Vishay Reports Results for Third Quarter 2006

MALVERN, Pa., Oct. 31 /PRNewswire-FirstCall/ -- Dr. Felix Zandman, Chairman of the Board, and Dr. Gerald Paul, President and Chief Executive Officer of Vishay Intertechnology, Inc. , announced today that net revenues for the fiscal quarter ended September 30, 2006 were $654.4 million, compared to $566.1 million for the fiscal quarter ended October 1, 2005, an increase of $88.3 million or 15.6%. Net earnings for the fiscal quarter ended September 30, 2006 were $32.5 million, or $0.17 per diluted share, compared with net earnings for the fiscal quarter ended October 1, 2005 of $20.0 million, or $0.11 per diluted share.

Net earnings of $32.5 million, or $0.17 per diluted share, for the third quarter of 2006 were impacted by pre-tax charges for restructuring and severance costs of $19.2 million, related asset write-downs and inventory obsolescence charges for discontinued tantalum products totaling $4.1 million, losses resulting from adjustments to previously existing purchase commitments of $0.7 million for tantalum powder and wire, and charges totaling $2.9 million to settle past product quality issues. These items and their tax-related consequences had a negative $0.10 effect on earnings per share.

Net earnings of $20.0 million or $0.11 per diluted share for the third quarter of 2005 were impacted by restructuring and severance costs of $3.9 million and related asset write-downs of $4.7 million, partially offset by gains resulting from adjustments to previously existing purchase commitments of $1.1 million. These items and their tax-related consequences had a negative $0.03 effect on earnings per share.

Net revenues for the nine fiscal months ended September 30, 2006 were $1,946.0 million, compared to $1,702.8 million for the nine fiscal months ended October 1, 2005, an increase of $243.2 million or 14.3%. Net earnings for the nine fiscal months ended September 30, 2006 were $113.5 million, or $0.59 per diluted share, compared with net earnings for the nine fiscal months ended October 1, 2005 of $35.4 million, or $0.20 per diluted share.

Net earnings of $113.5 million, or $0.59 per diluted share, for the nine fiscal months ended September 30, 2006 were impacted by pre-tax charges for restructuring and severance costs of $28.1 million, related asset write-downs of $6.6 million, write-downs and write-offs of tantalum inventories totaling $9.6 million, losses resulting from adjustments to previously existing purchase commitments of $4.8 million, a loss on early extinguishment of debt of $2.9 million, an adjustment to increase the estimated cost of environmental remediation obligations associated with the 2001 General Semiconductor acquisition of $3.6 million, and charges totaling $2.9 million to settle past product quality issues. These items and their tax-related consequences had a negative $0.21 effect on earnings per share.

Net earnings of $35.4 million, or $0.20 per diluted share, for the nine fiscal months ended October 1, 2005 were impacted by restructuring and severance costs of $18.2 million, related asset write-downs of $4.8 million, charges for purchased in-process research and development of $9.2 million, Siliconix transaction-related expenses of $3.8 million, and losses resulting from adjustments to previously existing purchase commitments of $2.5 million, partially offset by a gain on sale of land of $2.1 million. In addition, tax expense includes a $3.7 million favorable benefit, primarily due to a foreign tax ruling. These items and their tax-related consequences had a negative $0.13 effect on earnings per share.

Commenting on the results for the third quarter of 2006, Dr. Paul stated, "Our results were in line with our expectations. While orders from distribution to Vishay slowed down as anticipated, the sales by distributors to their end customers did not. In the current pricing environment we were able to pursue our programs of selective price increases, which resulted in basically flat pricing overall on a sequential basis. We continue to generate free cash--cash flows from operations for the third quarter 2006 were $98 million and capital expenditures were $45 million; for the nine months ended September 2006 cash flows from operations were $228 million and capital expenditures were $115 million."

Commenting on the outlook for the fourth quarter 2006, Dr. Paul continued, "While we expect stable demand for our products at OEM and EMS as well as from the end customers of distribution, we anticipate a continuation of inventory adjustments at distribution for the current quarter. For the fourth quarter we guide for sales in the range of $620 million to $640 million."

Commenting on the Company's acquisition and R&D activities, Dr. Felix Zandman, Chairman of the Board and Chief Technical and Business Development Officer, stated, "I am pleased to report that Vishay is aggressively pursuing potential acquisitions of small and large businesses. Furthermore, our R&D programs are progressing as scheduled. Our new products represent an increasing portion of our sales."

A conference call to discuss third quarter financial results is scheduled for Tuesday, October 31, 2006 at 11:00 AM (ET). The dial-in number for the conference call is 877-589-6174 (+1 706-643-1406 if calling from outside the United States or Canada) and the conference ID is #7501751.

There will be a replay of the conference call from 12:30 PM (ET) on Tuesday, October 31, 2006 through 11:59 PM (ET) on Sunday, November 5, 2006. The telephone number for the replay is 800-642-1687 (+1 706-645-9291 if calling from outside the United States or Canada) and the access code is #7501751.

There will also be a live audio webcast of the conference call. This can be accessed from the Investor Relations section of the Vishay website at http://ir.vishay.com/.

Vishay Intertechnology, Inc., a Fortune 1,000 Company listed on the NYSE (VSH), is one of the world's largest manufacturers of discrete semiconductors (diodes, rectifiers, transistors, and optoelectronics and selected ICs) and passive electronic components (resistors, capacitors, inductors, sensors, and transducers). These components are used in virtually all types of electronic devices and equipment, in the industrial, computing, automotive, consumer, telecommunications, military, aerospace, and medical markets. Its product innovations, successful acquisition strategy, and ability to provide "one-stop shop" service have made Vishay a global industry leader. Vishay can be found on the Internet at http://www.vishay.com/.

Statements contained herein that relate to the Company's future performance, including statements with respect to trends in revenues and bookings, and the anticipated future benefits of the Company's product, acquisition, and research and development strategies are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, particularly in the markets that we serve, the availability of appropriate acquisition opportunities on terms that the Company considers attractive, difficulties in integrating acquired companies, difficulties in new product development, and other factors affecting the Company's operations, markets, products, services, and prices that are set forth in its Annual Report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission. You are urged to refer to the Company's Form 10-K for a detailed discussion of these factors. Vishay does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management believes that stating the impact on net earnings of items such as restructuring and severance, asset write-downs, charges for in-process research and development, gains or losses on purchase commitments, losses on early extinguishment of debt, special tax items and other items not reflecting on-going operating activities is meaningful to investors because it provides insight with respect to intrinsic operating results of the Company and, management believes, is a common measure of performance in the industries in which the Company competes. Investors should be aware, however, that this is a non-GAAP measure of performance and should not be considered as a substitute for the comparable GAAP measure.

Contact: Richard N. Grubb, Executive Vice President and Chief Financial Officer or Peter G. Henrici, Senior Vice President Corporate Communications 610-644-1300 VISHAY INTERTECHNOLOGY, INC. Summary of Operations (Unaudited - In thousands except earnings per share) Fiscal quarter ended September 30, October 1, 2006 2005 Net revenues $654,381 $566,077 Cost of products sold (a) 486,052 431,430 Loss (gain) on purchase commitments 741 (1,146) Gross profit 167,588 135,793 Gross margin 25.6% 24.0% Selling, general and administrative expenses 98,917 94,174 Restructuring and severance costs 19,160 3,924 Asset write-offs 2,709 4,682 Operating income 46,802 33,013 7.2% 5.8% Other income (expense): Interest expense (7,764) (8,170) Minority interest (215) (154) Other 5,665 3,442 Total other income (expense) - net (2,314) (4,882) Earnings before taxes 44,488 28,131 Income taxes 12,006 8,175 Net earnings $32,482 $19,956 Basic earnings per share $0.18 $0.11 Diluted earnings per share $0.17 $0.11 Weighted average shares outstanding - basic 184,451 184,114 Weighted average shares outstanding - diluted 208,685 195,719 (a) The fiscal quarter ended September 30, 2006 includes write-offs of tantalum inventories of $1,374 and charges to settle past product quality issues of $2,885 within costs of products sold. VISHAY INTERTECHNOLOGY, INC. Summary of Operations (Unaudited - In thousands except earnings per share) Nine fiscal months ended September 30, October 1, 2006 2005 Net revenues $1,945,990 $1,702,831 Cost of products sold (b) 1,437,146 1,315,718 Loss on purchase commitments 4,838 2,454 Gross profit 504,006 384,659 Gross margin 25.9% 22.6% Selling, general and administrative expenses (c) 299,086 286,352 Purchased in-process research and development - 9,201 Siliconix transaction-related expenses - 3,751 Restructuring and severance costs 28,085 18,178 Asset write-offs 6,583 4,813 Operating income 170,252 62,364 8.7% 3.7% Other income (expense): Interest expense (24,828) (24,685) Loss on early extinguishment of debt (2,854) - Minority interest (782) (3,918) Other 13,669 13,688 Total other income (expense) - net (14,795) (14,915) Earnings before taxes 155,457 47,449 Income taxes 41,973 12,065 Net earnings $113,484 $35,384 Basic earnings per share $0.62 $0.20 Diluted earnings per share $0.59 $0.20 Weighted average shares outstanding - basic 184,381 175,439 Weighted average shares outstanding - diluted 217,090 187,099 (b) The nine fiscal months ended September 30, 2006 includes write-downs and write-offs of tantalum inventories of $9,602 and charges to settle past product quality issues of $2,885 within costs of products sold. (c) The nine fiscal months ended September 30, 2006 includes $3,600 of expenses within selling, general and administrative expenses to increase the estimated cost of environmental obligations associated with the 2001 General Semiconductor acquisition. VISHAY INTERTECHNOLOGY, INC. Consolidated Condensed Balance Sheets (In thousands) September 30, December 31, 2006 2005 Assets (Unaudited) Current assets: Cash and cash equivalents $612,669 $622,577 Short-term investments - 9,925 Accounts receivable - net 393,337 350,850 Inventories: Finished goods 156,617 149,709 Work in process 203,475 181,125 Raw materials 178,044 157,036 Deferred income taxes 38,627 39,115 Prepaid expenses and other current assets 110,245 96,295 Total current assets 1,693,014 1,606,632 Property and equipment, at cost: Land 94,010 92,650 Buildings and improvements 423,489 406,798 Machinery and equipment 1,783,516 1,684,736 Construction in progress 72,524 67,229 Allowance for depreciation (1,284,086) (1,160,821) Total property and equipment, net 1,089,453 1,090,592 Goodwill 1,456,431 1,434,901 Other intangible assets, net 170,175 174,220 Other assets 201,310 221,246 Total assets $4,610,383 $4,527,591 Liabilities and stockholders' equity Current liabilities: Notes payable to banks $6,042 $3,473 Trade accounts payable 122,203 142,709 Payroll and related expenses 127,471 118,814 Other accrued expenses 195,566 173,982 Income taxes 41,151 29,655 Current portion of long-term debt 3,855 1,533 Total current liabilities 496,288 470,166 Long-term debt less current portion 608,850 751,553 Deferred income taxes 26,513 27,091 Deferred grant income 7,423 11,896 Other liabilities 163,514 149,938 Accrued pension and other postretirement costs 276,800 256,986 Minority interest 4,591 4,109 Stockholders' equity: Common stock 17,009 16,946 Class B common stock 1,436 1,468 Capital in excess of par value 2,229,419 2,225,966 Retained earnings 770,650 657,166 Unearned compensation - (95) Accumulated other comprehensive income 7,890 (45,599) Total stockholders' equity 3,026,404 2,855,852 Total liabilities and stockholders' equity $4,610,383 $4,527,591 VISHAY INTERTECHNOLOGY, INC. Reconciliation of Earnings Per Share (Unaudited - In thousands except earnings per share) Fiscal quarter ended Nine fiscal months ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2006 2005 2006 2005 Numerator: Numerator for basic earnings per share - net earnings $32,482 $19,956 $113,484 $35,384 Interest savings Assuming conversion of dilutive convertible and exchangeable notes, net of tax 3,090 683 13,758 2,034 Numerator for Diluted earnings per share - adjusted net earnings $35,572 $20,639 $127,242 $37,418 Denominator: Denominator for basic earnings per share - weighted average shares 184,451 184,114 184,381 175,439 Effect of dilutive securities Convertible and exchangeable notes (d) 23,496 10,604 31,835 10,666 Employee stock options 654 925 790 918 Other 84 76 84 76 Dilutive potential common shares 24,234 11,605 32,709 11,660 Denominator for diluted earnings per share - adjusted weighted average shares 208,685 195,719 217,090 187,099 Basic earnings per share $0.18 $0.11 $0.62 $0.20 Diluted earnings per share $0.17 $0.11 $0.59 $0.20 Diluted earnings per share for the periods presented do not reflect the following weighted-average potential common shares, as the effect would be antidilutive: Fiscal quarter ended Nine fiscal months ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2006 2005 2006 2005 Convertible and exchangeable notes: Convertible Subordinated Notes, due 2023 - 23,496 - 23,496 Exchangeable Unsecured Notes, due 2102 6,176 6,176 - 6,176 Weighted average employee stock options 5,244 6,046 4,879 6,242 Weighted average warrants 8,824 8,824 8,824 8,824 (d) The Company made a cash repurchase of all outstanding LYONs pursuant to the option of the holders to require the Company to repurchase the LYONs on June 4, 2006. In 2005, based on its action to settle the holders' purchase option on the June 4, 2004 purchase date in common stock, the Company assumed for purposes of the earnings per share computation that all future purchase options for the LYONs would be settled in stock based on the settlement formula set forth in the indenture governing the LYONs. Due to the decision to utilize cash to repurchase the notes on the June 4, 2006, purchase date, the earnings per share computation for the year-to-date 2006 period is based on the 3,809 shares that would have been issued in a normal conversion, weighted for the period they were outstanding. The LYONs were dilutive for nine fiscal months ended September 30, 2006, as well as the quarter and nine fiscal months ended October 1, 2005.