1
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 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
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. ( )
The aggregate market value of the Common Stock held by non-
affiliates of the registrant as of March 25, 1994, assuming
conversion of all its Class B Common Stock into Common Stock of the
registrant held by non-affiliates, was $648,375,000.
As of March 25, 1994, registrant had 17,641,081 shares of its
Common Stock and 3,590,232 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, 1993, are
incorporated by reference into Part III.
2
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 and tantalum and film
capacitors. Resistors, the most common component in electronic
circuits, are used to adjust and regulate levels of voltage and
current. Capacitors perform energy storage, frequency control,
timing and filtering functions in almost all types of electronic
equipment. The Company's products are used in a broad variety of
electronic applications, including those in the computer,
telecommunications, military/aerospace, instrument, industrial,
automotive, office equipment and entertainment industries.
Through a series of acquisitions over the last eight
years, the Company has grown from a small manufacturer of precision
resistors and strain gages to one of the world's largest manufac-
turers and suppliers of a broad line of passive electronic compo-
nents. The Company's acquisition strategy has focused on
acquiring manufacturers of those types of quality products in which
the Company has strong marketing organizations and technical
expertise but who have encountered operating, financial or
management difficulties. In connection with each acquisition, the
Company has implemented programs to realize synergies between its
existing businesses and the acquired business. These programs have
focused on reducing selling, general and administrative expenses
and maximizing production efficiencies, including the integration
of redundant sales offices and administrative functions and the
transfer of some production operations to regions where the Company
can take advantage of lower labor costs and available tax and other
incentives.
The Company's first major acquisition was the purchase in
1985 of a 50% interest in Dale Electronics, Inc. ("Dale"), a United
States producer of precision and commercial resistors, magnetic
components and plasma displays. In 1987, the Company established
a major presence in Germany with the acquisition of Draloric
Electronic GmbH ("Draloric"), strengthening the Company's metal
film resistor and specialty resistor businesses. In 1988, the
Company acquired the remaining 50% interest in Dale as well as all
of the outstanding shares of Sfernice, S.A., a French manufacturer
of resistors, potentiometers and printed circuit boards. Subse-
quently, Vishay acquired several small United States inductor
manufacturers and one French inductor manufacturer. In 1992, the
Company acquired the worldwide tantalum capacitor and United States
thick film resistor network businesses of American Annuity Group,
Inc., formerly Sprague Technologies, Inc. ("STI"). In January
3
1993, Vishay exercised its option to purchase 81% of the
outstanding share capital of Roederstein Spezialfabriken fur
Bauelemente der Elektronik und Kondensatoren der Starkstromtechnik
GmbH ("Roederstein"). Vishay acquired its initial 19% interest in
Roederstein in February 1992. Roederstein's principal products
include film, aluminum electrolytic and tantalum capacitors as well
as resistors. It also manufactures single layer ceramic
capacitors, heavy current capacitors and triplers.
Most recently, on July 2, 1993, Vishay acquired the
assets of the tantalum capacitor business of Philips Electronics
North America Corporation, a subsidiary of Philips Electronics
N.V., for approximately $11 million.
The Company currently operates as five separate business
units: (i) Vishay Electronic Components, U.S., which is comprised
of Dale, a manufacturer and supplier of resistors, the Vishay
Resistive Systems Unit, which primarily manufactures high
performance foil resistors and thin film resistor networks, and
Sprague, which consists of the tantalum capacitor and thick film
resistor network manufacturing businesses acquired from STI; (ii)
Draloric/Roederstein, German-based manufacturers and suppliers of
resistors and capacitors in Europe; (iii) Sfernice, S.A., a
resistor producer in France; (iv) Measurements Group, Inc., which
produces resistive sensors and other stress measuring devices in
the United States; and (v) Vishay Components (UK) Ltd., a
manufacturer and supplier of the Company's products in the United
Kingdom.
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 and
film capacitors, and, to a lesser extent, inductors, specialty
ceramic capacitors, transformers, potentiometers, plasma displays
and thermistors.
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
electronic measurement and experimental stress analysis systems, as
4
well as in transducers, for measuring loads (scales), acceleration
and fluid pressure.
Fixed resistive components can be broadly categorized as
discrete components or networks. A discrete component is designed
to perform a single function and is incorporated by the customer in
the circuitry of a system which requires that particular function.
A network, on the other hand, is a microcircuit (consisting of a
number of resistors placed on a ceramic base), which is designed to
perform a number of standard functions. Vishay manufactures
discrete resistors and networks both of which are principally sold
in the precision or higher quality segments of the resistor market
(i.e., fixed precision wirewound, metal film and foil resistors and
network resistors).
The Company's resistive products primarily consist of
fixed resistors (foil and thin film resistors, wire-wound
resistors, metal film resistors, oxide film resistors, thermistors,
thick film resistor chips, networks (microcircuits) and resistive
sensors); variable resistors (trimmers and potentiometers);
magnetic components (inductors and transformers) and printed
circuit boards. Vishay produces resistors 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 equip-
ment. 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 applica-
tions. The Company's capacitor products primarily consist of solid
tantalum chip capacitors, solid tantalum leaded capacitors,
wet/foil tantalum capacitors and film capacitors. The tantalum
capacitor is the smallest and most stable type of capacitor for its
range of capacitance.
Markets
The Company's products are sold primarily to other
manufacturers and, to a much lesser extent, to United States and
foreign government agencies. Its products are used in, among other
things, the circuitry of measuring instruments, industrial equip-
ment, automotive applications including engine controls and fuel
injection systems, process control systems, computer-related
products, telecommunications, military and aerospace applications,
medical instruments and scales.
5
Approximately 41% of the Company's net sales for the year
ended December 31, 1993 was attributable to sales to customers in
the United States while the remainder was attributable to sales
primarily in Europe. In the United States, products are marketed
primarily through independent manufacturers' representatives (who
are compensated solely on a commission basis), the Company's
own sales personnel and independent distributors. The
Company has regional sales personnel in several locations to
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. Internationally, products are sold to customers in
Germany, the United Kingdom, France, Israel, Japan, Singapore,
South Korea and other European and Pacific Rim countries through
Company sales offices, independent manufacturers' representatives
and distributors.
The Company endeavors to have its products incorporated
into the design of electronic equipment at the research and proto-
type 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.
One of the fastest growing markets for passive electronic
components is for surface mounted devices. These 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 certain advantages over through-hole mounting,
including the ability to place more components on a circuit board.
The Company believes it has taken advantage of the growth of the
surface mount market and is an industry leader in designing and
marketing surface mount devices. The Company offers a wide range
of these devices, including both thick and thin film resistor chips
and networks, capacitors, inductors, oscillators, transformers and
potentiometers, as well as a number of component packaging styles
to facilitate automated product assembly by its customers.
Sales of the Company's products to manufacturers in
defense-related industries have continued to decline over the past
year, primarily as a result of reduced governmental procurements of
defense-related products. 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 "Classifi-
cation 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.
In that event, the Company's product may not qualify for use as a
6
component in other products required to meet a more stringent
Classification Level, although the Company's product may still be
sold for use in other products requiring a less stringent classifi-
cation. After completion of additional retesting, however, the
product may again be classified at its original level. Sales of
the product may be adversely affected pending the completion of any
such additional retesting and the resumption of the original
Classification Level. Various United States manufacturing facili-
ties from time to time experience a product Classification Level
modification. During the time that such level is modified for any
specific product, net sales and earnings derived from such product
may be adversely affected.
The Company is undertaking to have the quality systems at
all of its major manufacturing facilities approved under the
established ISO 9000 international quality control standard. ISO
9000 is a comprehensive set of quality program standards developed
by the International Standards Organization. Several 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, 1993.
Research and Development
The Company 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 product and manufacturing techniques.
This decentralized system encourages individual product development
and, from time to time, developments at one manufacturing facility
will have applications at another facility. Most of the Company's
products and manufacturing processes have been invented, designed
and developed by Company engineers and scientists. Company
research and development costs were approximately $7.1 million for
1993, $7.1 million for 1992 and $7.0 million for 1991. The Company
spends additional amounts for the development 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) are available only from a limited number of
suppliers. In order to protect itself from manufacturing
disruptions due to potential supply shortages, the Company
7
maintains a supply of certain critical materials, the nondelivery
of which could have a materially adverse effect on the Company.
Tantalum metal is the principal material used in the
manufacture of tantalum capacitor products. Tantalum 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. Tantalum, and other required raw materials have
generally been available in sufficient quantities, but have been
subject to wide price variations. Disruptions in the supply of, or
substantial increases in the price of, tantalum metal could have a
materially adverse effect on the Company.
Inventory and Backlog
Although Vishay manufactures standardized products, a
substantial portion of its products are produced to meet specific
customer specifications. The Company does, however, maintain an
inventory of resistors and other components. Backlog of outstand-
ing orders for the Company's products was $198.4 million, $134.3
million and $104.5 million, at December 31, 1993, 1992 and 1991,
respectively. The increase in backlog at December 31, 1993 and
1992, as compared with prior periods, is attributable to the
acquisitions of Roederstein and Sprague, respectively. The current
backlog is expected to be filled during the next 12 months. 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 represented a
material portion of the backlog.
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. Certain of the Company's products compete on the basis of
its marketing and distribution network, which provides a high level
of customer service, such as design assistance, order expediting
and prompt delivery. In addition, the Company's competitive
position depends on its product quality, know-how, proprietary
data, marketing and service capabilities, business reputation and
price.
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.
8
In several areas the Company strengthens its market
position by conducting seminars and educational programs for
customers and for potential customers.
Although the Company has numerous United States and
foreign patents covering certain of its products and manufacturing
processes, and acquired various patents with the acquisition of the
STI tantalum capacitor and network lines, no particular patent is
considered material to the business of the Company.
Manufacturing Operations
The Company conducts manufacturing operations in three
principal geographic regions: the United States, Europe and
Israel. At December 31, 1993, approximately 40% of the Company's
identifiable assets were located in the United States,
approximately 50% were located in Europe, approximately 9% were
located in Israel and 1% in other regions. In the United States,
the Company's main manufacturing facilities are located in
Nebraska, South Dakota, North Carolina, Pennsylvania and Maine. In
Europe, the Company's main manufacturing facilities are located in
Selb and Landshut, Germany and Nice and Tours, France. In Israel,
manufacturing facilities are located in Holon and Dimona. The
Company also maintains manufacturing facilities in Juarez, Mexico
and Toronto, Canada.
For the year ended December 31, 1993, sales of products
manufactured in Israel accounted for approximately 8% of the
Company's net sales. The Company conducts manufacturing operations
in Israel in order to take advantage of the relatively low wage
rates in Israel and several incentive programs instituted by the
Government of Israel, including certain tax abatements. These
programs have contributed substantially to the growth and
profitability of the Company. The Company may 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.
Due to a shift in manufacturing emphasis, resulting from
the growing market for surface mount devices, over-capacity at a
number of the Company's manufacturing facilities and the relocation
of some production to regions with lower labor costs, portions of
the Company's work force and certain facilities may not be fully
utilized in the future. As a result, the Company may incur
significant costs in connection with work force reductions and the
closing of additional manufacturing facilities.
9
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 at this time. However, the Company is involved
in various legal actions concerning state government enforcement
proceedings and various dump site clean-ups. These actions may
result in fines and/or clean-up expenses. The Company believes
that any fine and/or clean-up 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 anticipates that it will undertake capital
expenditures of approximately $1,000,000 in fiscal 1994 for general
environmental enhancement programs.
Employees
As of December 31, 1993, the Company employed
approximately 14,200 full time employees of whom approximately
8,600 were located outside the United States. The Company hires
few employees on a part time basis. While many of the Company's
foreign employees are members of trade unions, none of the
Company's employees located in the United States are represented by
unions except for approximately 172 employees at the North Adams,
Massachusetts facility acquired from STI, who are represented by
three unions. The Company is currently negotiating the collective
bargaining agreements of such domestic employees with each of these
unions. The Company believes that its relationship with its
employees is excellent.
10
Item 2. PROPERTIES
- - - ------- ----------
The Company maintains 53 manufacturing facilities. The
principal locations of such facilities, along with available space
including administrative offices, are:
Approx. Available
Owned Locations Space (Square Feet)
- - - --------------- -------------------
United States
-------------
Malvern and Bradford, PA 223,000
Columbus and Norfolk, NE 336,000
Wendell and Statesville, NC 193,000
Sanford, ME 212,000
Foreign
-------
Germany (11 locations) 1,375,000
France (11 locations) 606,000
Israel (2 locations) 400,000
Portugal 100,000
Vishay owns an additional 239,000 square feet of manufac-
turing facilities located in Colorado, Maryland, South Dakota and
Florida.
Available leased facilities in the United States include
420,000 square feet of space located in New York, California, New
Jersey, South Dakota, Texas, Massachusetts and New Hampshire.
Foreign leased facilities consist of 206,000 square feet in Mexico,
151,000 square feet in France, 130,000 square feet in England,
109,000 square feet in Canada and 98,000 square feet in Germany.
The Company also has facilities in Japan, Austria, Switzerland,
and the Czech Republic.
In September 1993, Vishay entered into negotiations to
build an additional manufacturing facility in Israel. The facility,
which will be approximately 200,000 square feet, will be located
near Haifa.
Management believes it has sufficient manufacturing space
for its current business.
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 materially adverse effect on the Company's business or
financial condition.
11
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,
1994.
Name Age Positions Held
- - - ---- --- --------------
Felix Zandman* 65 Chairman of the Board,
President, Chief
Executive Officer
and Director
Robert A. Freece* 53 Vice President, Treasurer,
Chief Financial Officer
and Director
Henry V. Landau 47 Vice President; President
-- Measurements Group,
Inc.
Moshe Shamir 70 Vice President;
President -- Vishay
Israel Limited
William J. Spires 52 Vice President and
Secretary
Donald G. Alfson 48 Vice President, Director;
President -- Vishay
Electronic Components,
U.S. and Asia and
President -- Dale
Electronics, Inc.
Gerald Paul 45 Vice President, Director;
President -- Vishay
Electronic Components,
Europe and Managing
Director -- Draloric
Electronic GmbH.
* Member of the Executive Committee of the Board of Directors.
12
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.
Robert A. Freece has been Vice President, Treasurer,
Chief Financial Officer and a Director of the Company since 1972.
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.
Moshe Shamir has been the President of Vishay Israel
Limited since its inception in 1969. Mr. Shamir has been a Vice
President of the Company since 1972. Mr. Shamir is also a member
of the Board of Directors of Teva Pharmaceuticals Industries, Ltd.
and Chairman of the Executive Committee thereof.
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.
Donald G. Alfson has been a Vice President
since May 1993, a Director of the Company since May 1992 and the
President of Vishay Electronic Components U.S. and Asia, and
President of Dale Electronics, Inc. since April 1992. Mr. Alfson
has been employed by the Company since 1972.
Gerald Paul has been a Vice President and a Director of
the Company since May 1993 and President of Vishay Electronic
Components, Europe since January 1994. Dr. Paul has been Managing
Director of Draloric Electronic GmbH since January 1991. Dr. Paul
has been employed by the Company since February 1978.
13
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 sale prices for the Company's Common Stock
as reported on the New York Stock Exchange Composite Tape for the
quarterly periods within the 1993 and 1992 fiscal years indicated.
Stock prices have been restated to reflect stock dividends. 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 agreement (see Note 6 to the
consolidated financial statements). Holders of record of the
Company's Common Stock totalled approximately 1,441 at March 25,
1994.
COMMON STOCK MARKET PRICES
Calendar 1993 Calendar 1992
High Low High Low
------ ------ ------ ------
First Quarter $35.48 $27.38 $21.31 $14.74
Second Quarter 36.25 25.48 24.29 18.59
Third Quarter 37.75 31.63 26.67 22.03
Fourth Quarter 35.38 28.75 35.48 25.36
On October 1, 1990, the Company commenced a stock repur-
chase program pursuant to which the Company was authorized to
purchase up to $5 million worth of its Common Stock. The purchases
of Common Stock by the Company under the repurchase program are
made in open-market transactions, subject to the availability of
stock in accordance with the rules of the Securities and Exchange
Commission and at the discretion of management. As of December 31,
1990 the Company had repurchased 36,600 shares at an approximate
cost of $459,000. No repurchases were made in 1991, 1992 or 1993.
In addition at March 25, 1994, the Company had
outstanding 3,590,232 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 beneficially owned by Dr. Felix Zandman, Mr. Moshe Shamir
and a revocable trust for the benefit of Mr. Alfred P. Slaner. Dr.
Felix Zandman is an executive officer and director of the Company,
and Mr. Shamir is a director. Mr. Slaner and his wife, Luella B.
Slaner, are Trustees of the Slaner Trust, and accordingly, Mrs.
Slaner, a Vishay director, may also be deemed beneficially to own
such shares.
14
Item 6. SELECTED FINANCIAL DATA
- - - ------- -----------------------
The following table sets forth selected consolidated financial
information of the Company for the fiscal years ended December 31, 1993, 1992,
1991, 1990 and 1989. 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,
---------------------------------------------
1993(1) 1992(2) 1991 1990 1989
------- ------- ---- ---- ----
(in thousands, except per share amounts)
Net sales. . . . . . . . . $856,272 $664,226 $442,283 $445,596 $415,619
Interest expense . . . . . 20,624 19,110 15,207 19,426 21,068
Earnings before
income taxes and
cumulative effect of
accounting change. . . . 50,894 37,924 27,253 33,856 26,418
Income taxes . . . . . . . 8,246 7,511 6,363 10,655 8,651
Earnings before cumulative
effect of accounting change 42,648 30,413 20,890 23,201 17,767
Cumulative effect of
accounting change for
income taxes . . . . . . 1,427 -- -- -- --
Net earnings . . . . . . . 44,075 30,413 20,890 23,201 17,767
Total assets . . . . . . . 948,106 661,643 448,771 440,656 419,958
Long-term debt . . . . . . 266,999 139,540 127,632 140,212 186,182
Working capital. . . . . . 205,806 145,327 128,733 120,384 115,945
Stockholders' equity . . . 376,503 346,625 201,366 177,839 117,984
Earnings per share:
Before cumulative effect
of accounting change . 2.01 1.71 1.25 1.48 1.24
Accounting change for
income taxes . . . . . 0.07 -- -- -- --
Net earnings. . . . . . $ 2.08 $ 1.71 $ 1.25 $ 1.48 $ 1.24
Weighted average number
of shares outstanding. . 21,228 19,366 16,649 17,961 14,354
- - - ---------------
(1) Includes the results from January 1, 1993 of the Roederstein acquisition.
(2) Includes the results from January 1, 1992 of the businesses acquired
from STI.
15
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- - - ------- CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
Introduction and Background
The Company's sales and net income have increased
significantly in the past several years 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 is
reflected in an increase in the Company's sales and in the decline
in selling, general and administrative expenses as a percentage of
the Company's sales. Since mid-1990, sales of most of the
Company's products have been adversely affected by the worldwide
slowdown in the electronic components industry. In addition, sales
to defense-related industries have declined since the first quarter
of 1991. These trends are continuing.
Year ended December 31, 1993 compared to
Year ended December 31, 1992
Results of Operations
- - - ---------------------
Net sales for the year ended December 31, 1993 increased
by $192,046,000 over the comparable period of the prior year. The
increase resulted from the acquisition of Roederstein, effective
January 1, 1993. Net sales of Roederstein were $212,124,000 for
the year ended December 31, 1993. Net sales, exclusive of
Roederstein, decreased by $20,078,000, compared to the same period
of the prior year. This decrease in net sales is attributable to
the strengthening of the U.S. dollar against foreign currencies,
which resulted in a decrease in reported Vishay sales of
$15,671,000 for the year ended December 31, 1993, and recessionary
pressures in Europe.
Costs of products sold for the year ended December 31,
1993 were 77.5% of net sales as compared to 76.5% for the
comparable period of the prior year. The reason for this increase
is that the costs of products sold for Roederstein (prior to the
full implementation of synergistic cost reductions) are approx-
imately 80% of net sales, while Vishay's business, exclusive of
Roederstein, has been operating in the 76% to 78% range. In 1993,
grants of $3,424,000 received from the government of Israel, which
were utilized to offset start-up costs of new facilities, were
recognized as a reduction of costs of products sold.
Selling, general, and administrative expenses for the year
ended December 31, 1993 were 13.9% of net sales as compared to
15.3% for the comparable period of the prior year. The current
year's lower rates reflect the effect of the acquisition of
16
Roederstein and the ongoing cost savings programs implemented with
the acquisition of certain businesses of STI during 1992.
Restructuring charges of $6,659,000 for the year ended
December 31, 1993 consist primarily of severance costs related to
the Company's decision to downsize its European operations,
primarily in France, as a result of the European business climate.
Income from unusual items of $7,221,000 for the year ended
December 31, 1993 represents proceeds received for business
interruption insurance claims principally related to operations in
Dimona, Israel.
Interest costs increased by $1,514,000 for the year ended
December 31, 1993 as a result of increased debt incurred for the
acquisition of Roederstein.
Other income for the year ended December 31, 1993
decreased by $4,410,000 over the comparable period of the prior
year because other income for the year ended December 31, 1992
included consulting fees of $2,307,000 from Roederstein. These
fees to Vishay were for time and expenses of Vishay personnel
utilized by Roederstein in its attempt to restructure itself.
Also, other income for the year ended December 31, 1992 included
fees of approximately $3,325,000 from STI under one-year sales and
distribution agreements. Foreign currency losses for the year
ended December 31, 1993 were $1,382,000, as compared to foreign
currency losses of $1,594,000 for the year ended December 31, 1992.
The effective tax rate of 16.2% for the year ended
December 31, 1993 reflects the non-taxability of certain insurance
recoveries. The 1993 rate was also affected by increased
manufacturing in Israel, where the Company's average income tax
rate was approximately 4% in 1993. The effective tax rate for the
year ended December 31, 1993, exclusive of the effect of the non-
taxable insurance proceeds, was 18.6%. The effective tax rate for
the year ended December 31, 1992 was 19.8%.
Accounting Changes
- - - ------------------
Effective January 1, 1993, the Company changed its method
of accounting for income taxes from the deferred method to the
liability method required by FASB Statement No. 109, "Accounting
for Income Taxes". The cumulative effect of adopting Statement 109
as of January 1, 1993 was to increase net income by $1,427,000.
Application of the new income tax rules also decreased pretax
earnings by $2,870,000 for the year ended December 31, 1993 because
of increased depreciation expense as a result of Statement 109's
requirement to report assets acquired in prior business
combinations at their pretax amounts.
17
The Company also adopted FASB Statement No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions", effective January 1, 1993. The Company has elected to
recognize the transition obligation on a prospective basis over a
twenty-year period. In 1993, the new standard resulted in
additional annual net periodic postretirement benefit costs of
$1,200,000 before taxes, and $792,000 after taxes, or $0.04 per
share. Prior-year financial statements have not been restated to
apply the new standard.
Year ended December 31, 1992 compared to
Year ended December 31, 1991
Net sales for the year ended December 31, 1992 increased
$221,943,000 over the comparable period of the prior year. The
increase was the result of the inclusion of the businesses acquired
from STI effective as of January 1, 1992. Net sales of the
acquired businesses were $230,492,000 for the year ended December
31, 1992. For the year ended December 31, 1992, net sales,
exclusive of the acquired businesses, decreased by $8,549,000
compared to the same period of the prior year when recessionary
pressures affecting sales were not as great.
The weakening of the U.S. dollar against foreign
currencies resulted in an increase in reported Vishay sales of
$10,418,000 for the year ended December 31, 1992.
Costs of products sold for the year ended December 31,
1992 were 76.5% of net sales as compared to 71.9% for the
comparable period of the prior year. The reason for this increase
is that the costs of products sold for the newly purchased
businesses from STI (prior to any synergistic cost reductions) are
80% of net sales, while Vishay's resistor businesses traditionally
operate at levels of 70% to 75%.
Selling, general, and administrative expenses for the year
ended December 31, 1992 were 15.3% of net sales compared to 17.2%
for the comparable period of the prior year. The 15.3% rate
reflects the effect of the businesses acquired from STI. The rate
applicable to the businesses acquired from STI (approximately 11%)
includes the effects of initial cost saving programs installed
subsequent to the acquisition. For the year ended December 31,
1992, selling, general and administrative expenses of the Vishay
resistor business (approximately 17%) were comparable to the levels
experienced in the prior year.
Interest costs increased by $3,903,000 for the year ended
December 31, 1992 as a result of the increased debt incurred for
the purchase of the businesses from STI.
Other income for the year ended December 31, 1992 includes
consulting fees of $2,307,000 from Roederstein. Other income for
the year ended December 31, 1992 also includes fees of approxi-
18
mately $3,325,000 from STI under one-year sales and distribution
agreements expiring February 14, 1993, which were entered into in
connection with the acquisition of the businesses from STI.
The effective tax rate was 19.8% for the year ended
December 31, 1992. The effective rate is comparable to the rate of
23.3% for 1991. The 1992 rate was in part affected by increased
manufacturing in Israel where the Company's average income tax rate
was 7% for 1992.
Year ended December 31, 1991 compared to
Year ended December 31, 1990
Net sales decreased by $3,313,000 or approximately 1% to
$442,283,000 for the year ended December 31, 1991 from $445,596,000
for the year ended December 31, 1990. Sales increased in the
United States by 2.7% as a result of acquisitions, which partially
offset the effect of the worldwide recession. Sales in Western
Europe declined 4.9% compared to the year ended December 31, 1990
as a result of the recession and the strengthening of the dollar
against foreign currencies. Price increases did not materially
affect sales.
Costs of products sold increased to $318,166,000 or 71.9%
of sales for the year ended December 31, 1991 from $312,925,000 or
70.2% of sales for the year ended December 31, 1990. The increase
in costs of products sold as a percentage of sales reflects
increased production costs of relatively flat sales in addition to
certain manufacturing inefficiencies during the latter part of
1991.
Selling, general, and administrative expenses decreased
to $75,973,000 or 17.2% of sales for the year ended December 31,
1991 from $77,740,000 or 17.4% of sales for the year ended December
31, 1990 primarily because of the continuation of cost reduction
programs introduced during 1990.
Expenses of approximately $3,700,000 for layoff costs at
the Company's European subsidiaries were incurred during the latter
half of 1991. This correction to the work force was made to
strengthen the subsidiaries' ability to attain earnings goals and
to respond to the current recession.
Interest expense decreased by $4,219,000 to $15,207,000
for the year ended December 31, 1991 from $19,426,000 for the year
ended December 31, 1990 primarily as a result of payments made on
long-term debt and lower interest rates.
Other expenses for the year ended December 31, 1991 were
$289,000 compared to income of $2,344,000 for the year ended
December 31, 1990, primarily due to decreases in investment grants
from Israel and interest income. Investment grants and interest
19
income for the year ended December 31, 1991 were $106,000 and
$797,000, respectively, compared to $980,000 and $2,257,000,
respectively, for the year ended December 31, 1990.
The effective tax rate for the year ended December 31,
1991 was 23.3% versus 31.5% for the year ended December 31, 1990.
The decrease in the effective tax rate resulted from a reduced tax
rate for certain Israeli operations and an increase in the propor-
tion of earnings taxable in Israel. The lower rate was primarily
due to tax advantages of doing business in Israel where the
Company's effective average tax rate was approximately 10% at that
time.
Financial Condition
Cash flows from operations were $50,114,000 for the year
ended December 31, 1993 compared to $54,357,000 for the prior year
and were used primarily to finance capital expenditures. Purchases
of property and equipment were $76,813,000 for the year ended
December 31, 1993 compared to $49,801,000 for the prior year
primarily due to additions of manufacturing equipment for surface
mount products and expansion of manufacturing facilities in Israel.
The Company's financial condition at December 31, 1993 is strong
with the Company's current ratio of 2.1 to 1. The Company's ratio
of long-term debt to stockholders' equity was .7 to 1 at December
31, 1993 as compared to .4 to 1 at December 31, 1992. The increase
in this ratio resulted from additional borrowings in connection
with the acquisition of Roederstein.
In connection with the Roederstein acquisition, Vishay
entered into a DM 104,316,000 term loan agreement with its lending
banks in January 1993. In addition, an Israeli subsidiary of
Vishay borrowed $20 million pursuant to an unsecured credit
agreement. The funds from the credit facilities were used in
connection with the Roederstein acquisition and the refinancing of
Roederstein's debt. Vishay and the Banks also amended certain
terms of the outstanding $170,000,000 Revolving Credit and Term
Loan Agreement dated as of January 10, 1992 among Vishay and the
Banks and the Amended and Restated DM 42,375,000 Revolving Credit
and DM 57,036,000 Term Loan Agreement dated as of January 10, 1992
among Vishay, Draloric and the lending banks in order to, among
other things, allow Vishay to draw upon its revolving credit
facilities to refinance a portion of Roederstein's debt.
See Note 6 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.
Management believes that available sources of credit,
together with cash expected to be generated from operations, will
be sufficient to satisfy the Company's anticipated financing needs
20
for working capital and capital expenditures during the next twelve
months.
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.
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, 1993 and 1992.
Consolidated Statements of Operations -- for the years
ended December 31, 1993, 1992 and 1991.
Consolidated Statements of Cash Flows -- for the years
ended December 31, 1993, 1992 and 1991.
Consolidated Statements of Stockholders' Equity -- for the
years ended December 31, 1993, 1992 and 1991.
Notes to Consolidated Financial Statements -- December 31,
1993.
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, 1993, the
Company's most recent fiscal year. Such information is incor-
porated 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".
21
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, 1993 are filed herewith. See Item
8 of this Report for a list of such financial
statements.
(2) Financial Statement Schedules for Vishay, set
forth immediately following this Item 14 are as
follows:
Schedule V -- Property, Plant and Equipment
Schedule VI -- Accumulated Depreciation,
Depletion and Amortization of Property, Plant
and Equipment
Schedule IX -- Short-Term Borrowings
Schedule X -- Supplementary Income Statement
Information
All other schedules for which provision is made
in the applicable accounting regulation of the
Securities and Exchange Commission are not
required under the related instruction or are
inapplicable and therefore have been omitted.
(3) Exhibits -- See response to paragraph (c) below.
(b) Reports on Form 8-K
None
(c) Exhibits:
2.1 Purchase and Sale Agreement, dated as of November 14,
1991, among Sprague Technologies, Inc., Sprague Electric
Company and Vishay Intertechnology, Inc. Incorporated
by reference to Exhibit 1 to the Current Report on Form
8-K dated November 14, 1991.
3.1 Certificate of Incorporation of Registrant, as amended
and Certificate of Amendment of Restated Certificate of
Incorporation of Registrant dated May 18, 1993.
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
22
Securities Act of 1933 (the "Form S-2") and Amendment
No. 1 to Amended and Restated Bylaws of Registrant.
10.1 Performance-Based Compensation Plan for Chief Executive
Officer of Registrant.
10.2 Second Amendment dated as of January 29, 1993 to Amended
and Restated Vishay Intertechnology, Inc. $170,000,000
Revolving Credit and Term Loan Agreement by and among
Comerica Bank, NationsBank of North Carolina, N.A.,
Signet Bank Maryland, CoreStates Bank, N.A., Bank
Hapoalim, B.M., Meridian Bank, Bank Leumi le-Israel,
B.M., Berliner Handels-und Frankfurter Bank and ABN AMRO
Bank N.V. (collectively, the "Banks"), Comerica Bank, as
agent for the Banks (the "Agent"), and Vishay
Intertechnology, Inc. ("Vishay"), dated as of January
10, 1992. Incorporated by reference to Exhibit (10.1)
to the Current Report on Form 8-K, dated January 29,
1993.
10.3 Second Amendment dated as of January 29, 1993 to Amended
and Restated Draloric Electronic GmbH DM 42,375,000
Revolving Credit and DM 57,036,000 Term Loan Agreement
by and among the Banks, the Agent and Draloric
Electronic GmbH ("Draloric"), dated as of January 10,
1992. Incorporated by reference to Exhibit (10.2) to
the Current Report on Form 8-K, dated January 29, 1993.
10.4 Roederstein DM 104,315,990.20 Term Loan Agreement dated
as of January 29, 1993 by and among the Banks, the
Agent, Draloric and Vishay. Incorporated by reference
to Exhibit (10.3) to the Current Report on Form 8-K,
dated January 29, 1993.
10.5 Agreement between First International Bank of Israel and
Vishay Israel Ltd. dated January 28, 1993. Incorporated
by reference to Exhibit (10.4) to the Current Report on
Form 8-K, dated January 29, 1993.
10.6 Amended and Restated Vishay Intertechnology, Inc.
$170,000,000 Revolving, Credit and Term Loan Agreement
by and among Manufacturers Bank, N.A., NationsBank of
North Carolina, N.A., Signet Bank Maryland, CoreStates
Bank, N.A., Bank Hapoalim, B.M., Meridian Bank and Bank
Leumi le-Israel, B.M. (collectively, the "Prior Banks"),
the Agent and Vishay, dated as of January 10, 1992.
Incorporated by reference to Exhibit (10.1) to the
Current Report on Form 8-K, dated January 10, 1992.
10.7 Amended and Restated Draloric Electronic, GmbH DM
42,375,000 Revolving Credit and DM 57,036,000 Term Loan
23
Agreement by and among the Prior Banks, the Agent and
Draloric, dated as of January 10, 1992. Incorporated by
reference to Exhibit (10.2) to the Current Report on
Form 8-K, dated January 10, 1992.
10.8 Amended and Restated Guaranty by Vishay to the Banks,
dated as of January 29, 1993. Incorporated by reference
to Exhibit (10.5) to the Current Report on Form 8-K,
dated January 29, 1993.
10.9 Amended and Restated Guaranty by Dale Holdings, Inc.,
Dale Electronics, Inc., Bradford Electronics, Inc., and
Measurements Group, Inc. to the Banks, dated as of
January 29, 1993. Incorporated by reference to Exhibit
(10.6) to the Current Report on Form 8-K, dated January
29, 1993.
10.10 Amended and Restated Permitted Borrowers Guaranty by
Vilna Equities Holding B.V., Visra Electronics
Financing, B.V., Draloric, E-Sil Components, Ltd.,
Vishay Components (U.K.) Limited, Sfernice, S.A.,
Ultronix, Inc., Techno Components Corporation and
Ohmtek, Inc. to the Banks, dated as of January 29, 1993.
Incorporated by reference to Exhibit (10.7) to the
Current Report on Form 8-K, dated January 29, 1993.
10.11 Guaranty by Vishay Sprague, Inc., Sprague North Adams,
Sprague Sanford and Roederstein Electronics, Inc. to the
Banks, dated January 29, 1993. Incorporated by
reference to Exhibit (10.8) to the Current Report on
Form 8-K, dated January 29, 1993.
10.12 Guaranty Agreement, dated as of November 29, 1989
between the Company and Societe Generale, New York
Branch. Incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for December
31, 1989.
10.13 Option Agreement for the Assets of the Resista Division
of Roederstein by and among Vishay, Mr. Jorg
Roederstein, Roederstein Spezialfabriken fur Bauelemente
der Elektronik und Kondensatoren der Starkstromtechnik
GmbH ("Roederstein") and Mr. Till Roederstein, dated
February 18, 1992. Incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K, dated
February 18, 1992.
10.14 Purchase and Transfer Agreement concerning Shares by and
among, Mrs. Ute Roederstein, Mrs. Cornelia Bodinka, nee
Roederstein, Ms. Claudia Roederstein, Mr. Jorg
Roederstein, Mr. Till Roederstein and Vishay dated
February 18, 1992. Incorporated by reference to Exhibit
24
10.2 to the Current Report on Form 8-K, dated February
18, 1992.
10.15 Notarial Offer for a Purchase and Transfer Agreement
concerning Shares by Mr. Till Roederstein and Vishay
Intertechnology, Inc. dated February 18, 1992.
Incorporated by reference to Exhibit 10.3 to the Current
Report on Form 8-K, dated February 18, 1992.
10.16 Fiscal Agency Agreement, dated July 28, 1988, between
the Company and Citibank, N.A. Incorporated by
reference to Exhibit (10(i)) to the Current Report on
Form 8-K, dated August 30, 1988.
10.17 Management Fee Agreement between Dale Holdings, Inc. and
the Company, dated May 14, 1986. Incorporated by
reference to Exhibit 10.15 to the Form S-2.
10.18 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.
10.19 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).
10.20 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).
10.21 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).
10.22 Distributor Agreement between Nytron Inductors and VSD,
Inc. dated as of January 1, 1991. Incorporated by
reference to the Company's Annual Report on Form 10-K
for December 31, 1990.
10.23 Distribution Sales Agreement between Sprague Electric
Company and Vishay Intertechnology, Inc., dated February
14, 1992. Incorporated by reference to Exhibit (10.1)
to the Current Report on Form 8-K, dated February 14,
1992.
10.24 Sales Representation Agreement between Sprague Electric
Company and Vishay Intertechnology, Inc. dated February
14, 1992. Incorporated by reference to Exhibit (10.2)
to the Current Report on Form 8-K, dated February 14,
1992.
25
10.25 Agreement for Transfer of Computer Software License
Administration Services Agreement between Sprague
Electric Company and Vishay Intertechnology, Inc., dated
February 14, 1992. Incorporated by reference to Exhibit
(10.3) to the Current Report on Form 8-K, dated February
14, 1992.
10.26 Lease of Concord Facility, dated February 14, 1992.
Incorporated by reference to Exhibit (10.4) to the
Current Report on Form 8-K, dated February 14, 1992.
10.27 Sublease of Hudson Facility, dated February 14, 1992.
Incorporated by reference to Exhibit (10.5) to the
Current Report on Form 8-K, dated February 14, 1992.
10.28 Lease of El Paso Property, dated February 14, 1992.
Incorporated by reference to Exhibit (10.6) to the
Current Report on Form 8-K, dated February 14, 1992.
10.29 Non-Competition Agreement among Sprague Technologies,
Inc., Sprague Electric Company and Vishay Inter-
echnology, Inc., dated February 14, 1992. Incorporated
by reference to Exhibit (10.7) to the Current Report on
Form 8-K, dated February 14, 1992.
10.30 Agreement between Sprague Technologies, Inc. and Vishay
Israel, Ltd., dated February 14, 1992. Incorporated by
reference to Exhibit (10.8) to the Current Report on
Form 8-K, dated February 14, 1992.
11. Statement regarding Computation of Per Share Earnings.
22. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
26
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, 1993 and 1992, and
the related consolidated statements of operations, cash flows, and
stockholders equity for each of the three years in the period
ended December 31, 1993. Our audits also included the financial
statement schedules listed in the Index at Item 14(a). These
financial statements and schedules are the responsibility of the
Companys management. Our responsibility is to express an opinion
on these financial statements and schedules 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Vishay Intertechnology, Inc. at December 31,
1993 and 1992, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted
accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in the Notes to Consolidated Financial Statements, in
1993 the Company changed its methods of accounting for income
taxes (Note 5) and postretirement benefits other than pensions
(Note 10).
/s/ ERNST & YOUNG
Philadelphia, Pennsylvania
February 10, 1994
except for Note 6, as to which the date is
March 25, 1994
27
Vishay Intertechnology, Inc.
Consolidated Balance Sheets
(In thousands, except per share and share amounts)
December 31
1993 1992
--------------------------
Assets
Current assets:
Cash and cash equivalents $ 10,931 $ 15,977
Accounts receivable, less allowances
of $5,150 and $3,885 125,284 102,757
Inventories:
Finished goods 85,783 50,874
Raw materials and work in process 138,872 99,901
Prepaid expenses and other current
assets 33,365 18,192
--------------------------
Total current assets 394,235 287,701
Property and equipment--at cost:
Land 33,791 12,917
Buildings and improvements 136,432 87,623
Machinery and equipment 398,885 288,527
--------------------------
569,108 389,067
Less allowances for depreciation (149,004) (117,448)
--------------------------
420,104 271,619
Goodwill 118,286 74,872
Other assets 15,481 27,451
--------------------------
$948,106 $661,643
==========================
28
December 31
1993 1992
--------------------------
Liabilities and stockholders' equity
Current liabilities:
Notes payable to banks $ 22,695 $ 18,966
Trade accounts payable 48,404 42,727
Payroll and related expenses 28,942 23,124
Other accrued expenses 54,112 25,984
Income taxes 3,740 -
Current portion of long-term debt 30,536 31,573
--------------------------
Total current liabilities 188,429 142,374
Long-term debt--less current portion 266,999 139,540
Deferred income taxes 26,080 9,786
Other liabilities 24,081 1,021
Accrued pension costs 66,014 22,297
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--35,000,000 shares;
17,639,081 and 16,795,234 shares
outstanding after deducting 47,441
and 47,432 shares in treasury 1,763 1,679
Class B convertible Common Stock, par
value $.10 a share: Authorized--
15,000,000 shares; 3,590,232 and
3,419,385 shares outstanding after
deducting 125,965 and 119,967
shares in treasury 359 342
Capital in excess of par value 288,980 253,446
Retained earnings 105,849 97,156
Foreign currency translation
adjustment (13,109) (5,864)
Unearned compensation (60) (134)
Pension adjustment (7,279) -
--------------------------
376,503 346,625
--------------------------
$948,106 $661,643
==========================
See accompanying notes.
29
Vishay Intertechnology, Inc.
Consolidated Statements of Operations
(In thousands, except per share and share amounts)
Year ended December 31
1993 1992 1991
------------------------------------------
Net sales $856,272 $664,226 $442,283
Costs of products sold 663,239 508,018 318,166
------------------------------------------
Gross profit 193,033 156,208 124,117
Selling, general, and
administrative expenses 118,906 101,327 75,973
Restructuring expense 6,659 - 3,700
Unusual items (7,221) - -
------------------------------------------
74,689 54,881 44,444
Other income (expense):
Interest expense (20,624) (19,110) (15,207)
Amortization of goodwill (3,294) (2,380) (1,695)
Other 123 4,533 (289)
------------------------------------------
(23,795) (16,957) (17,191)
------------------------------------------
Earnings before income taxes
and cumulative effect of
accounting change 50,894 37,924 27,253
Income taxes 8,246 7,511 6,363
------------------------------------------
Earnings before cumulative
effect of accounting change 42,648 30,413 20,890
Cumulative effect of accounting
change for income taxes 1,427 - -
------------------------------------------
Net earnings $44,075 $30,413 $20,890
==========================================
Earnings per share:
Before cumulative effect of
accounting change $2.01 $1.71 $1.25
Accounting change for income
taxes 0.07 - -
------------------------------------------
Net earnings $2.08 $1.71 $1.25
==========================================
Weighted average shares
outstanding 21,228,000 19,366,000 16,649,000
==========================================
See accompanying notes.
30
Vishay Intertechnology, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year ended December 31
1993 1992 1991
---------------------------------
Operating activities
Net earnings $44,075 $30,413 $20,890
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 48,578 36,062 27,056
Interest accrued on Convertible Subordinated
Debentures in excess of coupon rate - 2,190 2,812
Cumulative effect of accounting change (1,427) - -
Other 530 5,133 (170)
Changes in operating assets and liabilities:
Accounts receivable 2,804 (7,774) 6,912
Inventories (22,780) (6,164) (7,949)
Prepaid expenses and other
current assets 182 (3,647) 1,644
Accounts payable (7,768) 1,650 (2,726)
Other current liabilities (14,080) (3,506) (2,646)
---------------------------------
Net cash provided by operating activities 50,114 54,357 45,823
Investing activities
Purchases of property and equipment (76,813) (49,801) (26,660)
Purchase of businesses, net of cash acquired (12,967) (131,479) (6,754)
Investment in and advances to Roederstein - (20,147) -
Cash provided by changes in short-term
investments - 176 43
---------------------------------
Net cash used in investing activities (89,780) (201,251) (33,371)
Financing activities
Proceeds from revolving line of credit and
long-term borrowings 265,274 403,970 79,483
Principal payments on revolving line of
credit and long-term debt (235,124) (327,797) (88,906)
Cash provided by (used in) net changes in
short-term borrowings 4,873 13,791 (4,689)
Proceeds from sale of common stock - 59,133 -
---------------------------------
Net cash provided by (used in) financing
activities 35,023 149,097 (14,112)
Effect of exchange rate changes on cash (403) (470) (165)
---------------------------------
(Decrease) increase in cash and cash equivalents (5,046) 1,733 (1,825)
Cash and cash equivalents at beginning of year 15,977 14,244 16,069
---------------------------------
Cash and cash equivalents at end of year $10,931 $15,977 $14,244
=================================
See accompanying notes.
31
Vishay Intertechnology, Inc.
Consolidated Statements of Stockholders' Equity
(In thousands, except share amounts)
Year ended December 31
1993 1992 1991
------------------------------------
Common Stock:
Beginning balance $1,679 $1,165 $1,105
Shares issued (3,775; 1,816,016; and
20,469 shares) - 182 2
Stock dividends (839,952; 583,748; and
554,015 shares) 84 58 55
Conversion of subordinated debentures
(2,536,783 shares) - 254 -
Conversions from Class B (120; 200,658;
and 25,752 shares) - 20 3
------------------------------------
Ending balance 1,763 1,679 1,165
Class B convertible Common Stock:
Beginning balance 342 345 331
Stock dividends (170,967; 172,383; and
165,398 shares) 17 17 17
Conversions to Common (120; 200,658;
and 25,752 shares) - (20) (3)
------------------------------------
Ending balance 359 342 345
Capital in excess of par value:
Beginning balance 253,446 115,398 101,173
Shares issued 123 59,162 382
Conversion of subordinated debentures - 60,312 -
Stock dividends 35,281 18,548 13,777
Tax effects relating to stock plan 130 26 66
------------------------------------
Ending balance 288,980 253,446 115,398
Retained earnings:
Beginning balance 97,156 85,366 78,325
Net earnings 44,075 30,413 20,890
Stock dividends (35,382) (18,623) (13,849)
------------------------------------
Ending balance 105,849 97,156 85,366
Foreign currency translation adjustment:
Beginning balance (5,864) (347) (2,084)
Translation adjustment for the year (7,245) (5,517) 1,737
------------------------------------
Ending balance (13,109) (5,864) (347)
Unearned compensation:
Beginning balance (134) (561) (1,011)
Shares issued under stock plans (3,775;
16,016; and 20,469 shares) (123) (208) (382)
Amounts expensed during the year 197 635 832
------------------------------------
Ending balance (60) (134) (561)
Pension adjustment:
Beginning balance - - -
Pension adjustment for the year (7,279) - -
------------------------------------
Ending balance (7,279) - -
------------------------------------
Total stockholders' equity $376,503 $346,625 $201,366
====================================
See accompanying notes.
32
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements
December 31, 1993
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.
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 $43,493,000,
$30,995,000, and $23,706,000 for the years ended December 31, 1993, 1992, and
1991, respectively.
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 $10,945,000 and $7,679,000 at December 31,
1993 and 1992, respectively.
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 $7,097,000, $7,149,000, and $6,967,000
for the years ended December 31, 1993, 1992, and 1991, 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 are recognized
as income when conditions for receipt are met. In 1993, grants of $3,424,000
received from the government of Israel, which were utilized to offset startup
costs of new facilities, were recognized as a reduction of costs of products
sold.
33
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Earnings Per Share
Earnings per share is based on the weighted average number of common shares and
dilutive common equivalent shares (from the assumed conversion of convertible
subordinated debentures) outstanding during the period. In October 1992, the
convertible subordinated debentures were converted into 2,536,783 shares of
Common Stock. For the year ended December 31, 1992, where assumed conversion
of the debentures has a dilutive effect, net earnings used in the computations
are adjusted for interest expense, net of income taxes, on the convertible
subordinated debentures. Earnings per share amounts for all periods presented
reflect 5% stock dividends paid on June 11, 1993, June 16, 1992, and June 11,
1991. Earnings per share for the years ended December 31, 1993 and 1992
reflect the weighted effect of the issuance of 1,800,000 shares of Common Stock
on December 24, 1992.
Accounting Changes
In 1993, the Company changed its methods of accounting for income taxes (Note
5) and postretirement benefits other than pensions (Note 10).
Reclassifications
Certain prior-year amounts have been reclassified to conform with the current
presentation.
2. Acquisitions
During January 1993, Vishay exercised its option to purchase the remaining 81%
of the outstanding share capital of Roederstein GmbH, a passive electronic
components manufacturer with headquarters in Germany for 4,050,000 Deutsche
Marks ("DM") ($2,502,000) pursuant to an option agreement dated February 18,
1992. Vishay had acquired its initial 19% interest in Roederstein on February
18, 1992 for DM 950,000 ($577,000). In connection with the acquisition, Vishay
refinanced all of Roederstein's existing bank debt of DM 160,381,000
($99,062,000). Funds to refinance Roederstein's debt were provided by a DM
104,316,000 term loan with a group of banks, $20,000,000 borrowed under an
unsecured credit agreement, and borrowings under an existing line of credit.
Effective January 1, 1992, the Company acquired the worldwide tantalum
capacitor and U.S. thick film resistor network businesses of Sprague
Technologies, Inc. Under the terms of the purchase agreement, Vishay paid
$127,000,000 cash, transferred to Sprague real property with a fair value of
$4,771,000, and assumed certain liabilities relating to the businesses. Vishay
also entered into certain ancillary agreements with the seller, including
one-year sales and distribution agreements under which Vishay received fees of
$3,325,000 during 1992, which are included in other income. The purchase price
was funded primarily from a $125,000,000 term loan facility.
34
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions (continued)
The acquisitions have been accounted for under the purchase method of
accounting. The operating results of Roederstein and Sprague have been
included in the Company's consolidated results of operations from January 1,
1993 and January 1, 1992, respectively. Excess of cost over the fair value of
net assets acquired (Roederstein--$45,210,000; Sprague--$19,534,000) is being
amortized on a straight-line basis over forty years.
Had the Roederstein and Sprague acquisitions been made at the beginning of the
year prior to their acquisition, the Company's pro forma unaudited results
would have been (in thousands, except per share amounts):
Year ended December 31
1992 1991
-------------------------
Net sales $913,398 $679,183
Net earnings (loss) (22,992) 20,591
Earnings (loss) per share $(1.19) $1.24
The unaudited pro forma results are not necessarily indicative of the results
that would have been attained had the acquisitions occurred at the beginning of
the periods presented or of results which may occur in the future. Pro forma
net earnings for 1992 reflect $31,860,000 of restructuring costs incurred
by Roederstein for work force reductions.
During 1992, Vishay provided Roederstein with management and sales support,
short-term working capital advances, and assistance in renegotiating
Roederstein's bank debt. Vishay also assisted Roederstein in developing a
cost-savings program involving reductions in the Roederstein work force,
including the closing of an unprofitable division. Vishay recognized
consulting fees, which are included in other income, from Roederstein of
$2,307,000 for the year ended December 31, 1992 for its assistance to
Roederstein. As of December 31, 1992, Vishay had investments in Roederstein of
$3,229,000, advances to Roederstein, included in other assets, of $16,918,000,
accounts receivable and other current receivables from Roederstein of
$5,166,000, and accounts payable to Roederstein of $1,158,000.
The Company made several minor acquisitions in 1993 and 1991, all of which were
accounted for under the purchase method. The results of operations of these
businesses have been included in the consolidated results of the Company from
the dates of acquisition.
3. Restructuring Expense and Unusual Items
Restructuring expenses of $6,659,000 for 1993 related to the downsizing of some
of the Company's European operations. Income from unusual items of $7,221,000
for 1993 represents insurance recoveries the Company has received for business
interruption insurance claims.
The Company incurred restructuring costs of $3,700,000 in 1991 relating
primarily to costs associated with layoffs in France.
35
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4. Foreign Subsidiaries
The following amounts relating to foreign subsidiaries are included in the
consolidated financial statements (in thousands):
As of and for the year ended December 31
1993 1992 1991
----------------------------------------
Current assets $239,371 $141,334 $113,515
Current liabilities 135,003 81,532 50,288
Net property and equipment 258,279 127,740 93,708
Parent company equity in net assets
(including intercompany accounts) 199,955 161,529 119,097
Sales to customers 429,578 258,226 200,475
Earnings after eliminating intercompany
earnings and expenses 23,620 12,490 7,333
5. Income Taxes
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes." As permitted under the new
rules, prior years' financial statements have not been restated.
The cumulative effect of adopting Statement 109 as of January 1, 1993 was to
increase net earnings by $1,427,000, or $.07 per share. For the year ended
December 31, 1993, application of the new income tax rules decreased pretax
income by $2,870,000 because of increased depreciation expense as a result of
Statement 109's requirement to report assets acquired in prior business
combinations at their pretax amounts.
At December 31, 1993, the Company has net operating loss carryforwards for tax
purposes of approximately $96,300,000 in Germany (no expiration date),
$3,100,000 in France (expire December 31, 1998), and $1,800,000 in Portugal
(expire December 31, 1997). Approximately $70,800,000 of the carryforward in
Germany, and the full $1,800,000 in Portugal, resulted from the Company's
acquisition of Roederstein. For financial reporting purposes, a valuation
allowance of $34,862,000 has been recognized to offset deferred tax assets
related to German net operating loss carryforwards. If tax benefits are
recognized in the future through reductions of the valuation allowance, such
amounts will reduce goodwill of acquired companies. The valuation allowance
decreased from January 1, 1993 by $6,584,000 primarily due to a decrease
in German tax rates which had the effect of reducing the deferred tax
asset for German net operating loss carryforwards.
36
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. 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 used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of December 31, 1993
are as follows (in thousands):
Deferred tax liabilities:
Tax over book depreciation $57,401
Other--net 2,685
---------
Total deferred tax liabilities 60,086
---------
Deferred tax assets:
Pension and other retiree obligations 20,179
Net operating loss carryforwards 38,773
Restructuring reserves 7,354
Other accruals and reserves 12,300
---------
Total deferred tax assets 78,606
Valuation allowance for deferred tax assets (34,862)
---------
Net deferred tax assets 43,744
---------
Net deferred tax liabilities $16,342
=========
For financial reporting purposes, earnings before income taxes and cumulative
effect of accounting change includes the following components (in thousands):
Year ended December 31
1993 1992 1991
----------------------------------
Pretax income:
Domestic $13,136 $10,252 $8,519
Foreign 37,758 27,672 18,734
----------------------------------
$50,894 $37,924 $27,253
==================================
37
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
Significant components of income taxes attributable to continuing operations
are as follows (in thousands):
Liability
Method Deferred Method
--------------------------------
Year ended December 31
1993 1992 1991
--------------------------------
Current:
U.S. Federal $3,032 $1,639 $3,558
Foreign 2,706 2,521 1,706
State 332 502 675
--------------------------------
6,070 4,662 5,939
Deferred:
U.S. Federal 1,960 1,760 103
Foreign 36 832 312
State 180 257 9
--------------------------------
2,176 2,849 424
--------------------------------
$8,246 $7,511 $6,363
================================
For the year ended December 31, 1992, deferred income taxes resulted from
accelerated methods of depreciation used for tax purposes ($2,494,000) and
restructuring reserves ($2,012,000). These amounts were partially offset by
differences relating to inventory valuation methods ($900,000) and other items
($757,000). For the year ended December 31, 1991, deferred taxes resulted
principally from use of accelerated methods of depreciation for tax purposes.
A reconciliation of income tax at the U.S. federal statutory income tax rate to
actual income tax expense is as follows (in thousands):
Liability
Method Deferred Method
--------------------------------
Year ended December 31
1993 1992 1991
--------------------------------
Tax at statutory rate $17,304 $12,894 $9,266
State income taxes, net of
federal tax 396 501 452
Effect of foreign income
tax rates (10,532) (5,649) (5,166)
Effect of purchase accounting
adjustments 717 939 1,291
Other 361 (1,174) 520
--------------------------------
$8,246 $7,511 $6,363
================================
38
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Income Taxes (continued)
At December 31, 1993, no provision has been made for U.S. income taxes on
approximately $169,678,000 of foreign earnings which are expected to be
reinvested indefinitely.
Income taxes paid were $6,933,000, $5,729,000 and $8,418,000 for the years
ended December 31, 1993, 1992, and 1991, respectively.
6. Long-Term Debt
Long-term debt consisted of the following (in thousands):
December 31
1993 1992
------------------------
Revolving Credit Loan $51,500 $7,500
Term Loan 102,500 117,500
Deutsche Mark Revolving Credit Loan 23,035 10,500
Deutsche Mark Term Loan 10,948 23,486
Deutsche Mark Term Loan II 60,073 -
Unsecured Credit Agreements 38,638 -
Industrial Development Revenue Bonds 578 2,581
French Industrial Bonds 3,147 1,952
Other Debt and Capital Lease Obligations 7,116 7,594
------------------------
297,535 171,113
Less current portion 30,536 31,573
------------------------
$266,999 $139,540
========================
As of December 31, 1993, five 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 4.25% at December 31, 1993), a U.S. term loan
(interest 4.44% at December 31, 1993), a Deutsche Mark revolving credit loan
(interest 7.50% at December 31, 1993), a Deutsche Mark term loan (interest
7.69% at December 31, 1993), and an additional Deutsche Mark term loan
(interest 8.25% at December 31, 1993).
During March 1994, the Company's bank group agreed to amend the Revolving
Credit and Term Loan and Deutsche Mark Revolving Credit and Term Loan
agreements in effect at December 31, 1993. The terms of the five facilities,
as agreed in March 1994, are summarized below. The first facility is a
$90,000,000 multicurrency revolving credit facility which is available to the
Company on a revolving basis until December 31, 1996, at which time the Company
may elect a term out option, with quarterly payments due beginning March 31,
1997 through December 31, 2000. Interest is payable at prime or at other
interest rate options. The Company is required to pay a commitment fee equal
to 3/8% per annum on the average unused line. The second facility is a
$102,500,000 term loan, with interest payable at prime plus 1/8% or at other
interest rate options. Principal payments are due as follows: 1994 --
$5,000,000; 1995--$10,000,000; 1996--$10,000,000;
39
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
6. Long-Term Debt (continued)
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 three Deutsche Mark ("DM") facilities. The first DM
facility is a DM 40,000,000 ($23,035,000) revolving credit facility which is
available until December 31, 1996, at which time the Company may elect a term
out option, with quarterly payments due beginning March 31, 1997 through
December 31, 2000. Interest is based on DM market rates plus 15/16%. The
Company is required to pay a commitment fee equal to 3/8% per annum on the
average unused line. The second DM facility is a DM 19,012,000 ($10,948,000)
term loan. Principal of DM 4,753,000 ($2,737,000) and interest at DM market
rates plus 1-1/8% is due quarterly with final payment on December 31, 1994.
The third DM facility is a DM 104,316,000 ($60,073,000) term loan.
Interest is based on DM market rates plus 1-11/16%. Principal
payments of DM 18,700,000, 34,100,000, 37,000,000, and 14,516,000 ($10,769,000,
$19,637,000, $21,307,000, and $8,360,000) are due on or before December 31,
1994, 1995, 1996, and 1997, respectively. Additional principal payments may be
required based on excess cash flow as defined in the agreement.
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. All of the Company's U.S.
assets and the stock of certain foreign subsidiaries are pledged as collateral
under loan agreements.
Borrowings under a $20,000,000 unsecured credit agreement with First
International Bank of Israel are at LIBOR plus 1-1/8% (4.25% at December 31,
1993). Principal payments of $5,000,000, $6,666,666, and $8,333,334 are due
on or before December 31, 1997, 1998, and 1999, respectively. Other unsecured
borrowings are at various interest rates ranging from 3.9% to 7.2%.
The industrial development revenue bonds are at various interest rates ranging
from 8% to 12% and mature at various dates from 1996 through 1999. The French
industrial bonds are payable in French francs and bear interest at rates
ranging from zero to 10% and require periodic payments through 2004.
Aggregate annual maturities of long-term debt, as revised to reflect the
agreement reached with the Company's bank group in March 1994
and excluding payments which may be required based on excess cash flow, are as
follows: 1994--$30,536,000; 1995--$32,132,000; 1996--$41,729,000;
1997--$50,393,000; 1998--$48,305,000; thereafter--$94,440,000.
The Company has short-term credit lines with various banks aggregating
$64,667,000, of which $29,030,000 was unused at December 31, 1993.
Interest paid was $20,587,000, $16,496,000, and $12,775,000 for the years ended
December 31, 1993, 1992, and 1991, respectively.
40
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
7. Stockholders' Equity
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 a 36-month period. 132,153 shares are available
for issuance under stock plans at December 31, 1993.
8. Other Income
Other income (expense) consists of the following (in thousands):
Year ended December 31
1993 1992 1991
---------------------------------------
Foreign exchange gains (losses) $(1,382) $(1,594) $41
Investment income 722 1,565 797
Sales and distribution fees from
Sprague Technologies, Inc. - 3,325 -
Roederstein consulting fees - 2,307 -
Other 783 (1,070) (1,127)
---------------------------------------
$123 $4,533 $(289)
=======================================
9. Employee Retirement Plans
Two U.S. subsidiaries of Vishay, Dale Electronics, Inc. and Sprague North
Adams, Inc., which was acquired effective January 1, 1992, maintain defined
benefit pension plans (the "Plans"). Substantially all full-time employees of
Dale and hourly employees of Sprague's North Adams facility are eligible to
participate. The benefits under the Dale Plan are based on the employees'
compensation during all years of participation. The benefits under the
Sprague Plan are based on number of years of credited service.
The Plans are tax qualified subject to the minimum funding requirements of
ERISA. Employees participating in the Dale Plan 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 the Dale Plan are invested primarily in guaranteed
investment contracts issued by an insurance company and mutual funds.
The assets of the Sprague Plan are invested primarily in fixed income
securities and common stock.
41
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Retirement Plans (continued)
Net pension cost for the Plans included the following components (in
thousands):
<CAPTIOM>
Year ended December 31
1993 1992 1991
---------------------------------
Annual service cost--benefits
earned for the period $2,233 $2,101 $2,061
Less: Employee contributions 1,157 1,067 1,096
---------------------------------
Net service cost 1,076 1,034 965
Interest cost on projected benefit obligation 4,732 4,206 2,599
Actual return on Plan assets (5,270) (4,611) (2,529)
Net amortization and deferral 655 648 337
---------------------------------
Net pension cost $1,193 $1,277 $1,372
=================================
The expected long-term rate of return on assets was 9.5%.
The following table sets forth the funded status of the Plans and amounts
recognized in the Company's financial statements (in thousands):
December 31
1993 1992
--------------------
Accumulated benefit obligation, including vested benefits
of $61,671 and $54,329 $62,448 $55,138
====================
Actuarial present value of projected benefit obligations $(67,077) $(59,144)
Plan assets at fair value 56,262 53,468
--------------------
Projected benefit obligations in excess of Plan assets (10,815) (5,676)
Unrecognized (gain) loss from past experience different from
that assumed and effects of changes in assumptions 5,085 (450)
Unrecognized prior service cost 1,300 1,534
Unrecognized net obligation at transition date, being
recognized over 15 years 575 685
--------------------
(3,855) (3,907)
Estimated tax effects of purchase
accounting adjustment - 1,169
--------------------
Accrued pension liability $(3,855) $(2,738)
====================
The following assumptions have been used in the actuarial determinations of the
Plans:
1993 1992
--------------------
Discount rate 7.5% 8.0%-8.5%
Rate of increase in compensation levels 4.5% 4.5%
42
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Retirement Plans (continued)
The Company's U.S. subsidiary, Measurements Group, Inc., maintains a defined
contribution pension plan covering substantially all full-time employees.
Contributions are made based on participants' compensation. Costs for this
plan were $530,000, $512,000, and $485,000 for the years ended December 31,
1993, 1992, and 1991, respectively. In addition, 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 $1,996,000, $1,894,000, and $1,170,000 for the years
ended December 31, 1993, 1992, and 1991, respectively.
The Company provides pension and similar benefits to employees of certain
foreign subsidiaries consistent with local practices. German subsidiaries of
the Company (including Roederstein, which was acquired in January 1993) have
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
1993 1992 1991
---------------------------------
Annual service cost--benefits earned for the
period $682 $122 $151
Interest cost on projected benefit obligation 4,521 757 681
Actual return on plan assets (796) - -
Net amortization and deferral (86) (99) 186
---------------------------------
Net pension cost $4,321 $780 $1,018
=================================
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
1993 1992
--------------------------
Accumulated benefit obligation, including vested
benefits of $60,326 and $12,564 $63,002 $12,720
==========================
Actuarial present value of projected benefit obligations $(63,218) $(13,080)
Plan assets at fair value 11,540 -
--------------------------
Projected benefit obligation in excess of plan assets (51,678) (13,080)
Unrecognized loss 6,810 57
Unrecognized prior service cost 391 -
Unrecognized net asset at transition date, being
recognized over 15 years (37) (44)
Additional minimum liability, recognized as a
reduction of stockholders' equity (7,279) -
--------------------------
Accrued pension liability $(51,793) $(13,067)
==========================
43
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Retirement Plans (continued)
The following assumptions have been used in the actuarial determinations of the
German Plans:
December 31
1993 1992
------------------------
Discount rate 7.0% 6.0%
Rate of increase in compensation levels 3.0% 4.0%
10. Postretirement Medical Benefits
The Company pays limited health care premiums for certain eligible retired U.S.
employees. Prior to 1993, the cost of these benefits, which was not
significant, was charged to expense when the benefits were paid.
Effective January 1, 1993, the Company adopted FASB Statement
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." Under this new standard, the Company recognizes the cost of
postretirement benefits over the active service period of its employees. The
Company elected to recognize the transition obligation, which represents the
previously unrecognized prior service cost, on a prospective basis over a
twenty-year period. In 1993, the new standard resulted in additional annual
net periodic postretirement benefit cost of $1,200,000 before taxes and
$792,000 after taxes, or $0.04 per share. Prior-year financial statements have
not been restated to apply the new standard.
Net postretirement benefit cost for the year ended December 31, 1993 included
the following components (in thousands):
Service cost $ 351
Interest cost 713
Net amortization and deferral 424
-------
Net postretirement benefit cost $ 1,488
=======
The cost information does not include the effects of Plan amendments made at
the end of 1993, which are expected to reduce future costs. Cash payments
for these benefits were $288,000 for 1993. The Company continues to fund
postretirement medical benefits on a pay-as-you-go basis.
The status of the plan and amounts recognized in the Company's consolidated
balance sheet as of December 31, 1993 were as follows (in thousands):
Accumulated postretirement benefit obligation:
Retirees $(2,234)
Actives eligible to retire (956)
Other actives (3,028)
------------
Total (6,218)
Unrecognized loss 955
Unrecognized transition obligation 4,063
------------
Accrued postretirement benefit liability $(1,200)
============
The accumulated postretirement benefit obligation reflects Plan amendments
made at the end of 1993 which capped employer contributions for each
participant at the 1993 dollar amounts. The discount rate used in the
calculation was 7.5%.
44
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
11. Leases
Total rental expense under operating leases was $7,528,000, $9,577,000, and
$4,435,000 for the years ended December 31, 1993, 1992, and 1991, respectively.
Future minimum lease payments for operating leases with initial or remaining
noncancelable lease terms in excess of one year are as follows: 1994--
$5,694,000; 1995--$4,226,000; 1996--$3,582,000; 1997--$2,947,000; 1998--
$2,602,000; thereafter--$7,492,000
12. 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, 1993 and 1992, 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.
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, 1993
- - - -----------------
Net sales to unaffiliated
customers $426,695* $407,527 $ 3,923 $18,127 $ - $856,272
Net sales between
geographic areas 13,245 33,548 67,939 - (114,732) -
-------------------------------------------------------------------------------
Total net sales $439,940 $441,075 $71,862 $18,127 $(114,732) $856,272
===============================================================================
Operating profit $31,302 $ 11,932 $33,467 $ 3,100 $79,801
===============================================================================
Identifiable assets $375,456 $470,434 $85,634 $16,582 $948,106
===============================================================================
45
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
13. Segment and Geographic Information (continued)
United States Europe Israel Other Elimination Consolidated
-------------------------------------------------------------------------------
Year ended
December 31, 1992
- - - -----------------
Net sales to unaffiliated
customers $395,249* $251,195 $ 3,762 $14,020 $ - $664,226
Net sales between
geographic areas 14,070 15,232 50,341 - (79,643) -
-------------------------------------------------------------------------------
Total net sales $409,319 $266,427 $54,103 $14,020 $(79,643) $664,226
===============================================================================
Operating profit $31,964 $11,765 $19,724 $429 $63,882
===============================================================================
Identifiable assets $346,938 $252,829 $47,658 $14,218 $661,643
===============================================================================
Year ended
December 31, 1991
- - - -----------------
Net sales to unaffiliated
customers $241,792* $192,317 $ 3,070 $ 5,104 $ - $442,283
Net sales between
geographic areas 15,163 6,900 42,780 - (64,843) -
-------------------------------------------------------------------------------
Total net sales $256,955 $199,217 $45,850 $ 5,104 $(64,843) $442,283
===============================================================================
Operating profit $26,107 $10,091 $11,575 $309 $48,082
===============================================================================
Identifiable assets $208,104 $188,966 $44,672 $7,029 $448,771
===============================================================================
* Includes export sales of $78,793, $63,606, and $34,282 for the years ended
December 31, 1993, 1992, and 1991, respectively.
Sales between geographic areas are priced to result in operating profit which
approximates that earned 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.
46
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, 1993 and 1992
is as follows:
(In thousands, except per share amounts)
First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
------------------ ----------------- ------------------- ------------------ ------------------
1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net sales $227,500 $173,270 $224,653 $168,494 $200,201 $164,879 $203,918 $157,583 $856,272 $664,226
Gross profit 49,934 41,389 50,200 40,228 43,410 37,096 49,489 37,495 193,033 156,208
Earnings before
cumulative
effect of
accounting
change for
income taxes 11,038 7,095 12,082 8,515 10,696 7,408 8,832 7,395 42,648 30,413
Net earnings 12,465(1) 7,095 12,082 8,515 10.696 7,408 8,832 7,395 44,075 30,413
Earnings per
share (2):
Before
cumulative
effect of
accounting
change $.52 $.41 $.57 $.49 $.50 $.43 $.42 $.38 $2.01 $1.71
Net earnings $.59(1) $.41 $.57 $.49 $.50 $.43 $.42 $.38 $2.08 $1.71
(1) Included in net earnngs for the first quarter of 1993 is a one-time
tax benefit of $1,427 or $.07 per share resulting from the adoption
of FASB Statement No. 109, "Accounting for Income Taxes".
(2) Adjusted to give retroactive effect to 5% stock dividends in
June 1993 and June 1992. Fourth quarter 1992 earnings
reflect the difference between the Company's actual effective income
tax rate of 19.8% and the estimated effective rate of 23.1% used
through the third quarter.
47
Vishay Intertechnology, Inc.
Schedule V -- Property, Plant, and Equipment
(In thousands)
COL. A COL. B COL. C COL. D COL. E COL. F
---------------------------------------------------------------------------------------------------
Other Changes--
Balance at Additions Add Balance
Beginning at (Deduct)-- at End of
DESCRIPTION of Period Cost Retirements Describe Period
---------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
Land $12,917 $22,764 $ 413 ($1,477) $ 33,791
Buildings and improvements 87,623 48,710 1,626 1,725 136,432
Machinery and equipment 288,527 118,150 9,575 1,783 398,885
-------------------------------------------------------------------
$389,067 $189,624(3) $11,614 $2,031 (1) $569,108
===================================================================
Year ended December 31, 1992:
Land $ 11,630 $ 3,000 $ 1,175 ($538)(4) $ 12,917
Buildings and improvements 69,563 24,205 4,741 (1,404)(4) 87,623
Machinery and equipment 186,512 116,937 6,530 (8,392)(4) 288,527
-------------------------------------------------------------------
$267,705 $144,142(2) $12,446(2) ($10,334) $389,067
===================================================================
Year ended December 31, 1991:
Land $ 11,696 $ 2 $ 0 ($68)(4) $11,630
Buildings and improvements 65,344 5,173 403 (551)(4) 69,563
Machinery and equipment 164,414 25,845 3,573 (174)(4) 186,512
-------------------------------------------------------------------
$241,454 $ 31,020 $ 3,976 ($793) $267,705
===================================================================
(1) $18,406 recorded for the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes". Statement 109 requires
assets acquired in prior business combinations to be reported at their
pretax amounts. Offset principally by foreign currency translation
adjustments.
(2) $93,022 of the additions and $5,798 of the retirements relate to the
Sprague acquisition.
(3) $109,961 of the additions relate to the Roederstein acquisition.
(4) Principally foreign currency translation adjustments.
48
Vishay Intertechnology, Inc.
Schedule VI -- Accumulated Depreciation, Depletion, and
Amortization of Property, Plant, and Equipment
(In thousands)
COL. A COL. B COL. C COL. D COL. E COL. F
---------------------------------------------------------------------------------------------------
Additions Other Changes--
Balance at Charged to Add Balance
Beginning Cost and (Deduct)-- at End of
DESCRIPTION of Period Expenses Retirements Describe Period
---------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
Buildings and improvements $17,632 $ 5,537 $ 512 ($763)(1) $ 21,894
Machinery and equipment 99,816 37,956 9,064 (1,598)(1) 127,110
-------------------------------------------------------------
$117,448 $43,493 $ 9,576 ($2,361) $149,004
=============================================================
Year ended December 31, 1992:
Buildings and improvements $12,915 $ 6,086 $ 1,108 ($261)(1) $ 17,632
Machinery and equipment 82,839 24,909 5,008 (2,924)(1) 99,816
-------------------------------------------------------------
$95,754 $30,995 $ 6,116(2) ($3,185) $117,448
=============================================================
Year ended December 31, 1991:
Buildings and improvements $10,498 $ 2,772 $ 403 $48 (1) $ 12,915
Machinery and equipment 64,610 20,934 2,578 (127)(1) 82,839
-------------------------------------------------------------
$75,108 $23,706 $ 2,981 ($79) $ 95,754
=============================================================
(1) Principally foreign currency translation adjustments.
(2) $1,026 of the retirements relates to the Sprague acquisition.
49
Vishay Intertechnology, Inc.
Schedule IX Short-Term Borrowings
(In thousands, except percentages)
COL. A COL. B COL. C COL. D COL. E COL. F
- - - -------------------------------------------------------------------------------------------------------------------------------
Maximum Amount Average Amount Weighted Average
CATEGORY OF AGGREGATE Balance at End Weighted Average Outstanding Outstanding Interest Rate
SHORT-TERM BORROWINGS of Period Interest Rate During the Period During the Period(2) During the Period(3)
- - - --------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1993:
Notes Payable to Bank (1) $22,695 6.85% $35,273 $22,348 8.90%
Year ended December 31, 1992:
Notes Payable to Bank (1) $18,966 10.02% $25,481 $14,265 10.33%
Year ended December 31, 1991:
Notes Payable to Bank (1) $ 5,447 9.95% $ 9,128 $ 7,125 9.37%
(1) Notes payable to bank represent borrowings under lines of credit
borrowing arrangements which have no termination date but
are reviewed annually for renewal.
(2) The average amount outstanding during the period was based on quarter
ending balances.
(3) The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term
debt outstanding.
50
Vishay Intertechnology, Inc.
Schedule X -- Supplementary Income Statement Information
(In thousands)
COL. A COL. B
- - - -----------------------------------------------------------------------------
ITEM Charged to Costs and Expenses
- - - -----------------------------------------------------------------------------
Year ended December 31,
1993 1992 1991
----------------------------------
Maintenance and repairs $23,177 $18,344 $12,131
Amounts for depreciation and amortization of intangible assets, taxes, other
than payroll and income taxes, royalties, and advertising costs are not
presented as such amounts are less than 1% of total sales and revenues.
51
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 30, 1994 /s/Felix Zandman
-------------------------------------
Date Felix Zandman, Chairman of the Board,
President, Chief Executive Officer
& Director
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.
/s/Robert A. Freece /s/Felix Zandman
- - - -------------------------- ------------------------------
Robert A. Freece Felix Zandman, Chairman
Director, Vice President, of the Board, Director,
Treasurer and Chief President and Chief
Financial Officer Executive Officer
(Principal Financial and (Principal Executive Officer)
Accounting Officer)
/s/Luella B. Slaner /s/Avi D. Eden
- - - -------------------------- ------------------------------
Luella B. Slaner, Director Avi D. Eden, Director
/s/Edward B. Shils /s/Guy Brana
- - - -------------------------- ------------------------------
Edward B. Shils, Director Guy Brana, Director
/s/Donald Alfson /s/Jean-Claude Tine
- - - -------------------------- ------------------------------
Donald Alfson, Director, Jean-Claude Tine, Director
Vice President, President
of Vishay Electronic
Components, U.S. and Asia,
and President of Dale
Electronics, Inc.
/s/Gerald Paul /s/Mark I. Solomon
- - - -------------------------- ------------------------------
Gerald Paul, Director, Mark I. Solomon, Director
Vice President, President
of Vishay Electronic
Components, Europe, and
Managing Director of
Draloric Electronic GmbH
March 30, 1994
Date