Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 4, 2015
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number 1-7416
VISHAY INTERTECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
|
38-1686453
|
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification Number)
|
|
63 Lancaster Avenue
Malvern, PA 19355-2143
|
610-644-1300
|
|
(Address of Principal Executive Offices)
|
(Registrant's Area Code and Telephone Number)
|
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. ý Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.
ýYes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ý
|
Accelerated filer ☐
|
|
Non-accelerated filer ☐ (Do not check if smaller reporting company)
|
Smaller reporting company ☐
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ý No
As of July 31, 2015, the registrant had 135,440,811 shares of its common stock and 12,129,227 shares of its Class B common stock outstanding.
1
This page intentionally left blank.
2
VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q
July 4, 2015
CONTENTS
Page Number
|
||||
PART I.
|
FINANCIAL INFORMATION
|
|||
Item 1.
|
Financial Statements
|
|||
Consolidated Condensed Balance Sheets – July 4, 2015 (Unaudited) and December 31, 2014
|
4
|
|||
Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended July 4, 2015 and June 28, 2014
|
6
|
|||
Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Fiscal Quarters Ended July 4, 2015 and June 28, 2014
|
7
|
|||
Consolidated Condensed Statements of Operations (Unaudited) – Six Fiscal Months Ended July 4, 2015 and June 28, 2014
|
8
|
|||
Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Six Fiscal Months Ended July 4, 2015 and June 28, 2014
|
9
|
|||
Consolidated Condensed Statements of Cash Flows (Unaudited) – Six Fiscal Months Ended July 4, 2015 and June 28, 2014
|
10
|
|||
Consolidated Condensed Statement of Equity (Unaudited)
|
11
|
|||
Notes to the Consolidated Condensed Financial Statements (Unaudited)
|
12
|
|||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
52
|
||
Item 4.
|
Controls and Procedures
|
52
|
||
PART II.
|
OTHER INFORMATION
|
|||
Item 1.
|
Legal Proceedings
|
53
|
||
Item 1A.
|
Risk Factors
|
53
|
||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
53
|
||
Item 3.
|
Defaults Upon Senior Securities
|
53
|
||
Item 4.
|
Mine Safety Disclosures
|
53
|
||
Item 5.
|
Other Information
|
53
|
||
Item 6.
|
Exhibits
|
53
|
||
SIGNATURES
|
54
|
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)
July 4,
2015
|
December 31,
2014
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
483,020
|
$
|
592,172
|
||||
Short-term investments
|
578,975
|
514,776
|
||||||
Accounts receivable, net
|
294,062
|
271,554
|
||||||
Inventories:
|
||||||||
Finished goods
|
118,496
|
113,361
|
||||||
Work in process
|
198,382
|
185,769
|
||||||
Raw materials
|
123,670
|
125,464
|
||||||
Total inventories
|
440,548
|
424,594
|
||||||
Deferred income taxes
|
27,355
|
17,815
|
||||||
Prepaid expenses and other current assets
|
90,997
|
105,539
|
||||||
Total current assets
|
1,914,957
|
1,926,450
|
||||||
Property and equipment, at cost:
|
||||||||
Land
|
89,931
|
91,844
|
||||||
Buildings and improvements
|
554,609
|
560,926
|
||||||
Machinery and equipment
|
2,357,161
|
2,368,046
|
||||||
Construction in progress
|
68,438
|
82,684
|
||||||
Allowance for depreciation
|
(2,221,802
|
)
|
(2,205,405
|
)
|
||||
848,337
|
898,095
|
|||||||
Goodwill
|
143,596
|
144,359
|
||||||
Other intangible assets, net
|
170,919
|
186,613
|
||||||
Other assets
|
141,138
|
143,256
|
||||||
Total assets
|
$
|
3,218,947
|
$
|
3,298,773
|
Continues on following page.
4
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)
July 4,
2015
|
December 31,
2014
|
|||||||
(Unaudited)
|
||||||||
Liabilities and equity
|
||||||||
Current liabilities:
|
||||||||
Notes payable to banks
|
$
|
17
|
$
|
18
|
||||
Trade accounts payable
|
159,086
|
174,451
|
||||||
Payroll and related expenses
|
119,482
|
120,023
|
||||||
Other accrued expenses
|
149,459
|
137,576
|
||||||
Income taxes
|
20,269
|
24,671
|
||||||
Total current liabilities
|
448,313
|
456,739
|
||||||
Long-term debt less current portion
|
427,294
|
454,922
|
||||||
Deferred income taxes
|
183,600
|
178,900
|
||||||
Other liabilities
|
67,519
|
76,811
|
||||||
Accrued pension and other postretirement costs
|
278,733
|
300,524
|
||||||
Total liabilities
|
1,405,459
|
1,467,896
|
||||||
Stockholders' equity:
|
||||||||
Vishay stockholders' equity
|
||||||||
Common stock
|
13,544
|
13,532
|
||||||
Class B convertible common stock
|
1,213
|
1,213
|
||||||
Capital in excess of par value
|
2,056,611
|
2,055,246
|
||||||
(Accumulated deficit) retained earnings
|
(136,242
|
)
|
(175,485
|
)
|
||||
Accumulated other comprehensive income (loss)
|
(126,900
|
)
|
(69,140
|
)
|
||||
Total Vishay stockholders' equity
|
1,808,226
|
1,825,366
|
||||||
Noncontrolling interests
|
5,262
|
5,511
|
||||||
Total equity
|
1,813,488
|
1,830,877
|
||||||
Total liabilities and equity
|
$
|
3,218,947
|
$
|
3,298,773
|
See accompanying notes.
5
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Fiscal quarters ended
|
||||||||
July 4,
2015
|
June 28,
2014
|
|||||||
Net revenues
|
$
|
590,470
|
$
|
641,929
|
||||
Costs of products sold
|
448,988
|
477,836
|
||||||
Gross profit
|
141,482
|
164,093
|
||||||
Selling, general, and administrative expenses
|
91,652
|
97,156
|
||||||
Restructuring and severance costs
|
5,660
|
9,014
|
||||||
Operating income
|
44,170
|
57,923
|
||||||
Other income (expense):
|
||||||||
Interest expense
|
(6,736
|
)
|
(5,821
|
)
|
||||
Other
|
1,160
|
208
|
||||||
(5,576
|
)
|
(5,613
|
)
|
|||||
Income before taxes
|
38,594
|
52,310
|
||||||
Income tax expense
|
12,076
|
16,478
|
||||||
Net earnings
|
26,518
|
35,832
|
||||||
Less: net earnings attributable to noncontrolling interests
|
250
|
190
|
||||||
Net earnings attributable to Vishay stockholders
|
$
|
26,268
|
$
|
35,642
|
||||
Basic earnings per share attributable to Vishay stockholders
|
$
|
0.18
|
$
|
0.24
|
||||
Diluted earnings per share attributable to Vishay stockholders
|
$
|
0.17
|
$
|
0.23
|
||||
Weighted average shares outstanding - basic
|
147,700
|
147,567
|
||||||
Weighted average shares outstanding - diluted
|
151,700
|
154,322
|
||||||
Cash dividends per share
|
$
|
0.06
|
$
|
0.06
|
See accompanying notes.
6
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited - In thousands)
Fiscal quarters ended
|
||||||||
July 4,
2015
|
June 28,
2014
|
|||||||
Net earnings
|
$
|
26,518
|
$
|
35,832
|
||||
Other comprehensive income (loss), net of tax
|
||||||||
Foreign currency translation adjustment
|
15,482
|
(7,479
|
)
|
|||||
Pension and other post-retirement actuarial items
|
2,078
|
1,357
|
||||||
Unrealized gain (loss) on available-for-sale securities
|
(961
|
)
|
660
|
|||||
Other comprehensive income (loss)
|
16,599
|
(5,462
|
)
|
|||||
Comprehensive income
|
43,117
|
30,370
|
||||||
Less: comprehensive income attributable to noncontrolling interests
|
250
|
190
|
||||||
Comprehensive income attributable to Vishay stockholders
|
$
|
42,867
|
$
|
30,180
|
See accompanying notes.
7
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)
Six fiscal months ended
|
||||||||
July 4,
2015
|
June 28,
2014
|
|||||||
Net revenues
|
$
|
1,183,906
|
$
|
1,244,307
|
||||
Costs of products sold
|
897,386
|
934,931
|
||||||
Gross profit
|
286,520
|
309,376
|
||||||
Selling, general, and administrative expenses
|
187,722
|
193,463
|
||||||
Restructuring and severance costs
|
7,070
|
15,418
|
||||||
Operating income
|
91,728
|
100,495
|
||||||
Other income (expense):
|
||||||||
Interest expense
|
(13,097
|
)
|
(11,801
|
)
|
||||
Other
|
4,620
|
1,520
|
||||||
(8,477
|
)
|
(10,281
|
)
|
|||||
Income before taxes
|
83,251
|
90,214
|
||||||
Income taxes
|
25,808
|
28,418
|
||||||
Net earnings
|
57,443
|
61,796
|
||||||
Less: net earnings attributable to noncontrolling interests
|
476
|
344
|
||||||
Net earnings attributable to Vishay stockholders
|
$
|
56,967
|
$
|
61,452
|
||||
Basic earnings per share attributable to Vishay stockholders
|
$
|
0.39
|
$
|
0.42
|
||||
Diluted earnings per share attributable to Vishay stockholders
|
$
|
0.37
|
$
|
0.40
|
||||
Weighted average shares outstanding - basic
|
147,699
|
147,561
|
||||||
Weighted average shares outstanding - diluted
|
152,183
|
153,438
|
||||||
Cash dividends per share
|
$
|
0.12
|
$
|
0.12
|
See accompanying notes.
8
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited - In thousands)
Six fiscal months ended
|
||||||||
July 4,
2015
|
June 28,
2014
|
|||||||
Net earnings
|
$
|
57,443
|
$
|
61,796
|
||||
Other comprehensive income (loss), net of tax
|
||||||||
Foreign currency translation adjustment
|
(60,836
|
)
|
(8,439
|
)
|
||||
Pension and other post-retirement actuarial items
|
4,191
|
2,860
|
||||||
Unrealized gain (loss) on available-for-sale securities
|
(1,115
|
)
|
1,188
|
|||||
Other comprehensive loss
|
(57,760
|
)
|
(4,391
|
)
|
||||
Comprehensive income (loss)
|
(317
|
)
|
57,405
|
|||||
Less: comprehensive income attributable to noncontrolling interests
|
476
|
344
|
||||||
Comprehensive income (loss) attributable to Vishay stockholders
|
$
|
(793
|
)
|
$
|
57,061
|
See accompanying notes.
9
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)
Six fiscal months ended
|
||||||||
July 4, 2015
|
June 28, 2014
|
|||||||
Operating activities
|
||||||||
Net earnings
|
$
|
57,443
|
$
|
61,796
|
||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
90,185
|
86,931
|
||||||
(Gain) loss on disposal of property and equipment
|
(115
|
)
|
23
|
|||||
Accretion of interest on convertible debentures
|
2,090
|
1,933
|
||||||
Inventory write-offs for obsolescence
|
9,329
|
9,867
|
||||||
Other
|
(10,924
|
)
|
1,312
|
|||||
Net change in operating assets and liabilities, net of effects of businesses acquired
|
(55,646
|
)
|
(62,789
|
)
|
||||
Net cash provided by operating activities
|
92,362
|
99,073
|
||||||
Investing activities
|
||||||||
Capital expenditures
|
(49,550
|
)
|
(53,336
|
)
|
||||
Proceeds from sale of property and equipment
|
1,675
|
1,741
|
||||||
Purchase of businesses, net of cash acquired
|
-
|
(20,776
|
)
|
|||||
Purchase of short-term investments
|
(185,583
|
)
|
(243,975
|
)
|
||||
Maturity of short-term investments
|
91,953
|
236,624
|
||||||
Sale of other investments
|
400
|
-
|
||||||
Other investing activities
|
1,274
|
927
|
||||||
Net cash used in investing activities
|
(139,831
|
)
|
(78,795
|
)
|
||||
Financing activities
|
||||||||
Principal payments on long-term debt and capital leases
|
-
|
(11
|
)
|
|||||
Net proceeds (payments) on revolving credit lines
|
(30,000
|
)
|
20,000
|
|||||
Net changes in short-term borrowings
|
(1
|
)
|
16
|
|||||
Dividends paid to common stockholders
|
(16,252
|
)
|
(16,238
|
)
|
||||
Dividends paid to Class B common stockholders
|
(1,456
|
)
|
(1,456
|
)
|
||||
Excess tax benefit from RSUs vested
|
21
|
-
|
||||||
Distributions to noncontrolling interests
|
(725
|
)
|
(547
|
)
|
||||
Net cash provided by (used in) financing activities
|
(48,413
|
)
|
1,764
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(13,270
|
)
|
(2,797
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
(109,152
|
)
|
19,245
|
|||||
Cash and cash equivalents at beginning of period
|
592,172
|
640,348
|
||||||
Cash and cash equivalents at end of period
|
$
|
483,020
|
$
|
659,593
|
See accompanying notes.
10
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statement of Equity
(Unaudited - In thousands, except share and per share amounts)
Common Stock
|
Class B Convertible Common Stock
|
Capital in Excess of Par Value
|
Retained Earnings (Accumulated Deficit)
|
Accumulated Other Comprehensive Income (Loss)
|
Total Vishay Stockholders' Equity
|
Noncontrolling Interests
|
Total Equity
|
|||||||||||||||||||||||||
Balance at January 1, 2015
|
$
|
13,532
|
$
|
1,213
|
$
|
2,055,246
|
$
|
(175,485
|
)
|
$
|
(69,140
|
)
|
$
|
1,825,366
|
$
|
5,511
|
$
|
1,830,877
|
||||||||||||||
Net earnings
|
-
|
-
|
-
|
56,967
|
-
|
56,967
|
476
|
57,443
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(57,760
|
)
|
(57,760
|
)
|
-
|
(57,760
|
)
|
|||||||||||||||||||||
Distributions to noncontrolling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(725
|
)
|
(725
|
)
|
||||||||||||||||||||||
Restricted stock issuances (116,498 shares)
|
12
|
-
|
(651
|
)
|
-
|
-
|
(639
|
)
|
-
|
(639
|
)
|
|||||||||||||||||||||
Dividends declared ($ 0.12 per share)
|
-
|
-
|
16
|
(17,724
|
)
|
-
|
(17,708
|
)
|
-
|
(17,708
|
)
|
|||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
1,979
|
-
|
-
|
1,979
|
-
|
1,979
|
||||||||||||||||||||||||
Tax effects of stock plan
|
-
|
-
|
21
|
-
|
-
|
21
|
-
|
21
|
||||||||||||||||||||||||
Balance at July 4, 2015
|
$
|
13,544
|
$
|
1,213
|
$
|
2,056,611
|
$
|
(136,242
|
)
|
$
|
(126,900
|
)
|
$
|
1,808,226
|
$
|
5,262
|
$
|
1,813,488
|
See accompanying notes.
11
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 1 – Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. ("Vishay" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations for the fiscal quarter and six fiscal months ended July 4, 2015 are not necessarily indicative of the results to be expected for the full year.
The Company reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first fiscal quarter, which always begins on January 1, and the fourth fiscal quarter, which always ends on December 31. The four fiscal quarters in 2015 end on April 4, 2015, July 4, 2015, October 3, 2015, and December 31, 2015, respectively. The four fiscal quarters in 2014 ended on March 29, 2014, June 28, 2014, September 27, 2014, and December 31, 2014, respectively.
Recently Issued Accounting Guidance
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a convergence project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The ASU removes inconsistencies and weaknesses in revenue requirements; provides a more robust framework for addressing revenue issues; improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; provides more useful information to users of financial statements through expanded disclosure requirements; and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The ASU is effective for the Company for interim and annual periods beginning on or after January 1, 2018, with the ability to early adopt on January 1, 2017. Vishay is currently evaluating the effect of the ASU on its revenue contracts and its adoption alternatives.
In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The ASU is the result of the FASB's simplification initiative intended to improve GAAP by reducing costs and complexity while maintaining or enhancing the usefulness of related financial statement information. The ASU specifies that debt issuance costs related to a note shall be reported in the balance sheet as a direct reduction from the face amount of the note. The ASU is effective for the Company for interim and annual periods beginning on or after January 1, 2016. The ASU will require the Company to reclassify its capitalized debt issuance costs currently recorded as assets on the consolidated condensed balance sheets. The ASU will have no effect on the Company's results of operations or liquidity.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current financial statements presentation.
12
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 2 – Restructuring and Related Activities
The Company places a strong emphasis on controlling its costs.
Historically, the Company's primary cost reduction technique was through the transfer of production to the extent possible from high-labor-cost countries, such as the United States and Western Europe, to lower-labor-cost countries, such as the Czech Republic, Hungary, Israel, India, Malaysia, Mexico, the People's Republic of China, and the Philippines. Between 2001 and 2009, the Company recorded, in the consolidated statements of operations, restructuring and severance costs and related asset write-downs in order to reduce its cost structure going forward.
The Company also incurred significant costs to restructure and integrate acquired businesses, which were included in the cost of the acquisitions under then-applicable GAAP.
The Company did not initiate any new restructuring projects in the years ended December 31, 2012, 2011, or 2010.
On October 28, 2013, the Company announced various cost reduction programs as part of its continuous efforts to improve efficiency and operating performance. The cash costs of these programs, primarily severance, are expected to be approximately $32,000. Complete implementation of all of the programs is expected to occur before the end of the first fiscal quarter of 2016. Many of the severance costs will be recognized ratably over the required stay periods.
On August 3, 2015, the Company announced additional global cost reduction programs as part of its continuous efforts to improve efficiency and operating performance. These programs include a facility closure in the Netherlands that was previously announced in the second fiscal quarter of 2015. The cash costs of these programs, primarily severance, are expected to aggregate to approximately $30,000. Complete implementation of these programs is expected to occur before the end of 2017.
The following table summarizes restructuring and related expenses which were recognized and reported on a separate line in the accompanying consolidated statements of operations:
Fiscal quarters ended
|
Six fiscal months ended
|
|||||||||||||||
July 4, 2015
|
June 28, 2014
|
July 4, 2015
|
June 28, 2014
|
|||||||||||||
MOSFETs Enhanced Competitiveness Program
|
$
|
939
|
$
|
1,492
|
$
|
2,292
|
$
|
3,219
|
||||||||
Voluntary Separation / Retirement Program
|
20
|
7,522
|
77
|
12,199
|
||||||||||||
Modules Production Transfer Program
|
-
|
-
|
-
|
-
|
||||||||||||
Global Cost Reduction Programs
|
4,701
|
-
|
4,701
|
-
|
||||||||||||
Total
|
$
|
5,660
|
$
|
9,014
|
$
|
7,070
|
$
|
15,418
|
MOSFETs Enhanced Competitiveness Program
Over a period of approximately 2 years and in a series of discrete steps, the manufacture of wafers for a substantial share of products will be transferred into a more cost-efficient fab. As a consequence, certain other manufacturing currently occurring in-house will be transferred to third-party foundries.
The total severance costs associated with these initiatives are expected to be approximately $16,000. Employees generally must remain with the Company during the production transfer period. Accordingly, the Company will accrue these severance costs ratably over the respective employees' remaining service periods.
The following table summarizes the activity to date related to this program:
Expense recorded in 2013
|
$
|
2,328
|
||
Cash paid
|
(267
|
)
|
||
Balance at December 31, 2013
|
$
|
2,061
|
||
Expense recorded in 2014
|
6,025
|
|||
Cash paid
|
(856
|
)
|
||
Balance at December 31, 2014
|
$
|
7,230
|
||
Expense recorded in 2015
|
2,292
|
|||
Cash paid
|
(399
|
)
|
||
Balance at July 4, 2015
|
$
|
9,123
|
Severance benefits are generally paid in a lump sum at cessation of employment. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated condensed balance sheets.
13
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Voluntary Separation / Retirement Program
The voluntary separation / early retirement program was offered to employees worldwide who were eligible because they met job classification, age, and years-of-service criteria as of October 31, 2013. The program benefits vary by country and job classification, but generally include a cash loyalty bonus based on years of service. All employees eligible for the program have been identified, and have left or will leave the Company after the expiration of their respective transition periods.
These employees generally were not aligned with any particular segment. The effective separation / retirement date for most employees who accepted the offer was June 30, 2014 or earlier, with a few exceptions to allow for a transition period.
The following table summarizes the activity to date related to this program:
Expense recorded in 2013
|
$
|
486
|
||
Cash paid
|
(98
|
)
|
||
Foreign currency translation
|
3
|
|||
Balance at December 31, 2013
|
$
|
391
|
||
Expense recorded in 2014
|
12,792
|
|||
Cash paid
|
(8,054
|
)
|
||
Foreign currency translation
|
(455
|
)
|
||
Balance at December 31, 2014
|
$
|
4,674
|
||
Expense recorded in 2015
|
77
|
|||
Cash paid
|
(2,058
|
)
|
||
Foreign currency translation
|
(244
|
)
|
||
Balance at July 4, 2015
|
$
|
2,449
|
The payment terms vary by country, but generally are paid in a lump sum at cessation of employment. Certain participants are being paid in installments. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated balance sheets.
Modules Production Transfer
In an effort to reduce costs and streamline production of its module products within its Diodes segment, the Company committed to two smaller cost reduction programs related to the transferring of production of certain of its products.
The following table summarizes the activity to date related to this program:
Expense recorded in 2014
|
$
|
2,080
|
||
Cash paid
|
(464
|
)
|
||
Foreign currency translation
|
(121
|
)
|
||
Balance at December 31, 2014
|
$
|
1,495
|
||
Cash paid
|
(563
|
)
|
||
Foreign currency translation
|
(111
|
)
|
||
Balance at July 4, 2015
|
$
|
821
|
Severance benefits are generally paid in a lump sum at cessation of employment. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated condensed balance sheets.
Global Cost Reduction Programs
The Global Cost Reduction Programs announced in 2015 include a plan to reduce selling, general, and administrative costs company-wide, and targeted streamlining and consolidation of production for certain product lines within its Capacitors and Resistors & Inductors segments. During the second fiscal quarter of 2015, restructuring expenses of $4,701 were recorded related to these programs. No amounts were paid during the second fiscal quarter of 2015 pursuant to these programs. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated balance sheets.
14
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 3 – Income Taxes
The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended July 4, 2015 and June 28, 2014 reflect the Company's expected tax rate on reported income from continuing operations before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company's earnings and the applicable tax rates in the various jurisdictions where the Company operates.
During the six fiscal months ended July 4, 2015, the liabilities for unrecognized tax benefits increased by $378 on a net basis, principally due to increases for tax positions taken in prior periods and interest.
During 2014, the Company borrowed $53,000 on its revolving credit facility to achieve future flexibility given the legal entity and the financial structure utilized for the Capella Microsystems Inc. ("Capella") acquisition. Subsequent to the acquisition of the noncontrolling interests in Capella on December 31, 2014, the Company planned to repatriate cash from the 2014 earnings of non-U.S. subsidiaries to the United States primarily to repay those borrowings on the revolving credit facility, and also to realign the acquired entity structure to have Capella's U.S. subsidiary directly owned by Vishay Intertechnology, Inc. The tax provision for the year ended December 31, 2014 included all U.S. federal and state income taxes, incremental foreign income taxes, and withholding taxes payable related to that anticipated repatriation transaction. During the second fiscal quarter of 2015, we reduced the balance of the revolving credit facility by approximately $45,000 using cash that was repatriated. An additional $11,000 is expected to be repatriated in August 2015 and used to further reduce the balance of the revolving credit facility.
15
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 4 – Long-Term Debt
Long-term debt consists of the following:
July 4, 2015
|
December 31, 2014
|
|||||||
Credit facility
|
$
|
170,000
|
$
|
200,000
|
||||
Exchangeable unsecured notes, due 2102
|
38,642
|
38,642
|
||||||
Convertible senior debentures, due 2040
|
104,986
|
103,841
|
||||||
Convertible senior debentures, due 2041
|
53,914
|
53,249
|
||||||
Convertible senior debentures, due 2042
|
59,752
|
59,190
|
||||||
427,294
|
454,922
|
|||||||
Less current portion
|
-
|
-
|
||||||
$
|
427,294
|
$
|
454,922
|
Convertible Senior Debentures
Vishay currently has three issuances of convertible senior debentures outstanding with generally congruent terms. The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for each issuance of the Company's convertible senior debentures effective as of the ex-dividend date of each cash dividend.
The following table summarizes some key facts and terms regarding the three series of outstanding convertible senior debentures following the adjustment made to the conversion rate of the debentures on the ex-dividend date of the June 25, 2015 dividend payment:
Due 2040
|
Due 2041
|
Due 2042
|
||||||||||
Issuance date
|
November 9, 2010
|
May 13, 2011
|
May 31, 2012
|
|||||||||
Maturity date
|
November 15, 2040
|
May 15, 2041
|
June 1, 2042
|
|||||||||
Principal amount
|
$
|
275,000
|
$
|
150,000
|
$
|
150,000
|
||||||
Cash coupon rate (per annum)
|
2.25
|
%
|
2.25
|
%
|
2.25
|
%
|
||||||
Nonconvertible debt borrowing rate at issuance (per annum)
|
8.00
|
%
|
8.375
|
%
|
7.50
|
%
|
||||||
Conversion rate effective June 9, 2015 (per $1 principal amount)
|
73.8821
|
53.9153
|
86.8677
|
|||||||||
Effective conversion price effective June 9, 2015 (per share)
|
$
|
13.54
|
$
|
18.55
|
$
|
11.51
|
||||||
130% of the conversion price (per share)
|
$
|
17.60
|
$
|
24.12
|
$
|
14.96
|
||||||
Call date
|
November 20, 2020
|
May 20, 2021
|
June 7, 2022
|
Prior to three months before the maturity date, the holders may only convert their debentures under the following circumstances: (1) during any fiscal quarter after the first full quarter subsequent to issuance, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the debentures falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; (3) Vishay calls any or all of the debentures for redemption, at any time prior to the close of business on the third scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.
Based on an evaluation of the conversion criteria at July 4, 2015 and December 31, 2014, none of the convertible senior debentures due 2040, due 2041, or due 2042 were convertible. The conversion criteria of the debentures will continue to be evaluated and the debentures may become convertible in the future. At the direction of the Company's Board of Directors, the Company intends, upon conversion, to repay the principal amount of the convertible debentures in cash and settle any additional amounts in shares of the Company's common stock. The Company intends to finance the principal amount of any converted debentures using borrowings under its credit facility.
16
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
GAAP requires an issuer to separately account for the liability and equity components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. The resulting discount on the debt is amortized as non-cash interest expense in future periods.
The carrying values of the liability and equity components of the convertible debentures are reflected in the Company's consolidated condensed balance sheets as follows:
Principal amount of
the debentures
|
Unamortized discount
|
Embedded derivative
|
Carrying value of liability component
|
Equity component - net carrying value
|
||||||||||||||||
July 4, 2015
|
||||||||||||||||||||
Due 2040
|
$
|
275,000
|
(170,646
|
)
|
632
|
$
|
104,986
|
$
|
110,094
|
|||||||||||
Due 2041
|
$
|
150,000
|
(96,564
|
)
|
478
|
$
|
53,914
|
$
|
62,246
|
|||||||||||
Due 2042
|
$
|
150,000
|
(90,525
|
)
|
277
|
$
|
59,752
|
$
|
57,874
|
|||||||||||
Total
|
$
|
575,000
|
$
|
(357,735
|
)
|
$
|
1,387
|
$
|
218,652
|
$
|
230,214
|
|||||||||
December 31, 2014
|
||||||||||||||||||||
Due 2040
|
$
|
275,000
|
(171,685
|
)
|
526
|
$
|
103,841
|
$
|
110,094
|
|||||||||||
Due 2041
|
$
|
150,000
|
(97,092
|
)
|
341
|
$
|
53,249
|
$
|
62,246
|
|||||||||||
Due 2042
|
$
|
150,000
|
(91,048
|
)
|
238
|
$
|
59,190
|
$
|
57,874
|
|||||||||||
Total
|
$
|
575,000
|
$
|
(359,825
|
)
|
$
|
1,105
|
$
|
216,280
|
$
|
230,214
|
Interest is payable on the debentures semi-annually at the cash coupon rate; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company's estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, contingent interest will accrue in certain circumstances relating to the trading price of the debentures and under certain other circumstances beginning ten years subsequent to issuance.
Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:
Contractual
coupon interest
|
Non-cash amortization of debt discount
|
Non-cash amortization of deferred financing costs
|
Non-cash change in value of derivative liability
|
Total interest expense related to the debentures
|
||||||||||||||||
July 4, 2015
|
||||||||||||||||||||
Due 2040
|
$
|
1,547
|
524
|
22
|
165
|
$
|
2,258
|
|||||||||||||
Due 2041
|
$
|
844
|
267
|
12
|
124
|
$
|
1,247
|
|||||||||||||
Due 2042
|
$
|
844
|
263
|
14
|
46
|
$
|
1,167
|
|||||||||||||
Total
|
$
|
3,235
|
$
|
1,054
|
$
|
48
|
$
|
335
|
$
|
4,672
|
||||||||||
June 28, 2014
|
||||||||||||||||||||
Due 2040
|
$
|
1,547
|
485
|
22
|
(76
|
)
|
$
|
1,978
|
||||||||||||
Due 2041
|
$
|
844
|
245
|
13
|
(20
|
)
|
$
|
1,082
|
||||||||||||
Due 2042
|
$
|
844
|
245
|
14
|
(21
|
)
|
$
|
1,082
|
||||||||||||
Total
|
$
|
3,235
|
$
|
975
|
$
|
49
|
$
|
(117
|
)
|
$
|
4,142
|
17
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the six fiscal months ended:
Contractual
coupon interest
|
Non-cash amortization of debt discount
|
Non-cash amortization of deferred financing costs
|
Non-cash change in value of derivative liability
|
Total interest expense related to the debentures
|
||||||||||||||||
July 4, 2015
|
||||||||||||||||||||
Due 2040
|
$
|
3,094
|
1,039
|
44
|
106
|
$
|
4,283
|
|||||||||||||
Due 2041
|
$
|
1,688
|
528
|
24
|
137
|
$
|
2,377
|
|||||||||||||
Due 2042
|
$
|
1,688
|
523
|
27
|
39
|
$
|
2,277
|
|||||||||||||
Total
|
$
|
6,470
|
$
|
2,090
|
$
|
95
|
$
|
282
|
$
|
8,937
|
||||||||||
June 28, 2014
|
||||||||||||||||||||
Due 2040
|
$
|
3,094
|
961
|
44
|
(31
|
)
|
$
|
4,068
|
||||||||||||
Due 2041
|
$
|
1,688
|
486
|
24
|
(6
|
)
|
$
|
2,192
|
||||||||||||
Due 2042
|
$
|
1,688
|
486
|
27
|
(1
|
)
|
$
|
2,200
|
||||||||||||
Total
|
$
|
6,470
|
$
|
1,933
|
$
|
95
|
$
|
(38
|
)
|
$
|
8,460
|
18
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 5 – Accumulated Other Comprehensive Income (Loss)
The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows:
Pension and other post-retirement actuarial items
|
Currency translation adjustment
|
Unrealized gain (loss) on available-for-sale securities
|
Total
|
|||||||||||||
Balance at January 1, 2015
|
$
|
(155,760
|
)
|
$
|
84,703
|
1,917
|
$
|
(69,140
|
)
|
|||||||
Other comprehensive income (loss) before reclassifications
|
-
|
(60,836
|
)
|
(1,035
|
)
|
$
|
(61,871
|
)
|
||||||||
Tax effect
|
-
|
-
|
362
|
$
|
362
|
|||||||||||
Other comprehensive income (loss) before reclassifications, net of tax
|
-
|
(60,836
|
)
|
(673
|
)
|
$
|
(61,509
|
)
|
||||||||
Amounts reclassified out of AOCI
|
6,374
|
-
|
(680
|
)
|
$
|
5,694
|
||||||||||
Tax effect
|
(2,183
|
)
|
-
|
238
|
$
|
(1,945
|
)
|
|||||||||
Amounts reclassified out of AOCI, net of tax
|
4,191
|
-
|
(442
|
)
|
$
|
3,749
|
||||||||||
Net other comprehensive income (loss)
|
$
|
4,191
|
$
|
(60,836
|
)
|
$
|
(1,115
|
)
|
$
|
(57,760
|
)
|
|||||
Balance at July 4, 2015
|
$
|
(151,569
|
)
|
$
|
23,867
|
$
|
802
|
$
|
(126,900
|
)
|
Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. (See Note 6 for further information). The amount of unrealized gains (losses) on available-for-sale securities reclassified out of AOCI as a result of sales of securities held by the Company's rabbi trust used to fund a deferred compensation plan was $680 for the six fiscal months ended July 4, 2015. These reclassifications are recorded as a component of compensation expense within Selling, General, and Administrative expenses on our consolidated condensed statements of operations.
Other comprehensive income (loss) includes Vishay's proportionate share of other comprehensive income (loss) of nonconsolidated subsidiaries accounted for under the equity method.
19
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 6 – Pensions and Other Postretirement Benefits
The Company maintains various retirement benefit plans.
The following table shows the components of the net periodic pension cost for the second fiscal quarters of 2015 and 2014 for the Company's defined benefit pension plans:
Fiscal quarter ended
July 4, 2015
|
Fiscal quarter ended
June 28, 2014
|
|||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plans
|
Non-U.S. Plans
|
|||||||||||||
Net service cost
|
$
|
-
|
$
|
826
|
$
|
-
|
$
|
831
|
||||||||
Interest cost
|
2,885
|
1,419
|
3,834
|
2,195
|
||||||||||||
Expected return on plan assets
|
(3,398
|
)
|
(456
|
)
|
(4,058
|
)
|
(532
|
)
|
||||||||
Amortization of prior service cost (credit)
|
16
|
-
|
(23
|
)
|
1
|
|||||||||||
Amortization of losses
|
2,074
|
1,282
|
1,810
|
691
|
||||||||||||
Net periodic benefit cost
|
$
|
1,577
|
$
|
3,071
|
$
|
1,563
|
$
|
3,186
|
The following table shows the components of the net periodic pension cost for the six fiscal months ended July 4, 2015 and June 28, 2014 for the Company's defined benefit pension plans:
Six fiscal months ended
July 4, 2015
|
Six fiscal months ended
June 28, 2014
|
|||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plans
|
Non-U.S. Plans
|
|||||||||||||
Net service cost
|
$
|
-
|
$
|
1,655
|
$
|
-
|
$
|
1,655
|
||||||||
Interest cost
|
5,828
|
2,851
|
7,668
|
4,376
|
||||||||||||
Expected return on plan assets
|
(6,783
|
)
|
(910
|
)
|
(8,116
|
)
|
(1,057
|
)
|
||||||||
Amortization of prior service cost (credit)
|
32
|
-
|
(46
|
)
|
2
|
|||||||||||
Amortization of losses
|
4,096
|
2,581
|
3,620
|
1,378
|
||||||||||||
Net periodic benefit cost
|
$
|
3,173
|
$
|
6,177
|
$
|
3,126
|
$
|
6,354
|
In the second fiscal quarter of 2015, the Company began the process of terminating the Vishay Retirement Plan, the Company's U.S. qualified pension plan. Plan participants will not be adversely affected by the plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.
The completion of this proposed termination and settlement is contingent upon the receipt of a favorable determination letter from the Internal Revenue Service ("IRS") and meeting certain IRS and Pension Benefit Guarantee Corporation ("PBGC") requirements, which is expected to take at least one year.
As of the last fiscal year-end measurement date (December 31, 2014), the Vishay Retirement Plan was fully-funded on a GAAP basis. In order to terminate the plan in accordance with IRS and PBGC requirements, the Company is required to fully fund the plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between zero and $35,000.
20
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
The following table shows the components of the net periodic benefit cost for the second fiscal quarters of 2015 and 2014 for the Company's other postretirement benefit plans:
Fiscal quarter ended
July 4, 2015
|
Fiscal quarter ended
June 28, 2014
|
|||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plans
|
Non-U.S. Plans
|
|||||||||||||
Service cost
|
$
|
30
|
$
|
68
|
$
|
29
|
$
|
79
|
||||||||
Interest cost
|
84
|
36
|
88
|
63
|
||||||||||||
Amortization of prior service (credit)
|
(209
|
)
|
-
|
(206
|
)
|
-
|
||||||||||
Amortization of losses (gains)
|
23
|
19
|
(35
|
)
|
10
|
|||||||||||
Net periodic benefit cost
|
$
|
(72
|
)
|
$
|
123
|
$
|
(124
|
)
|
$
|
152
|
The following table shows the components of the net periodic pension cost for the six fiscal months ended July 4, 2015 and June 28, 2014 for the Company's other postretirement benefit plans:
Six fiscal months ended
July 4, 2015
|
Six fiscal months ended
June 28, 2014
|
|||||||||||||||
U.S. Plans
|
Non-U.S. Plans
|
U.S. Plans
|
Non-U.S. Plans
|
|||||||||||||
Service cost
|
$
|
60
|
$
|
137
|
$
|
58
|
$
|
158
|
||||||||
Interest cost
|
167
|
73
|
176
|
126
|
||||||||||||
Amortization of prior service (credit)
|
(418
|
)
|
-
|
(412
|
)
|
-
|
||||||||||
Amortization of losses (gains)
|
45
|
38
|
(70
|
)
|
20
|
|||||||||||
Net periodic benefit cost
|
$
|
(146
|
)
|
$
|
248
|
$
|
(248
|
)
|
$
|
304
|
21
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 7 – Stock-Based Compensation
The Company has various stockholder-approved programs which allow for the grant of stock-based compensation to officers, employees, and non-employee directors of the Company.
The amount of compensation cost related to stock-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Company determines compensation cost for restricted stock units ("RSUs"), phantom stock units, and restricted stock based on the grant-date fair value of the underlying common stock adjusted for expected dividends paid over the required vesting period for non-participating awards. Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.
The following table summarizes stock-based compensation expense recognized:
Fiscal quarters ended
|
Six fiscal months ended
|
|||||||||||||||
July 4, 2015
|
June 28, 2014
|
July 4, 2015
|
June 28, 2014
|
|||||||||||||
Stock options
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
|||||||||
Restricted stock units
|
924
|
804
|
1,838
|
1,614
|
||||||||||||
Phantom stock units
|
-
|
-
|
141
|
131
|
||||||||||||
Total
|
$
|
924
|
$
|
804
|
$
|
1,979
|
1,745
|
The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes.
The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at July 4, 2015 (amortization periods in years):
Unrecognized Compensation Cost
|
Weighted Average Remaining Amortization Periods
|
|||||||
Stock options
|
$
|
-
|
0.0
|
|||||
Restricted stock units
|
9,480
|
1.5
|
||||||
Phantom stock units
|
-
|
0.0
|
||||||
Total
|
$
|
9,480
|
Unrecognized compensation cost presented in the table above includes $2,935 of unrecognized compensation cost for performance-based RSUs that are not currently expected to vest and for which no compensation cost is currently being recognized.
22
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
2007 Stock Incentive Plan
The Company's 2007 Stock Incentive Program (the "2007 Program"), as amended and restated, permits the grant of up to 6,500,000 shares of restricted stock, unrestricted stock, RSUs, stock options, and phantom stock units, to officers, employees, and non-employee directors of the Company. Such instruments are available for grant until May 20, 2024.
Restricted Stock Units
RSU activity under the 2007 Program as of July 4, 2015 and changes during the six fiscal months then ended are presented below (number of RSUs in thousands):
Number of RSUs
|
Weighted Average Grant-date Fair Value per Unit
|
|||||||
Outstanding:
|
||||||||
January 1, 2015
|
1,147
|
$
|
12.75
|
|||||
Granted
|
349
|
13.60
|
||||||
Vested*
|
(162
|
)
|
11.34
|
|||||
Cancelled or forfeited
|
(276
|
)
|
12.88
|
|||||
Outstanding at July 4, 2015
|
1,058
|
$
|
13.21
|
|||||
Expected to vest at July 4, 2015
|
836
|
* The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.
The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance criteria between the established target and maximum levels. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):
Vesting Date
|
Expected to Vest
|
Not Expected to Vest
|
Total
|
|||||||||
January 1, 2016
|
-
|
222
|
222
|
|||||||||
January 1, 2017
|
192
|
-
|
192
|
|||||||||
January 1, 2018
|
202
|
-
|
202
|
Phantom Stock Units
The 2007 Program authorizes the grant of phantom stock units to the extent provided for in the Company's employment agreements with certain executives. Each phantom stock unit entitles the recipient to receive a share of common stock at the individual's termination of employment or any other future date specified in the applicable employment agreement. Phantom stock units participate in dividend distribution on the same basis as the Company's common stock and Class B common stock. Dividend equivalents are issued in the form of additional units of phantom stock. The phantom stock units are fully vested at all times.
Phantom stock unit activity under the phantom stock plan as of July 4, 2015 and changes during the six fiscal months then ended are presented below (number of phantom stock units in thousands):
Number of units
|
Grant-date Fair Value per Unit
|
|||||||
Outstanding:
|
||||||||
January 1, 2015
|
119
|
|||||||
Granted
|
10
|
$
|
14.09
|
|||||
Dividend equivalents issued
|
2
|
|||||||
Redeemed for common stock
|
-
|
|||||||
Outstanding at July 4, 2015
|
131
|
23
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Stock Options
In addition to stock options outstanding pursuant to the 2007 Program, during the periods presented, the Company had stock options outstanding under previous stockholder-approved stock option programs. These programs are more fully described in Note 12 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014. No additional options may be granted pursuant to these programs.
At December 31, 2014 and July 4, 2015, there were 105,000 options outstanding with a weighted average exercise price of $15.38. At July 4, 2015, the weighted average remaining contractual life of all outstanding options was 1.82 years.
At July 4, 2015, there were no unvested options outstanding.
The pretax aggregate intrinsic value (the difference between the closing stock price on the last trading day of the second fiscal quarter of 2015 of $11.63 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on July 4, 2015 was zero because all outstanding options have exercise prices in excess of market value. This amount changes based on changes in the market value of the Company's common stock. During the six fiscal months ended July 4, 2015, no options were exercised.
24
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 8 – Segment Information
Vishay operates, and its chief operating decision maker makes strategic and operating decisions with regards to assessing performance and allocating resources based on, five reporting segments: MOSFETs, Diodes, Optoelectronic Components, Resistors & Inductors, and Capacitors.
The Company evaluates business segment performance on operating income, exclusive of certain items ("segment operating income"). Only dedicated, direct selling, general, and administrative expenses of the segments are included in the calculation of segment operating income. The Company's calculation of segment operating income excludes such selling, general, and administrative costs as global operations, sales and marketing, information systems, finance and administration groups, as well as restructuring and severance costs, executive compensation charges (credits), material gains and losses on sales of property, and other items. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company. These items represent reconciling items between segment operating income and consolidated operating income. Business segment assets are the owned or allocated assets used by each business.
The following tables set forth business segment information:
MOSFETs
|
Diodes
|
Optoelectronic Components
|
Resistors & Inductors
|
Capacitors
|
Total
|
|||||||||||||||||||
Fiscal quarter ended July 4, 2015:
|
||||||||||||||||||||||||
Product Sales
|
$
|
106,348
|
$
|
138,722
|
$
|
72,977
|
$
|
178,786
|
$
|
92,891
|
$
|
589,724
|
||||||||||||
Royalty Revenues
|
-
|
-
|
-
|
746
|
-
|
$
|
746
|
|||||||||||||||||
Total Revenue
|
$
|
106,348
|
$
|
138,722
|
$
|
72,977
|
$
|
179,532
|
$
|
92,891
|
$
|
590,470
|
||||||||||||
Gross Margin
|
$
|
14,708
|
$
|
31,600
|
$
|
24,331
|
$
|
53,342
|
$
|
17,501
|
$
|
141,482
|
||||||||||||
Fiscal quarter ended June 28, 2014:
|
||||||||||||||||||||||||
Product Sales
|
$
|
123,971
|
$
|
149,571
|
$
|
63,258
|
$
|
192,536
|
$
|
111,744
|
$
|
641,080
|
||||||||||||
Royalty Revenues
|
71
|
-
|
-
|
778
|
-
|
$
|
849
|
|||||||||||||||||
Total Revenue
|
$
|
124,042
|
$
|
149,571
|
$
|
63,258
|
$
|
193,314
|
$
|
111,744
|
$
|
641,929
|
||||||||||||
Gross Margin
|
$
|
18,871
|
$
|
34,706
|
$
|
22,788
|
$
|
61,395
|
$
|
26,333
|
$
|
164,093
|
||||||||||||
Six fiscal months ended July 4, 2015:
|
||||||||||||||||||||||||
Product Sales
|
$
|
213,107
|
$
|
275,233
|
$
|
141,602
|
$
|
365,178
|
$
|
186,927
|
$
|
1,182,047
|
||||||||||||
Royalty Revenues
|
11
|
-
|
-
|
1,848
|
-
|
$
|
1,859
|
|||||||||||||||||
Total Revenue
|
$
|
213,118
|
$
|
275,233
|
$
|
141,602
|
$
|
367,026
|
$
|
186,927
|
$
|
1,183,906
|
||||||||||||
Gross Margin
|
$
|
28,466
|
$
|
61,490
|
$
|
46,514
|
$
|
112,191
|
$
|
37,859
|
$
|
286,520
|
||||||||||||
Six fiscal months ended June 28, 2014:
|
||||||||||||||||||||||||
Product Sales
|
$
|
237,084
|
$
|
286,500
|
$
|
120,756
|
$
|
380,525
|
$
|
217,255
|
$
|
1,242,120
|
||||||||||||
Royalty Revenues
|
99
|
-
|
-
|
2,088
|
-
|
$
|
2,187
|
|||||||||||||||||
Total Revenue
|
$
|
237,183
|
$
|
286,500
|
$
|
120,756
|
$
|
382,613
|
$
|
217,255
|
$
|
1,244,307
|
||||||||||||
Gross Margin
|
$
|
31,488
|
$
|
64,471
|
$
|
44,025
|
$
|
121,515
|
$
|
47,877
|
$
|
309,376
|
25
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Fiscal quarters ended
|
Six fiscal months ended
|
|||||||||||||||
July 4, 2015
|
June 28, 2014
|
July 4, 2015
|
June 28, 2014
|
|||||||||||||
Operating margin reconciliation:
|
||||||||||||||||
MOSFETs
|
$
|
5,140
|
$
|
9,493
|
$
|
9,667
|
$
|
11,980
|
||||||||
Diodes
|
25,528
|
28,130
|
49,013
|
51,188
|
||||||||||||
Optoelectronic Components
|
19,163
|
18,945
|
36,250
|
36,349
|
||||||||||||
Resistors & Inductors
|
44,470
|
51,969
|
93,995
|
102,305
|
||||||||||||
Capacitors
|
11,786
|
20,122
|
26,350
|
35,463
|
||||||||||||
Restructuring and Severance Costs
|
(5,660
|
)
|
(9,014
|
)
|
(7,070
|
)
|
(15,418
|
)
|
||||||||
Unallocated Selling, General, and Administrative Expenses
|
(56,257
|
)
|
(61,722
|
)
|
(116,477
|
)
|
(121,372
|
)
|
||||||||
Consolidated Operating Income
|
$
|
44,170
|
$
|
57,923
|
$
|
91,728
|
$
|
100,495
|
26
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 9 – Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share attributable to Vishay stockholders (shares in thousands):
Fiscal quarters ended
|
Six fiscal months ended
|
|||||||||||||||
July 4, 2015
|
June 28, 2014
|
July 4, 2015
|
June 28, 2014
|
|||||||||||||
Numerator:
|
||||||||||||||||
Numerator for basic earnings per share:
|
||||||||||||||||
Net earnings
|
$
|
26,268
|
$
|
35,642
|
$
|
56,967
|
$
|
61,452
|
||||||||
Adjustment to the numerator for continuing operations and net earnings:
|
||||||||||||||||
Interest savings assuming conversion of dilutive convertible and exchangeable notes, net of tax
|
17
|
15
|
33
|
30
|
||||||||||||
Numerator for diluted earnings per share:
|
||||||||||||||||
Net earnings
|
$
|
26,285
|
$
|
35,657
|
$
|
57,000
|
$
|
61,482
|
||||||||
Denominator:
|
||||||||||||||||
Denominator for basic earnings per share:
|
||||||||||||||||
Weighted average shares
|
147,570
|
147,449
|
147,569
|
147,444
|
||||||||||||
Outstanding phantom stock units
|
130
|
118
|
130
|
117
|
||||||||||||
Adjusted weighted average shares
|
147,700
|
147,567
|
147,699
|
147,561
|
||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Convertible and exchangeable debt instruments
|
3,788
|
6,513
|
4,283
|
5,647
|
||||||||||||
Restricted stock units
|
212
|
234
|
198
|
222
|
||||||||||||
Other
|
-
|
8
|
3
|
8
|
||||||||||||
Dilutive potential common shares
|
4,000
|
6,755
|
4,484
|
5,877
|
||||||||||||
Denominator for diluted earnings per share:
|
||||||||||||||||
Adjusted weighted average shares
|
151,700
|
154,322
|
152,183
|
153,438
|
||||||||||||
Basic earnings per share attributable to Vishay stockholders
|
$
|
0.18
|
$
|
0.24
|
$
|
0.39
|
$
|
0.42
|
||||||||