip resistors, thin film
networks, wirewound chip resistors, power strip resistors, bulk metal foil chip
resistors, current sensing chips, chip inductors, chip transformers, chip
trimmers and NTC chip thermistors. The Company also provides a number of
component packaging styles to facilitate automated product assembly by its
customers. Surface mount devices adhere to the surface of a circuit board rather
than being secured by leads that pass through holes to the back side of the
board. Surface mounting provides distinct advantages over through-hole mounting.
For example, surface mounting allows the placement of more components on a
circuit board, which is particularly desirable for a growing number of
manufacturers who require greater miniaturization in products such as hand held
computers and cellular telephones. Surface mounting also facilitates automation,
resulting in lower production costs for equipment manufacturers than those
associated with leaded devices.
MARKETS
The Company's products are sold primarily to original equipment
manufacturers ("OEMs"), OEM subcontractors that assemble printed circuit boards
and independent distributors that maintain large inventories of electronic
components for resale to OEMs. Its products are used in, among other things,
virtually every type of product containing electronic circuitry, including
computer-related products, telecommunications, measuring instruments, industrial
equipment, automotive applications, process control systems, military and
aerospace applications, consumer electronics, medical instruments and scales.
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For the year ended December 31, 1996, approximately 41% of the
Company's net sales was attributable to customers in the United States, while
the remainder was attributable to sales primarily in Europe.
In the United States, products are marketed through independent
manufacturers' representatives, who are compensated solely on a commission
basis, by the Company's own sales personnel and by independent distributors. The
Company has regional sales personnel in several North American locations that
make sales directly to OEMs and provide technical and sales support for
independent manufacturers' representatives throughout the United States, Mexico
and Canada. In addition, the Company uses independent distributors to resell its
products. Outside North America, products are sold to customers in Germany, the
United Kingdom, France, Israel, Japan, Singapore, South Korea, Brazil and other
European and Pacific Rim countries through Company sales offices, independent
manufacturers' representatives and distributors. In order to better serve its
customers, the Company maintains production facilities in those regions where it
markets the bulk of its products, such as the U.S., Germany, France and the U.K.
In addition, to maximize production efficiencies, the Company seeks whenever
practicable to establish manufacturing facilities in those regions, such as
Israel, Mexico, Portugal and the Czech Republic, where it can take advantage of
lower labor costs and available tax and other government-sponsored incentives.
The Company undertakes to have its products incorporated into the
design of electronic equipment at the research and prototype stages. Vishay
employs its own staff of application and field engineers who work with its
customers, independent manufacturers' representatives and distributors to solve
technical problems and develop products to meet specific needs.
The Company has qualified certain products under various military
specifications, approved and monitored by the United States Defense Electronic
Supply Center ("DESC"), and under certain European military specifications.
Classification levels have been established by DESC based upon the rate of
failure of products to meet specifications (the "Classification Level"). In
order to maintain the Classification Level of a product, tests must be
continuously performed, and the results of these tests must be reported to DESC.
If the product fails to meet the requirements for the applicable Classification
Level, the product's classification may be reduced to a less stringent level.
Various United States manufacturing facilities from time to time experience a
product Classification Level modification. During the time that such level is
reduced for any specific product, net sales and earnings derived from such
product may be adversely affected.
The Company is aggressively undertaking to have the quality systems at
most of its major manufacturing facilities approved under the ISO 9000
international quality control standard.
-4-
ISO 9000 is a comprehensive set of quality program standards developed by the
International Standards Organization. A majority of the Company's manufacturing
operations have already received ISO 9000 approval and others are actively
pursuing such approval.
Vishay's largest customers vary from year to year, and no customer has
long-term commitments to purchase products of the Company. No customer accounted
for more than 10% of the Company's sales for the year ended December 31, 1996.
RESEARCH AND DEVELOPMENT
Many of the Company's products and manufacturing processes have been
invented, designed and developed by Company engineers and scientists. The
Company maintains strategically located design centers where proximity to
customers enables it to more easily satisfy the needs of the local market. These
design centers are located in the United States (Connecticut, Maine, Nebraska,
North Carolina, Pennsylvania), in Germany (Selb, Landshut, Pfafenberg,
Backnang), in France (Nice, Evry) and Israel (Dimona, Migdal Ha-emek). The
Company also maintains separate research and development staffs and promotes
separate programs at a number of its production facilities to develop new
products and new applications of existing products, and to improve manufacturing
techniques. This decentralized system encourages individual product development
at individual manufacturing facilities that occasionally have applications at
other facilities. Company research and development costs were approximately
$10.4 million for 1996 and 1995, respectively, and $7.2 million for 1994. These
amounts do not include substantial expenditures for the development and
manufacturing of machinery and equipment for new processes and for cost
reduction measures. See "Competition".
SOURCES OF SUPPLIES
Although most materials incorporated in the Company's products are
available from a number of sources, certain materials (particularly tantalum and
palladium) are available only from a relatively limited number of suppliers.
Tantalum, a metal, is the principal material used in the manufacture of
tantalum capacitors. It is purchased in powder and wire form primarily under
annual contracts with domestic suppliers at prices that are subject to periodic
adjustment. The Company is a major consumer of the world's annual tantalum
production. There are currently three major suppliers that process tantalum ore
into capacitor grade tantalum powder. Although the Company believes that there
is currently a surplus of tantalum ore reserves and a sufficient number of
tantalum processors relative to foreseeable demand, and that the tantalum
required by the Company has generally been available in sufficient quantities to
meet requirements, the
-5-
limited number of tantalum powder suppliers could lead to increases in tantalum
prices that the Company may not be able to pass on to its customers.
In an attempt to address this concern, the Company has begun to
implement a multifaceted plan to develop a tantalum mine, refinery and capacitor
production facilities in China. In May 1996, the Company, along with its joint
venture partner, United Development Incorporated, Ltd., an affiliate of the
Eisenberg Group of Companies ("UDI"), signed a Cooperation Agreement with the
Chinese National Non-Ferrous Metals Industry Corp., a Chinese government agency
("CNNC"), that calls for the comprehensive development of the tantalum industry
in China. The agreement contemplates mining and refining tantalum ore and
producing tantalum capacitors in China through several joint ventures. In
furtherance of the Cooperation Agreement, in July, 1996, the Vishay/UDI joint
venture signed a letter of intent with the mining facility located in Yichun,
Jiangxi Province, China to create a joint venture to increase the capacity and
concentration of tantalum, niobium and other metals mined from the site. In
August 1996, the Vishay/UDI joint venture signed a letter of intent with the
refinery and smeltering facility located in Ningxia Province, China to increase
the quantity and improve the quality and product selection of tantalum and
niobium ore processed at the facility, and in November 1996, the Vishay/UDI
joint venture signed a letter of intent with CNNC to construct a tantalum
capacitor manufacturing plant in Nanchung, Jiangxi Province, China. The Company
is now negotiating definitive agreements for each of these projects. The Company
believes that if it is able to consummate these joint ventures with the CNNC,
the Company will have access to a long term, stable supply of low cost tantalum
material, thus reducing its cost to produce tantalum capacitors and making the
Company more competitive in the worldwide market for these products, and will at
the same time be in the position to significantly expand its presence in China
and the Pacific Rim.
Palladium is primarily purchased on the spot and forward markets,
depending on market conditions. Palladium is considered a commodity and is
subject to price volatility. The price of palladium has fluctuated in the range
of approximately $120 to $145 per troy ounce during the last three years.
Although palladium is currently found in South Africa and Russia, the Company
believes that there are a sufficient number of domestic and foreign suppliers
from which the Company can purchase palladium. However, an inability on the part
of the Company to pass on increases in palladium costs to its customers could
have an adverse effect on the margins of those products using the metal.
-6-
INVENTORY AND BACKLOG
Although Vishay manufactures standardized products, a substantial
portion of its products are produced to meet customer specifications. The
Company does, however, maintain an inventory of resistors and other components.
Backlog of outstanding orders for the Company's products was $237.7 million,
$339.2 million and $305.7 million, respectively, at December 31, 1996, 1995 and
1994. The decrease in backlog at December 31, 1996 reflects a worldwide slowdown
in demand for tantalum and multi-layer ceramic chip capacitors, the economic
downturn in Germany, where a significant portion of the Company's products are
sold, and the abrupt worldwide decline in demand for passive electronic
components by personal computer and telecommunications manufacturers.
Most of the orders in the Company's backlog may be cancelled by its
customers, in whole or in part, although sometimes subject to penalty. To date,
however, cancellations have not been significant.
COMPETITION
The Company faces strong competition in its various product lines from
both domestic and foreign manufacturers that produce products using technologies
similar to those of the Company. The Company's main competitors for tantalum
capacitors are KEMET Corporation, AVX Corporation and NEC Electronics Inc.; for
MLCC capacitors, competitors are KEMET, AVX, Murata and TDK Corp. For thick film
chip resistors, competitors are Rohm Corp., Koa Speer Electronics Inc. and Yageo
Corporation. For wirewound and metal film resistors, competitors are I.R.C.
Inc., Rohm Corp. and Ohmite Manufacturing Company.
The Company's competitive position depends on its product quality,
know-how, proprietary data, marketing and service capabilities and business
reputation, as well as on price. In respect of certain of its products, the
Company competes on the basis of its marketing and distribution network, which
provides a high level of customer service. For example, the Company works
closely with its customers to have its components incorporated into their
electronic equipment at the early stages of design and production and maintains
redundant production sites for most of its products to ensure an uninterrupted
supply of products. Further, the Company has established a National Accounts
Management Program, which provides the Company's largest customers with one
national account executive who can cut across Vishay business unit lines for
sales, marketing and contract coordination. In addition, the breadth of the
Company's product offerings enables the Company to strengthen its market
position by providing its customers with "one-stop" access to one of the
broadest selections of passive electronic components available from a direct
manufacturing source.
-7-
A number of the Company's customers are contractors or subcontractors
on various United States and foreign government contracts. Under certain United
States Government contracts, retroactive adjustments can be made to contract
prices affecting the profit margin on such contracts. The Company believes that
its profits are not excessive and, accordingly, no provision has been made for
any such adjustment.
Although the Company has numerous United States and foreign patents
covering certain of its products and manufacturing processes, no particular
patent is considered material to the business of the Company.
MANUFACTURING OPERATIONS
The Company strives to balance the location of its manufacturing
facilities. In order to better serve its customers, the Company maintains
production facilities in those regions where it markets the bulk of its
products, such as the United States, Germany, France and the United Kingdom. To
maximize production efficiencies, the Company seeks whenever practicable to
establish manufacturing facilities in countries, such as Israel, Mexico,
Portugal and the Czech Republic, where it can take advantage of lower labor and
tax costs and, in the case of Israel, to take advantage of various government
incentives, including grants and tax relief.
At December 31, 1996, approximately 40% of the Company's identifiable
assets were located in the United States, approximately 37% were located in
Europe, approximately 22% were located in Israel and approximately 1% in other
regions. In the United States, the Company's main manufacturing facilities are
located in Nebraska, South Dakota, North Carolina, Pennsylvania, Maine,
Connecticut, Virginia, New Hampshire and Florida. In Europe, the Company's main
manufacturing facilities are located in Selb, Landshut and Backnang, Germany and
Nice, France. In Israel, manufacturing facilities are located in Holon, Dimona
and Migdal Ha-emek. The Company also maintains major manufacturing facilities in
Juarez, Mexico and the Czech Republic. Over the past several years, the Company
has invested substantial resources to increase capacity and to maximize
automation in its plants, which it believes will further reduce production
costs.
The Company has expanded, and plans to continue to expand, its
manufacturing operations in Israel, where it benefits from the government's
employment and tax incentive programs designed to increase employment, lower
wage rates and a highly-skilled labor force, all of which have contributed
substantially to the growth and profitability of the Company.
Under the terms of the Israeli government's incentive programs, once a
project is approved, the recipient is eligible to
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receive the benefits of the related grants for the life of the project, so long
as the recipient continues to meet preset eligibility standards. None of the
Company's approved projects has ever been cancelled or modified and the Company
has already received approval for a majority of the projects contemplated by its
capital expenditure program. However, the government has recently scaled back or
discontinued some of its incentive programs. Accordingly, there can be no
assurance that in the future the Israeli government will continue to offer new
incentive programs applicable to the Company or that, if it does, such programs
will provide the same level of benefits the Company has historically received or
that the Company will continue to be eligible to take advantage of them.
Although the Company might be materially adversely affected if these incentive
programs were no longer available to the Company for new projects, because a
majority of the Company's projects in Israel already benefit from government
incentive programs, the Company does not anticipate that any cutbacks in the
incentive programs would have an adverse impact on its earnings and operations
for at least several years. In addition, the Company might be materially
adversely affected if hostilities were to occur in the Middle East that
interfere with the Company's operations in Israel. The Company, however, has
never experienced any material interruption in its Israeli operations in its 27
years of production there, in spite of several Middle East crises, including
wars. For the year ended December 31, 1996, sales of products manufactured in
Israel accounted for approximately 23% of the Company's net sales.
Due to a strategic shift in manufacturing emphasis to higher automation
and the relocation of some production to regions with lower labor costs, the
Company incurred restructuring costs in the year ended December 31, 1996
associated with the downsizing and closing of manufacturing facilities in North
America and Europe. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
ENVIRONMENT
The Company's manufacturing operations are subject to various federal,
state and local laws restricting discharge of materials into the environment.
The Company is not involved in any pending or threatened proceedings which would
require curtailment of its operations. However, the Company is involved in
various legal actions concerning government enforcement proceedings and various
dump site cleanups. These actions may result in fines and/or cleanup expenses.
The Company believes that any fine or cleanup expense, if imposed, would not be
material. The Company continually expends funds to ensure that its facilities
comply with applicable environmental regulations. The Company has nearly
completed its undertaking to comply with new environmental regulations relating
to the elimination of chlorofluorocarbons (CFCs) and ozone depleting substances
(ODS) and other anticipated compliances with the Clean Air Act amendments of
1990. The Company
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anticipates that it will undertake capital expenditures of approximately
$5,000,000 in fiscal 1997 for general environmental compliance and enhancement
programs. The Company has been named a Potentially Responsible Party (PRP) at
seven Superfund sites. The Company has settled three of these for minimal
amounts and does not expect the others to be material. While the Company
believes that it is in material compliance with applicable environmental laws,
it cannot accurately predict future developments or have knowledge of past
occurrences on sites currently occupied by the Company. Moreover, the risk of
environmental liability and remediation costs is inherent in the nature of the
Company's business and, therefore, there can be no assurance that material
environmental costs, including remediation costs will not arise in the future.
With each acquisition, the Company undertakes to identify potential
environmental concerns and to minimize the environmental matters it may be
required to address. In addition, the Company establishes reserves for
specifically identified potential environmental liabilities. The Company
believes that the reserves it has established are adequate. Nevertheless, the
Company often unavoidably inherits certain pre-existing environmental
liabilities, generally based on successor liability doctrines. Although the
Company has never been involved in any environmental matter that has had a
material adverse impact on its overall operations, there can be no assurance
that in connection with any past or future acquisition the Company will not be
obligated to address environmental matters that could have a material adverse
impact on its operations.
EMPLOYEES
As of December 31, 1996, the Company employed approximately 14,900 full
time employees of whom approximately 9,400 were located outside the United
States. Some of the Company's foreign employees are members of trade unions. In
connection with the Company's restructuring program in 1996, including the
downsizing or closing of manufacturing facilities in North America and Europe,
the Company dismissed approximately 2,600 employees in its worldwide workforce.
No assurance can be given that if the Company continues to restructure its
operations in response to changing economic conditions that labor unrest or
strikes (especially at European facilities) will not occur.
ITEM 2. PROPERTIES
The Company maintains approximately 52 manufacturing facilities. The
principal locations of such facilities, along with available space including
administrative offices, are:
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Approx. Available
Owned Locations Space (Square Feet)
- --------------- -------------------
United States
Columbus and Norfolk, NE* 336,000
Malvern and Bradford, PA* 215,000
Sanford, ME 225,000
Wendell and Statesville, NC* 193,000
Concord, NH 120,000
Roanoke, VA 120,000
Monroe, CT 91,000
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* two locations
Foreign
Germany (10 locations) 954,000
France (7 locations) 560,000
Israel (4 locations) 950,000
Portugal 299,000
Vishay owns an additional 272,000 square feet of manufacturing
facilities located in Colorado, Maryland, New York, South Dakota and Florida.
Available leased facilities in the United States include 171,000 square
feet of space located in California, South Dakota and Massachusetts. Foreign
leased facilities consist of 121,000 square feet in Mexico, 188,000 square feet
in France, 127,000 square feet in England, 37,000 square feet in Canada and
198,000 square feet in Germany. The Company also has facilities in Japan and the
Czech Republic.
To alleviate capacity restraints over the past several years, the
Company constructed a 250,000 square foot plant in Migdal Ha-emek, Israel and is
in the process of completing a 270,000 square foot facility in Beersheba,
Israel.
In the opinion of management, the Company's properties and equipment
generally are in good operating condition and are adequate for its present
needs. The Company does not anticipate difficulty in renewing existing leases as
they expire or in finding alternative facilities.
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time is involved in routine litigation
incidental to its business. Management believes that such matters, either
individually or in the aggregate, should not have a material adverse effect on
the Company's business or financial condition.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matter was submitted to a vote of security holders of the Company.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the
executive officers of the Company as of March 25, 1997. This information
reflects the implementation of certain management changes that took place in
August and November, 1996 in order to consolidate certain operations in the
U.S., Europe and Asia.
Name Age Positions Held
- ---- --- --------------
Felix Zandman* 68 Chairman of the Board,
President, Chief
Executive Officer
and Director
Avi D. Eden* 49 Vice-Chairman of the
Board, Executive
Vice President and
Director
Gerald Paul* 48 Chief Operating Officer,
Executive Vice President
and Director
Richard N. Grubb* 50 Executive Vice President,
Treasurer, Chief
Financial Officer
and Director
Donald G. Alfson* 51 Executive Vice President,
Chief Business
Development Officer and
Director
Robert A. Freece* 56 Senior Vice President
and Director
Abraham Inbar 68 Senior Vice President;
President -- Vishay
Israel Ltd., a
subsidiary of Vishay
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Henry V. Landau 50 Vice President; President
-- Measurements Group,
Inc., a subsidiary of
Vishay
William J. Spires 55 Vice President and
Secretary
* Member of the Executive Committee of the Board of Directors.
Dr. Felix Zandman, a founder of the Company, has been President, Chief
Executive Officer and a Director of the Company since its inception. Dr. Zandman
has been Chairman of the Board since March 1989.
Avi D. Eden has been a Director and General Counsel of the Company
since June 1988, and has been Vice Chairman of the Board and Executive Vice
President of the Company since August 1996.
Gerald Paul has served as a Director of the Company since May 1993 and
has been Chief Operating Officer and Executive Vice President of the Company
since August 1996. He was President of Vishay Electronic Components, Europe from
January 1994 to August 1996. Dr. Paul has been Managing Director of Draloric
Electronic GmbH since January 1991. Dr. Paul has been employed by Draloric since
February 1978.
Richard N. Grubb has been a Director, Vice President, Treasurer and
Chief Financial Officer of the Company since May 1994, and has been Executive
Vice President of the Company since August 1996. Mr. Grubb has been associated
with the Company in various capacities since 1972. He is a Certified Public
Accountant who was previously engaged in private practice.
Donald G. Alfson has been a Director of the Company since May 1992 and
has been Executive Vice President, Chief Business Development Officer and Senior
Vice President of Marketing and Sales of the Company since August 1996. He was
President of Vishay Electronic Components North America and Asia from April 1992
to August 1996. Mr. Alfson served as President of Dale Electronics, Inc. from
April 1992 to August 1996 and had been employed by Dale since 1972.
Robert A. Freece has been a Director of the Company since 1972. He was
Vice President of the Company from 1972 until 1994, and has been Senior Vice
President since May 1994.
Abraham Inbar has been Senior Vice President of the Company since
August 1996 and had been a Vice President of the Company since June 1994. Mr.
Inbar has been the President of Vishay Israel Ltd., a subsidiary of the Company,
since May 1994. Mr. Inbar was Senior Vice President and General Manager of
Vishay
-13-
Israel Ltd. from 1992 to 1994. Previously, Mr. Inbar was Vice President -
Operations for Vishay Israel Ltd. He has been employed by the Company since
1973.
Henry V. Landau has been a Vice President of the Company since 1983.
Mr. Landau has been the President and Chief Executive Officer of Measurements
Group, Inc., a subsidiary of the Company, since July 1984. Mr. Landau was an
Executive Vice President of Measurements Group, Inc. from 1981 to 1984 and has
been employed by the Company since 1972.
William J. Spires has been a Vice President and Secretary of the
Company since 1981. Mr. Spires has been Vice President - Industrial Relations
since 1980 and has been employed by the Company since 1970.
-14-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol VSH. The following table sets forth the high and low sales
prices for the Company's Common Stock as reported on the New York Stock Exchange
Composite Tape for the quarterly periods within the 1996 and 1995 fiscal years
indicated. Stock prices have been restated to reflect stock dividends and stock
splits. The Company does not currently pay cash dividends on its capital stock.
Its policy is to retain earnings to support the growth of the Company's business
and the Company does not intend to change this policy at the present time. In
addition, the Company is restricted from paying cash dividends under the terms
of the Company's revolving credit and term loan agreements (see Note 5 to the
consolidated financial statements). Holders of record of the Company's Common
Stock totalled approximately 2,100 at March 25, 1997.
COMMON STOCK MARKET PRICES
Calendar 1996 Calendar 1995
High Low High Low
---- --- ---- ---
First Quarter $ 30.95 $ 22.86 $ 27.50 $ 21.89
Second Quarter $ 32.62 $ 20.25 $ 36.08 $ 26.19
Third Quarter $ 25.00 $ 17.38 $ 42.27 $ 31.19
Fourth Quarter $ 23.38 $ 17.50 $ 40.12 $ 23.70
On November 27, 1995, the Company commenced a stock repurchase program
pursuant to which the Company was authorized to repurchase up to 750,000 shares
of its Common Stock for an aggregate amount not to exceed $30 million. The
purchases of Common Stock by the Company under the repurchase program are made
in accordance with the rules of the Securities and Exchange Commission and at
the discretion of management. As of December 31, 1996 the Company had
repurchased 110,000 shares at an approximate cost of $3,578,000. No repurchases
were made in 1994 or 1996.
In addition, at March 25, 1997 the Company had outstanding 7,563,720
shares of Class B Common Stock par value $.10 per share (the "Class B Stock")
each of which entitles the holder to ten votes. The Class B Stock generally is
not transferable and there is no market for those shares. The Class B Stock is
convertible, at the option of the holder, into Common Stock on a share for share
basis. Substantially all such Class B Stock is owned by Dr. Felix Zandman, Mrs.
Luella B. Slaner and trusts for the benefit of Mrs. Slaner's grandchildren
(either directly or beneficially). Dr. Felix Zandman is an executive officer and
director of the Company. Mrs. Luella B. Slaner is a director of the Company.
-15-
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial
information of the Company for the fiscal years ended December 31, 1996, 1995,
1994, 1993 and 1992. This table should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes thereto
included elsewhere in this Form 10-K.
Year Ended December 31,
-----------------------------------------------------------
1996 1/ 1995 1994 2/ 1993 3/ 1992 4/
------- ---- ------- ------- -------
(in thousands except per share amounts)
- --------------------------------------------------------------------------------------------
Net sales ................... $1,097,979 $1,224,416 $ 987,837 $856,272 $664,226
Interest expense ............ 17,408 29,443 24,769 20,624 19,110
Earnings before
income taxes and
cumulative effect of
accounting change ......... 70,357 122,974 74,116 50,894 37,924
Income taxes ................ 17,741 30,307 15,169 8,246 7,511
Earnings before cumulative
effect of accounting change 52,616 92,667 58,947 42,648 30,413
Cumulative effect of
accounting change for
income taxes .............. -- -- -- 1,427 --
Net earnings ................ 52,616 92,667 58,947 44,075 30,413
Total assets ................ 1,556,047 1,543,331 1,333,959 948,106 661,643
Long-term debt .............. 229,885 228,610 402,337 266,999 139,540
Working capital ............. 434,199 411,286 328,322 205,806 145,327
Stockholders' equity ........ 945,230 907,853 565,088 376,503 346,625
Earnings per share:5/
Before cumulative effect
of accounting change .... $ 0.86 $ 1.62 $ 1.14 $ 0.87 $ 0.74
Accounting change for
income taxes ............ -- -- -- 0.03 --
Net earnings .............. $ 0.86 $ 1.62 $ 1.14 $ 0.90 $ 0.74
Weighted average number
of shares outstanding5/ ... 61,292 57,045 51,553 49,146 44,837
- ----------
1/ Includes restructuring expense of $38,030,000 ($0.43 per share).
2/ Includes the results from July 1, 1994 of Vitramon.
3/ Includes the results from January 1, 1993 of Roederstein.
4/ Includes the results from January 1, 1992 of the acquired Sprague
businesses.
5/ Adjusted to reflect 2-for-1 stock split distributed June 16, 1995 and 5%
stock dividends paid on June 7, 1996, March 31, 1995, June 13, 1994 and
June 11, 1993.
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION AND BACKGROUND
The Company's sales and net income increased significantly through 1995
primarily as a result of its acquisitions. Following each acquisition, the
Company implemented programs to take advantage of distribution and operating
synergies among its businesses. This implementation was reflected in increases
in the Company's sales and in the decline in selling, general, and
administrative expenses as a percentage of the Company's sales.
From mid-1990 through the end of 1993, sales of most of the Company's
products were adversely affected by the worldwide slowdown in the electronic
components industry, which reflected general recessionary trends in all major
industrialized countries. In addition, sales to defense-related industries
declined from the end of the first quarter of 1991 until the second half of
1993. Despite this slowdown, Vishay realized record net earnings in each year
throughout this period. This was a result of its acquisitions and focus on the
bottom-line, including the implementation of operating efficiencies.
In 1995, the Company's growth was fueled not only by its acquisition of
Vitramon, but also by the dramatic expansion in the electronic components
industry. This resulted in Vishay's record net earnings of $92.7 million in
1995.
However, beginning with the last quarter of 1995 and continuing into
the first quarter of 1997, the Company has experienced a decline in demand for
its products, resulting in a decrease in revenues, earnings and backlogs. The
Company believes this may be primarily a result of the worldwide slowdown in
demand for tantalum and multi-layer ceramic chip capacitors, the economic
downturn in Germany, where a significant portion of the Company's products are
sold, and the abrupt worldwide decline in demand for passive electronic
components by personal computer and telecommunications manufacturers.
In order to address the slowdown in demand, the Company implemented a
restructuring program in 1996 that included the downsizing and closing of
manufacturing facilities in North America and Europe. In connection with the
restructuring, the Company incurred $38,030,000 of pretax charges for the year
ended December 31, 1996 relating to employee termination and facility closure
costs. When the restructuring program is fully implemented, the Company believes
that by reducing overhead costs and improving manufacturing efficiency, it will
reduce costs by approximately $38 million per year. Depending on future economic
conditions, the Company may continue to downsize or close existing facilities in
North America, Europe or elsewhere.
-17-
The Company's strategy contemplates transferring some of its
manufacturing operations from countries with high labor costs and tax rates
(such as the United States, France and Germany) to Israel, Mexico, Portugal and
the Czech Republic in order to benefit from lower labor costs and, in the case
of Israel, to take advantage of various government incentives, including
government grants and tax incentives. The Company may further reduce its costs
in the face of a decline in demand by accelerating the transfer of production to
countries with lower labor costs and more favorable tax environments.
The Company realizes approximately 49% of its revenues outside the
United States. As a result, fluctuations in currency exchange rates can
significantly affect the Company's reported sales and to a lesser extent
earnings. Currency fluctuations impact the Company's net sales and other income
statement amounts, as denominated in U.S. dollars, including other income as it
relates to foreign exchange gains or losses. Generally, in order to minimize the
effect of currency fluctuations on profits, the Company endeavors to (i) borrow
money in the local currencies and markets where it conducts business, and (ii)
minimize the time for settling intercompany transactions. The Company does not
purchase foreign currency exchange contracts or other derivative instruments to
hedge foreign currency exposures.
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 rate in the United States) have had the effect of increasing the
Company's net earnings. 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, if the investment in the project is over $20 million, for a period
of 15 years, which has been the case for most of the Company's projects in
Israel since 1994. New projects are continually being introduced. In addition,
the Israeli government offers certain incentive programs in the form of grants
designed to increase employment in Israel. However, the Israeli government has
recently scaled back or discontinued some of its incentive programs.
Accordingly, there can be no assurance that in the future the Israeli government
will continue to offer new incentive programs applicable to the Company or that,
if it does, such programs will provide the same level of benefits the Company
has historically received or that the Company will continue to be eligible to
take advantage of them. Although the Company might be materially adversely
affected if these incentive programs were no longer available to the Company for
new projects, because a majority of the Company's projects in Israel already
benefit from government incentive programs, the Company does not anticipate that
any cutbacks in the incentive programs would have an adverse impact on its
earnings and operations for at least several years.
Israeli government grants, recorded as a reduction of costs of products
sold, were $9,449,000 for the year ended December
-18-
31, 1996, as compared to $13,243,000 for the prior year. To the extent the
Israeli government continues its grant and incentive programs, future benefits
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.
RESULTS OF OPERATIONS
Income statement captions as a percentage of sales and the effective
tax rates were as follows:
Year Ended December 31,
1996 1995 1994
---- ---- ----
Costs of products sold 75.2% 73.7% 75.7%
Gross profit 24.8 26.3 24.3
Selling, general and
administrative expenses 12.9 13.0 13.9
Operating income 7.8 12.4 9.9
Earnings before income taxes 6.4 10.0 7.5
Effective tax rate 25.2 24.6 20.5
Net earnings 4.8 7.6 6.0
YEAR ENDED DECEMBER 31, 1996 COMPARED TO
YEAR ENDED DECEMBER 31, 1995
Net sales for the year ended December 31, 1996 decreased $126,437,000
or 10.3% from the prior year. The decrease in net sales is indicative of the
worldwide slowdown in the demand for tantalum and multi-layer ceramic chip
capacitors, the economic downturn in Germany, where a significant portion of the
Company's products are sold, and the abrupt worldwide decline in demand for
passive electronic components by personal computer and telecommunications
manufacturers, which started at the end of 1995.
The strengthening of the U.S. dollar against foreign currencies for the
year ended December 31, 1996 in comparison to the prior year resulted in a
decrease in reported sales of $20,712,000.
Net sales, exclusive of foreign currency fluctuations, decreased 8.6%
over the prior year.
Costs of products sold for the year ended December 31, 1996 were 75.2%
of net sales, as compared to 73.7% for the prior year. Costs of products sold
for the year ended December 31, 1996 were negatively affected by, among other
things, a difficult pricing environment and start-up costs of the Company's new
capacitor plant in Israel.
-19-
Israeli government grants, recorded as a reduction of costs of products
sold, were $9,449,000 for the year ended December 31, 1996, as compared to
$13,243,000 for the prior year. To the extent the Israeli government continues
these grant and incentive programs, future benefits 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 December 31, 1996 relating to Israeli government grants was
$58,570,000 as compared to $30,849,000 at December 31, 1995.
Selling, general and administrative expenses for the year ended
December 31, 1996 were 12.9% of net sales, as compared to 13.0% for the prior
year. Selling, general and administrative expenses have decreased by
$17,056,000, as compared to the prior year, as a result of a cost reduction
program instituted in the fourth quarter 1995, lower sales and a reduction in
management incentives.
The Company incurred a pretax restructuring charge of $38,030,000 for
the year ended December 31, 1996. Approximately $28,953,000 of those charges
relate to employee termination costs covering approximately 2,600 technical,
production, administrative and support employees located in the United States,
Canada, France and Germany. As of December 31, 1996, approximately 1,939
employees had been terminated and $12,822,000 of the termination costs were
paid. The remaining $9,077,000 of restructuring expense relates to facility
closure costs in North America and Europe. The restructuring plan is expected to
be completed by the end of 1997. The Company has sufficient lines of credit to
fund these payments. Depending on future economic conditions, the Company may
continue to downsize or close existing facilities in North America, Europe or
elsewhere.
When fully implemented, the restructuring is expected to reduce the
Company's costs by approximately $38,000,000 annually.
Interest costs decreased by $12,025,000 for the year ended December 31,
1996 from the prior year primarily as a result of the net proceeds of
$230,279,000 from a common stock offering completed in September 1995 which were
used, in large part, to prepay bank indebtedness.
Other income (expense) increased by $1,950,000 for the year ended
December 31, 1996, as compared to the prior year. The increase is primarily due
to foreign exchange gains of $371,000 for the year ended December 31, 1996 as
compared to foreign exchange losses of $2,022,000 for the year ended December
31, 1995.
The effective tax rate for the year ended December 31, 1996 was 25.2%
as compared to 24.6% for the prior year. The continuing effect of low tax rates
in Israel (as compared to the statutory rate in the United States) has been to
increase net
-20-
earnings by $10,109,000 and $19,183,000 for the years ended December 31, 1996
and 1995, 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. The Israeli tax effect benefit was more pronounced in 1995 primarily
as a result of increased proportional earnings in Israel. See "Description of
Business--Manufacturing Operations".
YEAR ENDED DECEMBER 31, 1995 COMPARED TO
YEAR ENDED DECEMBER 31, 1994
Net sales for the year ended December 31, 1995 increased $236,579,000
or 23.9% from the prior year. The increase reflects the strong performance of
Vitramon, acquired July 1, 1994, and Vishay's other surface mount components
businesses. Net sales for the year ended December 31, 1995 includes $87,753,000
of net sales relating to Vitramon for the first six months of 1995.
The weakening of the U.S. dollar against foreign currencies for the
year ended December 31, 1995 in comparison to the prior year resulted in an
increase in reported sales of $57,128,000.
Net sales, exclusive of foreign currency fluctuations, increased 18.2%
over the prior year. Net sales, exclusive of foreign currency fluctuations and
Vitramon sales for the first six months, increased 9.3% over the prior year. Net
bookings for the year ended December 31, 1995 increased 7.8% over the prior
year.
Costs of products sold for the year ended December 31, 1995 were 73.7%,
of net sales, as compared to 75.7% for the prior year. The factors contributing
to this decrease included: (i) the effect of the Mexican peso devaluation, which
contributed approximately $4,100,000 to gross profit for 1995, (ii) the fact
that gross profits for Vitramon were higher than Vishay's other operating
companies, (iii) Israeli government grants of $13,243,000 for the year ended
December 31, 1995, as compared to $10,999,000 for the prior year, and (iv) an
increase in production in Israel where labor costs are lower than in most other
regions in which Vishay manufactures. The increase in Israeli government grants
resulted from a significant increase in the Company's manufacturing operations
in Israel. Deferred income at December 31, 1995 relating to Israeli government
grants was $30,849,000.
Selling, general, and administrative expenses, for the year ended
December 31, 1995 were 13.0% of net sales, as compared to 13.9% for the prior
year. Management continues to explore additional cost-saving opportunities.
Restructuring expenses of $4,200,000 in 1995 resulted from downsizing
of some of the Company's European operations and represent employee termination
benefits covering approximately 276 technical, production, administrative and
support employees located
-21-
primarily in France and Germany. This downsizing was completed during the year
ended December 31, 1996.
Interest costs increased by $4,664,000 for the year ended December 31,
1995 over the prior year as a result of an increase in average debt outstanding
resulting from the acquisition of Vitramon in July 1994 and purchases of
property and equipment.
The effective tax rate for the year ended December 31, 1995 was 24.6%
compared to 20.5% for the prior year. The higher effective tax rate for 1995
reflects increased earnings in higher tax rate countries.
The effect of low tax rates in Israel (as compared to the statutory
rate in the United States) has been to increase net earnings by $19,183,000 and
$15,291,000 for the years ended December 31, 1995 and 1994, respectively. The
Israeli tax effect was more pronounced in 1995 primarily as a result of
increased earnings for the Israeli operations as a result of increased
production. See "Description of Business--Manufacturing Operations".
FINANCIAL CONDITION AND LIQUIDITY
Cash flows from operations were $122,186,000 for the year ended
December 31, 1996 compared to $115,511,000 for the prior year. Net purchases of
property and equipment for the year ended December 31, 1996 were $123,984,000
compared to $165,699,000 in the prior year. Capital expenditures of $105.0
million in 1996 related principally to construction of new facilities in Israel
and the purchase of equipment to increase capacity and maximize automation in
the Company's plants. The Company has substantially completed its current
restructuring/expansion program. Net cash provided by financing activities was
$4,018,000 for the year ended December 31, 1996.
See Note 5 to the Company's Consolidated Financial Statements elsewhere
herein for additional information with respect to Vishay's loan agreements,
long-term debt and available short-term credit lines.
The Company's financial condition at December 31, 1996 is strong, with
a current ratio of 3.30 to 1. The Company's ratio of long-term debt (less
current portion) to stockholders' equity was .24 to 1 at December 31, 1996 and
.25 to 1 at December 31, 1995.
Management believes that the Company's 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.
-22-
INFLATION
Normally, inflation has not had 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 rapid technological
changes and the need for the Company to timely bring to market new
products and applications to meet customers' 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
-23-
adversely impact the Company's results of operations.
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 insure 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 49% 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 (such as described in
"Description of Business--Manufacturing Operations") 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
-24-
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.
When the Company restructures its operations in response to changing
economic conditions, particularly in Europe, labor unrest or strikes
may occur, which could have an adverse effect on the Company.
The Company's results of operations may be adversely impacted by (i)
difficulties in obtaining raw materials, supplies, power, natural
resources and any other items needed for the production of the
Company's products; (ii) the effects of quality deviations in raw
materials, particularly tantalum powder, palladium and ceramic
dielectric materials; and (iii) 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
into a certain market prior to entering into formal 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 and the Czech
Republic. The Company's inability to achieve
-25-
any of these goals could have an adverse effect on the Company's
results of operations.
The Company may be adversely affected by the costs and other effects
associated with (i) legal and administrative cases and proceedings
(whether civil, such as environmental and product-related, or
criminal); (ii) settlements, investigations, claims, and changes in
those items; (iii) developments or assertions by or against the
Company relating to intellectual property rights and intellectual
property licenses; and (iv) 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 (i)
changes within the Company's organization, particularly at the
executive officer level, or in compensation and benefit plans; and
(ii) 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 (i) the effects
of war or severe weather or other acts of God on the Company's
operations, including disruptions at manufacturing facilities; (ii)
the effects of a disruption in the Company's computerized ordering
systems; and (iii) the effects of a disruption in the Company's
communications systems.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of the Company and its
subsidiaries, together with the report of independent auditors thereon, are
presented under Item 14 of this report:
Report of Independent Auditors
Consolidated Balance Sheets -- December 31, 1996 and 1995.
-26-
Consolidated Statements of Operations -- for the years ended December
31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows -- for the years ended December
31, 1996, 1995 and 1994.
Consolidated Statements of Stockholders' Equity -- for the years ended
December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements -- December 31, 1996.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Information with respect to Items 10, 11, 12 and 13 on Form 10-K is set
forth in the Company's definitive proxy statement, which will be filed within
120 days of December 31, 1996, the Company's most recent fiscal year. Such
information is incorporated herein by reference, except that information with
respect to Executive Officers of Registrant is set forth in Part I, Item 4A
hereof under the caption, "Executive Officers of the Registrant".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) All Consolidated Financial Statements of the Company and its
subsidiaries for the year ended December 31, 1996 are filed
herewith. See Item 8 of this Report for a list of such financial
statements.
(2) All financial statement schedules for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore
have been omitted.
(3) Exhibits -- See response to paragraph (c) below.
(b) Reports on Form 8-K
None
-27-
(c) Exhibits:
2.1 Stock Purchase Agreement, dated July 12, 1994, between Thomas
& Betts Corporation and Vishay Intertechnology, Inc.
Incorporated by reference to Exhibit (2.1) to the Current
Report on 8-K dated July 18, 1994.
3.1 Composite Amended and Restated Certificate of Incorporation of
the Company dated August 3, 1995. Incorporated by reference to
Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 1995
(the "1995 Form 10- Q").
3.2 Amended and Restated Bylaws of Registrant. Incorporated by
reference to Exhibit 3.2 to Registration Statement No.
33-13833 of Registrant on Form S-2 under the Securities Act of
1933 (the "Form S-2") and Amendment No. 1 to Amended and
Restated Bylaws of Registrant Incorporated by reference to
Exhibit 3.2 to Form 10-K file number 1-7416 for fiscal year
ended December 31, 1993 (the "1993 Form 10-K").
10.1 Performance-Based Compensation Plan for Chief Executive
Officer of Registrant. Incorporated by reference to Exhibit
10.1 to the 1993 Form 10-K.
10.2 The First Amendment dated June 27, 1995, to the Amended and
Restated Vishay Intertechnology, Inc. $302,500,000 Revolving
Credit and Term Loan Agreement dated as of July 18, 1994 by
and among Comerica Bank, NationsBank of North Carolina, N.A.,
Berliner Handels-und Frankfurter Bank, Signet Bank Maryland,
CoreStates Bank, N.A., Bank Hapoalim, B.M., ABN AMRO Bank
N.V., Credit Lyonnais New York Branch, Meridian Bank, Bank
Leumi le-Israel, B.M. and Credit Suisse (collectively, the
"Banks"), Comerica Bank, as agent for the Banks (the "Agent"),
and Vishay Intertechnology, Inc. ("Vishay"), and the Vishay
Intertechnology, Inc. $200,000,000 Acquisition Loan Agreement
dated as of July 18, 1994 by and among the Banks, the Agent
and Vishay. Incorporated by reference to Exhibit 10.4 to the
1995 Form 10-Q.
10.3 The First Amendment, dated June 27, 1995, to the Amended and
Restated Vishay Europe GmbH DM 40,000,000 Revolving Credit and
DM 9,506,000 Term Loan Agreement dated as of July 18, 1994 by
and among the Banks, the Agent and Vishay Europe GmbH ("VEG"),
and the Amended and Restated Roederstein DM 104,315,990.20
Term Loan Agreement dated as of July 18, 1994 by and among the
Banks, the Agent and VEG. Incorporated by reference to Exhibit
10.5 to the 1995 Form 10-Q.
-28-
10.4 Amended and Restated Vishay Intertechnology, Inc. $302,500,000
Revolving Credit and Term Loan Agreement, dated as of July 18,
1994, by and among the Banks and Vishay, Inc. ("Vishay").
Incorporated by reference to Exhibit (10.1) to the Current
Report on Form 8-K dated July 18, 1994 (the "July 1994 8-K").
10.5 Amended and Restated Vishay Beteiligungs GmbH DM 40,000,000
Revolving Credit and DM 9,506,000 Term Loan Agreement, dated
as of July 18, 1994, by and among the Former Banks, the Agent
and Vishay Beteiligungs GmbH ("VBG"). Incorporated by
reference to Exhibit (10.2) to the July 1994 8-K.
10.6 Amended and Restated Roederstein DM 104,315,990.20 Term Loan
Agreement, dated as of July 18, 1994, by and among the Former
Banks, the Agent, Vishay and VBG. Incorporated by reference to
Exhibit (10.3) to the July 1994 8-K.
10.7 Vishay Intertechnology, Inc. $200,000,000 Acquisition Loan
Agreement, dated as of July 18, 1994, by and among the Banks,
the Agent and Vishay. Incorporated by reference to Exhibit
(10.4) to the July 1994 8-K.
10.8 Amended and Restated Guaranty by Vishay to the Banks, dated
July 18, 1994. Incorporated by reference to Exhibit (10.5) to
the July 1994 8-K.
10.9 Employment Agreement, dated as of March 15, 1985, between the
Company and Dr. Felix Zandman. Incorporated by reference to
Exhibit (10.12) to the Form S-2.
10.10 Vishay Intertechnology 1995 Stock Option Program. Incorporated
by reference to the Company's Registration Statement on Form
S-8 (No. 33-59609).
10.11 1986 Employee Stock Plan of the Company. Incorporated by
reference to Exhibit 4 to the Company's Registration Statement
on Form S-8 (No. 33-7850).
10.12 1986 Employee Stock Plan of Dale Electronics, Inc.
Incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form S-8 (No. 33-7851).
10.13 Money Purchase Plan Agreement of Measurements Group, Inc.
Incorporated by reference to Exhibit 10(a)(6) to Amendment No.
1 to the Company's Registration Statement on Form S-7 (No.
2-69970).
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
-29-
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) 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.
March 25, 1997 /s/Felix Zandman
----------------
Felix Zandman, Director, Chairman
of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated below.
March 25, 1997 /s/Felix Zandman
----------------
Felix Zandman, Director, Chairman
of the Board, President and Chief
Executive Officer
(Principal Executive Officer)
March 25, 1997 /s/Avi D. Eden
--------------
Avi D. Eden, Director, Vice-Chairman
of the Board and Executive
Vice President
March 25, 1997 /s/Gerald Paul
--------------
Gerald Paul, Director, Chief
Operating Officer and
Executive Vice President
March 25, 1997 /s/Richard N. Grubb
-------------------
Richard N. Grubb, Director,
Executive Vice President, Treasurer
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
March 25, 1997 /s/Donald G. Alfson
--------------------
Donald G. Alfson, Director,
Executive Vice President and
Chief Business Development
Officer
-33-
March 25, 1997 /s/Robert A. Freece
--------------------
Robert A. Freece, Director,
Senior Vice President
March 25, 1997 /s/Eli Hurvitz
--------------
Eli Hurvitz, Director
March 25, 1997 /s/Edward B. Shils
------------------
Edward B. Shils, Director
March 25, 1997 /s/Luella B. Slaner
-------------------
Luella B. Slaner, Director
March 25, 1997 /s/Mark I. Solomon
------------------
Mark I. Solomon, Director
March 25, 1997 /s/Jean-Claude Tine
-------------------
Jean-Claude Tine, Director
-31-
Report of Independent Auditors
Board of Directors and Stockholders
Vishay Intertechnology, Inc.
We have audited the accompanying consolidated balance sheets of Vishay
Intertechnology, Inc. as of December 31, 1996 and 1995, and the related
consolidated statements of operations, cash flows, and stockholders' equity for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Vishay
Intertechnology, Inc. at December 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
Philadelphia, Pennsylvania
February 5, 1997
1
Vishay Intertechnology, Inc.
Consolidated Balance Sheets
(In thousands, except per share and share amounts)
December 31
1996 1995
--------------------------------
Assets
Current assets:
Cash and cash equivalents $ 20,945 $ 19,584
Accounts receivable, less allowances
of $7,561 and $6,915 163,164 180,383
Inventories:
Finished goods 182,722 148,846
Work in process 73,606 92,166
Raw materials 100,418 112,572
Prepaid expenses and other current
assets 82,310 86,647
--------------------------------
Total current assets 623,165 640,198
Property and equipment--at cost:
Land 43,705 46,073
Buildings and improvements 222,743 197,164
Machinery and equipment 695,084 603,175
Construction in progress 57,891 76,564
--------------------------------
1,019,423 922,976
Less allowances for depreciation (308,761) (253,748)
--------------------------------
710,662 669,228
Goodwill 201,574 218,102
Other assets 20,646 15,803
--------------------------------
$ 1,556,047 $ 1,543,331
================================
2
December 31
1996 1995
-----------------------------
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks $ 31,212 $ 22,174
Trade accounts payable 33,930 66,942
Payroll and related expenses 35,973 43,790
Other accrued expenses 55,381 51,102
Income taxes 7,076 7,083
Current portion of long-term debt 25,394 37,821
-----------------------------
Total current liabilities 188,966 228,912
Long-term debt--less current portion 229,885 228,610
Deferred income taxes 33,113 42,044
Deferred income 58,570 30,849
Other liabilities 30,534 29,017
Accrued pension costs 69,749 76,046
Stockholders' equity:
Preferred Stock, par value $1.00 a share:
Authorized--1,000,000 shares; none
issued
Common Stock, par value $.10 a share:
Authorized--65,000,000 shares;
53,727,874 and 51,139,826 shares
outstanding after deducting 13,248
and 209,881 shares in treasury 5,373 5,114
Class B convertible Common Stock, par
value $.10 a share: Authorized--
15,000,000 shares; 7,563,720 and
7,222,035 shares outstanding after
deducting 221,809 and 229,518
shares in treasury 756 722
Capital in excess of par value 825,949 734,316
Retained earnings 107,762 146,370
Foreign currency translation adjustment 9,106 28,487
Unearned compensation (370) (364)
Pension adjustment (3,346) (6,792)
-----------------------------
945,230 907,853
-----------------------------
$ 1,556,047 1,543,331
=============================
See accompanying notes.
3
Vishay Intertechnology, Inc.
Consolidated Statements of Operations
(In thousands, except per share and share amounts)
Year ended December 31
1996 1995 1994
---------------------------------------------------------------------
Net sales $ 1,097,979 $ 1,224,416 $ 987,837
Costs of products sold 825,866 902,518 748,135
---------------------------------------------------------------------
Gross profit 272,113 321,898 239,702
Selling, general, and
administrative expenses 141,765 158,821 137,124
Amortization of goodwill 6,494 6,461 4,609
Restructuring expense 38,030 4,200 --
---------------------------------------------------------------------
85,824 152,416 97,969
Other income (expense):
Interest expense (17,408) (29,433) (24,769)
Other 1,941 (9) 916
---------------------------------------------------------------------
(15,467) (29,442) (23,853)
---------------------------------------------------------------------
Earnings before income taxes 70,357 122,974 74,116
Income taxes 17,741 30,307 15,169
---------------------------------------------------------------------
Net earnings $ 52,616 $ 92,667 $ 58,947
=====================================================================
Earnings per share $ 0.86 $ 1.62 $ 1.14
=====================================================================
Weighted average shares
outstanding 61,292,000 57,045,000 51,553,000
=====================================================================
See accompanying notes.
4
Vishay Intertechnology, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year ended December 31
1996 1995 1994
-----------------------------------------------------
Operating activities
Net earnings $ 52,616 $ 92,667 $ 58,947
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 77,247 69,547 57,742
Changes in operating assets and liabilities:
Accounts receivable 12,541 (8,147) (12,921)
Inventories (11,575) (48,123) (44,195)
Prepaid expenses and other
current assets 3,438 (14,023) (23,119)
Accounts payable (31,573) 998 3,023
Other current liabilities (942) (7,442) (12,420)
Other 20,434 30,034 19,410
-----------------------------------------------------
Net cash provided by operating activities 122,186 115,511 46,467
Investing activities
Purchases of property and equipment (123,984) (165,699) (91,571)
Purchases of businesses, net of cash acquired -- -- (179,847)
-----------------------------------------------------
Net cash used in investing activities (123,984) (165,699) (271,418)
Financing activities
Proceeds from long-term borrowings 3,476 245 186,271
Principal payments on long-term debt (86,026) (118,226) (142,961)
Net proceeds (payments) on revolving credit lines 76,502 (59,800) 83,300
Net changes in short-term borrowings 10,066 (7,188) 3,879
Purchases of common stock -- (3,578) --
Proceeds from sale of common stock -- 230,279 109,738
-----------------------------------------------------
Net cash provided by financing activities 4,018 41,732 240,227
Effect of exchange rate changes on cash (859) 1,183 650
-----------------------------------------------------
Increase (decrease) in cash and cash equivalents 1,361 (7,273) 15,926
Cash and cash equivalents at beginning of year 19,584 26,857 10,931
-----------------------------------------------------
Cash and cash equivalents at end of year $ 20,945 $ 19,584 $ 26,857
=====================================================
See accompanying notes.
5
Vishay Intertechnology, Inc.
Consolidated Statements of Stockholders' Equity
(In thousands, except share amounts)
Year ended December 31
1996 1995 1994
----------------------------------------------------------
Common Stock:
Beginning balance $ 5,114 $ 2,257 $ 1,763
Shares issued (10,556; 5,777,300; and 5,602,500 shares) 1 576 280
Stock dividends (2,558,069; 1,091; and 3,915,440 shares) 256 -- 196
Stock split -- 2,275 --
Shares repurchased (110,000 shares) -- (11) --
Conversions from Class B (19,423; 325,509; and 349,824
shares) 2 17 18
----------------------------------------------------------
Ending balance 5,373 5,114 2,257
Class B convertible Common Stock:
Beginning balance 722 377 359
Stock dividends (361,108 and 716,904 shares) 36 -- 36
Stock split -- 362 --
Conversions to Common (19,423; 325,509; and 349,824
shares) (2) (17) (18)
----------------------------------------------------------
Ending balance 756 722 377
Capital in excess of par value:
Beginning balance 734,316 509,966 288,980
Shares issued 618 230,534 110,012
Stock dividends 90,932 -- 110,830
Stock split -- (2,637) --
Shares repurchased -- (3,567) --
Tax effects relating to stock plan 83 20 144
----------------------------------------------------------
Ending balance 825,949 734,316 509,966
Retained earnings:
Beginning balance 146,370 53,734 105,849
Net earnings 52,616 92,667 58,947
Stock dividends (91,224) (31) (111,062)
----------------------------------------------------------
Ending balance 107,762 146,370 53,734
Foreign currency translation adjustment:
Beginning balance 28,487 4,584 (13,109)
Translation adjustment for the year (19,381) 23,903 17,693
----------------------------------------------------------
Ending balance 9,106 28,487 4,584
Unearned compensation:
Beginning balance (364) (20) (60)
Shares issued under stock plans (10,556; 27,300; and 4,000
shares) (262) (519) (70)
Amounts expensed during the year 256 175 110
----------------------------------------------------------
Ending balance (370) (364) (20)
Pension adjustment:
Beginning balance (6,792) (5,810) (7,279)
Pension adjustment for the year 3,446 (982) 1,469
----------------------------------------------------------
Ending balance (3,346) (6,792) (5,810)
----------------------------------------------------------
Total stockholders' equity $ 945,230 $ 907,853 $ 565,088
==========================================================
See accompanying notes.
6
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements
December 31, 1996
Vishay Intertechnology, Inc. is a leading international manufacturer and
supplier of passive electronic components, particularly resistors, capacitors
and inductors, offering its customers access to one of the most comprehensive
passive electronic component lines of any manufacturer in the United States or
Europe. Passive electronic components, together with semiconductors (integrated
circuits), which the Company does not produce, are the primary elements of
electronic circuits. Components manufactured by the Company are used in
virtually all types of electronic products, including those in the computer,
telecommunications, military/aerospace, instrument, automotive, medical and
consumer electronics industries.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements of Vishay Intertechnology, Inc. include
the accounts of the Company and its subsidiaries, after elimination of all
significant intercompany transactions, accounts, and profits.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Inventories
Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market.
Depreciation
Depreciation is computed principally by the straight-line method based upon the
estimated useful lives of the assets. Depreciation of capital lease assets is
included in total depreciation expense. Depreciation expense was $68,688,000,
$60,155,000, and $51,301,000, for the years ended December 31, 1996, 1995, and
1994, respectively.
7
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Construction in Progress
The estimated cost to complete construction in progress at December 31, 1996 is
$34,178,000.
Goodwill
Goodwill, representing the excess of purchase price over net assets of
businesses acquired, is being amortized on a straight-line basis over 40 years.
Accumulated amortization amounted to $29,726,000 and $23,737,000 at December 31,
1996 and 1995, respectively. The recoverability of goodwill is evaluated at the
operating unit level by an analysis of operating results and consideration of
other significant events or changes in the business environment. If an operating
unit has current operating losses and based upon projections there is a
likelihood that such operating losses will continue, the Company will determine
whether impairment exists on the basis of undiscounted expected future cash
flows from operations before interest for the remaining amortization period. If
impairment exists, goodwill will be reduced by the estimated shortfall of cash
flows.
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers demand
deposits and all highly liquid investments with maturities of three months or
less when purchased to be cash equivalents.
Research and Development Expenses
The amount charged to expense aggregated $10,429,000, $10,430,000, and
$7,205,000, for the years ended December 31, 1996, 1995, and 1994, respectively.
The Company spends additional amounts for the development of machinery and
equipment for new processes and for cost reduction measures.
Grants
Grants received from governments by certain foreign subsidiaries, primarily in
Israel, are recognized as income in accordance with the purpose of the specific
contract and in the period in which the related expense is incurred. Grants
received from the government of Israel and recognized as a reduction of costs of
products sold were $9,449,000
8
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Grants (continued)
$13,243,000, and $10,999,000 for the years ended December 31, 1996, 1995, and
1994, respectively. Grants receivable of $23,163,000 and $20,585,000 are
included in other current assets at December 31, 1996 and 1995, respectively.
Deferred grant income is $58,570,000 and $30,849,000 at December 31, 1996 and
1995, respectively. The grants are subject to conditions, including maintaining
specified levels of employment for periods up to ten years. Noncompliance with
such conditions could result in repayment of grants, however, management expects
that the Company will comply with all terms and conditions of grants.
Share and Per Share Amounts
All numbers of common shares and per share amounts have been adjusted to give
retroactive effect to a 2-for-1 stock split distributed on June 16, 1995.
Earnings per share is based on the weighted average number of common shares
outstanding during the period. No material dilution of earnings per share would
result if it were assumed that all outstanding stock options were exercised.
Earnings per share amounts for all periods presented reflect the 1995 2-for-1
stock split and 5% stock dividends paid on June 7, 1996, March 31, 1995, and
June 13, 1994. Earnings per share reflect the weighted effect of the issuance of
5,750,000 shares of Common Stock in September 1995 and the issuance of 5,576,000
shares of Common Stock in August 1994.
Stock Options
In October 1995, the FASB issued Statement No. 123, "Accounting for Stock- Based
Compensation" (FAS 123). This Statement establishes a fair value method of
accounting for stock-based compensation plans. As permitted by FAS 123, the
Company has elected to continue to account for stock-based compensation plans
according to the provisions of Accounting Principles Board Statement No. 25,
"Accounting for Stock Issued to Employees" (APB 25). The effect of applying the
fair value method of FAS 123 results in net income and earnings per share that
are not materially different from amounts reported.
Reclassifications
Certain prior-year amounts have been reclassified to conform with the current
presentation.
9
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions
In July 1994, the Company purchased all of the capital stock of Vitramon,
Incorporated and Vitramon Limited, U.K. (collectively, "Vitramon") for
$184,000,000 in cash. Vitramon is a leading producer of multilayer ceramic chip
capacitors with manufacturing facilities primarily in the United States, France,
Germany, and the United Kingdom. In connection with the acquisition of Vitramon,
the Company borrowed an aggregate of $200,000,000 from a group of banks, of
which $100,000,000 was a bridge facility that was subsequently paid off with
proceeds from an equity offering completed in August 1994 and $100,000,000 was a
nonamortizing term loan which has been paid off as of December 31, 1996.
The acquisition was accounted for under the purchase method of accounting. The
operating results of Vitramon are included in the Company's consolidated results
of operations from July 1, 1994. Excess of cost over the fair value of net
assets acquired ($104,582,000) is being amortized on a straight-line basis over
forty years.
Had the Vitramon acquisition been made at the beginning of 1994, the Company's
pro forma unaudited results for the year ended December 31, 1994 would have been
(in thousands, except per share amount):
Net sales $ 1,056,520
Net earnings 64,573
Earnings per share $ 1.17
The unaudited pro forma results are not necessarily indicative of the results
that would have been attained had the acquisition occurred at the beginning of
1994 or of future results.
3. Restructuring Expense
Restructuring expense of $38,030,000 in 1996 results from a downsizing of the
Company's worldwide operations. Approximately $28,953,000 of these expenses
relate to employee termination costs covering approximately 2,600 technical,
production, administrative, and support employees located in the United States,
Canada, France, and Germany. Approximately 1,939 employees had been terminated
and $12,822,000 of the termination costs paid as of December 31, 1996. The
remaining $9,077,000 of restructuring expense relates to facilities closure
costs in North America and Europe. The restructuring plan is expected to be
completed by the end of 1997. At December 31, 1996, $21,931,000 of restructuring
costs are included in other accrued expenses.
10
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
3. Restructuring Expense (continued)
Restructuring expense of $4,200,000 in 1995 resulted from the downsizing of some
of the Company's European operations and represented employee termination costs
covering 276 technical, production, administrative, and support employees
located primarily in France and Germany. This downsizing was completed during
the year ended December 31, 1996.
4. Income Taxes
Earnings before income taxes consists of the following components (in
thousands):
1996 1995 1994
------------------------------------
Domestic $ 42,406 $ 34,926 $ 19,650
Foreign 27,951 88,048 54,466
------------------------------------
$ 70,357 $122,974 $ 74,116
====================================
Significant components of income taxes are as follows (in thousands):
Year ended December 31
1996 1995 1994
-------------------------------------
Current:
U.S. Federal $ 13,836 $ 10,578 $ 5,187
Foreign 8,098 10,927 3,251
State 1,586 1,082 882
-------------------------------------
23,520 22,587 9,320
Deferred:
U.S. Federal 1,632 2,247 1,889
Foreign (7,793) 5,082 3,858
State 382 391 102
-------------------------------------
(5,779) 7,720 5,849
-------------------------------------
$ 17,741 $ 30,307 $ 15,169
====================================
11
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts for income tax purposes. Significant components of the
Company's deferred tax liabilities and assets are as follows (in thousands):
December 31
1996 1995
---------------------------
Deferred tax liabilities:
Tax over book depreciation $ 77,402 $ 71,060
Other--net 7,325 7,640
---------------------------
Total deferred tax liabilities 84,727 78,700
Deferred tax assets:
Pension and other retiree obligations 25,358 25,461
Net operating loss carryforwards 84,574 53,638
Restructuring reserves 7,698 3,631
Other accruals and reserves 16,120 16,368
---------------------------
Total deferred tax assets 133,750 99,098
Valuation allowance for deferred tax assets (59,021) (45,700)
---------------------------
Net deferred tax assets 74,729 53,398
---------------------------
Net deferred tax liabilities $ 9,998 $ 25,302
===========================
A reconciliation of income tax expense at the U.S. federal statutory income tax
rate to actual income tax expense is as follows (in thousands):
Year ended December 31
1996 1995 1994
-----------------------------------------
Tax at statutory rate $ 24,625 $ 43,041 $ 25,941
State income taxes, net of U.S.
federal tax benefit 1,413 1,094 684
Effect of foreign income tax rates (9,717) (13,801) (13,194)
Benefit of net operating loss
carryforwards (817) (2,054) --
Other 2,237 2,027 1,738
-----------------------------------------
$ 17,741 $ 30,307 $ 15,169
=========================================
12
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
At December 31, 1996, the Company has net operating loss carryforwards for tax
purposes of $134,055,000 in Germany (no expiration date), $26,823,000 in France
(expire December 31, 2001), and $10,021,000 in Portugal (expire December 31,
2001). Approximately $80,224,000 of the carryforward in Germany, and $5,054,000
of the carryforward in Portugal, resulted from the Company's acquisition of
Roederstein. For financial reporting purposes, the deferred tax asset for net
operating losses increased due primarily to a reorganization in Germany which
resulted in a local tax loss and a higher effective tax rate in Germany.
Valuation allowances of $59,021,000 and $45,700,000 have been recognized at
December 31, 1996 and 1995, respectively, for deferred tax assets related to
foreign net operating loss carryforwards. In 1996, tax benefits recognized
through reductions of the valuation allowance had the effect of reducing
goodwill of acquired companies by $5,723,000. If additional tax benefits are
recognized in the future through further reduction of the valuation allowance,
$38,187,000 of such benefits will reduce goodwill.
At December 31, 1996, no provision has been made for U.S. federal and state
income taxes on approximately $302,475,000 of foreign earnings which are
expected to be reinvested indefinitely. Upon distribution of those earnings in
the form of dividends or otherwise, the Company would be subject to U.S. income
taxes (subject to an adjustment for foreign tax credits) and withholding taxes
payable to the various foreign countries. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable because of
the complexities associated with its hypothetical calculation.
Income taxes paid were $22,141,000, $30,272,000, and $11,125,000 for the years
ended December 31, 1996, 1995, and 1994, respectively.
5. Long-Term Debt
Long-term debt consisted of the following (in thousands):
December 31
1996 1995
----------------------------
Multicurrency Revolving Credit Loan $121,039 $ 29,722
Term Loan 77,500 87,500
Term Loan II -- 50,000
Deutsche Mark Revolving Credit Loan 25,974 27,778
Deutsche Mark Term Loan 9,426 35,775
Other Debt and Capital Lease Obligations 21,340 35,656
----------------------------
255,279 266,431
Less current portion 25,394 37,821
----------------------------
$229,885 $228,610
============================
13
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt (continued)
As of December 31, 1996, four facilities were available under the Company's
amended and restated Revolving Credit and Term Loan and Deutsche Mark Revolving
Credit and Term Loan agreements with a group of banks; a multicurrency revolving
credit loan (interest 5.89% on U.S. dollar borrowings and 3.60% on Deutsche Mark
borrowings at December 31, 1996), a U.S. term loan (interest 5.99% at December
31, 1996), a Deutsche Mark revolving credit loan (interest 3.60% at December 31,
1996), and a Deutsche Mark term loan (interest 3.70% at December 31, 1996). The
terms of the four facilities are summarized below. The first facility is a
$400,000,000 multicurrency revolving credit facility which is available to the
Company until December 31, 2001. The Company had outstanding $110,000,000 and DM
17,000,000 ($11,039,000) under the multicurrency revolving credit loan at
December 31, 1996. The Company can request one-year extensions of the facility
annually from 1997 through 2002. Each extension granted by the banks extends the
maturity of the facility by one year. Interest is payable at prime or at other
interest rate options. The Company is required to pay certain commitment and
facility fees on the used and unused portion of this credit facility. The second
facility is a $77,500,000 term loan, with interest payable at prime or at other
interest rate options. Principal payments are due as follows: 1997--$15,000,000;
1998--$20,000,000; 1999--$20,000,000; 2000-- $22,500,000. Additional principal
payments may be required based on excess cash flow as defined in the agreement.
The loan agreements also provide a German subsidiary of the Company with two
Deutsche Mark ("DM") facilities. The first DM facility is a DM 40,000,000
($25,974,000) revolving credit facility which is available until December 31,
2001. The Company can request one-year extensions of the facility annually from
1997 through 2002. Each extension granted by the banks extends the maturity of
the facility by one year. Interest is based on DM market rates. The Company is
required to pay certain commitment and facility fees on the used and unused
portion of this credit facility. The second DM facility is a DM 14,516,000
($9,426,000) term loan. Interest is based on DM market rates. A principal
payment of DM 14,516,000 ($9,426,000) is due on or before December 31, 1997.
Under the loan agreements, the Company is restricted from paying cash dividends
and must comply with other covenants, including the maintenance of specific
ratios. The Company is in compliance with the restrictions and limitations under
the terms of loan agreements, as amended.
Other debt and capital lease obligations include borrowings under short-term
credit lines of $3,120,000 and $30,254,000 at December 31, 1996 and 1995,
respectively, which are classified as long-term based on the Company's intention
and ability to refinance the obligations on a long-term basis.
14
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt (continued)
Aggregate annual maturities of long-term debt, excluding payments which may be
required based on excess cash flow, are as follows: 1997--$25,394,000; 1998--
$22,269,000; 1999--$21,305,000; 2000--$22,896,000; 2001--$162,257,000;
thereafter--$1,158,000.
At December 31, 1996, the Company has committed and uncommitted short-term
credit lines with various U.S. and foreign banks aggregating $170,733,000, of
which $136,401,000 was unused. The weighted average interest rate on short-term
borrowings outstanding as of December 31, 1996 and 1995 was 5.60% and 6.31%,
respectively.
Interest paid was $17,736,000, $29,459,000, and $24,150,000 for the years ended
December 31, 1996, 1995, and 1994, respectively.
6. Stockholders' Equity
On May 19, 1995, the Company's shareholders approved an increase in the number
of shares of Common Stock, $.10 par value, which the Company is authorized to
issue, from 35,000,000 shares to 65,000,000 shares.
The Company's Class B Stock carries ten votes per share while the Common Stock
carries one vote per share. Class B shares are transferable only to certain
permitted transferees while the Common Stock is freely transferable. Class B
shares are convertible on a one-for-one basis at any time to Common Stock.
Unearned compensation relating to Common Stock issued under employee stock plans
is being amortized over periods ranging from three to five years. At December
31, 1996, 237,677 shares are available for issuance under stock plans.
In 1995, certain key executives of the Company were granted options to purchase
1,104,700 shares of the Company's Common Stock, all of which remain outstanding
at December 31, 1996. These options expire March 1, 2000, with one-third
exercisable at $25.23, one-third exercisable at $31.74, and one-third
exercisable at $45.35.
15
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
7. Other Income
Other income (expense) consists of the following (in thousands):
Year ended December 31
1996 1995 1994
------------------------------------
Foreign exchange gains (losses) $ 371 $(2,022) $ 440
Investment income 1,586 1,529 229
Other (16) 484 247
------------------------------------
$ 1,941 $ (9) $ 916
====================================
8. Employee Retirement Plans
The Company maintains various defined benefit pension plans covering
substantially all full-time U.S. employees. The benefits under these plans are
based on the employees' compensation during all years of participation.
Participants in these plans, other than U.S. employees of Vitramon, are required
to contribute an amount based on annual earnings. The Company's funding policy
is to contribute annually amounts that satisfy the funding standard account
requirements of ERISA. The assets of these plans are invested primarily in
mutual funds and guaranteed investment contracts issued by an insurance company.
Net pension cost for the Plans included the following components (in thousands):
Year ended December 31
1996 1995 1994
---------------------------------
Annual service cost--benefits
earned for the period $ 5,091 $ 3,613 $2,547
Less: Employee contributions 1,842 1,459 1,142
---------------------------------
Net service cost 3,249 2,154 1,405
Interest cost on projected benefit obligation 6,014 5,702 5,153
Actual return on Plan assets (10,737) (11,892) (1,702)
Net amortization and deferral 4,213 7,211 (3,349)
---------------------------------
Net pension cost $ 2,739 $ 3,175 $1,507
=================================
The expected long-term rate of return on assets was 8.5% - 9.5%.
16
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
8. Employee Retirement Plans (continued)
The following table sets forth the funded status of the Plans and amounts
recognized in the Company's financial statements (in thousands):
December 31
1996 1995
-----------------------
Accumulated benefit obligation, including vested
benefits of $80,046 and $75,636 $ 80,343 $ 75,949
=======================
Actuarial present value of projected benefit obligations $(87,740) $(82,105)
Plan assets at fair value 87,369 78,686
-----------------------
Projected benefit obligations in excess of Plan assets (371) (3,419)
Unrecognized (gain) loss (238) 3,043
Unrecognized prior service cost 601 834
Unrecognized net obligation at transition date, being
recognized over 15 years 246 356
-----------------------
Accrued pension liability $ 238 $ 814
=======================
The following assumptions have been used in the actuarial determinations of the
Plans:
1996 1995
-----------------------
Discount rate 7.50% 7.25%
Rate of increase in compensation levels 4.5%-5.0% 4.5% - 5.0%
Many of the Company's U.S. employees are eligible to participate in 401(k)
Savings Plans, some of which provide for Company matching under various
formulas. The Company's matching expense for the plans was $2,250,000,
$2,314,000, and $2,282,000 for the years ended December 31, 1996, 1995, and
1994, respectively.
The Company provides pension and similar benefits to employees of certain
foreign subsidiaries consistent with local practices. German subsidiaries of the
Company have
17
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
8. Employee Retirement Plans (continued)
noncontributory defined benefit pension plans covering management and employees.
Pension benefits are based on years of service. Net pension cost for the German
Plans included the following components (in thousands):
Year ended December 31
1996 1995 1994
--------------------------------------
Annual service cost--benefits earned for the period $ 126 $ 164 $ 138
Interest cost on projected benefit obligation 5,082 5,267 4,496
Actual return on plan assets (1,174) (854) (1,039)
Net amortization and deferral 133 (220) 83
--------------------------------------
Net pension cost $ 4,167 $ 4,357 $ 3,678
======================================
The expected long-term rate of return on assets was 2.0%.
The following table sets forth the funded status of the German Plans and amounts
recognized in the Company's financial statements (in thousands):
December 31
1996 1995
---------------------------
Accumulated benefit obligation, including vested
benefits of $69,477 and $76,556 $ 70,122 $ 77,445
===========================
Actuarial present value of projected benefit obligations $(70,398) $(77,791)
Plan assets at fair value 15,508 15,331
---------------------------
Projected benefit obligations in excess of plan assets (54,890) (62,460)
Unrecognized loss 4,155 4,935
Unrecognized prior service cost 414 571
Unrecognized net asset at transition date, being
recognized over 15 years (29) (36)
Additional minimum liability, recognized as a
reduction of stockholders' equity (3,346) (6,792)
---------------------------
Accrued pension liability $(53,696) $(63,782)
===========================
The following assumptions have been used in the actuarial determinations of the
German Plans:
1996 1995
--------------------------
Discount rate 7.0% 7.0%
Rate of increase in compensation levels 2.5% 3.0%
18
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Postretirement Medical Benefits
The Company pays limited health care premiums for certain eligible retired U.S.
employees. Net postretirement benefit cost included the following components (in
thousands):
December 31
1996 1995 1994
-------------------------
Service cost $236 $215 $214
Interest cost 485 497 453
Net amortization and deferral 264 245 230
-------------------------
Net postretirement benefit cost $985 $957 $897
=========================
The status of the plan and amounts recognized in the Company's consolidated
balance sheet were as follows (in thousands):
December 31
1996 1995
-------------------------
Accumulated postretirement benefit obligation:
Retirees $(2,313) $(2,075)
Actives eligible to retire (1,519) (1,402)
Other actives (3,145) (3,712)
-------------------------
Total (6,977) (7,189)
Unrecognized loss 925 1,440
Unrecognized transition obligation, being amortized
over 20 years 3,421 3,635
-------------------------
Accrued postretirement benefit liability $(2,631) $(2,114)
=========================
19
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Postretirement Medical Benefits (continued)
The discount rates used in the calculations were 7.50% and 7.25% for 1996 and
1995, respectively.
10. Leases
Total rental expense under operating leases was $9,679,000, $9,984,000, and
$8,871,000, for the years ended December 31, 1996, 1995, and 1994, respectively.
Future minimum lease payments for operating leases with initial or remaining
noncancelable lease terms in excess of one year are as follows:
1997--$7,289,000; 1998--$5,441,000; 1999--$3,751,000; 2000--$3,233,000;
2001--$2,885,000; thereafter--$9,915,000.
11. Financial Instruments
Financial instruments with potential credit risk consist principally of accounts
receivable. Concentrations of credit risk with respect to receivables are
limited due to the Company's large number of customers and their dispersion
across many countries and industries. At December 31, 1996 and 1995, the Company
had no significant concentrations of credit risk. The amounts reported in the
balance sheet for cash and cash equivalents and for short-term and long-term
debt approximate fair value.
12. Current Vulnerability Due to Certain Concentrations
Sources of Supply
Although most materials incorporated in the Company's products are available
from a number of sources, certain materials (particularly tantalum and
palladium) are available only from a relatively limited number of suppliers.
Tantalum, a metal, is the principal material used in the manufacture of tantalum
capacitor products. It is purchased in powder form primarily under annual
contracts with domestic suppliers at prices that are subject to periodic
adjustment. The Company is a major consumer of the world's annual tantalum
production. There are currently three major suppliers that process tantalum ore
into capacitor grade tantalum powder. Although the Company believes that there
is currently a surplus of tantalum ore reserves and a sufficient number of
tantalum processors relative to foreseeable demand, and that the tantalum
required by the Company has generally been available in sufficient quantities to
meet requirements, the
20
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
12. Current Vulnerability Due to Certain Concentrations (continued)
Sources of Supply (continued)
limited number of tantalum powder suppliers could lead to increases in tantalum
prices that the Company may not be able to pass on to its customers. In an
attempt to ensure that the Company will have access to a long-term, stable
supply of low-cost tantalum, the Company is negotiating joint venture agreements
for a tantalum mine, a refinery, and capacitor production facilities in China.
Palladium is primarily purchased on the spot and forward markets, depending on
market conditions. Palladium is considered a commodity and is subject to price
volatility. Although palladium is currently found in South Africa and Russia,
the Company believes that there are a sufficient number of domestic and foreign
suppliers from which the Company can purchase palladium. However, an inability
on the part of the Company to pass on increases in palladium costs to its
customers could have an adverse effect on the margins of those products using
the metal.
Geographic Concentration
To address the increasing demand for its products and in order to lower its
costs, the Company has expanded, and plans to continue to expand, its
manufacturing operations in Israel in order to take advantage of that country's
lower wage rates, highly skilled labor force, government-sponsored grants, as
well as various tax abatement programs. These incentive programs have
contributed substantially to the growth and profitability of the Company. The
Company might be materially and adversely affected if these incentive programs
were no longer available to the Company or if hostilities were to occur in the
Middle East that materially interfere with the Company's operations in Israel.
21
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
13. Segment and Geographic Information
Vishay operates in one line of business--the manufacture of electronic
components. Information about the Company's operations in different geographic
areas is as follows (in thousands):
United States Europe Israel Other Elimination Consolidated
------------- ------ ------ ----- ----------- ------------
Year ended
December 31, 1996
- -----------------
Net sales to unaffiliated
customers $ 557,935* $ 504,397 $ 8,118 $ 27,529 $ -- $ 1,097,979
Net sales between
geographic areas 67,839 45,682 235,219 11,243 (359,983) --
-------------------------------------------------------------------------------------------
Total net sales $ 625,774 $550,079 $243,337 $ 38,772 $(359,983) $ 1,097,979
===========================================================================================
Operating profit $ 60,868 $ (13,755) $ 49,562 $ 3,854 $ -- $ 100,529
=====================================================================
General corporate
expenses (12,764)
Interest expense (17,408)
------------------
Earnings before income
taxes $ 70,357
==================
Identifiable assets $ 617,484 $570,004 $347,053 $ 21,506 $ -- $ 1,556,047
============================================================================================
United States Europe Israel Other Elimination Consolidated
------------- ------ ------ ----- ----------- ------------
Year ended
December 31, 1995
- -----------------
Net sales to unaffiliated
customers $ 597,154* $589,488 $ 5,684 $ 32,090 $ -- $ 1,224,416
Net sales between
geographic areas 74,283 53,883 214,322 341 (342,829) --
---------------------------------------------------------------------------------------------------
Total net sales $ 671,437 $643,371 $220,006 $ 32,431 $(342,829) $ 1,224,416
====================================================================================================
Operating profit $ 59,877 $ 31,759 $ 66,640 $ 5,528 $ -- $ 163,804
==============================================================================
General corporate
expenses (11,397)
Interest expense (29,433)
------------------
Earnings before income
taxes $ 122,974
==================
Identifiable assets $ 610,106 $653,395 $255,268 $ 24,562 $ -- $ 1,543,331
===================================================================================================
22
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
13. Segment and Geographic Information (continued)
United States Europe Israel Other Elimination Consolidated
------------- ----------- ------------ --------- ------------ ------------
Yea
Year ended
December 31, 1994
- -----------------
S>
Net sales to unaffiliated
customers $ 495,004* $ 466,552 $ 3,687 $ 22,594 $ -- $ 987,837
Net sales between
geographic areas 25,339 65,705 139,615 -- (230,659) --
--------------------------------------------------------------------------------------------
Total net sales $ 520,343 $ 532,257 $ 143,302 $ 22,594 $(230,659) $ 987,837
============================================================================================
Operating profit $ 43,889 $ 15,129 $ 45,091 $ 4,842 $ -- $ 108,951
==========================================================================
General corporate
expenses (10,066)
Interest expense (24,769)
------------------
Earnings before income
taxes $ 74,116
==================
Identifiable assets $ 555,418 $ 614,998 $ 152,329 $ 22,325 $ $ 1,345,070
============================================================================================
* Includes export sales of $112,402, $123,387, $107,196 for the years ended
December 31, 1996, 1995, and 1994, respectively.
Sales between geographic areas are priced to result in operating profit that
would be achieved on sales to unaffiliated customers. Operating profit is total
revenue less operating expenses. In computing operating profit, general
corporate expenses, interest expense, and income taxes were not deducted.
23
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
14. Summary of Quarterly Financial Information (Unaudited)
Quarterly financial information for the years ended December 31, 1996 and 1995
is as follows:
(In thousands, except per share amounts)
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
--------------------- ------------------- -------------------- -------------------- -------------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net sales $310,660 $310,284 $273,502 $315,461 $259,889 $300,629 $253,928 $298,042 $1,097,979 $1,224,416
Gross profit 85,081 79,265 71,864 83,526 61,177 79,265 53,991 79,842 272,113 321,898
Net earnings (1) 28,041 22,034 3,783 24,724 14,484 22,332 6,308 23,577 52,616 92,667
Earnings per
share (1), (2):
Net earnings $.46 $.40 $.06 $.45 $.24 $.40 $.10 $.38 $.86 $1.62
(1) Includes restructuring expense of $24,826,000 ($.26 per share) and
$13,204,000 ($.17 per share) in the second and fourth quarters of 1996,
respectively, and restructuring expense of $800,000 ($.01 per share) and
$3,400,000 ($.04 per share) in the third and fourth quarters of 1995,
respectively.
(2) Adjusted to give retroactive effect to 5% stock dividend in June 1996 and
the 2-for-1 stock split distributed on June 16, 1995.
24
EXHIBIT INDEX
Page Number in
Exhibit sequentially
No. Description Numbered Copy
- --- ----------- -------------
2.1 Stock Purchase Agreement, dated July
12, 1994, between Thomas & Betts
Corporation and Vishay
Intertechnology, Inc. Incorporated
by reference to Exhibit (2.1) to the
Current Report on 8-K dated July 18,
1994.
3.1 Composite Amended and Restated
Certificate of Incorporation of the
Company dated August 3, 1995.
Incorporated by reference to Exhibit
3.1 to Form 10-Q for the quarter
ended June 30, 1995 (the "1995 Form
10-Q").
3.2 Amended and Restated Bylaws of
Registrant. Incorporated by
reference to Exhibit 3.2 to
Registration Statement No. 33-13833
of Registrant on Form S-2 under the
Securities Act of 1933 (the "Form S-
2") and Amendment No. 1 to Amended
and Restated Bylaws of Registrant
Incorporated by reference to Exhibit
3.2 to Form 10-K file number 1-7416
for fiscal year ended December 31,
1993 (the "1993 Form 10-K").
10.1 Performance-Based Compensation Plan
for Chief Executive Officer of
Registrant. Incorporated by
reference to Exhibit 10.1 to the 1993
Form 10-K.
-33-
10.2 The First Amendment dated June 27,
1995, to the Amended and Restated
Vishay Intertechnology, Inc.
$302,500,000 Revolving Credit and
Term Loan Agreement dated as of July
18, 1994 by and among Comerica Bank,
NationsBank of North Carolina, N.A.,
Berliner Handels-und Frankfurter
Bank, Signet Bank Maryland,
CoreStates Bank, N.A., Bank Hapoalim,
B.M., ABN AMRO Bank N.V., Credit
Lyonnais New York Branch, Meridian
Bank, Bank Leumi le-Israel, B.M. and
Credit Suisse (collectively, the
"Banks"), Comerica Bank, as agent for
the Banks (the "Agent"), and Vishay
Intertechnology, Inc. ("Vishay"), and
the Vishay Intertechnology, Inc.
$200,000,000 Acquisition Loan
Agreement dated as of July 18, 1994
by and among the Banks, the Agent and
Vishay. Incorporated by references
to Exhibit 10.4 to the 1995 Form
10-Q.
10.3 The First Amendment, dated June 27,
1995, to the Amended and Restated
Vishay Europe GmbH DM 40,000,000
Revolving Credit and DM 9,506,000
Term Loan Agreement dated as of July
18, 1994 by and among the Banks, the
Agent and Vishay Europe GmbH ("VEG"),
and the Amended and Restated
Roederstein DM 104,315,990.20 Term
Loan Agreement dated as of July 18,
1994 by and among the Banks, the
Agent and VEG. Incorporated by
references to Exhibit 10.5 to the
1995 Form 10-Q.
-34-
10.4 Amended and Restated Vishay
Intertechnology, Inc. $302,500,000
Revolving Credit and Term Loan
Agreement, dated as of July 18, 1994,
by and among Comerica Bank,
NationsBank of North Carolina, N.A.,
Berliner Handelsund Frankfurter Bank,
Signet Bank Maryland, CoreStates
Bank, N.A., Bank Hapoalim, B.M., ABN
AMRO Bank N.V., Credit Lyonnais New
York Branch, Meridian Bank, Bank
Leumi le-Israel, B.M. and Credit
Suisse (collectively, the "Former
Banks"), Comerica Bank, as agent for
the Former Banks (the "Agent"), and
Vishay Intertechnology, Inc.
("Vishay"). Incorporated by
reference to Exhibit (10.1) to the
Current Report on Form 8-K dated July
18, 1994.
10.5 Amended and Restated Vishay
Beteiligungs GmbH DM 40,000,000
Revolving Credit and DM 9,506,000
Term Loan Agreement, dated as of July
18, 1994, by and among the Former
Banks, the Agent and Vishay
Beteiligungs GmbH ("VBG").
Incorporated by reference to Exhibit
(10.2) to the Current Report on Form
8-K dated July 18, 1994.
10.6 Amended and Restated Roederstein DM
104,315,990.20 Term Loan Agreement,
dated as of July 18, 1994, by and
among the Former Banks, the Agent,
Vishay and VBG. Incorporated by
reference to Exhibit (10.3) to the
Current Report on Form 8-K dated July
18, 1994.
10.7 Vishay Intertechnology, Inc.
$200,000,000 Acquisition Loan
Agreement, dated as of July 18, 1994,
by and among the Banks, the Agent and
Vishay. Incorporated by reference to
Exhibit (10.4) to the Current Report
on Form 8-K dated July 18, 1994.
-35-
10.8 Amended and Restated Guaranty by
Vishay to the Banks, dated July 18,
1994. Incorporated by reference to
Exhibit (10.5) to the Current Report
on Form 8-K dated July 18, 1994.
10.9 Employment Agreement, dated as of
March 15, 1985, between the Company
and Dr. Felix Zandman. Incorporated
by reference to Exhibit (10.12) to
the Form S-2.
10.10 Vishay Intertechnology 1995 Stock
Option Program. Incorporated by
reference to the Company's
Registration Statement on Form S-8
(No. 33-59609).
10.11 1986 Employee Stock Plan of the
Company. Incorporated by reference
to Exhibit 4 to the Company's
Registration Statement on Form S-8
(No. 33-7850).
10.12 1986 Employee Stock Plan of Dale
Electronics, Inc. Incorporated by
reference to Exhibit 4 to the
Company's Registration Statement on
Form S-8 (No. 33-7851).
10.13 Money Purchase Plan Agreement of
Measurements Group, Inc.
Incorporated by reference to Exhibit
10(a)(6) to Amendment No. 1 to the
Company's Registration Statement on
Form S-7 (No. 2-69970).
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule
-36-