VISHAY INTERTECHNOLOGY, INC.
ANNUAL REPORT 2001
One of the World’s Largest Manufacturers of Discrete Semiconductors and Passive Components
VISHAY INTERTECHNOLOGY, INC.
40 YEARS OF TECHNOLOGY LEADERSHIP
From its start in 1962, Vishay has been committed to innovation — the development of new manufacturing
techniques, products, technologies and packaging methods. Innovation, the reason for Vishay’s technology
leadership, is a driving force within the Company.
MANY NAMES, ONE MANUFACTURER
Vishay has grown through acquisition to include such top names in discrete electronic components as Dale,
Sfernice, Draloric, Sprague, Vitramon, Siliconix, and General Semiconductor. All these and more are part of
one global company: Vishay.
ONE OF THE WORLD’S LARGEST MANUFACTURERS OF DISCRETE SEMICONDUCTORS AND PASSIVE COMPONENTS
Vishay is a Fortune 1,000 Company listed on the New York Stock Exchange. It is the largest U.S. and European
manufacturer of passive electronic components (resistors, capacitors, inductors) and the number-two manufac-
turer of discrete semiconductors worldwide. Vishay employs over 20,000 people in more than 68 plants
located in 14 countries.
www.vishay.com
page
TABLE OF CONTENTS
Financial Highlights
A Message from the Chairman
Innovation, Technology Leadership
The Vishay Story
Communications Market
Consumer Market
Computer Market
Automotive Market
Industrial and Medical Markets
Military and Aerospace Markets
List of Products
Financial Report
Corporate Information
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inside
back
cover
ABOUT THE COVER
Vishay components are used in virtually all types of
electronic devices and equipment, including cell phones,
P D A s , g a m e c o n s o l e s , a u d i o a n d v i d e o s y s t e m s ,
computers, household appliances, lighting, scales,
industrial equipment, subsystems in automobiles,
airplanes, and spacecraft, etc.
VISHAY INTERTECHNOLOGY, INC.
FINANCIAL HIGHLIGHTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31
(In thousands, except per share amounts)
2001
2000
1999
Net sales .............................................................................................
$ 1,655,346
$2,465,066
$1,760,091
Operating profit ................................................................................
Net earnings ......................................................................................
14,250 ***
513 *
Depreciation and amortization ......................................................
163,387
Basic earnings per share ..................................................................
Diluted earnings per share .............................................................
Weighted average shares outstanding – basic .............................
Weighted average shares outstanding – diluted .........................
$
$
0.00 *
0.00 *
141,171
142,514
696,498
517,864
140,840
$
$
3.83
3.77
135,295
137,463
193,744
83,237*
139,676
$
$
0.66*
0.65*
126,678
128,233
Cash flows from operations ............................................................
$
161,418
$ 542,319
$ 239,547
Working capital ................................................................................
Property and equipment – net .......................................................
Long-term debt .................................................................................
1,096,034
1,167,533
605,031
1,057,200
973,554
140,467
604,150
930,545
656,943
Stockholders’ equity ........................................................................
$ 2,366,545
$1,833,855
$1,013,592
97
98
99
00
01
97
98
99
00
01
97
98
99
00
01
$1,125.2 $1,572.7 $1,760.1 $2,465.1 $1,655.3
$81.0**
$53.3*
$63.5**
$8.2*
$97.8**
$83.2*
$517.9
$119.3**
$0.5*
$0.64**
$0.42*
$0.51**
$0.O7*
$0.76**
$0.65*
$3.77
$0.84**
$0.00*
NET SALES
$ in millions
NET EARNINGS
$ in millions
DILUTED EARNINGS PER SHARE
$ in millions
*
Includes charges for the sale of a subsidiary and a German tax rate change of $14,562,000 ($0.11 per share) for the year ended December 31, 1999, and restructuring
expenses and unusual charges of $118,776,000 ($0.84 per share), $55,335,000 ($0.44 per share), and $27,692,000 ($0.22 per share) for the years ended December
31, 2001, 1998 and 1997, respectively.
** Darker shade in graphs excludes charges for the sale of a subsidiary and a German tax rate change of $14,562,000 ($0.11 per share) for the year ended December 31,
1999, and restructuring expenses and unusual charges of $118,776,000 ($0.84 per share), $55,335,000 ($0.44 per share), and $27,692,000 ($0.22 per share) for the
years ended December 31, 2001, 1998 and 1997, respectively.
*** Excluding the write-down of inventories ($70,000,000), restructuring expense ($61,908,000), and purchased research and development ($16,000,000), operating
profit would have been $162,158,000.
1
A MESSAGE FROM THE CHAIRMAN
TO OUR SHAREHOLDERS, EMPLOYEES, CUSTOMERS, AND VENDORS:
YEAR 2001
While year 2000 was by far the most successful for
Vishay, 2001 has been the most difficult year in the
forty-year histor y of the Company. Due to the
depressed worldwide electronics markets, our sales
for the year 2001 were 33% below those of the
extraordinary year 2000. As a result, we reduced the
n u m b e r o f e m p l o y e e s ( b e f o r e o u r G e n e r a l
Semiconductor acquisition) by 6,000 during the year
2001; furthermore, we consolidated and closed some
facilities and reduced expenses wherever possible.
At the same time, however, during 2001 we have
made strategic moves to strengthen the Company and,
I believe, have made the Company stronger today than
it was one year ago.
• In June 2001, the Company paid off its long-term
bank debt when it received $294 million from the
sale of zero-coupon convertible subordinated notes
due 2021. This move enabled the Company to
significantly strengthen its cash position and
balance sheet.
• I n J u l y 2 0 0 1 , t h e C o m p a n y a n n o u n c e d i t s
acquisition of the entire infrared components
b u s i n e s s o f I n f i n e o n Te c h n o l o g i e s A G f o r
approximately $116 million. In fiscal year 2000,
Infineon’s infrared components business had
revenues of approximately $133 million. With this
acquisition, the Company now becomes the world’s
largest manufacturer of the transceiver modules that
enable short-range connectivity among and between
notebook computers, cell phones, PDAs, printers,
and other devices. We also now become the second
largest worldwide manufacturer of optocouplers
used in many electronic devices and the largest
manufacturer of infrared remote control transmitter
modules.
• In November 2001, the Company acquired General
Semiconductor, Inc., a leading manufacturer of
power management devices. We are very excited
about this acquisition. With this acquisition
completed, Vishay becomes the #2 manufacturer of
discrete semiconductors worldwide and the #1
manufacturer of diodes and rectifiers worldwide.
The complementary nature of our product lines
s h o u l d re s u l t i n s u b s t a n t i a l o p e r a t i o n a l a n d
marketing synergies and provide significantly more
opportunities for additional cost savings. Vishay’s
s t ro n g b a l a n c e s h e e t , c o u p l e d w i t h G e n e r a l
Semiconductor’s reputation and market presence,
should create an ideal platform for further growth
t h ro u g h a c q u i s i t i o n s i n t h e s e m i c o n d u c t o r
components market. Stockholders of General
We will continue to pursue acquisition opportunities to facilitate the growth
of our business and to strengthen our position in the markets we serve.
This is consistent with Vishay’s historic ability to maintain
a competitive edge throughout economic cycles.
In the year 2002 and beyond, we will continue to build on our position as
a leader in the U.S., European and Asian electronic markets.
2
A MESSAGE FROM THE CHAIRMAN
Semiconductor received 0.563 of a share of Vishay’s
common stock for each General Semiconductor
s h a r e , o r a v a l u e o f $ 1 0 . 7 4 p e r G e n e r a l
Semiconductor share based on Vishay’s November
1 , 2 0 0 1 c l o s i n g p r i c e o f $ 1 9 . 0 8 . G e n e r a l
Semiconductor had sales of $494 million for the
year ended December 31, 2000.
• In November 2001, the Company announced the
acquisition of North American Capacitor Company
(NACC), also known as Mallory. Mallor y is a
m a n u f a c t u r e r o f w e t t a n t a l u m e l e c t ro l y t i c
capacitors, among other products. In the fiscal year
ended October 31, 2001, Mallory had sales of
approximately $44 million. The acquisition of
Mallory has resulted in Vishay becoming the largest
producer of wet tantalum capacitors.
FINANCIAL HIGHLIGHTS
For the year ended December 31, 2001, sales were
$1,655,346,000 compared to sales of $2,465,066,000
in the previous year, a decrease of 33%. Before
restructuring charges and other nonrecurring items
of $118,776,000, net earnings for the year ended
December 31, 2001 were $119,289,000 or $0.84 per
share compared to net earnings of $517,864,000 or
$3.77 per share for the year ended December 31,
2000. After the restructuring charges and other non-
recurring items, net earnings for the year ended
December 31, 2001 were $513,000 or $0.00 per share.
Despite the weak worldwide economic environment,
the Company continued to generate cash from
operations during year 2001. In fact, for the year
ended December 31, 2001, the Company’s cash flow
from operations were $161,418,000. Purchases of
property and equipment for the year ended December
31, 2001 were $162,493,000 and depreciation and
a m o r t i z a t i o n e x p e n s e f o r t h e s a m e p e r i o d w a s
$163,387,000.
As previously stated, in June 2001, the Company paid
off its long-term bank debt when it received $294
million from the sale of zero-coupon convertible
subordinated notes due 2021. As a result of this
transaction and subsequent acquisitions, the long-
term debt of the Company was $605,031,000 at
December 31, 2001 and the stockholders’ equity at
December 31, 2001 was $2,366,545,000 resulting in
a debt to equity ratio of 0.26. In addition, our cash
balance at December 31, 2001 was $367,115,000.
LOOKING AHEAD
While year 2000 was an extraordinary year, we
foresaw at that time a downturn for the year 2001.
As we stated in last year’s Annual Report, “2001 will
DR. FELIX ZANDMAN
Chairman of the Board and Chief Executive Officer
3
A MESSAGE FROM THE CHAIRMAN
be a time for adjustment. We hope that this period of
adjustment, characterized by customer inventory
reductions, reduction in market demand, and order
cancellations, will be temporary. However, this lower
market profile will provide new opportunities for
Vishay to leverage its strong financial position and
aggressively pursue new acquisitions.” This is, in fact,
what we accomplished during 2001. As a result of
our acquisition strategy, we now have a company that
has been transformed from being only in passive
components to one that is now split in sales almost
evenly between passive components and discrete
semiconductors. Looking ahead, we believe this will
enable the Company to grow its sales and net earnings
faster than if we had stayed strictly a company in
passive components.
We believe that the worst is behind us. We have
continued to see improvements in orders in our
discrete semiconductor (active) business. We believe
that this is a sign of the beginning of a recovery in
the semiconductor business and hope that our passive
component business will follow suit as it did in
previous recessions where the semiconductor sector
was the first to recover.
We will continue to pursue acquisition opportunities
to facilitate the growth of our business and to
strengthen our position in the markets we serve. This
is consistent with Vishay’s historic ability to maintain
a competitive edge throughout economic cycles. In
the year 2002 and beyond, we will continue to build
on our position as a leader in the U.S., European and
Asian electronic markets. We look with confidence
and optimism towards the future when the electronic
markets will recover.
We are extremely grateful to our employees worldwide
for their loyalty, skill, and energy, which have
contributed significantly to our growth. We value
highly the relationships we have with our customers
and suppliers. To our fellow stockholders, we thank
you for your continued confidence in Vishay. We look
forward to meeting the challenges ahead.
Sincerely,
FELIX ZANDMAN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
APRIL 2002
THE BOARD OF DIRECTORS, MANAGEMENT,
AND EMPLOYEES OF VISHAY DEEPLY MOURN
THE PASSING OF LUELLA B. SLANER ON
NOVEMBER 3, 2001. LUELLA B. SLANER SERVED
ON VISHAY’S BOARD OF DIRECTORS AND WAS
THE WIFE OF THE LATE ALFRED P. SLANER,
CO-FOUNDER OF VISHAY.
4
INNOVATION, TECHNOLOGY LEADERSHIP
ESSENTIAL BUILDING
BLOCKS OF ELECTRONICS
Vishay makes electronic components used in virtually all types of electronic
devices and equipment, including cell phones, PDAs, game consoles, audio
and video systems, televisions and other “brown goods,” computers, household
appliances (“white goods”), lighting, scales, medical equipment, industrial
equipment, and subsystems in automobiles, airplanes, and spacecraft.
Vishay components are essential “building blocks” of electronic circuits that
power communications and technology. Every day throughout the world —
in homes, offices, factories, hospitals, highways, airports, and military bases
— people depend on discrete semiconductors and passive components
manufactured by Vishay.
Top Photo: Close-up of a silicon wafer.
Bottom Photo: Part of a printed circuit board.
Vishay chips and other electronic
components attached to printed circuit
boards are used in virtually all types of
electronic devices and equipment.
ELECTRONIC COMPONENTS
All electronic products and equipment contain components. There are
four basic categories of electronic components: semiconductors, passive
components, printed circuit boards, and electromechanical components
(connectors, switches). Vishay manufactures semiconductors (discrete
semiconductors and some types of integrated circuits) and passive
components. These components are attached to printed circuit boards
for use in end-products of all kinds. Vishay also manufactures
measurement sensors and equipment.
DISCRETE SEMICONDUCTORS (diodes, transistors, optoelectronic
components) typically perform a single function in electronic circuits,
the purpose of which is switching, amplifying, or rectifying and
transmitting electrical signals. Semiconductors are referred to as “active”
components because they require power to function.
PASSIVE COMPONENTS (resistors, capacitors, inductors) do not require
a power supply to handle the signals that pass through them. Passive
components are used to store electrical charges, to limit or resist
electrical current, and for filtering, surge suppression, measurement,
timing, and tuning applications.
A technician works in a semiconductor “clean room” where silicon wafers
are processed. The wafers are separated into small chips used in discrete
semiconductors or integrated circuits.
5
INNOVATION, TECHNOLOGY LEADERSHIP
INNOVATIVE
PRODUCTS
Vishay scientists and engineers bring to market technologies and components that
lead to better and more advanced end-products for consumers and industry. Vishay’s
focus on research and development has led to patents, proprietary know-how, new
manufacturing techniques, and a steady stream of new products that address
customer needs.
VISHAY ADVANTAGES
• INNOVATIVE PRODUCTS AND TECHNOLOGIES
• EXPERIENCED MANAGEMENT TEAM WITH PROVEN TRACK RECORD
• PROVEN GROWTH STRATEGY (25% COMPOUNDED ANNUAL
GROWTH RATE IN SALES FOR LAST 15 YEARS)
• NUMBER-ONE OR LEADING INDUSTRY RANKINGS FOR MOST
PRODUCTS
• ONE-STOP SHOPPING FOR DISCRETE COMPONENT SOLUTIONS
This automated equipment quality-
tests surface-mount passive
electronic components and inserts
them into tape-and-reel packaging.
BLUE-CHIP
CUSTOMER BASE
(Partial List)*
ALCATEL
ARROW
AVNET/EBV
BOSCH
CELESTICA
DELL
DELPHI
DYNAMAR
ERICSSON
FLEXTRONICS
FUTURE
IBM
INTEL
LG ELECTRONICS
MOTOROLA
NOKIA
PHILIPS
SAMSUNG
SCI
SEAGATE
SIEMENS
SOLECTRON
SONY
TOMEN
TTI
UPPERTECH
VISTEON
WPI
* Original-equipment manufacturers
(OEMs), electronics manufacturing
services (EMS) companies,
distributors
DIODES
Discrete Semiconductors
Diodes are semiconductor devices with two terminals, an anode and a cathode. By allowing current to travel
in only one direction, different types of diodes perform a number of useful functions. These include emitting
visible light (as in light-emitting diodes, or LEDs), emitting infrared energy (as in infrared diodes for remote
controls), voltage regulation (as in Zener diodes), switching (as in switching diodes), or surge protection (as
in suppressor diodes).
6
INNOVATION, TECHNOLOGY LEADERSHIP
EXPERIENCED MANAGEMENT,
ETHICAL LEADERSHIP
Prudent fiscal management and responsible, ethical leadership enable Vishay to
fulfill its obligations to shareholders, customers, suppliers, and employees. Careful
long-term planning by an experienced executive team has enabled Vishay to enhance
its market position during both upturns and downturns in the global electronics
industry. Historically, Vishay has maintained a competitive edge throughout
economic cycles. Its strong financial balance sheet provides the foundation for
organic growth and strategic acquisitions.
MISSION STATEMENT
PROVIDE OUR CUSTOMERS WITH:
• A SINGLE MANUFACTURING SOURCE FOR DISCRETE
SEMICONDUCTORS AND PASSIVE COMPONENTS
• QUALITY STATE-OF-THE-ART PRODUCTS AT COMPETITIVE PRICES
• A CONTINUOUS STREAM OF NEW PRODUCTS
• SUPERIOR CUSTOMER SERVICE WORLDWIDE
PROVIDE OUR SUPPLIERS WITH:
• RELIABLE LONG-TERM RELATIONSHIPS
PROVIDE OUR SHAREHOLDERS WITH:
• A GOOD RETURN ON THEIR INVESTMENT
PROVIDE OUR EMPLOYEES WITH:
• RESPONSIBLE AND ETHICAL LEADERSHIP
• A CREATIVE WORKING ENVIRONMENT
• RESPONSIBLE COMMUNITY MEMBERSHIP AT ALL VISHAY LOCATIONS
RECTIFIERS
Discrete Semiconductors
Rectifiers are semiconductors that convert alternating current (AC) into direct current (DC), a unidirectional
current required for operation of many electronic systems. For example, a bridge rectifier is used in a clock
radio to change the AC voltage from a wall outlet to a specific DC voltage.
7
INNOVATION, TECHNOLOGY LEADERSHIP
MARKET
STRENGTH
VISHAY SALES
BY REGION, 2001
as percent
Americas
41%
Asia
24%
Europe
35%
VISHAY’S MAJOR MARKETS
all electronic circuits:
COMMUNICATIONS EQUIPMENT
CONSUMER ELECTRONICS
COMPUTERS AND PERIPHERALS
HOUSEHOLD APPLIANCES
AUTOMOTIVE ELECTRONICS
INDUSTRIAL ELECTRONICS
MEDICAL ELECTRONICS
MILITARY EQUIPMENT
SECURITY EQUIPMENT
AEROSPACE EQUIPMENT
Vishay’s commitment to innovation and its financial strength have enabled it to
grow through R&D and acquisitions. As a result, Vishay has market shares ranging
from substantial to number-one for each of its products.
Vishay is number-two worldwide in discrete semiconductors, with these specific
product rankings:
• NUMBER-1 WORLDWIDE IN INFRARED DATA COMMUNICATION DEVICES (IRDCs)
• NUMBER-1 WORLDWIDE IN DIODES AND RECTIFIERS
• NUMBER-1 WORLDWIDE IN LOW-VOLTAGE POWER MOSFETs
• NUMBER-2 WORLDWIDE IN OPTOCOUPLERS
• NUMBER-3 WORLDWIDE IN OPTICAL SENSORS
Vishay is the number-one U.S. and European manufacturer of passive electronic
components (resistors, capacitors, inductors), and is number-one worldwide in
several specific passive-component categories, including wirewound resistors, foil
resistors, wet tantalum capacitors, strain gage sensors, and others.
Because passive components and discrete semiconductors are used in the same
end-products, Vishay’s semiconductor acquisitions have enhanced its passive-
components position in all major markets.
TRANSISTORS
Discrete Semiconductors
Transistors are semiconductor devices that amplify and switch analog signals, radio frequency signals, and
power. Vishay manufactures both individual transistors and multiple-transistor components, including junc-
tion field-effect transistors (JFETs), metal-oxide-semiconductor field-effect transistors (MOSFETs), and bipo-
lar junction transistors (BJTs).
8
INNOVATION, TECHNOLOGY LEADERSHIP
MANY NAMES,
ONE MANUFACTURER
Vishay is an industry-leading manufacturer that partners with major original-
equipment manufacturers (OEMs), electronics manufacturing services (EMS)
companies, and distributors worldwide. Vishay’s customers enjoy the benefits of
one-stop shopping for discrete electronic component solutions. Vishay’s product
family, the broadest in the industry, includes top names in discrete semiconductors
and passive components: General Semiconductor, Siliconix, Vitramon, Sprague,
Draloric, Dale, and many others. These names and the products associated with
them are integrated into one global company with one brand: Vishay.
VISHAY
VISHAY INCLUDES THESE
NAMES AND OTHERS
AZTRONIC
CERA-MITE
DALE
DRALORIC
ELECTRO-FILMS
ESTA
FOIL RESISTORS
GENERAL SEMICONDUCTOR
MEASUREMENTS GROUP
ROEDERSTEIN
SFERNICE
SILICONIX
SPECTROL
SPRAGUE
TANSITOR
TECHNO
TELEFUNKEN
THIN FILM
VITRAMON
MOSFETs
Discrete Semiconductors
MOSFETs — metal-oxide semiconductor field-effect transistors — are made up of many individual transis-
tors (as many as six million) on one piece of silicon. Power MOSFETs are used to switch and manage power.
Leading-edge silicon and packaging technologies help power MOSFETs to perform this function more effi-
ciently — so a minimal amount of the energy passing through the device is wasted. Common uses include
cell phones, notebook computers, communications networks, and electronics for automobiles.
9
THE VISHAY STORY
THE VISHAY
STORY
STRATEGIC ACQUISITIONS
1985
DALE
ELECTRONICS
1987
DRALORIC
ELECTRONICS
1988
SFERNICE
Dr. Felix Zandman
Chairman of the Board and
Chief Executive Officer
Vishay was founded in 1962. During the years that followed, the electronics industry
has grown exponentially — and so has Vishay. Advances in technology have been
profound, resulting in electronic devices that have changed the ways in which people
worldwide communicate, travel, work, and play. Vishay has grown from a leader in
one area — Bulk Metal® foil technology — to a leader in many areas of discrete-
electronic-component technology. Technological innovation has always been a key
part of Vishay’s identity.
INITIAL TECHNOLOGY BREAKTHROUGHS
In the 1950s, as the electronics industry began its accelerated growth, Dr. Felix
Zandman, a physicist, and current Chairman and CEO of Vishay, was issued patents
for his PhotoStress® coatings and instruments. These devices are used to reveal
and measure the distribution of stresses in structures under live load conditions
such as airplanes and cars. Dr. Zandman’s research in this area led him to develop
Bulk Metal foil resistors — ultra-precise, ultra-stable resistors that, even now,
provide performance far beyond any other resistor available.
In 1962, Dr. Zandman, with the financial help of the late Alfred P. Slaner, founded
Vishay to develop and manufacture Bulk Metal foil resistors. Concurrently, J.E.
Starr, a colleague of Dr. Zandman, developed foil resistance strain gages, which
also became a part of Vishay. The Company was named after Dr. Zandman’s and
Mr. Slaner’s ancestral village in Lithuania, in memory of family members who
perished in the Holocaust.
Throughout the ’60s and ’70s, Vishay established itself as a technical and market
leader in PhotoStress products, strain gages, and foil resistors.
ACQUISITIONS AND DRAMATIC GROWTH
By the early ’80s, Vishay was positioned to grow significantly. Because the markets
for PhotoStress, resistance strain gages, and ultra-precise resistors were relatively
small, the Company moved to expand into high-volume resistors. Such resistors
are used by the billions every year, in virtually every sector of the electronics
industry.
1 0
1993
ROEDERSTEIN
1994
VITRAMON
1992
SPRAGUE
ELECTRIC
THE VISHAY STORY
1998
2000
TELEFUNKEN;
SILICONIX
(FORMERLY TEMIC)
ELECTRO-FILMS
CERA-MITE
SPECTROL
2001
TANSITOR
2002
SENSORTRONICS
INFRARED COMPONENTS BUSINESS
OF INFINEON TECHNOLOGIES
GENERAL SEMICONDUCTOR
NORTH AMERICAN CAPACITOR
COMPANY
Vishay’s strategy was to enter the market through the acquisition of respected,
well-positioned manufacturers. The Company set strict acquisition criteria for
technological strength, brand recognition, manufacturing capabilities, markets
served, and management depth.
Beginning in 1985, Vishay acquired Dale Electronics, Draloric Electronics, and
Sfernice. These new operations helped produce dramatic sales growth — from $57
million to more than $400 million in just three years. Vishay quickly achieved a
position as the largest fixed resistor manufacturer in the United States and Europe.
These acquisitions also brought other passive electronic components into Vishay,
such as inductors, specialty capacitors, plasma displays, specialty connectors,
transformers, thermistors, potentiometers, and trimmers — complementing Vishay’s
strength in resistors. In fact, this diversification underscores the strategy that Vishay
continues to pursue today — to be the manufacturer of the broadest line of discrete
electronic components in the industry.
NEW PRODUCTS AND MARKETS
In the early ’90s, Vishay applied its acquisition strategy to the high-volume capacitor
market, extending its range of products and increasing penetration in passive
components. Major acquisitions included Sprague Electric, the inventor and
manufacturer of tantalum capacitors; Roederstein, a manufacturer of film,
aluminum, and ceramic disk capacitors and thick film chip resistors; and Vitramon,
a high-quality manufacturer of multilayer ceramic chip capacitors. By 1994, annual
sales had reached $988 million.
EXPANSION INTO SEMICONDUCTORS
In 1998, Vishay acquired the Semiconductor Business Group of TEMIC, which
included Telefunken and 80.4% of Siliconix, producers of MOSFETs, RF transistors,
diodes, optoelectronics, and power and analog switching integrated circuits.
1 1
THE VISHAY STORY
ONGOING GROWTH
During 2000, Vishay acquired passive-component companies Electro-Films, Cera-
Mite, and Spectrol. Each of these acquisitions, while relatively small, strengthened
Vishay’s position in niche markets.
Vishay’s acquisitions during 2001 included Tansitor, the infrared components
business of Infineon Technologies, General Semiconductor, and North American
Capacitor Company (Mallory). The addition of Infineon’s infrared components
group and General Semiconductor enhanced Vishay’s existing Telefunken and
Siliconix businesses — and propelled Vishay into the top ranks of discrete
semiconductor manufacturers worldwide. The Tansitor and North American
Capacitor Company (Mallory) acquisitions enhanced Vishay’s position in tantalum
capacitors.
Vishay’s growth has been fueled by research and development, strategic acquisitions,
a commitment to address customer needs, and an ongoing effort to improve product
performance. The Company continues to explore acquisition opportunities in both
passive components and semiconductors.
Top Photo: A technician inspects a
silicon wafer.
Bottom Photo: An example of the
colorful patterns that are revealed
when a PhotoStress® coating is
mounted to a test part or structure,
subjected to load, and viewed with
polarized light.
OPTOELECTRONIC COMPONENTS
Optoelectronic components emit or detect light in electronic circuits. Types include infrared data communi-
cations devices (IRDCs) for wireless two-way data transfer; optocouplers for circuit isolation; IR emitters for
one-way remote control; optical sensors for detection; and LEDs for light sources.
1 2
VISHAY MARKETS
COMMUNICATIONS
MARKET
Communications market demand for the types of
components manufactured by Vishay is projected to
increase each year from 2001 through 2005. In the
semiconductor categories where Vishay competes,
global semiconductor usage (in dollar value) in
communications electronics is expected to grow from
$7.660 billion in 2001 to $13.882 billion in 2005.
This is an increase of over 81%.* During the same
period, global passive component usage (fixed
capacitors, fixed resistors, and inductors; in dollar
value) in telecommunications electronics is expected
to increase from $2.376 billion to $5.176 billion.**
* Source: Gartner Dataquest, February 2002
** Source: Paumanok, March 2002
01
02
03
04
05
$7,660
$8,166
$9,567
$12,033
$13,882
Millions of $, estimated
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN COMMUNICATIONS ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
01
02
03
04
05
$2,376
$2,673
Millions of $, estimated
$2,925
$3,732
$5,176
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN TELECOMMUNICATIONS ELECTRONICS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
Individual telecommunications satellites (top photo) are part of the global
communications infrastructure. PDAs (bottom photo) that enable individual
recordkeeping are evolving into devices with complete two-way communication
capabilities. Both satellites and PDAs use types of electronic components
manufactured by Vishay.
IRDCs
IRDCs — infrared data communications devices — are a type of optoelectronic component that enable two-
way, wireless data transmission at very fast speeds. An infrared transceiver includes an IR emitting device, a
detecting device, and an integrated control IC, all part of a special package design with two integrated optical
lenses. IRDCs are used in PDAs, cell phones, computers, digital cameras, and other products.
1 3
VISHAY MARKETS
COMMUNICATIONS
MARKET
Vishay parts are essential to the operation of cell phones, PDAs, and other
communication devices. Each step of the way, Vishay components support the
signals that — travelling via infrared links, telephone lines, coaxial cables, fiber
optic systems, radio waves, microwave transmissions, and satellites — make possible
voice and data communications worldwide.
A cell phone, depending on make and model, can have as many as 500 or more
discrete electronic components. Virtually all of these are component types produced
by Vishay. The dollar value of these components in a digital, tri-band phone can be
over $17.*
The first generation of brick-like analog cell phones has been replaced by smaller,
lighter, more powerful digital devices. Today, a brand-new generation of handheld
units offers e-mail access, Web access, enhanced visual displays, and other features.
New product features require additional electronic components. These include
resistors, capacitors, inductors, diodes, discrete transistors, power MOSFETs, power
ICs, optoelectronic components, and integrated modules from Vishay.
Vishay components are used, not just in cell phones and PDAs, but in virtually all
types of communications-related products, including cordless phones and standard
(landline) handsets, PBX equipment, voice and data switches, transmission
equipment, optical networking equipment, power supplies, and even the
communication satellites that dot our skies.
* Source: Portelligent, 2001
From microwave towers (top photo) that
support voice and data communications
to cell phones (bottom photo),
practically all communications
equipment relies on types of discrete
semiconductors and passive
components manufactured by Vishay.
INTEGRATED CIRCUITS (ICs)
Integrated circuits (ICs) take the functions of discrete semiconductor and passive components and combine
them together on a single chip. These may include “on-board” transistors, diodes, resistors, capacitors and
other circuit components. Unlike discrete semiconductor components, which usually perform one function
(such as switching), ICs are capable of performing multiple functions. Vishay produces analog switches and
power ICs.
1 4
VISHAY MARKETS
COMPONENT CONTENT
IN A CELL PHONE
The photos on this page show both sides of a Motorola
Timeport T260 GPRS (general packet radio service)
cellular telephone. Highlighted are types of electronic
components manufactured by Vishay.
Chip Resistor
Multilayer Ceramic
Chip Capacitor
APPROXIMATE DOLLAR
CONTENT PER PHONE*
Diode
COMPONENT
Low Power MOSFET
Resistors
Capacitors
Magnetics
Diodes
Transistors
LEDs
MOSFETs
IRDC
DOLLAR
CONTENT
$1.12
3.78
1.06
0.95
5.80
1.35
1.93
1.25
Power MOSFET
Total Value
$17.24*
TOTAL NUMBER OF DISCRETE COMPONENTS = 514**
Molded Tantalum
Chip Capacitor
* Source: Portelligent, 2001
** Excluding connectors, battery charger
Chip Inductor
Coated Tantalum
Chip Capacitor
Note: Individual components above and to the right are not shown to scale.
1 5
IRDC Transceiver
Power IC
VISHAY MARKETS
CONSUMER
MARKET
Video game consoles, digital video disk (DVD) players, CD
players, televisions, camcorders and cameras, MP3 portable audio
players (such as the Apple® iPod® and competing devices) — the
consumer electronics market is huge and growing. Today, even
children’s toys have electronic functions and remote control
systems. This trend is driving increased global demand for Vishay
components.
In 2001, the total dollar value of global semiconductor usage in
consumer electronics, in the categories where Vishay competes,
was $8.364 billion. The projected figure for 2005 is $14.537
billion. This represents an increase of almost 74%.* Meanwhile,
the total dollar value of global passive component usage (fixed
capacitors, fixed resistors, and inductors) in consumer electronics
is expected to grow from $4.251 billion in 2001 to $7.291 billion
in 2005.**
To put this into perspective, consider the DVD player, which has
been termed the fastest-growing category of consumer electronic
products.*** DVD sales worldwide are projected to grow from
$ 1 . 7 0 0 b i l l i o n i n 2 0 0 1 t o $ 4 . 0 7 2 b i l l i o n i n 2 0 0 5 — a
compounded annual growth rate of 16.9%.
* Source: Gartner Dataquest, February 2002
** Source: Paumanok, March 2002
*** Source: Electronic Engineering Times, February 25, 2002
01
02
03
04
05
$8,364
$8,974
Millions of $, estimated
$10,946
$13,339
$14,537
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN CONSUMER ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
Sales of handheld remote controls, televisions, and other
consumer electronics equipment help to drive demand for
Vishay components. Vishay is the number-one worldwide
manufacturer of infrared remote control transmitter modules.
RESISTORS
Passive Components
Resistors are passive components that restrict current flow. They are used in virtually all electronic circuits.
Resistor categories include foil, thin film, thick film, metal oxide film, carbon film, and wirewound. Resistive
products also include resistor networks and arrays, in which multiple components are combined in a single
package, and thermistors (thermally sensitive resistors).
1 6
VISHAY MARKETS
01
02
03
04
05
$4,251
$5,155
Millions of $, estimated
$5,698
$6,513
$7,921
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN CONSUMER ELECTRONICS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
Even as consumers embrace DVD technology for video and audio
playback, advanced formats are on the horizon. These include the
HD-DVD playback format, with 9 gigabytes of storage per disc, and
the Blu-ray format for high-definition video recording, which has a
capacity of 27 gigabytes per side — an almost six-fold increase over
current DVD technology.
Another example of the growth in consumer electronics is video
game hardware. These systems — Sony PlayStation®2, Microsoft®
Xbox™, Nintendo ® GameCube™, and others — use types of
semiconductors and passive components manufactured by Vishay.
The total global value of these types of semiconductors and passive
components consumed in video game controllers, consoles, and
related devices is expected to grow from $4.838 billion in 2001 to
$8.145 billion in 2005.*
In the consumer electronics market, as in all other major markets,
end-products use both discrete semiconductors and passive
components. This gives Vishay, which has the industry’s broadest
line of discrete semiconductors and passive components, a unique
advantage.
* Sources: Gartner Dataquest, February 2002; Paumanok, March 2002
Top Photo: The growing popularity of DVD players, such
as this one, increases demand for types of electronic
components manufactured by Vishay.
Bottom Photo: Electronic components used in the Sony
PlayStation®2 computer entertainment system include
Vishay Siliconix power MOSFETs.
Photo of Sony PlayStation®2 courtesy of Sony Corporation.
MAGNETICS
Passive Components
Magnetics are passive components, including inductors and transformers, that use an internal magnetic field
to change the phase of electrical current. Magnetic devices are used to change voltage levels and to isolate
system sections with different ground levels. Inductors are used to control AC current and voltage and filter
out unwanted electronic signals.
1 7
VISHAY MARKETS
COMPUTER
MARKET
01
02
03
04
05
$5,892
$6,186
Millions of $, estimated
$8,003
$9,435
$10,566
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN DATA PROCESSING ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
A highly specialized integrated circuit on a computer’s motherboard serves as the
microprocessor that does all the calculations and coordinates the computer’s
a c t i v i t i e s . E a c h n e w g e n e r a t i o n o f p e r s o n a l c o m p u t e r ( P C ) h a s a f a s t e r
microprocessing speed — from 200 megahertz (200 million cycles per second) in
1995 to a blazingly fast 2 gigahertz (2 billion cycles per second) in 2002 — a 10-
fold increase.
A typical computer motherboard with the now-obsolete Intel® 486 microprocessor
chip had 124 passive components. In contrast, a motherboard with the Pentium®
4 microprocessor chip requires approximately 600 passive components — an almost
five-fold increase. Behind this fact lies a basic truth: each newer and faster
generation of computer microprocessor chip — from the 486 to the Pentium,
Pentium II, Pentium III, and Pentium 4 — requires a greater number of supporting
passive components.*
* Source: Vishay estimates, 2002
Vishay components are found in PC keyboards, PC monitors, notebook
computers, printers, and virtually all other kinds of computer and data
processing hardware.
INTEGRATED MODULES
Integrated modules combine different components in a single package to save space, reduce assembly costs,
and increase reliability. Vishay FunctionPAK™ dc-to-dc converter modules include all the active and passive
components required for a complete power conversion solution in a single package that can be mounted
directly to the circuit board.
1 8
VISHAY MARKETS
01
02
03
04
05
$3,099
$3,479
$3,836
$4,344
$5,305
Millions of $, estimated
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN COMPUTERS/PERIPHERALS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
C o m p u t e r s a l s o i n c l u d e s u b s t a n t i a l n u m b e r s o f d i s c r e t e
semiconductors, many of which are produced by Vishay. In fact,
Vishay discrete semiconductor and passive components are found
in most parts of a PC — not just the motherboard, but also the
monitor, keyboard, mouse, disk drive, and modem. In addition,
Vishay components play key supporting roles in virtually all kinds
of other data processing products — from smart cards and memory
cards to servers and mainframe computers — as well as in printers,
scanners, fax machines, and photocopiers.
The data processing electronics market is larger than any other single
market sector, in terms of semiconductor and passive component
consumption. In the semiconductor categories where Vishay competes,
global semiconductor usage (in dollar value) in data processing
electronics is expected to grow from $5.892 billion in 2001 to $10.566
billion in 2005. This is an increase of over 79%.* Global passive
component usage (fixed capacitors, fixed resistors, and inductors; in
dollar value) in computer and peripheral electronics is expected to
increase from $3.099 billion in 2001 to $5.305 billion in 2005.**
* Source: Gartner Dataquest, February 2002
** Source: Paumanok, March 2002
CAPACITORS
Passive Components
Capacitors are widely used to store energy and discharge it when needed. They deliver a stable voltage for a
wide variety of functions, including power conversion, DC-linking, frequency conversion, and bypass,
decoupling, and filtering applications. Capacitor types include tantalum (both solid and wet), ceramic (both
multilayer chip and disk), film, power, heavy-current, and aluminum.
1 9
VISHAY MARKETS
AUTOMOTIVE
MARKET
01
02
03
04
05
$4,358
$4,710
Millions of $, estimated
$5,116
$6,019
$6,812
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN AUTOMOTIVE ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
1 POWERTRAIN
Powertrain,
Alternator,
Ignition System,
Engine Management
The automobile, in its infancy, was compared to the horse-and-carriage. Today,
the automobile has a different point of reference: the computer. As mechanical
functions are replaced by electronic functions, the automobile is becoming, more
and more, a computer on wheels. For example, the Mercedes-Benz C-Class car
contains 150 microprocessors.* In all new automobiles of all sizes and brands,
electronics are involved.
Vishay manufactures components that are used in a wide range of automotive
applications — powertrain, body controls, safety, comfort, and driver information.
Throughout an automobile, the parts with electronic functionality — airbags, audio
system, brakes, climate-control system, engine, global positioning system (GPS),
lighting, security system, steering, suspension, transmission, and more — use
discrete semiconductors and passive components.
Over the years, Vishay has worked closely with automotive suppliers and
manufacturers to develop electronic components that function reliably under
extreme conditions, including high under-the-hood temperatures and heavy
vibration. Vishay components used in automobiles include Power Metal Strip®
resistors, multilayer ceramic capacitors, TRANSZORB ® transient voltage
suppressors, automotive power MOSFETs, glass-passivated Superectifiers®, optical
sensors, and many others.
Vishay components are helping to enable the transition from 12-V to 42-V system
voltages, which will have a number of implications for automotive applications.
As engineers and manufacturers cope with the consequences of rising voltage levels,
the need to handle higher levels of power, more complex system architecture, and
other concerns accompanying the transition from 12-V to 42-V system voltages,
Vishay components will be involved.
*Source: Red Herring, February 2002
2 0
VISHAY MARKETS
01
02
03
04
05
$1,476
$1,708
Millions of $, estimated
$1,986
$2,336
$2,962
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN AUTOMOTIVE ELECTRONICS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
2
BODY
CONTROLS
3
SAFETY
4
COMFORT
5
DRIVER
INFORMATION
HID-headlights,
Suspension, Gear,
Headlight Adjustment,
Speed Control,
Steering, Traction Control,
Wiper Control
ABS, EPS, ASR,
Airbag, Seatbelt,
Immobilizer,
Anti-theft
Central Locking,
Power Window,
Instrument Cluster,
Trip Computer,
Seat/Mirror Adjustment,
Audio System,
Window/Mirror Heating,
Navigation System,
Sunroof, Climate Control,
Electric Clock
Interior Lighting,
Neckrest Control
I n t h e s e m i c o n d u c t o r c a t e g o r i e s w h e re Vi s h a y
competes, global semiconductor usage (in dollar
value) in automotive electronics is expected to grow
from $4.358 billion in 2001 to $6.812 billion in 2005.
This is an increase of over 56%.** Meanwhile, global
passive component usage (fixed capacitors, fixed
resistors, and inductors; in dollar value) in automotive
electronics is expected to increase from $1.476 billion
in 2001 to $2.962 billion in 2005.***
** Source: Gartner Dataquest, February 2002
*** Source: Paumanok, March 2002
A diesel engine control unit which uses electronic
components manufactured by Vishay.
Photo courtesy of Robert Bosch GmbH.
2 1
VISHAY MARKETS
INDUSTRIAL
AND MEDICAL
MARKETS
Industrial processes and equipment rely on electronic
components for data handling, motor control, power
m a n a g e m e n t , f i l t e r i n g , a n d a v a r i e t y o f o t h e r
applications. In the semiconductor categories where
Vishay competes, global semiconductor usage (in
dollar value) in industrial electronics is expected to
grow from $5.100 billion in 2001 to $9.248 billion in
2005. This is an increase of over 81%.* Meanwhile,
global passive component usage (fixed capacitors,
fixed resistors, and inductors; in dollar value) in
industrial electronics is expected to increase from
$631 million in 2001 to $1.075 billion in 2005.**
Vishay manufactures semiconductors and passive
components designed to handle wide voltage and
capacitance ranges, extreme temperatures, space
c o n s t r a i n t s , a n d o t h e r f a c t o r s a s s o c i a t e d w i t h
industrial applications — from large, heavy machinery
to testing and measurement equipment to handheld
scanning devices.
In the medical market, where people’s lives depend
on reliable and highly accurate monitoring and
treatment, Vishay components are widely used. Vishay
is a leading manufacturer of telemetry coils for
defibrillators and pacemakers, transformers for
defibrillators, tantalum capacitors for hearing aids,
and electronic components for all types of medical
instrumentation and equipment, from handheld
oscilloscopes to MRI and CAT-scan machines. Vishay
has a track record of excellent relationships with
medical manufacturers.
* Source: Gartner Dataquest, February 2002
** Source: Paumanok, March 2002
01
02
03
04
05
$5,100
$5,305
$6,781
$8,625
$9,248
Millions of $, estimated
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN INDUSTRIAL ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
01
02
$631
$725
Millions of $, estimated
03
$768
04
$860
05
$1,075
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN INDUSTRIAL ELECTRONICS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
Top Photo: Vishay heavy-current capacitors are used in a wide range of industrial
applications, including impulse current test systems.
Photo courtesy of HighVolt Dresden.
MEASUREMENT SENSORS AND EQUIPMENT
Measurement sensors and equipment convert physical variables such as strain, force, weight, pressure, and
displacement into measurable electrical signals. This broad product category includes both individual com-
ponents and sophisticated instrumentation devices. Vishay is a leading manufacturer of strain gages, instru-
mentation (strain indicators, amplifiers, and data systems), transducers, and PhotoStress® products.
2 2
VISHAY MARKETS
MILITARY
AND AEROSPACE
MARKETS
Vishay’s commitment to military and aerospace
customers dates back to the Company’s founding four
decades ago. For example, Vishay ultra-precision Bulk
Metal® foil resistors have been used — and continue
to be used — in the NASA space program, civilian
airplanes, and military equipment. Military and
aerospace equipment where Vishay components have
been employed include tanks, submarines, missile
systems, jet aircraft, satellites, the Hubble space
telescope, and other equipment.
The types of electronic components manufactured by
Vi s h a y a r e a l s o u s e d i n t h e g ro w i n g f i e l d o f
sur veillance and security, where companies are
developing systems to protect against potential attacks
on government facilities, office buildings, airports,
energy plants, and other targets.
Vishay components used in military, security, and
aerospace equipment are designed to function reliably
w h e n s u b j e c t e d t o e x t re m e l y h o t a n d c o l d
t e m p e r a t u r e s ,
i n t e n s e v i b r a t i o n , a n d o t h e r
environmental stresses. In addition, Vishay has the
ability to custom-design and produce components to
meet the high expectations of quality and reliability
demanded by military and aerospace customers.
Vishay manufactures
components that
withstand the
environmental extremes
of spacecraft and
airplanes such as the
international space
station (top photo) and
the U.S. Air Force F-22
jet (bottom photo).
Space station photo:
NASA; F-22 jet photo:
U.S. Air Force
01
$931
02
03
04
05
$1,001
$1,190
$1,450
$1,552
Millions of $, estimated
WORLDWIDE SEMICONDUCTOR CONSUMPTION†
IN MILITARY/CIVIL AEROSPACE ELECTRONICS
† Includes only general purpose – analog IC, general purpose –
discrete, and general purpose – optical
Source: Gartner Dataquest, February 2002
01
02
$445
$559
Millions of $, estimated
03
$587
04
$628
05
$659
WORLDWIDE PASSIVE COMPONENT CONSUMPTION†
IN MILITARY AND AEROSPACE ELECTRONICS
† Includes only fixed capacitors, fixed resistors, and inductors
Source: Paumanok, March 2002
I n t h e s e m i c o n d u c t o r c a t e g o r i e s w h e re Vi s h a y
competes, global semiconductor usage (in dollar
value) in military and civilian aerospace electronics
is expected to increase from $931 million in 2001 to
$1.552 billion in 2005. This is an increase of almost
67%.* Meanwhile, global passive component usage
(fixed capacitors, fixed resistors, and inductors; in
dollar value) in military and aerospace electronics is
expected to increase from $445 million in 2001 to
$659 million in 2005.**
* Source: Gartner Dataquest, February 2002
** Source: Paumanok, March 2002
2 3
VISHAY
PRODUCTS
DISCRETE SEMICONDUCTORS
RECTIFIERS
Schottky (single, dual)
Standard, Fast and Ultra-fast Recovery (single, dual)
Clamper/Damper
Bridge
Superectifier®
SMALL-SIGNAL DIODES
Schottky and Switching (single, dual)
Tuner/Capacitance (single, dual)
Bandswitching
PIN
ZENER & SUPPRESSOR DIODES
Zener Diodes (single, dual)
TVS (TRANSZORB®, Automotive, Arrays)
MOSFETS
Power MOSFETs
JFETs
RF TRANSISTORS
Bipolar Transistors (AF and RF)
Dual Gate MOSFETs
MOSMICs®
OPTOELECTRONICS
IR Emitters, Detectors and IR Receiver Modules
Opto Couplers and Solid State Relays
Optical Sensors
LEDs and 7-Segment Displays
Infrared Data Transceiver Modules
Custom Products
ICS
Power ICs
Analog Switches
INTEGRATED MODULES
DC/DC Converters
MEASUREMENT SENSORS AND EQUIPMENT
STRAIN GAGES
Stress Analysis
Transducer-Class®
Installation Accessories
INSTRUMENTATION
Strain Indicators
Amplifiers
Data Systems
PHOTOSTRESS® PRODUCTS
Polariscopes
Plastics
TRANSDUCERS
Load Cells
Linear Displacement Sensors
PASSIVE COMPONENTS
CAPACITORS
Tantalum Capacitors
Solid Tantalum Capacitors
Wet Tantalum Capacitors
Ceramic Capacitors
Multilayer Chip Capacitors
Disc Capacitors
Film Capacitors
Power Capacitors
Heavy Current Capacitors
Aluminum Capacitors
RESISTIVE PRODUCTS
Foil Resistors
Film Resistors
Thin Film Resistors
Thick Film Resistors
Metal Oxide Film Resistors
Carbon Film Resistors
Wirewound Resistors
Variable Resistors
Cermet Variable Resistors
Wirewound Variable Resistors
Conductive Plastic Variable Resistors
Networks/Arrays
Non-linear Resistors
NTC Thermistors
PTC Thermistors
MAGNETICS
Inductors
Transformers
24
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the fiscal year ended December 31, 2001
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
(State or other jurisdiction of
incorporation or organization)
38-1686453
(IRS employer identification no.)
63 Lincoln Highway
Malvern, Pennsylvania 19355-2120
(Address of principal executive offices)
(610) 644-1300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.10 par value
(Title of Class)
New York Stock Exchange
(Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the common stock held by non-affiliates of the registrant as of March 27, 2002, assuming
conversion of all its Class B common stock held by non-affiliates into common stock of the registrant, was $2,923,632,000.
As of March 27, 2002, registrant had 143,947,182 shares of its common stock and 15,383,663 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, 2001, are
incorporated by reference into Part III.
Item 1.
DESCRIPTION OF BUSINESS
General
PART I
Vishay Intertechnology, Inc. is a leading international manufacturer and supplier of passive and discrete
active electronic components. Passive components include resistors, capacitors and inductors. Active components
include diodes, transistors, rectifiers, power integrated circuits (ICs), infrared transceivers and optocouplers. Passive
electronic components, discrete active electronic components and integrated circuits are the primary elements of
every electronic circuit. We offer our customers “one-stop” access to one of the most comprehensive electronic
component lines of any manufacturer in the United States, Europe and Asia in both the newer surface mount
configuration and the traditional leaded form.
Our components are used in virtually every type of product that contains electronic circuitry, including:
•
•
•
•
•
computer-related products,
power management products,
telecommunications equipment,
measuring instruments,
industrial equipment,
•
•
•
•
•
•
automotive applications,
process control systems,
military and aerospace applications,
consumer electronics,
medical instruments, and
electronic scales.
Since 1985, we have pursued a business strategy that principally consists of the following elements:
1.
expanding within the electronic components industry, primarily through the acquisition of other
manufacturers of electronic components that have established positions in major markets, reputations for product
quality and reliability, and product lines with which we have substantial marketing and technical expertise;
2.
reducing selling, general and administrative expenses through the integration or elimination of
redundant sales offices and administrative functions at acquired companies;
3.
achieving significant production cost savings through the transfer and expansion of manufacturing
operations to regions such as Israel, Mexico, Portugal, the Czech Republic, the Republic of China (Taiwan) and the
People’s Republic of China, where we can take advantage of lower labor costs and available tax and other
government-sponsored incentives; and
4.
maintaining significant production facilities in those regions where we market the bulk of our
products in order to enhance the service and responsiveness that we provide to our customers.
As a result of this strategy, we have grown from a small manufacturer of precision resistors and strain
gages to one of the world’s largest manufacturers and suppliers of a broad line of electronic components.
Our significant acquisitions in the last several years include:
Siliconix and Telefunken. We acquired an 80.4% interest in Siliconix incorporated (NASDAQ; SILI), in
March 1998 from Daimler-Benz A.G. Siliconix is a publicly traded chip maker, based in Santa Clara, California,
which designs, markets and manufactures power and analog semiconductor products for computers, cell phones,
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fixed communications networks, automobiles and other electronic systems. Siliconix has manufacturing facilities in
Santa Clara, California, maintains assembly and testing facilities in the Republic of China (Taiwan), is party to a
joint venture in Shanghai, the People’s Republic of China and has subcontractors in the Philippines, the People’s
Republic of China and the United States. Siliconix reported worldwide sales of $305.6 million in 2001, $473.1
million in 2000 and $383.3 million in 1999.
In the same transaction, we acquired from Daimler-Benz, the semiconductor business unit of TEMIC
Telefunken Microelectronic GmbH headquartered in Heilbronn, Germany, but promptly disposed of its integrated
circuits division. Telefunken launched our expansion into discrete active components with a product line of diodes,
RF transistors, metal-oxide-semiconductor field-effect transistors (MOSFET) switches, bipolar power switches,
optoelectronic semiconductors, infrared data transceivers (IRDC), power MOSFETs, power ICs, signal processing
switches and junction field-effect transistors (JFETs). Our net cost of these two acquisitions was approximately
$444 million.
Electro-Films, Cera-Mite and Spectrol. In May 2000, we acquired Electro-Films, Inc., a manufacturer of
thin film components and networks on ceramic and silicon. In August 2000, we acquired Cera-Mite Corporation, a
world-wide supplier of ceramic capacitors, used in power supplies, electronic lighting and other applications, and
thermistors--temperature-sensitive resistors--used in refrigeration, HVAC, telecommunications and other electronic
applications.
Separately, in August 2000, we acquired Spectrol, a manufacturer of sensing potentiometers used primarily
in the automotive industry and trimmer potentiometers used in various kinds of electronic circuitry.
Tansitor and Mallory. In January 2001, we acquired Tansitor, a leading manufacturer of wet tantalum
electrolytic capacitors and miniature conformal coated solid tantalum capacitors. These components have power
management applications in the military, aerospace and medical industries. Later, in November 2001, we acquired
the North American Capacitor Company, known as Mallory, a manufacturer and distributor of wet tantalum
capacitors and other products. As a result of these two acquisitions, we have become the number one manufacturer
of wet tantalum capacitors worldwide.
Infineon. In July 2001, we acquired the entire infrared components business of Infineon A.G. for
approximately $116 million. As a result, we added several new device types to our optoelectronics portfolio. We
also became the largest supplier outside Japan of optocouplers and the largest supplier worldwide of infrared data
transceivers (IRDCs).
General Semiconductor. On November 2, 2001, we completed the acquisition of General Semiconductor,
Inc., a leader in the design, manufacture and distribution of semiconductors for the power management market. In
the transaction, we exchanged 0.563 of a share of Vishay common stock for each share of General Semiconductor
stock. Based on the closing price of our common stock, on November 2, 2001 the transaction was valued at
approximately $555 million. General Semiconductor manufactures and distributes a broad range of power
management products, including rectifiers, transient voltage suppressors, small-signal transistors, diodes, MOSFETs
and analog ICs. As a result of this acquisition, we became the number one manufacturer of diodes and rectifiers
world-wide.
Sensortronics. In January 2002, we acquired the transducer and strain gage business of Sensortronics, Inc.
This business, which includes load cells and torque transducers, expands the product portfolio of our measurements
group, and makes us a world leader in stress analysis products.
In addition to our acquisition activity, during 2001 we took steps to assure our competitiveness, enhance
our operating efficiency and strengthen our liquidity in the face of the economic downturn which broadly impacted
the electronics industry during the year. In this regard, we:
(i)
closed or consolidated several manufacturing facilities and administrative offices;
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(ii)
reduced our headcount, before acquisitions, by approximately six thousand employees; or a
reduction of approximately 31%;
(iii)
(iv)
(v)
candidates.
integrated our acquisitions within our existing management and operational infrastructure;
raised approximately $294 million from the sale of convertible Liquid Yield Option Notes; and
relying on the strength of our balance sheet, continued our search for suitable acquisition
Vishay was incorporated in Delaware in 1962 and maintains its principal executive offices at 63 Lincoln
Highway, Malvern, Pennsylvania 19355-2120. Our telephone number is (610) 644-1300.
Products
We design, manufacture and market electronic components that cover a wide range of products and
technologies. Our products primarily consist of:
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fixed resistors,
tantalum capacitors,
multi-layer ceramic chip capacitors
(MLCCs),
film capacitors,
power MOSFETs,
power integrated circuits,
and, to a lesser extent:
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•
inductors,
aluminum and specialty ceramic
capacitors,
transformers,
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diodes and rectifiers,
signal processing integrated circuits,
transistors,
voltage suppressors,
infrared data transceivers (IRDCs),
optocouplers, and
strain gages and load cells
plasma displays,
thermistors, and
potentiometers
We manufacture one of the broadest lines of surface mount devices, a format for electronic components that has
evolved into the standard required by most customers. In addition, we continue to produce components in the
traditional leaded form. We believe that we produce one of the broadest lines of discrete electronic components
available from any single manufacturer.
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Passive Components
Passive components include resistors, capacitors and inductors. They are referred to as “passive” because
they do not require power to operate. These components adjust and regulate voltage and current, store energy and
filter frequencies. We also include in this category the products and services of our measurements group that employ
passive components in electro-mechanical measurements.
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 from numerous materials and in
many forms. Resistive components are classified as variable or fixed, depending on whether or not their resistance is
adjustable. Resistors can also be used as measuring devices. We manufacture a line of thermistors, which are heat
sensitive resistors. Other types of resistive sensors are used in strain gages for measurement of mechanical stress.
See “Measurements Group” below.
We manufacture virtually all types of fixed resistors, both in discrete and network forms. These resistors
are produced for virtually every segment of the resistive product market, from resistors used in the highest quality
precision instruments for which the performance of the resistor is the most important requirement, to low-cost
resistors for which price is the most important factor.
Capacitors perform energy storage, frequency control, timing and filtering functions in most types of
electronic equipment. The more important applications for capacitors are:
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•
electronic filtering for linear and switching power supplies;
decoupling and bypass of electronic signals for integrated circuits and circuit boards; and
frequency control, timing and conditioning of electronic signals for a broad range of applications.
Our capacitor products include primarily solid tantalum surface mount chip capacitors, solid tantalum leaded
capacitors, wet/foil tantalum capacitors, MLCC capacitors, and film capacitors. Each capacitor product has unique
physical and electrical performance characteristics that make that type of capacitor useful for specific applications.
Tantalum and MLCC capacitors are generally used in conjunction with integrated circuits in applications requiring
low to medium capacitance values, “capacitance” being the measure of the capacitor’s ability to store energy. The
tantalum capacitor is the smallest and most stable type of capacitor for its range of capacitance and is best suited for
applications requiring medium capacitance values. MLCC capacitors, on the other hand, are more cost-effective for
applications requiring lower capacitance.
Inductors use an internal magnetic field to change the phase of electric current. They are utilized in
electronic circuitry to control alternating current and voltage, and to filter out unwanted electronic signals. They are
also used in transformers to change voltage levels.
Measurements Group
Vishay Measurements Group is a leading manufacturer of products for precision measurement of
mechanical strains. Our products include strain gages, load cells, force measurement sensors, displacement sensors,
and photoelastic sensors. These products are used in experimental stress analysis systems, as well as in the electronic
measurement of loads (electronic scales), acceleration and fluid pressure. The Measurements Group also provides
installation accessories for its products, instrumentation to sample and record measurement output and training
seminars in stress analysis testing and transducer development and manufacture.
Active Components
Our active electronic components include both discrete devices and integrated circuits (ICs). They are
referred to as “active” because they require power to function. Discrete devices are single components or an
arrangement of components that generate, control, regulate and amplify or switch electronic signals or energy.
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Examples of our discrete active components include diodes, rectifiers, transient voltage suppressors, transistors and
power MOSFETs. These devices are interconnected with passive components or other active components to create
an electronic circuit. Our IC devices consist of a number of active and passive components interconnected on a
single chip to perform a specific function. Examples of our integrated circuits include power ICs, motor control ICs
and signal processing ICs. Our discrete active components and ICs are manufactured and marketed primarily
through our majority-owned Siliconix subsidiary, our Telefunken unit and the recently acquired General
Semiconductor business.
We also include in the category of active components, our line of optoelectronic components, manufactured
and marketed by our Telefunken unit, and the recently acquired infrared components business of Infineon A.G.
Discrete Devices
Diodes and other rectifiers are used to convert electrical currents from alternating current (AC) into direct
current (DC) by conducting electricity in one direction and blocking it in the reverse direction. Because electrical
outlets carry AC while the vast majority of electronic devices use DC, rectifiers are used in a wide variety of
applications. We offer a broad line of diodes and rectifiers with differing power, speed, cost, packaging and
conversion (half wave or full wave) characteristics. Our rectifiers include a series of high voltage devices that have
been optimized for power correction circuits.
Transient voltage suppressors protect electronic circuits by limiting voltage to a safe level. Examples of
transient events that could damage unprotected circuits include static electricity charges and natural or induced
lightning. Voltage suppressors protect circuits by absorbing large amounts of energy for short periods of time. We
offer a broad range of state-of-the-art transient voltage suppressors for use in most modern electronic equipment.
Small signal diodes and transistors perform amplification, signal blocking, routing and switching functions
at lower current levels. Our small-signal transistors range from the older junction field-effect transistors (JFETs), to
newer products such as those based upon double-diffused metal oxide semiconductor (DMOS) technology.
Discrete power metal-oxide-semiconductor field-effect transistors (MOSFETs) are specialized field effect
transistors used to switch and manage power in a broad range of electronic devices. These include particularly low-
voltage applications such as cell phones, portable and desktop computers, automobiles, instrumentation and
industrial applications. Our innovative “trench” power MOSFET technology offers very high cell density, very low
on resistance and optimized switching parameters for high frequency DC-DC power conversion. Power MOSFETs
conserve power and help prevent components from heating up.
Integrated Circuits
Power ICs are used in applications such as cellular phones, where an input voltage from a battery or other
supply source must be switched, interfaced or converted to a level that is compatible with logic signals used by
microprocessors and other digital components. Our ICs are designed to operate at higher frequencies without
compromising efficiencies. Often our power MOSFETs and power ICs can be used together as chip sets with
complementary performance characteristics optimized for a specific application.
Motor control ICs control the starting, speed or position of electric motors, such as the head positioning and
spindle motors in hard disk drives.
Signal processing ICs are used for analog switching and multiplexing in devices that either receive or
output analog (non-digital) signals. A recent application of this technology is in broadband communications devices
such as DSL modems.
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Optoelectronics
Our line of optoelectronic components includes photo emitters and detectors, optocouplers and IRDCs.
Our photo detectors are light-sensitive semiconductor devices, and include linear photo diodes for light
measurement, photo-transistors for light switching applications in printers, copiers, facsimile machines, vending
machines and automobiles and high speed photo PIN diodes specially designed for infrared data transfer. Our photo
detector products are available in a wide variety of sensitivity angles, light sensitivities, daylight filters and
packaging shapes. Our infrared photo emitters are used for optical switching and data transfer applications, often in
conjunction with our photo detectors, and in devices like infrared remote controls for televisions.
An optocoupler consists of a light emitting diode and a receiver facing each other through an insulation
medium inside a light-isolated housing. The receiver may either be a photodetector or a pair of MOSFETs, and in
the latter case the device is referred to as a solid state relay (SSR). The function of an optocoupler is to electrically
isolate input and output signals. Our optocouplers are used in switchable power supplies, safety circuitry and
programmable controllers for computer monitors, consumer electronics, telecommunications equipment and
industrial systems.
Infrared data tranceivers (IRDCs) consist of a detector photo diode, an infrared light emitting diode and a
control IC. IRDCs are used for short range, two-way wireless, infrared data transfer between electronic devices such
as mobile phones and other telecommunications equipment, computers and personal digital assistants (PDAs).
Packaging
We have taken advantage of the growth of the surface mount component market, and we are an industry
leader in designing and marketing surface mount devices. Surface mount devices adhere to the surface of a circuit
board rather than being secured by leads that pass through holes to the back side of the board. Surface mounting
provides distinct advantages over through-hole mounting. For example, surface mounting allows the placement of
more components on a circuit board, which is particularly desirable in applications such as hand held computers and
cellular phones where there is a continuing design trend towards product miniaturization. Surface mounting also
facilitates automation, resulting in lower production costs for equipment manufacturers than those associated with
leaded or through-hole mounted devices. We believe that we are a market leader in the development and production
of a wide range of surface mount devices, including:
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•
•
•
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•
•
thick film chip resistors,
thick film resistor networks and
arrays,
metal film leadless resistors (MELFs),
molded tantalum chip capacitors,
coated tantalum chip capacitors,
film capacitors,
multi-layer ceramic chip capacitors,
thin film chip resistors,
thin film networks,
•
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•
•
•
•
•
wirewound chip resistors,
power strip resistors,
bulk metal foil chip resistors,
current sensing chips,
chip inductors,
chip transformers,
chip trimmers,
NTC chip thermistors, and
certain diodes and transistor products.
- 7 -
We also provide a number of component packaging styles to facilitate automated product assembly by our
customers.
Military Qualifications
We have 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. DESC
qualification levels are based in part upon the rate of failure of products. In order to maintain the classification level
of a product, we must continuously perform tests on the product 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 lower level. Products from some of our United States manufacturing facilities
experience a reduction in product classification levels from time to time. During the time that the DESC
classification level is reduced for a product with military application, net sales and earnings attributable to that
product may be adversely affected.
Customers
We sell our products primarily to original equipment manufacturers (OEMs), OEM subcontractors that
assemble printed circuit boards and independent distributors that maintain large inventories of electronic
components for resale to OEMs.
To better serve our customers, we maintain production facilities in regions where we market the bulk of our
products, principally in the U.S., Germany, France and the U.K. We work with our customers so that our products
are incorporated into the design of electronic equipment at the research and prototype stages. We also employ a staff
of application and field engineers to assist our customers, independent manufacturers’ representatives and
distributors in solving technical problems and developing products to meet specific needs.
Our largest customers vary from year to year, and no customer has long-term commitments to purchase our
products. During 2001, no one customer accounted for more than 10% of our sales.
During 2001, approximately 41% of our net sales were attributable to customers in the United States, while
the remainder was attributable to sales primarily in Europe and Asia.
Marketing
Our products are marketed through independent manufacturers’ representatives compensated solely on a
commission basis, by our own sales personnel and by independent distributors. We have regional sales personnel in
several North American locations that make sales directly to OEMs and provide technical and sales support for
independent manufacturers’ representatives throughout the United States, Mexico and Canada. As noted, we also
use independent distributors to resell our products. Outside North America, we use similar channels to sell our
products in Brazil, France, Israel, Japan, the Republic of China (Taiwan), Singapore, South Korea, the United
Kingdom and other countries in Europe and the Pacific Rim.
Research and Development
Many of our products and manufacturing processes have been invented, designed and developed by our
engineers and scientists. We maintain strategically placed design centers where proximity to customers enables us to
more easily gauge and satisfy the needs of local markets. These design centers are located in the United States,
Germany, France, South Korea, Israel, the Republic of China (Taiwan) and the People’s Republic of China.
We also maintain research and development staffs and promote programs at a number of our production
facilities to develop new products and new applications of existing products, and to improve manufacturing
techniques. This decentralized system encourages individual product development at individual manufacturing
facilities that occasionally have applications at other facilities. Company research and development costs (exclusive
of purchased in-process research and development) were approximately $30.2 million for 2001, $37.1 million for
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2000 and $35.0 million for 1999. These amounts include expenditures of our Siliconix subsidiary of $17.2 million,
$21.0 million and $17.0 million in 2001, 2000 and 1999, respectively, principally for the development of new power
products and power ICs. These amounts do not include substantial expenditures for the development and
manufacturing of machinery and equipment for new processes and for cost reduction measures.
Although we have numerous United States and foreign patents covering certain of our products and
manufacturing processes, no particular patent is considered material to our business.
Sources of Supplies
Although most materials incorporated in our products are available from a number of sources, certain
materials, particularly tantalum and palladium, are available only from a relatively limited number of suppliers.
We are a major consumer of the world’s annual production of tantalum. Tantalum, a metal purchased in
powder or wire form, is the principal material used in the manufacture of tantalum capacitors. There are currently
three major suppliers that process tantalum ore into capacitor grade tantalum powder. Due to the strong demand for
our tantalum capacitors and difficulty in obtaining sufficient quantities of tantalum powder from our suppliers, we
stockpiled tantalum ore in 2000 and early 2001. During the year ended December 31, 2001, we subsequently
experienced a significant decrease in sales due to declining orders and the deferral or cancellation of existing orders.
Our tantalum capacitor business was particularly affected by this year’s slowdown in sales. Prices for tantalum ore
and powder decreased during this period. As a result, we recorded in cost of goods sold write-downs of $52,000,000
on tantalum inventories during the year ended December 31, 2001. If the downward pricing trend were to continue,
we could again be required to write down the carrying amount of tantalum ore.
During the period of shortage, we entered into long-term contracts to purchase specified quantities of
tantalum at fixed prices through 2005. Under the terms of these contracts, the tantalum purchase commitments are
approximately $145,000,000 for 2002 and approximately $150,000,000 annually for 2003 through 2005. In addition,
we may make purchases of tantalum from our other suppliers at prices that are subject to periodic adjustment. The
fixed prices for tantalum under the long term contracts could exceed the market price at various times during the
terms of the contracts. Also, the quantities of powder and wire committed to or that we otherwise purchase could
exceed our production demands. If this were to happen we could be required to take further write-downs.
Palladium, a metal used to produce multi-layered ceramic capacitors, is found primarily in South Africa
and Russia. Palladium is a commodity product subject to price volatility. The price of palladium has fluctuated in
the range of approximately $201 to $970 per troy ounce during the last three years. As of December 31, 2001, the
price of palladium was approximately $446 per troy ounce. During the year ended December 31, 2001, we recorded
in cost of products sold a write-down of $18,000,000 on palladium inventories.
From time to time there have been short-term market shortages of raw materials. While these shortages
have not historically adversely affected our ability to increase production of products containing tantalum and
palladium, they have historically resulted in higher raw material costs. We cannot assure you that any of these
market shortages in the future would not adversely affect our ability to increase production, particularly during
periods of growing demand for our products, such as at the beginning of an economic upturn.
Inventory and Backlog
We manufacture both standardized products and those designed and produced to meet customer
specifications. We maintain an inventory of resistors and other standardized components. Backlogs of outstanding
orders for our products were $337.9 million, $773.1 million and $505.1 million, respectively, at December 31, 2001,
2000 and 1999. The decrease in backlog at December 31, 2001 primarily reflects the decrease in demand during
2001 for both our passive and active components as a result of the global slowdown in the electronics industry,
particularly in the personal computer and cell phone markets.
Many of the orders that comprise our backlog may be canceled by customers without penalty. Customers
may on occasion double and triple order components from multiple sources to ensure timely delivery when backlog
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is particularly long. Customers often cancel orders when business is weak and inventories are excessive, a
phenomenon that we have experienced in the current economic slowdown. Therefore, the amount of our backlog
may exceed the level of orders that will ultimately be delivered. Our results of operations could be adversely
impacted if customers cancel a material portion of orders in our backlog.
Competition
We face strong competition in various product lines from both domestic and foreign manufacturers that
produce products using technologies similar to ours. Our main competitors for tantalum capacitors are KEMET
Corporation, AVX Corporation and NEC Electronics, Inc. For MLCC capacitors, our principal competitors are
KEMET, AVX, Murata and TDK Corp. For thick film chip resistors, our competitors are Rohm Corp., Koa Speer
Electronics Inc. and Yageo Corporation. For wirewound and metal film resistors, the principal competitors are
I.R.C. Inc., Rohm Corp. and Ohmite Manufacturing Company. For active components, competitors are International
Rectifier, Philips, N.V., ON Semiconductor, Rohm Corp., Motorola, Inc., Fairchild Semiconductor Corp., Maxim,
Shindengen Electric Manufacturing Co. Ltd., Sanken Electric Co. Ltd., ST Microelectronics N.V. and Samsung
Electro-Mechanics Co., Ltd. There are many other companies that produce products in the markets in which we
compete.
Our competitive position depends on our product quality, know-how, proprietary data, marketing and
service capabilities and business reputation, as well as on price. We compete for sales of certain products on the
basis of our marketing and distribution network, which provides a high level of customer service. For example, we
work closely with our customers to have our components incorporated into their electronic equipment at the early
stages of design and production and maintain redundant production sites for most of our products to ensure an
uninterrupted supply of products. We have also established a National Accounts Management Program, which
provides our largest customers with one national account executive who can cut across business unit lines for sales,
marketing and contract coordination. In addition, the breadth of our product offerings enables us to strengthen our
market position by providing customers with “one-stop” access to one of the broadest selections of passive
electronic components available directly from a manufacturing source.
Manufacturing Operations
We strive to balance the location of our manufacturing facilities. In order to better serve our customers, we
maintain some of our production facilities in regions where we market the bulk of our products, such as the United
States, Germany, France, Asia and the United Kingdom. To maximize production efficiencies, we seek whenever
practicable, to establish manufacturing facilities in countries, such as the Czech Republic, Israel, Malaysia, Mexico,
the People’s Republic of China, the Philippines, Portugal, and the Republic of China (Taiwan), where we can take
advantage of lower labor and tax costs and, in the case of Israel, to take advantage of various government incentives,
including grants and tax relief.
Some of our most sophisticated manufacturing operations are the production of power semiconductor
components. This manufacturing process involves two phases of production: wafer fabrication and assembly (or
packaging). Wafer fabrication subjects silicon wafers to various thermal, metallurgical and chemical process steps
that change their electrical and physical properties. These process steps define cells or circuits within numerous
individual devices (termed “dies” or “chips”) on each wafer. Assembly is the sequence of production steps that
divides the wafer into individual chips and encloses the chips in structures (termed “packages”) that make them
usable in a circuit. Both wafer fabrication and assembly phases incorporate wafer level and device level electrical
testing to ensure that device design integrity has been achieved.
At December 31, 2001, approximately 44% of our identifiable assets were located in the United States,
approximately 22% were located in Europe, approximately 16% were located in Israel, and approximately 18% were
located in Asia. In the United States, our manufacturing facilities are located in Nebraska, Maine, Pennsylvania,
California, North Carolina, Wisconsin, Virginia, Connecticut, Florida, Maryland, New York and South Dakota. In
Europe, our main manufacturing facilities are located in Germany and France. We also have manufacturing facilities
in the Czech Republic, Hungary, Israel, Malaysia, Mexico, the People’s Republic of China, the Philippines, Portugal
and the Republic of China (Taiwan). Over the past several years, we have invested substantial resources to increase
capacity and to maximize automation in our plants, which we believe will further reduce production costs.
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We are aggressively undertaking to have the quality systems at most of our major manufacturing facilities
approved under the ISO 9001 international quality control standard. ISO 9001 is a comprehensive set of quality
program standards developed by the International Standards Organization. A majority of our manufacturing
operations have already received ISO 9001 approval and others are actively pursuing such approval.
In 2001, we accelerated the implementation of our strategy to shift manufacturing emphasis to higher
automation in higher labor cost regions and to relocate a fair amount of production to regions with lower labor costs.
As a result, we incurred significant restructuring costs in the year ended December 31, 2001, associated with the
downsizing and closing of manufacturing facilities in Europe. We may continue to incur such expenses in 2002.
See Note 14 of the Notes to the Consolidated Financial Statements, “Business Segment and Geographic
Area Data,” for financial information by geographic area.
Israeli Government Incentives
We have substantial manufacturing operations in Israel, where we benefit from the government’s
employment and tax incentive programs designed to increase employment, lower wage rates and increase our ability
to attract a highly-skilled labor force, all of which have contributed substantially to our growth and profitability. For
the year ended December 31, 2001, sales of products manufactured in Israel accounted for approximately 25.3% of
our net sales.
Under the terms of the Israeli government’s incentive programs, once a project is approved, the recipient is
eligible to receive the benefits of the related grants for the life of the project, so long as the recipient continues to
meet preset eligibility standards. None of our approved projects has ever been cancelled or modified, and we have
already received approval for a majority of the projects contemplated by our capital expenditure program. However,
as a result of the recent economic downturn, we were forced to lay off a significant number of employees in Israel.
While the number of employees continues to satisfy the eligibility requirements for our Israeli government grants,
economic circumstances could compel future additional layoffs. Also, over the past few years, the Israeli
government has scaled back or discontinued some of its incentive programs. There can be no assurance that we will
maintain our eligibility for existing projects or that in the future the Israeli government will continue to offer new
incentive programs applicable to us or that, if it does, such programs will provide the same level of benefits we have
historically received or that we will continue to be eligible to take advantage of them. Because we have received
approvals for most projects currently contemplated, we do not anticipate that cutbacks in the incentive programs for
new projects would have an adverse impact on our earnings and operations for at least several years.
We might be materially adversely affected if events were to occur in the Middle East that interfered with
our operations in Israel. However, we have never experienced any material interruption in our Israeli operations in
our 31 years of operations there, in spite of several Middle East crises, including wars.
Environment, Health and Safety
We have adopted an Environmental Health and Safety Corporate Policy that commits us to achieve and
maintain compliance with applicable environmental laws, to promote proper management of hazardous materials for
the safety of our employees and the protection of the environment, and to minimize the hazardous materials
generated in the course of our operations. This policy is implemented with accountability directly to the Chairman of
the Board of Directors. In addition, our manufacturing operations are subject to various federal, state and local laws
restricting discharge of materials into the environment.
We are not involved in any pending or threatened proceedings that would require curtailment of our
operations. We continually expend funds to ensure that our facilities comply with applicable environmental
regulations. In regard to all of our facilities, we have completed our undertaking to comply with environmental
regulations relating to the elimination of chlorofluorocarbons (“CFCs”) and ozone depleting substances (“ODS”)
pursuant to the Clean Air Act amendments of 1990. We have completely eliminated the use of CFCs and ODS in
our manufacturing processes, and all facilities are currently in compliance with the Clean Air Act.
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While we believe that we are in material compliance with applicable environmental laws, we cannot
accurately predict future developments and do not necessarily have knowledge of past occurrences on sites that we
currently occupy. More stringent environmental regulations may be enacted in the future, and we cannot determine
the modifications, if any, in our operations that any such future regulations might require, or the cost of compliance
with these regulations. Moreover, the risk of environmental liability and remediation costs is inherent in the nature
of our business and, therefore, there can be no assurance that material environmental costs, including remediation
costs, will not arise in the future.
We have been named a Potentially Responsible Party (“PRP”) at nine Superfund sites, including two
Siliconix facilities and have become responsible for certain obligations as a PRP in connection with our acquisition
of General Semiconductor. We expend minimal amounts in connection with several of these sites and do not expect
costs associated with the others to be material.
The ultimate cost of site cleanup is difficult to predict given the uncertainties regarding the extent of the
required cleanup, the interpretation of applicable laws and regulations and alternative cleanup methods. Based upon
our experience with the foregoing environmental matters, we have concluded that there is at least a reasonable
possibility that we will incur remedial costs in the range of $30 million to $35 million. As of December 31, 2001, we
concluded that the best estimate within this range is $32.5 million, of which $2.5 million is included in accrued
expenses and other current liabilities and $30.0 million is included in other long-term liabilities on the Consolidated
Balance Sheet. The majority of the environmental reserve is due to the acquisition of General Semiconductor, Inc. In
view of our financial position and reserves for environmental matters of $32.5 million, we have concluded that any
potential payment of such estimated amounts will not have a material adverse effect on our consolidated financial
position, results of operations or liquidity.
With each acquisition, we attempt to identify potential environmental concerns and to minimize, or obtain
indemnification for, the environmental matters we may be required to address. In addition, we establish reserves for
specifically identified potential environmental liabilities. We believe that the reserves we have established are
adequate. Nevertheless, we often unavoidably inherit certain pre-existing environmental liabilities, generally based
on successor liability doctrines. Although we have never been involved in any environmental matter that has had a
material adverse impact on our overall operations, there can be no assurance that in connection with any past or
future acquisition we will not be obligated to address environmental matters that could have a material adverse
impact on our operations.
Employees
As of December 31, 2001, we employ approximately 21,410 full time employees of whom approximately
16,015 are located outside the United States. Some of our employees outside the U.S. are members of trade unions,
and employees at one small U.S. facility are represented by a union. Our relationship with our employees is good.
However, no assurance can be given that, if we continue to restructure our operations in response to changing
economic conditions, labor unrest or strikes, especially at European facilities, will not occur. See “Legal
Proceedings.”
- 12 -
Item 2.
PROPERTIES
As of December 31, 2001, we maintain approximately 68 manufacturing facilities. The principal locations
of such facilities, along with available space including administrative offices, are:
Owned Locations
United States
Columbus and Norfolk, NE*
Sanford, ME
Malvern and Bradford, PA*
Santa Clara, CA
Wendell and Statesville, NC*
Grafton and Oconto, WI*
Roanoke, VA
Monroe, CT
____________________
* 2 locations
Non-U.S.
Israel (4 locations)
Germany (12 locations)
France (5 locations)
Republic of China (Taiwan) (2 locations)
Czech Republic (5 locations)
Portugal
Malaysia
Hungary
Austria
Philippines
People’s Republic of China
Approx. Available
Space (Square Feet)
298,000
225,000
222,000
220,000
194,000
165,000
128,000
91,000
990,000
845,000
449,000
400,000
368,000
301,000
296,000
194,000
153,000
146,000
84,000
We own an additional 180,000 square feet of manufacturing facilities located in Florida, Maryland, New
York, South Dakota, and Mexico.
Available leased facilities in the United States include 265,000 square feet of space located in California,
Massachusetts, New York, Rhode Island and South Dakota. Foreign leased facilities consist of 224,000 square feet
in China, 220,000 square feet in Mexico, 13,000 square feet in England, 204,000 square feet in Germany, 131,000
square feet in Hungary, 75,000 square feet in the Czech Republic and 4,000 square feet in Japan.
In the opinion of management, our properties and equipment generally are in good operating condition and
are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they expire or in
finding alternative facilities.
Item 3.
LEGAL PROCEEDINGS
From time to time we are involved in routine litigation incidental to our business. Management believes
that such matters, either individually or in the aggregate, should not have a material adverse effect on our business or
financial condition.
As part of our 1996 restructuring program, our subsidiary, Sprague France S.A., laid off certain workers at
our facility in Tours, France. The trade union representing the workers at the Sprague facility claimed that the
layoffs were not economically motivated, and were therefore prohibited under French law. A court ruled that,
although we would not be required to rehire the employees, we would have to pay damages equal to approximately
- 13 -
10 million French Francs (approximately U.S. $1,331,000) as of March 28, 2002, to the former employees. We have
appealed this decision.
Our 80.4% owned subsidiary, Siliconix, is a party to two environmental proceedings. The first involves
property that Siliconix vacated in 1972. In July 1989, the California Regional Water Quality Control Board
(RWQCB) issued Cleanup and Abatement Order No. 89-115 both to Siliconix and the current owner of the property.
The Order alleged that Siliconix contaminated both the soil and the groundwater on the property by the improper
disposal of certain chemical solvents. The RWQCB considered both parties to be liable for the contamination and
sought to have them decontaminate the site to acceptable levels. Siliconix subsequently reached a settlement of this
matter with the current owner of the property. The settlement provided that the current owner will indemnify
Siliconix and its employees, officers, and directors against any liability that may arise out of any governmental
agency actions brought for environmental cleanup of the subject site, including liability arising out of RWQCB
Order No. 89-115, to which Siliconix remains nominally subject.
The second proceeding involves Siliconix’s Santa Clara, California facility, which we have owned and
occupied since 1969. In February 1989, the RWQCB issued Cleanup and Abatement Order No. 89-27 to Siliconix.
The Order is based on the discovery of contamination of both the soil and the groundwater on the property by
certain chemical solvents. The Order calls for Siliconix to specify and implement interim remedial actions and to
evaluate final remedial alternatives. The RWQCB issued a subsequent order requiring Siliconix to complete the
decontamination. Siliconix has substantially completed its compliance with the RWQCB’s orders.
Our subsidiary General Semiconductor has been named a PRP at several Superfund sites. See
“Environment, Health and Safety”.
In February and March 2001, several purported class action complaints were filed in the Delaware Court of
Chancery and the California Superior Court against us, Siliconix and the directors of Siliconix in connection with
our proposal in February 2001 to purchase all issued and outstanding shares of Siliconix that we did not already
own. The class actions alleged that our proposed offer was unfair and a breach of fiduciary duty. One of the
Delaware class actions also alleged that we had usurped Siliconix inventory and patents, appropriated Siliconix’s
separate corporate identity, and obtained a below-market loan from Siliconix. The actions sought injunctive relief,
damages and other relief. The Delaware Chancery Court denied a preliminary injunction motion seeking to enjoin
our tender offer, which was commenced in May 2001 but not successfully completed. Our motion and that of
Siliconix to dismiss the actions in Delaware and for summary judgment are pending. The actions in California have
been stayed.
Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 2, 2001, the following matters were submitted to the vote of our security holders at a special
meeting of stockholders:
1.
2.
amending our certificate of incorporation to increase the number of authorized shares of capital
stock of the Company; and
approving the issuance of common stock in connection with the acquisition of General
Semiconductor, Inc.
78,115,060 votes of common stock were cast on the proposal to amend our certificate of incorporation, out
of which 74,275,045 were voted in favor and 3,840,015 voted against. 78,143,382 votes of common stock were cast
on the proposal to issue common stock in connection with the acquisition of General Semiconductor, Inc. out of
which 77,258,019 were voted in favor and 885,363 voted against. 15,378,108 votes of Class B common stock were
cast and all voted in favor of the proposal to amend our certificate of incorporation and the proposal to issue
common stock in connection with the acquisition of General Semiconductor.
Each share of common stock is entitled to one vote and each share of Class B common stock is entitled to
10 votes on matters voted upon by stockholders.
- 14 -
Item 4A.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding our executive officers as of March 28, 2002.
Name
Felix Zandman*
Avi D. Eden*
Gerald Paul*
Richard N. Grubb*
Robert A. Freece*
William J. Spires
Age
Positions Held
73
54
53
55
61
60
Chairman of the Board and Chief Executive
Officer
Vice-Chairman of the Board, Executive Vice
President and General Counsel
Chief Operating Officer, President and
Director
Executive Vice President, Treasurer, Chief
Financial Officer and Director
Senior Vice President and Director
Vice President and Secretary
* Member of the Executive Committee of the Board of Directors.
Dr. Felix Zandman, a founder of the Company, has been the Chief Executive Officer and a Director of the
Company since its inception. Dr. Zandman had been President of the Company from its inception until March 16,
1998, when Dr. Gerald Paul was appointed President of the Company. Dr. Zandman has been Chairman of the
Board since March 1989.
Avi D. Eden has been a Director and General Counsel of the Company since June 1988, and has been Vice
Chairman of the Board and an Executive Vice President of the Company since August 1996.
Dr. Gerald Paul has served as a Director of the Company since May 1993 and has been Chief Operating
Officer and an Executive Vice President of the Company since August 1996. On March 16, 1998, Dr. Paul was
appointed President of the Company. He was President of Vishay Electronic Components, Europe from January
1994 to August 1996. Dr. Paul has been Managing Director of Draloric Electronic GmbH, an affiliate of the
Company, since January 1991. Dr. Paul has been employed by Draloric since February 1978.
Richard N. Grubb has been a Director, Vice President, Treasurer and Chief Financial Officer of the
Company since May 1994, and has been an Executive Vice President of the Company since August 1996. Mr.
Grubb has been associated with the Company in various capacities since 1972.
Robert A. Freece has been a Director of the Company since 1972. He was a Vice President of the Company
from 1972 until 1994, and has been a Senior Vice President since May 1994.
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.
- 15 -
PART II
Item 5.
MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
Our common stock is listed on the New York Stock Exchange under the symbol VSH. The following table
sets forth the high and low sales prices for our common stock as reported on the New York Stock Exchange
Composite Tape for the quarterly periods within the 2000 and 2001 calendar years indicated. Stock prices have been
restated to reflect a stock split in June 2000. We do not currently pay cash dividends on our capital stock. Our policy
is to retain earnings to support the growth of our business and we do not intend to change this policy at the present
time. In addition, we are restricted from paying cash dividends under the terms of our revolving credit agreement.
See Note 5 to the Consolidated Financial Statements. Holders of record of our common stock totaled approximately
1,900 at March 27, 2002.
COMMON STOCK MARKET PRICES
Calendar 2000
Calendar 2001
High
$40.88
$62.63
$44.75
$31.75
Low
$18.58
$35.00
$26.00
$13.88
High
$22.75
$27.98
$25.25
$21.88
Low
$13.75
$17.00
$16.08
$16.86
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
At March 27, 2002, we had outstanding 15,383,663 shares of Class B common stock, par value $.10 per
share, each of which entitles the holder to ten votes. The Class B common stock generally is not transferable except
in certain very limited instances, and there is no market for those shares. The Class B common stock is convertible,
at the option of the holder, into common stock on a share for share basis. Substantially all of such Class B common
stock is owned by Dr. Felix Zandman our chairman and chief executive officer, the estate of Mrs. Luella B. Slaner, a
former director, and trusts for the benefit of the grandchildren of Mrs. Slaner, either directly or beneficially.
- 16 -
Item 6.
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial information of the Company for the
fiscal years ended December 31, 2001, 2000, 1999, 1998 and 1997. 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.
As of and for the Year Ended December 31,
2001 (1)
2000
1999 (2)
1998 (3)
1997 (4)
Income Statement Data (in thousands, except per share
amounts):
Net sales
Interest expense
Earnings before income taxes and minority interest
Income taxes
Minority interest
Net earnings
$1,655,346
16,848
10,103
5,695
3,895
513
$2,465,066
25,177
690,225
148,186
24,175
517,864
$1,760,091
53,296
134,711
36,940
14,534
83,237
$1,572,745
49,038
42,646
30,624
3,810
8,212
$1,125,219
18,819
89,561
34,167
2,092
53,302
Basic earnings per share(5)
Diluted earnings per share(5)
Weighted average shares outstanding – basic (5)
Weighted average shares outstanding – diluted (5)
$0.00
$0.00
141,171
142,514
$3.83
$3.77
135,295
137,463
$ 0.66
$ 0.65
126,678
128,233
$ 0.07
$ 0.07
126,665
126,797
$ 0.42
$ 0.42
126,627
126,904
Balance Sheet Data (in thousands):
Total assets
Long-term debt
Working capital
Stockholders’ equity
$3,951,523
605,031
1,096,034
2,366,545
$2,783,658
140,467
1,057,200
1,833,855
$2,323,781
656,943
604,150
1,013,592
$2,462,744
814,838
650,483
1,002,519
$1,719,648
347,463
455,134
959,648
_______________________________________________________________________
(1)
Includes the results from January 1, 2001 of Tansitor, July 27, 2001 of Infineon U.S., November 2, 2001 of General
Semiconductor, and November 7, 2001 of Mallory. Also includes restructuring expenses net of taxes, of $39,972,000; write-
down of raw materials inventory, net of taxes, of $57,431,000; purchased research and development (no tax effect) of
$16,000,000; and other expenses, net of taxes, of $5,373,000 for a total of $118,776,000 ($0.84 per share).
(2) Includes the sale of Nicolitch, S.A. and a tax rate change in Germany reduced net earnings by $14,562,000 ($0.11 per share).
(3)
(4)
Includes the results from March 1, 1998 of Siliconix and Telefunken and special charges after taxes of $55,335,000 ($0.44
per share).
Includes the results from July 1, 1997 of Lite-On Power Semiconductor Corporation and special charges after taxes of
$27,692,000 ($0.22 per share).
(5) Adjusted to reflect a three-for-two stock split distributed June 9, 2000, a five-for-four stock split distributed June 22, 1999
and 5% stock dividends paid on June 11, 1998 and June 9, 1997.
- 17 -
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
2001 was a difficult year in the electronic components business, as it was for economies in the United
States and much of the world. In part, our depressed operating results for 2001 were attributable to the same factors
that contributed to the exceptional operating results in 2000, results that far exceeded any in the history of our
Company. Throughout most of 2000 our customers, especially our distributors, built up sizeable inventories, out of
concern over possible product shortages and rising prices fueled by overly optimistic assessments of customer
demand. Because inventories were out of proportion to actual demand, orders for new products dropped off
significantly in 2001. In addition, the softening of demand for our products, which we began to see in the fourth
quarter of 2000, became more pronounced during 2001, particularly in the telecommunications and computer
markets.
Product Demand
Demand for our products, and for products in our industry generally, affects our operating results in two
ways. When demand is lower, we experience substantial downward pressure on pricing. Also, lower demand results
in lower unit sales levels. With smaller revenues over which to spread our fixed costs, our gross profit margins
decline. We felt both of these effects in our business in 2001.
Because we regard customer demand as such an important parameter in analyzing our business, we
carefully monitor the indicators of demand. One of these indicators is our backlog level. Backlogs were down in
2001. Moreover, in uncertain economic times, such as those we experienced in 2001, orders are more susceptible to
cancellation, so that backlog as a measure of future sales becomes less reliable. We also have to look at the nature of
the orders in our backlog. Orders that provide for longer delivery times indicate that customers are ordering for
inventory rather than immediate requirements. The delivery times for these types of orders could be pushed out and,
especially in a soft economy, provide less assurance of ultimate sales. Orders for short-term delivery are less subject
to push out or cancellation, are indicative of the immediate needs of our customers and are likely to be a better
barometer of the direction of our business.
A second important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the
amount of product ordered during a period as compared with the product that we ship during that period. A book-to-
bill ratio that is greater than one indicates that our orders are building and that we are likely to see increasing
revenues in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of declining demand
and likely foretells declining sales.
The quarter-to-quarter trends in backlog and book-to-bill ratio can also be an important indicator of the
likely direction of our business. The following table shows the end-of-period backlog and the book-to-bill ratio for
our business as a whole during the five quarters beginning with the last quarter of 2000 and through the last quarter
of 2001. We think that the improving trend of book-to-bill ratio will continue in 2002, but we cannot assure you that
this will be so.
4th Quarter 2000
1st Quarter 2001
2nd Quarter 2001
3rd Quarter 2001
4th Quarter 2001
End of Period
Backlog
$773,089,000
$505,732,000
$342,144,000
$302,754,000
$337,883,000 (1)
Book-to-Bill Ratio
0.69
0.53
0.59
0.77
0.89
(1) Includes $70,360,000 of backlog attributable to the business of General Semiconductor.
- 18 -
Segments
Our management evaluates our operating results along the lines of two major segments, passive
components and active components. Passive components include resistors, capacitors and inductors. These are
necessary elements of all electronic circuits and are referred to as passive because they do not require power to
operate. We also include in this segment strain gages and load cells, because the core components of these devices
are resistors that are sensitive to various types of mechanical stress. We began our business as a manufacturer of
passive components, and this remains major part of our business.
We are now also one of the world’s leading manufacturers of active electronic components. These include
transistors, diodes, rectifiers, certain types of integrated circuits and optoelectronic products. These components are
referred to as active because they require power to function. We entered the active component business in 1998 with
the acquisition from Daimler-Benz of Telefunken, a manufacturer of optoelectronic components and small signal
transistors, and of an 80.4% interest in Siliconix, a manufacturer of power integrated circuits. In 2001, we
substantially increased our presence in the active component market, first with the acquisition in July of the
optoelectronic infrared business of Infineon A.G., and later with the acquisition in November of General
Semiconductor, a manufacturer of rectifiers and power management components whose business is complementary
to that of Siliconix. As a percentage of our total sales, active components were 39% in 2001, 34% in 2000 and 43%
in 1999.
The passive and active segments of our business have historically responded differently to phases of the
business cycle. Having strong capabilities in both areas not only gives us a broad line of products to offer our
customers, it also smoothes, to some extent, the business swings that we experience. When business slows down,
active components are usually first to feel the effects of the downturn that are later experienced by passive
components. Similarly, when business begins to increase, our semiconductor products usually lead the recovery,
followed some time later by capacitors and resistors. We are seeing certain indications that this pattern of recovery
may repeat itself in the current environment.
We also find that the commodity and specialty products in our passive segment react differently in different
parts of the business cycle. Commodity products, which have general use and application, experience significant
fluctuations in demand. The variations in demand experienced by specialty products, which are produced for
specific purposes and, in some cases, to the specific design criteria of purchasers, are far less pronounced. This
disparity has a corresponding effect on the respective profit margins for commodity and specialty products.
The following table shows our sales and book-to-bill ratios broken out by segment for the five quarters
beginning with the last quarter of 2000 and through the last quarter of 2001:
Sales ($)/
Book-to-bill
Passive
Components
Active
Components
4th Quarter 2000
1st Quarter 2001
2nd Quarter 2001
3rd Quarter 2001
4th Quarter 2001
$451,264,000
0.67
$192,353,000
0.74
$392,658,000
0.49
$165,807,000
0.64
$250,973,000
0.49
$132,464,000
0.79
$188,708,000
0.72
$143,585,000
0.84
$178,295,000
0.83
$202,856,000 (1)
0.94 (1)
(1) Includes $51,274,000 attributable to General Semiconductor for active components. Excluding General Semiconductor, the
book-to-bill ratio for active components during the fourth quarter of 2001 would have been 0.95.
Cost Management
We place a strong emphasis on reducing our costs. One way we do this is by moving production to the
extent possible from high labor cost markets, such as the United States and Western Europe, to lower labor cost
markets, such as Israel, Mexico, the Republic of China (Taiwan), the People’s Republic of China and Eastern
Europe. The percentage of our total headcount in lower labor cost countries is a measure of the extent to which we
are successful in implementing this program. This percentage was 61% at the end of 2001 as compared to 57% at the
- 19 -
end of 2000, and was positively affected by our acquisition activity during 2001. We are hopeful that as we integrate
the new acquisitions we will be able to further increase this percentage.
During 2001, we focused on reducing both variable and fixed costs in response to our industry’s downturn.
We reduced our variable labor headcount by 6,050 positions or 35% and fixed labor headcount by 960 positions or
17%. These numbers do not take into account the additions to our workforce as a result of the 2001 acquisition
activity. We also closed several factories during the year. We estimate that as a result of our cost containment
activities we were able to reduce fixed costs during 2001 by approximately $14 million.
Israeli Government Incentives
Our production facilities in Israel benefit from incentives offered by the Israeli government for creation of
jobs and capital investment in that country. These benefits take the form of government grants and reduced tax rates
that are lower than those in the United States. These reduced tax rates apply to projects specifically approved by the
Israeli government and, depending on project size, are available for periods of ten or fifteen years. The effect of
lower tax rates in Israel, as compared to the statutory rate in the United States, resulted in increases in net earnings
of $3,009,000, $89,745,000 and $12,469,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
Israeli government grants are awarded to specific projects. These grants are intended to promote
employment in Israel’s industrial sector and are conditioned on the recipient maintaining certain prescribed
employment levels. Grants are paid when the related projects become operational, and the Israeli government
approves the project. Israel government grants, recorded as a reduction in the costs of products sold, were
$19,064,000, $15,721,000 and $14,256,000 in the years 2001, 2000 and 1999, respectively. At December 31, 2001,
our balance sheet reflected $57,208,000 in deferred grant income.
Our production in Israel has been adversely affected by the current economic downturn. Despite the
economic situation in which we were forced to make lay-offs in Israel, in 2001 we were able to maintain
employment at our facilities in Israel at levels sufficient to maintain our qualification for grants previously awarded
to us. If we were no longer able to maintain the required level of employment in the future, we could be required to
return grant funds that were previously awarded to us. The effect of the return of these funds would be to reduce our
income in future years. Also, if the current business climate continues, we might not initiate new projects that
qualify for grants or reduced tax rates or the Israeli government could curtail or eliminate the programs from which
we have benefited in the past.
Inventory Write-Downs and Purchase Commitments
During 2001, we wrote-down our raw material inventories of tantalum, which we use in the production of
tantalum capacitors, and palladium, which is used in the production of multi-layer ceramic capacitors. Demand for
these products, particularly on the commodity side, experienced a significant decline in 2001, and market prices for
tantalum ore and powder and palladium wire were sharply lower. We purchased our inventories of tantalum and
palladium when demand was vigorous and prices were substantially higher. As required by accounting rules, we
recorded our inventories at the lower of cost or market, and reduced the carrying value of our tantalum by
$52,000,000 and palladium by $18,000,000 in 2001. The write-downs are reflected in our income statement as an
increase in cost of goods sold.
During the period of shortage, we entered into long-term contracts to purchase specified quantities of
tantalum at fixed prices through 2005. Under the terms of these contracts, the tantalum purchase commitments are
approximately $145,000,000 for 2002 and approximately $150,000,000 annually for 2003 through 2005. In addition,
we may make purchases of tantalum from our other suppliers at prices that are subject to periodic adjustment. The
fixed prices for tantalum under the long term contracts could exceed the market price at various times during the
terms of the contracts. Also, the quantities of powder and wire committed to or that we otherwise purchase could
exceed our production demands. If this were to happen we could be required to take further write-downs.
- 20 -
Foreign Currency
In 2001, we realized approximately 59% of our revenues from customers outside the United States. Any
third party sales not using the U.S. dollar as the functional currency must report sales in local currency and be
translated at the weighted average exchange rate. This translation will have an impact on the net sales line of the
income statement and also on the expense lines of the income statement. We generally do not purchase foreign
currency exchange contracts or other derivative instruments to hedge our exposure to foreign currency fluctuations.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 1 to our Consolidated Financial Statements.
We identify here a number of policies which entail significant judgments or estimates.
Revenue recognition
We record revenues at the time that we ship products to our customers. Many of our shipments are to
distributors, who purchase for resale to end-users. The distributors have certain limited rights to return products.
They are also entitled to certain price protection benefits, which give them credit for unsold products that they
continue to hold in inventory when we reduce our book prices for these items. At the time we record sales to these
distributors, we also recognize allowances against net sales for estimated product returns and price protection. To
estimate these allowances, we review historical returns and price adjustments on both a consolidated level and on an
individual distributor level as well as the general business and economic climate. These procedures require the
exercise of significant judgments, but we believe they enable us to estimate reasonably future credits for returns and
price adjustments.
Accounts Receivable
Our receivables represent a significant portion of our current assets. We are required to estimate the
collectability of our receivables and to establish allowances for the amount of receivables that will prove
uncollectible. We base these allowances on our historical collection experience, the length of time our receivables
are outstanding, the financial circumstances of individual customers, and general business and economic conditions.
In difficult economic periods such as in 2001, it becomes more difficult to accurately assess collectability, and we
are likely to increase the size of our collection reserves relative to the amount of receivables outstanding.
Inventories
We value our inventories at the lower of cost or market, with cost determined under the first-in first-out
method and market based upon net realizable value. The valuation of our inventories requires our management to
make market estimates. For instance, in the case of tantalum powder, we estimate market value by obtaining current
quotations from a number of available sources of supply. For work in progress goods, we are required to estimate
the cost to completion of the products and the prices at which we will be able to sell the products. For finished
goods, we must assess the prices at which we believe the inventory can be sold. As noted, we recorded substantial
write-downs of our tantalum and palladium inventories in 2001.
Estimates of Restructuring Expense and Purchase Related Restructuring Costs
In 2001, we recorded restructuring costs of approximately $95,000,000 related to our acquisitions and
$61,908,000 related to our existing businesses. Our acquisition-related restructuring costs included, among other
things, costs related to an exit plan that management began to formulate prior to the acquisition of General
Semiconductor. Our restructuring activities related to our existing business were designed to cut both our fixed and
variable costs, particularly in response to the reduced demand for our products occasioned by the electronics
industry downturn experienced in 2001. These included the closing of facilities and the termination of employees.
Acquisition-related costs are included in the allocation of the cost of the acquired business and generally add to
goodwill. Other restructuring costs are expensed during the period in which we determine that we will incur those
costs, and all of the requirements for accrual are met.
- 21 -
Because these costs are recorded based upon estimates, our actual expenditures for the restructuring
activities may differ from the initially recorded costs. If this happens, we will have to adjust our estimates in future
periods. In the case of acquisition-related restructuring costs, this would generally require a change in value of the
goodwill appearing on our balance sheet, but would not affect our earnings. In the case of other restructuring costs,
we could be required either to record additional expenses in future periods, if our initial estimates were too low, or
to reverse part of the charges that we recorded initially, if our initial estimates were too high.
Results of Operations
Income statement captions as a percentage of sales and the effective tax rates were as follows:
Costs of products sold
Gross profit
Selling, general and
administrative expenses
Operating income
Earnings before income taxes
and minority interest
Net earnings
Effective tax rate
Net Sales, Gross Profits and Margins
2001
77.0%
23.0
16.8
0.9
0.6
0.0
56.4
Year Ended December 31
2000
59.2%
40.8
12.1
28.3
28.0
21.0
21.5
1999
73.8%
26.2
14.5
11.0
7.7
4.7
27.4
Sales for the year ended December 31, 2001 decreased $809,720,000 or 32.9% from the prior year,
reflecting the downturn in the electronics industry that we experienced in 2001. The strengthening of the U.S. dollar
against foreign currencies for the year ended December 31, 2001, in comparison to the prior year, resulted in
decreases in reported sales of $16,338,000. We experienced lower sales in both our active and passive components
businesses. The decline was particularly pronounced in our commodity business for passive components such as
capacitors and resistors. The decline in the year-to-year sales numbers reflects both lower unit sales volume and
substantial downward pricing pressure. The decline was evidenced in virtually all of our end markets, but was
particularly pronounced in wireless communications and computers.
Costs of products sold as a percentage of net sales were 77.0% for the year ended December 31, 2001 as
compared to 59.2% for the prior year. Gross profit, as a percentage of net sales, for the year ended December 31,
2001 was 23.0% as compared to 40.8% for the prior year. The erosion in profit margins, in both the active and
passive segments, reflects reduced volume and lower prices in 2001, offset, to some extent, by a reduction in fixed
costs during the year. For the year ended December 31, 2001, costs of products sold included $70,000,000 for the
write-down of tantalum and palladium inventories.
Net sales for the year ended December 31, 2000 increased $704,975,000 or 40.1% from the prior year.
Both the passive and active components segments contributed to this increase. The strengthening of the U.S. dollar
against foreign currencies for the year ended December 31, 2000, in comparison to the prior year, resulted in
decreases in reported sales of $105,615,000. Strong demand, particularly in the wireless communications market, for
our products and increased average selling prices contributed to the sales growth.
Costs of products sold for the year ended December 31, 2000 were 59.2% of net sales, as compared to
73.8% for the prior year. Gross profit, as a percentage of net sales, for the year ended December 31, 2000 was 40.8%
as compared to 26.2% for the prior year. Both the passive and active components segments contributed to the
improved gross margins.
- 22 -
See “Israeli Government Incentives” regarding Israeli government grants, which are recorded as a
reduction in costs of products sold.
The following tables show sales and gross profit margins separately for our passive and active segments.
Passive Components
2001
Year Ended December 31
2000
1999
Net Sales
Gross Profit Margin
$1,010,634,000
20.6%
$1,627,860,000
41.7%
$1,008,266,000
22.4%
Net sales of passive components for the year ended December 31, 2001 decreased by $617,227,000 or
37.9% from comparable sales of the prior year. The decrease in net sales was primarily due to low volume and
strong pricing pressure with respect to commodity products and tantalum molded capacitor products. The decrease
in the passive components business gross profit margins in 2001 was related to strong pricing pressure, particularly
with respect to commodity products, excess capacity and higher costs for palladium and tantalum powder.
Additionally, write-downs of $70,000,000 on tantalum and palladium inventories were taken during the year ended
December 31, 2001, negatively impacting gross profit.
Sales of passive components for the year ended December 31, 2000 increased by $619,595,000 or 61.5%
over comparable sales from the prior year. Strong demand, particularly in the wireless communications market, for
our products, and increased average selling prices contributed to the sales growth. The increase in the passive
components business gross profit margins in 2000 over 1999 were attributable to price and volume increases in the
resistor, tantalum capacitor, and multi-layer ceramic chip capacitor product lines.
Active Components
2001
Year Ended December 31
2000
1999
Net Sales
Gross Profit Margin
$644,712,000
26.9%
$837,206,000
39.0%
$751,825,000
31.4%
Net sales of the active components business for the year ended December 31, 2001 decreased by
$192,494,000 or 23% from comparable sales of the prior year. The decrease in the active components business net
sales was primarily due to the decrease in net sales of Siliconix, of which Vishay owns 80.4%. Siliconix’s net sales
for the year ended December 31, 2001 were $305,566,000 as compared to $473,145,000, a 35.4% decrease. The
decrease from the prior year was primarily due to the downturn in the computer and cellular phone handset markets,
which resulted in reduced demand for the Company’s products, and overly optimistic industry forecasts for the cell
phone handset market, which led to excess handset inventories.
Revenues in the active segment for 2001 reflect revenues of $82,655,000 from the acquisitions of the U.S.
infrared business of Infineon in July 2001 and General Semiconductor in November 2001. Excluding the
contribution of these acquisitions, net sales in 2001 would have decreased by 32.9% as compared to 2000 and gross
profit margin would have been 26.9%.
Net sales for the active components business for the year ended December 31, 2000 increased by
$85,381,000 or 11.4% as compared to the prior year. The increase reflected strong demand and higher selling prices.
Gross profit margins in the active components business increased for the year ended December 31, 2000 over the
prior year as a result of continued cost reductions, increased manufacturing efficiencies and an improved product
mix. The increase reflects improvements at the Siliconix operation, where gross profit margins increased to 46.0%
of net sales in 2000 compared to 41.0% in 1999. This increase resulted from economies of scale in manufacturing
operations, productivity improvements, and further advances in technologies.
- 23 -
Selling, General and Administrative Expenses
Selling, general, and administrative expenses for the year ended December 31, 2001 were 16.8% of net
sales as compared to 12.1% of net sales for the prior year. The higher percentage in 2001 was due to reduced sales
levels. Selling, general and administrative expenses decreased by $19,144,000 for the year ended December 31,
2001, as compared to the prior year. We continue to implement cost reduction initiatives company-wide, with
particular emphasis on reducing headcount in high labor cost countries.
Our selling, general, and administrative expenses for the year ended December 31, 2000 were 12.1% of net
sales, as compared to 14.5% for the prior year. This reduction was a result of higher net sales in 2000 as compared to
1999 and reflects company-wide cost reduction initiatives, particularly the reduction of headcount in high labor cost
countries.
Restructuring Expense
Restructuring expense was $61,908,000 for the year ended December 31, 2001. Restructuring of European,
Asia Pacific, and Israeli operations included $27,064,000 of employee termination costs covering approximately
3,778 technical, production, administrative and support employees located in Austria, France, Germany, Hungary,
Israel, the Philippines and Portugal. Our European operations also recorded $2,191,000 of noncash costs associated
with the write-down of buildings and equipment that are no longer in use. In the United States, $13,870,000 of
restructuring expense relates to termination costs for approximately 1,885 technical, production, administrative and
support employees. The remaining $18,783,000 of restructuring expense relates to the noncash write-down of
buildings and equipment that are no longer in use.
The restructuring expense reflects the cost reduction programs that we have currently implemented. As of
December 31, 2001, $23,838,000 of severance costs have been paid. The remaining $17,096,000 of severance costs,
currently shown in other accrued expenses, should be paid by December 31, 2002.
Purchased Research and Development
We estimated that $16,000,000 of the General Semiconductor purchase price represents purchased in-
process technology that had not reached technological feasibility and had no alternative future use. Accordingly, this
amount was expensed with no tax benefit upon the acquisition of General Semiconductor. The value assigned to
purchased in-process technology was determined by identifying research projects in areas for which technological
feasibility has not been established. The value was determined by estimating the costs to develop the purchased in-
process technology into commercially viable products, estimating the resulting net cash flows from such projects,
and discounting the net cash flows back to their present value. The discount rate included a factor that takes into
account the uncertainty surrounding the successful development of the purchased in-process technology. If these
projects are not successfully developed, our future revenue and profitability may be adversely affected. Additionally,
the value of other intangible assets acquired may become impaired.
Interest Expense
Interest expense for the year ended December 31, 2001 decreased by $8,329,000 when compared to the
prior year. This decrease was a result of lower average outstanding bank borrowings and lower interest rates on
borrowings in 2001 as compared to the prior year. During the second quarter of 2001, we paid down the debt then
outstanding under our revolving credit agreement with the proceeds received from the issuance of Liquid Yield
Option Notes (LYONs). We also added $172,500,000 principal amount of 5.75% Convertible Subordinated
Debentures and $85,000,000 of bank debt in November 2001 from the acquisition of General Semiconductor (see
Note 5 to the Consolidated Financial Statements).
Our interest costs decreased by $28,119,000 for the year ended December 31, 2000 from the prior year.
This decrease was a result of lower bank borrowings during the year 2000 as compared to the prior year. We
received net proceeds of $395,449,000 from our offering of common stock in May 2000, which we used to pay
down long-term debt.
- 24 -
Other Income
Other income for the year ended December 31, 2001 was $12,701,000 as compared to $18,904,000 for the
comparable prior year period. Other income for the year ended December 31, 2001 consists primarily of interest
income, gains on disposal of property and equipment, and foreign exchange gains.
Other income (expense) was $18,904,000 for the year ended December 31, 2000 as compared to an
expense of $5,737,000 in the prior year. The 2000 amount includes higher interest income, a gain on sale of
subsidiaries, and a gain from the termination of interest rate swap agreements. We used proceeds received from our
offering of common stock in May 2000 and cash flows from operations to pay down debt outstanding under our
long-term revolving credit agreement. In connection with debt repayments, we terminated $200,000,000 notional
amount of interest rate swap agreements and recognized pretax gains of $8,919,000. These amounts were partially
offset by foreign exchange losses of $7,305,000.
Minority Interest
Minority interest decreased by $20,280,000 for the year ended December 31, 2001 as compared to the prior
year primarily due to the decrease in net earnings of Siliconix, of which we own 80.4%.
Minority interest increased by $9,641,000 for the year ended December 31, 2000 as compared to the prior
year primarily due to the increase in net earnings of Siliconix.
Income Taxes
The effective tax rate for the year ended December 31, 2001 was 56.4% as compared to 21.5% for the prior
year. The increase in the tax rate for 2001 reflects a significant decrease in net earnings, as compared to 2000, in low
tax jurisdictions, and the non-tax deductibility of the purchased research and development expense ($16,000,000)
related to the acquisition of General Semiconductor. The continuing low tax rates in Israel applicable to the
Company, as compared to the statutory rate in the United States, resulted in increases in net earnings of $3,009,000
and $89,745,000 for the years ended December 31, 2001 and 2000, respectively. The more favorable Israeli tax rates
are applied to specific approved projects and are normally available for a period of ten or fifteen years.
Our effective tax rate for the year ended December 31, 2000 was 21.5% as compared to 27.4% for the prior
year. The higher tax rate for the year ended December 31, 1999 reflects the non-tax deductibility of the loss on the
sale of Nicolitch, S.A. Tax expense on the sale of Nicolitch, S.A. was $1,416,000. Also, a tax rate change in
Germany resulted in a decrease in German deferred tax assets, which increased tax expense by $1,939,000.
Exclusive of the effect of the sale of Nicolitch, S.A. and the tax rate change in Germany, the effective tax rate on
earnings before minority interest for the year ended December 31, 1999 would have been 23.2%.
Financial Condition and Liquidity
Cash flows from operations were $161,418,000 for the year ended December 31, 2001 compared to
$542,319,000 for the prior year. The decrease in cash flows from operations reflects the effect of the economic
downturn in 2001 on our operating results. Net purchases of property and equipment for the year ended December
31, 2001 were $162,493,000 compared to $229,781,000 in the prior year, reflecting the slowdown in the business.
We also used cash of $172,468,000 for acquisitions in 2001, primarily for acquisitions of Tansitor in January 2001,
the infrared business of Infineon A.G. in July 2001 and Mallory in November 2001. The acquisitions were funded in
part by our cash balances and in part from borrowings. See Note 2 to the Consolidated Financial Statements for
discussion of these acquisitions.
We made net payments of $100,047,000 on our revolving credit lines during 2001, which were funded
primarily from the proceeds of our LYONs offering referred to below. See Notes 2 and 3 to the Consolidated
Financial Statements for discussion of restructuring costs paid during 2001 and expected to be paid in the future.
Other accrued expenses include $112,096,000 of acquisition-related costs and other restructuring costs expected to
be paid in cash subsequent to December 31, 2001.
- 25 -
In May 2001, we completed the offering of $550 million aggregate principal amount at maturity of Liquid
Yield Option Notes (LYONs) at an offering price of price of $551.26 per $1,000 aggregate principal amount at
maturity of notes. The net proceeds to us of this offering were approximately $294.1 million. The LYONs are
convertible into approximately 9.7 million shares of our common stock. The LYONs may be put to us at their
accreted value on June 4 of each of 2004, 2006, 2011 and 2016 at a purchase price per $1,000 aggregate principal
amount at maturity of $602.77, $639.76, $742.47 and $816.67, respectively. See Note 5 to the Consolidated
Financial Statements for discussion of the terms of the LYONs.
We completed our acquisition of General Semiconductor on November 2, 2001 in a stock-for-stock
transaction resulting in the issuance of 21,305,127 shares of our common stock. General Semiconductor had
outstanding $172.5 million principal amount 5.75% convertible notes, which as a result of the acquisition are now
convertible into approximately 6.3 million shares of Vishay common stock. As required by the terms of the notes,
following the merger, General Semiconductor made an offer to repurchase the notes at 101% of their principal
amount plus accrued interest. As a result of this offer, we acquired notes with a principal amount of $1.5 million in
January, 2002.
At December 31, 2001, we had a current ratio, (current assets to current liabilities), of 3.3 to 1, compared
with a ratio of 3.5 to 1 at December 31, 2000. Our ratio of long-term debt, less current portion, to stockholders’
equity was 0.26 to 1 at December 31, 2001 compared to 0.08 to 1 at December 31, 2000. The increase in long-term
debt ratio reflects the issuance of the LYONs, the effect of the General Semiconductor convertible notes, and the
issuance of shares of common stock in the General Semiconductor acquisition.
Our bank credit facility, as currently amended, provides for a $660,000,000 long-term revolving credit and
swing line facility maturing on June 1, 2005, subject to our right to request year-to-year renewals. Borrowings under
the facility bear interest at variable rates based, at our option, on the prime rate or a eurocurrency rate, and in the
case of any swing line advance, the quoted rate. The borrowings are secured by pledges of stock in certain of our
significant subsidiaries and indirect subsidiaries and guaranteed by certain of our significant subsidiaries. We are
required to pay facility fees on the long-term facility. The credit facility restricts us from paying cash dividends, and
requires us to comply with certain financial covenants. See Note 5 to the Consolidated Financial Statements for
additional information.
We believe that available sources of credit, together with cash expected to be generated from operations,
will be sufficient to satisfy our anticipated financing needs for working capital, capital expenditures and
opportunistic acquisitions during the next twelve months.
Commitments
As of December 31, 2001 the Company had contractual obligations in the form of non-cancelable operating
leases (see Note 11 to the Consolidated Financial Statements) and long-term contracts for the purchase of tantalum
powder and wire (see Note 13 to the Consolidated Financial Statements), as follows:
(in thousands)
Payments Due by Period
Total
Less than
1 year
1-3
years
4-5
years
After
5
years
Operating Leases
$113,365
$19,252
$30,134
$21,472
$42,507
Tantalum purchases
$595,000
$145,000
$300,000
$150,000
0
Total
$708,365
$164,252
$330,134
$171,472
$42,507
- 26 -
Euro Conversion
On January 1, 2002, 11 of the 15 member countries of the European Union implemented the adoption of
the euro as their common legal currency. We do not expect costs of system modifications required by this
implementation to be material, nor do we expect the use of the euro to materially and adversely affect our financial
condition or results of operations. We continue to evaluate the impact of the euro introduction.
Inflation
Normally, inflation does not have a significant impact on our operations as our products are not generally
sold on long-term contracts. Consequently, we can adjust our selling prices, to the extent permitted by competition,
to reflect cost increases caused by inflation.
Safe Harbor Statement
From time to time, information provided by us, including but not limited to statements in this report, or
other statements made by or on our behalf, may contain “forward-looking” information within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties and
contingencies, many of which are beyond our control, which may cause actual results, performance or achievements
to differ materially from those anticipated. Set forth below are important factors that could cause our results,
performance or achievements to differ materially from those in any forward-looking statements made by us or on
our behalf.
Changes in Product Demand, Competition, Backlog
• We and others in the electronic and semiconductor component industry have recently
experienced a decline in product demand on a global basis, resulting in order cancellations
and deferrals. This decline is primarily attributable to a slowing of growth in the personal
computer and cellular telephone product markets. This slowdown may continue and may
become more pronounced. The current slowdown in demand, as well as recessionary trends in
the global economy, makes it more difficult for us to predict our future sales, which also
makes it more difficult to manage our operations, and could adversely impact our results of
operations. In the past, adverse economic trends that resulted in a slowdown in demand for
electronic components have materially and adversely impacted our results of operations.
There is a risk that distributors and other customers for our products have inventories that are
overstocked from the prior business cycle. This could cause a lower demand for our products
in the initial phase of an economic upturn even if production in the electronics markets
increases. In addition, at the initial stage of a business cycle, increased efforts by distributors
to sell inventory remaining from the prior cycle may cause average selling prices to decrease.
Our published operating results for 2001 reflect some of these industry trends. For example,
during 2001, restructuring costs were approximately $61.9 million as a result of our
accelerated effort to streamline operations in response to the continued weakness in the
electronic components market at the time.
• Our business is highly competitive worldwide, with low transportation costs and few import
barriers. We compete principally on the basis of product quality and reliability, availability,
customer service, technological innovation, timely delivery and price. The electronic
components industry has become increasingly concentrated and globalized in recent years and
our major competitors, some of which are larger than us, have significant financial resources
and technological capabilities.
• Many of the orders that comprise our backlog may be canceled by customers without penalty.
Customers may on occasion double and triple order components from multiple sources to
ensure timely delivery when backlog is particularly long. Customers often cancel orders when
business is weak and inventories are excessive, a phenomenon that we are experiencing in the
- 27 -
current economic slowdown. Therefore, we cannot be certain the amount of our backlog does
not exceed the level of orders that will ultimately be delivered. Our results of operations could
be adversely impacted if customers cancel a material portion of orders in our backlog.
Product Development, Business Expansion
• Our future operating results are dependent, in part, on our ability to develop, produce and
market new and innovative products, to convert existing products to surface mount devices
and to customize certain products to meet customer requirements. There are numerous risks
inherent in this complex process, including the risks that we will be unable to anticipate the
direction of technological change or that we will be unable to timely develop and bring to
market new products and applications to meet customers’ changing needs.
• Our long-term historical growth in revenues and net earnings has resulted, in large part, from
our strategy of expansion through acquisitions. However, we cannot assure you that we will
identify or successfully complete transactions with suitable acquisition candidates in the
future. We also cannot assure you that acquisitions we complete will be successful. If an
acquired business fails to operate as anticipated or cannot be successfully integrated with our
other businesses, our results of operations, enterprise value, market value and prospects could
all be materially and adversely affected.
•
If we were to undertake a substantial acquisition for cash, the acquisition would likely need to
be financed in part through bank borrowings or the issuance of public or private debt. This
would likely decrease our ratio of earnings to fixed charges and adversely affect other
leverage criteria. Under our existing credit facility, we are required to obtain our lenders’
consent for certain additional debt financing, to comply with other covenants including the
application of specific financial ratios, and are restricted from paying cash dividends on our
capital stock. We cannot assure you that the necessary acquisition financing would be
available to us on acceptable terms when required. If we were to undertake an acquisition for
equity, the acquisition may have a dilutive effect on the interests of the holders of our
common stock.
• Our business is cyclical and in periods of a rising economy may experience intense demand
for our products. During such periods, we may have difficulty expanding our manufacturing
to satisfy demand. Factors which could limit such expansion include delays in procurement of
manufacturing equipment, shortages of skilled personnel and capacity constraints at our
facilities. If we are unable to meet our customers’ requirements and our competitors
sufficiently expand production, we could lose customers and/or market share. This could have
an adverse effect on our financial condition and results of operations and prospects.
• Any drop in demand or increase in supply of our products due to the expansion of production
capacity by our competitors could cause a dramatic drop in average sales prices causing a
decrease in gross margins.
Foreign Operations and Sales
• We have operations in 14 countries around the world outside the United States, and
approximately 59% of our revenues during 2001 were derived from sales to customers outside
the United States. Some of the countries in which we operate have in the past experienced and
may continue to experience political, economic and military instability or unrest. These
conditions could have an adverse impact on our ability to operate in these regions and,
depending on the extent and severity of these conditions, could materially and adversely
affect our overall financial condition and operating results.
- 28 -
• We have increased our operations in Israel over the past several years. The low tax rates in
Israel applicable to earnings of our operations in that country, compared to the rates in the
United States, have had the effect of increasing our net earnings. In addition, we have taken
advantage of certain incentive programs in Israel, which take the form of grants designed to
increase employment in Israel. Any significant increase in the Israeli tax rates or reduction or
elimination of the Israeli grant programs that have benefited us could have an adverse impact
on our results of operations. See Note 1 to the Consolidated Financial Statements for the year
ended December 31, 2001, contained in this annual report, for a description of our accounting
policy for grants received by certain subsidiaries from governments outside the United States.
Restructuring and Cost Reduction Activities
• Our strategy is aimed at achieving significant production cost savings through the transfer and
expansion of manufacturing operations to and in countries with lower production costs, such
as the Czech Republic, Israel, Mexico, the People’s Republic of China, Portugal and the
Republic of China (Taiwan). In this process, we may experience under-utilization of certain
plants and factories in high labor cost regions and capacity constraints in plants and factories
located in low labor cost regions. This may result, initially, in production inefficiencies and
higher costs. These costs include those associated with compensation in connection with work
force reductions and plant closings in the higher labor cost regions, start-up expenses,
manufacturing and construction delays, and increased depreciation costs in connection with
the initiation or expansion of production in lower labor cost regions.
• As we implement transfers of certain of our operations, we may experience strikes or other
types of labor unrest as a result of lay-offs or termination of employees in high labor cost
countries.
• Our strategy also focuses on the reduction of selling, general and administrative expenses
through the integration or elimination of redundant sales offices and administrative functions
at acquired companies. Our inability to achieve these goals could have an adverse effect on
our results of operations.
Raw Materials
• Our results of operations may be adversely impacted by:
1.
any other items needed for the production of our products;
difficulties in obtaining raw materials, supplies, power, natural resources and
the effects of quality deviations in raw materials, particularly tantalum powder,
2.
palladium and ceramic dielectric materials; and
3.
the effects of significant price increases for tantalum or palladium, or an
inability to obtain adequate supplies of tantalum or palladium from the limited number of
suppliers.
4.
the effects of significant decreases in the prices for tantalum or palladium on
existing inventories and purchase commitments for these materials. See “Description of
the Business - Sources of Supplies” above.
Environmental Issues
• Our manufacturing operations, products and/or product packaging are subject
to
environmental laws and regulations governing air emissions, wastewater discharges, the
handling, disposal and remediation of hazardous substances, wastes and certain chemicals
- 29 -
used or generated in our manufacturing processes, employee health and safety labeling or
other notifications with respect to the content or other aspects of our processes, products or
packaging, restrictions on the use of certain materials in or on design aspects of our products
or product packaging and responsibility for disposal of products or product packaging. More
stringent environmental regulations may be enacted in the future, and we cannot presently
determine the modifications, if any, in our operations that any such future regulations might
require, or the cost of compliance with these regulations. In order to resolve liabilities at
various sites, we have entered into various administrative orders and consent decrees, some of
which may be, under certain conditions, reopened or subject to renegotiation.
The Class B Common Stock
• We have two classes of common stock: common stock and Class B common stock. The
holders of common stock are entitled to one vote for each share held, while the holders of
Class B common stock are entitled to 10 votes for each share held. Currently, the Chairman
and CEO owns or has voting power over substantially all of our Class B common stock and
accordingly controls approximately 49.1% of our outstanding voting power. As a result, Dr.
Zandman is able to effectively control stockholder action.
• Effective control of our company by holders of the Class B common stock may make us less
attractive as a target for a takeover proposal. It may also make it more difficult or discourage
a merger proposal or proxy contest for the removal of the incumbent directors. Accordingly,
this may deprive the holders of common stock of an opportunity they might otherwise have to
sell their shares at a premium over the prevailing market price in connection with a merger or
acquisition of the Company with or by another company.
- 30 -
New Accounting Standards
Derivative Financial Instruments
Effective January 1, 2001, we adopted Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 requires all derivative instruments to be
recognized as either assets or liabilities and measured at fair value. The accounting for changes in fair value depends
upon the purpose of the derivative instrument and whether it is designated and qualifies for hedge accounting. We
use interest rate swap agreements to modify variable rate obligations to fixed rate obligations, thereby reducing
exposure to market rate fluctuations. The interest rate swap agreements are designated as hedges. The effective
portion of gains or losses is reported in other comprehensive income and the ineffective portion, if any, is reported in
net income.
Business Combinations and Goodwill
In June 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial
Accounting Standards No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other Intangible
Assets (SFAS 142). SFAS 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. SFAS 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets arising from business combinations completed after June 30,
2001. SFAS 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. SFAS 142
requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will
continue to be amortized over their estimated useful lives.
We will apply SFAS 142 beginning in the first quarter of 2002. Application of the non-amortization
provisions of SFAS 142 is expected to result in an increase in net income of $10,210,000 ($0.06 per share) in 2002.
We will test goodwill for impairment using the two-step process prescribed in SFAS 142. The first step is a screen
for potential impairment, while the second step measures the amount of the impairment, if any. We expect to
perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1,
2002 in the first quarter of 2002. If an impairment charge were to result from these transitional impairment tests, it
would be reflected as the cumulative effect of a change in accounting principle in the first quarter of 2002. We have
not yet determined what the effect of these tests will be on the earnings and financial position of the Company.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Disclosure
Our cash flows and earnings are subject to fluctuations resulting from changes in foreign currency
exchange rates and interest rates. We manage our exposure to these market risks through internally established
policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. Our
policies do not allow speculation in derivative instruments for profit or execution of derivative instrument contracts
for which there are no underlying exposures. We do not use financial instruments for trading purposes and we are
not a party to any leveraged derivatives. We monitor our underlying market risk exposures on an ongoing basis and
believe that we can modify or adapt our hedging strategies as needed.
We are exposed to changes in U.S. dollar LIBOR interest rates on our floating rate revolving credit facility.
At December 31, 2001, the outstanding balance under this facility was $125,000,000. On a selective basis, we from
time to time enter into interest rate swap or cap agreements to reduce the potential negative impact increases in
interest rates could have on our outstanding variable rate debt. The impact of interest rate instruments on our results
of operations in each of the three years ended December 31, 2001, December 31, 2000 and December 31, 1999 was
not significant. See Notes 5 and 12 to Consolidated Financial Statements for components of our long-term debt and
interest rate swap arrangements.
In August 1998, we entered into six interest rate swap agreements with a total notional amount of
$300,000,000 to manage interest rate risk related to our multicurrency revolving line of credit. As of December 31,
- 31 -
2001, five of these six agreements had been terminated. The remaining agreement, which expires in 2003, has a
notional amount of $100,000,000 and requires us to make payments to the counterparty at variable rates based on
USD-LIBOR-BBA rates. At December 2001, 2000 and 1999, we paid a weighted average fixed rate of 5.77%,
5.77% and 5.61%, respectively, and received a weighted average variable rate of 1.93%, 6.66% and 6.49%,
respectively. The fair value of our interest rate swap agreements, based on current market rates, approximated a net
payable of $4,686,000 at December 31, 2001 and a net receivable of $51,000 at December 31, 2000. During the year
ended December 31, 2001, the Company recorded a pre tax loss of $3,668,000 relating to an ineffective hedge for a
portion of time relating to an interest rate swap agreement (see Note 7 to the Consolidated Financial Statements).
Foreign Exchange Risk
We are exposed to foreign currency exchange rate risks. Our significant foreign subsidiaries are located in
Germany, France, Israel and the Far East. In most locations, we have introduced a “netting” policy where
subsidiaries pay all intercompany balances within thirty days. In September 1999, a subsidiary of ours entered into
foreign currency forward exchange contracts to manage the effect of exchange rate changes on certain foreign
currency denominated transactions. As of December 31, 2001, we did not have any outstanding foreign currency
forward exchange contracts.
In the normal course of business, our financial position is routinely subjected to a variety of risks, including
market risks associated with interest rate movements, currency rate movements on non-U.S. dollar denominated
assets and liabilities and collectability of accounts receivable.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of the Company and our 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, 2001 and 2000.
Consolidated Statements of Operations -- for the years ended December 31, 2001, 2000 and 1999.
Consolidated Statements of Cash Flows -- for the years ended December 31, 2001, 2000, and
1999.
Consolidated Statements of Stockholders’ Equity -- for the years ended December 31, 2001, 2000
and 1999.
Notes to Consolidated Financial Statements-- December 31, 2001.
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
- 32 -
PART III
Information with respect to Items 10, 11, 12 and 13 on Form 10-K is set forth in our definitive proxy
statement, which will be filed within 120 days of December 31, 2001, our most recent fiscal year. Such information
is incorporated herein by reference, except that information with respect to Executive Officers of Registrant is set
forth in Part I, Item 4A hereof under the caption, “Executive Officers of the Registrant.”
- 33 -
Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PART IV
(a)
(1)
All Consolidated Financial Statements of the Company and its subsidiaries for
the year ended December 31, 2001 are filed herewith. See Item 8 of this Report
for a list of such financial statements.
(2)
All financial statement schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
(3)
Exhibits-- See response to paragraph (c) below.
(b)
(c)
None.
Exhibits:
2.1
3.1
3.2
4.1
4.2
4.3
4.4
Agreement and Plan of Merger, dated as of July 31, 2001, by and among Vishay Intertechnology,
Inc., Vishay Acquisition Corp., and General Semiconductor, Inc. Incorporated by reference to
Annex A to the Joint Proxy Statement/Prospectus forming a part of the Registration Statement on
Form S-4 (No. 333-69004) filed on September 6, 2001.
Composite Amended and Restated Certificate of Incorporation of the Company dated August 3,
1995. Incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q
for the quarter ended June 30, 1995 (the “1995 Form 10-Q”). Certificate of Amendment of
Composite Amended and Restated Certificate of Incorporation of the Company. Incorporated by
reference to Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 1997 (the “1997 Form 10-
Q”). Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to Exhibit 3.1 to Form 8-K File filed November 13, 2001.
Amended and Restated Bylaws of Registrant. Incorporated by reference to Exhibit 3.1 to the
Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2001.
Indenture dated as of June 4, 2001 between the Vishay Intertechnology, Inc. and Bank of New
York as Trustee (incorporated by reference to Exhibit 4.1 to Current Report of Registrant on Form
8-K filed on June 18, 2001 under the Securities Exchange Act of 1934 except that clause (x) of
Section 5 thereof is corrected to read “(x) 0.0625% of the average LYON Market Price for the
Five Day Period with respect to such Contingent Interest Period and”).
Indenture dated as of December 14, 1999 between General Semiconductor, Inc. and The Bank of
New York as Trustee (incorporated by reference to Exhibit 4.5 to the Registration Statement on
Form S-3 (No. 333-94513) filed by General Semiconductor, Inc. on January 12, 2000).
First Supplemental Indenture dated as of November 2, 2001 among General Semiconductor, Inc.,
Vishay Intertechnology, Inc., and The Bank of New York as Trustee to Indenture dated as of
December 14, 1999.
Second Supplemental Indenture dated as of January 8, 2002 among General Semiconductor, Inc.,
Vishay Intertechnology, Inc., and The Bank of New York as Trustee to Indenture dated as of
December 14, 1999.
10.1
Performance-Based Compensation Plan for Chief Executive Officer of Registrant. Incorporated by
reference to Exhibit 10.1 to Form 10-K for fiscal year ended December 31, 1993.
- 34 -
10.2
10.3
10.4
10.5
10.6
10.7
10.8
21.
23.
Vishay Intertechnology, Inc. Amended and Restated Long Term Revolving Credit Agreement,
dated as of June 1, 1999, by and among Vishay and the Permitted Borrowers (as defined therein),
the Lenders (as defined therein), and Comerica Bank, as administrative agent. Incorporated by
reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-3 (No. 333-52594)
filed December 22, 2000.
First Amendment to Amended and Restated Vishay Intertechnology, Inc. Long Term Revolving
Credit Agreement and Other Loan Documents, dated as of August 31, 2000, by and among the
Company and the Permitted Borrowers (as defined therein), Comerica Bank and the other Lenders
signatory thereto, and Comerica Bank, as administrative agent. Incorporated by reference to
Exhibit 10.2 to the Company’s Registration Statement on Form S-3 (No. 333-52594) filed
December 22, 2000.
Employment Agreement, dated as of March 15, 1985, between the Company and Dr. Felix
Zandman. Incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on
Form S-2 (No. 33-13833).
Vishay Intertechnology, Inc. 1995 Stock Option Program. Incorporated by reference to the
Company’s Definitive Proxy Statement on Schedule 14ADR filed April 7, 1995.
Vishay Intertechnology, Inc. 1997 Stock Option Program. Incorporated by reference to the
Company’s Definitive Proxy Statement on Schedule 14A filed April 16, 1998.
Vishay Intertechnology, Inc. 1998 Stock Option Program. Incorporated by reference to the
Company’s Definitive Proxy Statement on Schedule 14A filed April 16, 1998.
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).
Subsidiaries of the Registrant.
Consent of Independent Auditors.
- 35 -
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.
SIGNATURES
April 1, 2002
VISHAY INTERTECHNOLOGY, INC.
/s/ Felix Zandman
Felix Zandman, Chairman
of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
/s/ Felix Zandman
Felix Zandman, Chairman
of the Board and Chief
Executive Officer
(Principal Executive Officer)
/s/ Avi D. Eden
Avi D. Eden, Vice-Chairman
of the Board, Executive Vice President
and General Counsel
/s/Gerald Paul
Gerald Paul, Director, President
and Chief Operating Officer
/s/Richard N. Grubb
Richard N. Grubb, Director,
Executive Vice President, Treasurer and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
/s/Robert A. Freece
Robert A. Freece, Director,
Senior Vice President
/s/Eli Hurvitz
Eli Hurvitz, Director
/s/Edward B. Shils
Edward B. Shils, Director
- 36 -
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
April 1, 2002
/s/Ziv Shoshani
Ziv Shoshani, Director
/s/Mark I. Solomon
Mark I. Solomon, Director
/s/Jean-Claude Tine
Jean-Claude Tine, Director
/s/Marc Zandman
Marc Zandman, Director
/s/Ruta Zandman
Ruta Zandman, Director
- 37 -
Vishay Intertechnology, Inc.
Consolidated Financial Statements
Years ended December 31, 2001, 2000, and 1999
Contents
Report of Independent Auditors ................................................................................................................................................F-1
Audited Consolidated Financial Statements
Consolidated Balance Sheets......................................................................................................................................................F-2
Consolidated Statements of Operations....................................................................................................................................F-4
Consolidated Statements of Cash Flows...................................................................................................................................F-5
Consolidated Statements of Stockholders’ Equity..................................................................................................................F-7
Notes to Consolidated Financial Statements ...........................................................................................................................F-8
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,
2001 and 2000, and the related consolidated statements of operations, cash flows, and stockholders’ equity for each
of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Vishay Intertechnology, Inc. at December 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.
As discussed in Note 1 to the financial statements, the Company has not yet adopted Statement of Financial
Accounting Standards No. 142. However, the transition provisions of that Statement preclude the amortization of
goodwill acquired in a business combination for which the acquisition date is after June 30, 2001.
Philadelphia, Pennsylvania
February 6, 2002, except for Note 17,
as to which the date is February 13, 2002
/s/ Ernst & Young LLP
F-1
Vishay Intertechnology, Inc.
Consolidated Balance Sheets
(In thousands, except per share and share amounts)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, less allowances of $17,126 and $12,630
Inventories:
$
367,115
382,358
$
337,213
452,579
December 31
2001
2000
Finished goods
Work in process
Raw materials
Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Property and equipment – at cost:
Land
Buildings and improvements
Machinery and equipment
Construction in progress
Less allowances for depreciation
260,161
136,842
204,454
63,084
160,613
1,574,627
92,311
289,672
1,397,262
82,269
1,861,514
(693,981)
1,167,533
179,286
130,682
215,894
32,051
127,169
1,474,874
47,625
265,311
1,168,241
83,768
1,564,945
(591,391)
973,554
Goodwill
1,077,790
295,759
Other intangible assets
83,337
–
Other assets
Total assets
48,236
$ 3,951,523
39,471
$ 2,783,658
F-2
Liabilities and stockholders’ equity
Current liabilities:
Notes payable to banks
Trade accounts payable
Payroll and related expenses
Other accrued expenses
Income taxes
Current portion of long-term debt
Total current liabilities
Long-term debt – less current portion
Deferred income taxes
Deferred income
Minority interest
Other liabilities
Accrued pension costs
Stockholders’ equity:
Preferred Stock, par value $1.00 per share:
authorized – 1,000,000 shares; none issued
Common Stock, par value $.10 per share:
authorized – 300,000,000 shares; 143,795,355 and 122,408,402
shares outstanding after deducting 332,850 and 225,673 shares
in treasury
Class B convertible Common Stock, par value $.10 per share:
authorized – 40,000,000 shares; 15,496,634 and 15,518,546
shares outstanding after deducting 279,453 shares in treasury
Capital in excess of par value
Retained earnings
Unearned compensation
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes.
$
December 31
2001
2000
11,241
89,467
71,841
292,596
13,081
367
478,593
605,031
90,340
57,208
66,516
139,273
148,017
$
8,250
120,070
111,132
146,157
31,915
150
417,674
140,467
79,109
55,162
63,480
93,157
100,754
14,380
12,241
1,550
1,865,979
615,968
(921)
(130,411)
2,366,545
$ 3,951,523
1,552
1,319,426
615,455
(1,248)
(113,571)
1,833,855
$ 2,783,658
F-3
Vishay Intertechnology, Inc.
Consolidated Statements of Operations
(In thousands, except per share and share amounts)
Year ended December 31
2001
2000
1999
$ 1,655,346
1,273,827
$ 2,465,066
1,459,784
$ 1,760,091
1,299,705
381,519
1,005,282
460,386
278,171
11,190
61,908
16,000
14,250
(16,848)
12,701
(4,147)
10,103
5,695
3,895
513
0.00
0.00
$
$
$
297,315
11,469
–
–
696,498
(25,177)
18,904
(6,273)
690,225
148,186
24,175
517,864
3.83
3.77
$
$
$
254,282
12,360
–
–
193,744
(53,296)
(5,737)
(59,033)
134,711
36,940
14,534
83,237
0.66
0.65
$
$
$
Net sales
Costs of products sold
Gross profit
Selling, general, and administrative expenses
Amortization of goodwill
Restructuring expense
Purchased research and development
Other income (expense):
Interest expense
Other
Earnings before income taxes and minority interest
Income taxes
Minority interest
Net earnings
Basic earnings per share
Diluted earnings per share
Weighted average shares outstanding:
Basic
Diluted
141,171,000
142,514,000
135,295,000
137,463,000
126,678,000
128,233,000
See accompanying notes
F-4
Vishay Intertechnology, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Operating activities
Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization
(Gain) loss on sale of subsidiaries
(Gain) loss on disposal of property and equipment
Minority interest in net earnings of consolidated
subsidiaries
Equity in earnings of affiliate
Purchased research and development
Noncash charge for change in fair value of interest
rate swap
Accretion of interest on convertible debentures
Writedowns of property and equipment included in
restructuring expense
Changes in operating assets and liabilities, net of
effects of businesses acquired or sold:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Other current liabilities
Other
Net cash provided by operating activities
Investing activities
Purchases of property and equipment
Proceeds from sale of property and equipment
Purchases of businesses, net of cash acquired
Net cash proceeds from divestitures
Net cash used in investing activities
2001
Year ended December 31
2000
1999
$
513
$
517,864
$
83,237
163,387
–
(1,472)
3,895
–
16,000
3,668
5,313
20,975
120,095
6,038
(7,321)
(71,761)
(105,685)
7,773
161,418
(162,493)
9,911
(172,468)
–
(325,050)
140,840
(5,851)
2,320
24,175
2,577
–
–
–
–
(148,414)
(140,084)
(62,687)
28,507
106,084
76,988
542,319
(229,781)
7,267
(42,384)
33,162
(231,736)
139,676
10,073
1,146
14,534
2,195
–
–
–
–
(72,776)
25,998
14,451
15,838
24,146
(18,971)
239,547
(119,638)
7,934
–
9,118
(102,586)
F-5
Vishay Intertechnology, Inc.
Consolidated Statements of Cash Flows (continued)
(In thousands)
Year ended December 31
2000
1999
2001
Financing activities
Net payments on revolving credit lines
Proceeds from long-term borrowings
Principal payments on long-term debt
Proceeds from convertible subordinated debentures
Purchase of treasury stock
Proceeds from sale of common stock
Proceeds from stock options exercised
Net changes in short-term borrowings
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
$ (100,047)
415
(444)
294,096
(850)
–
854
3,274
197,298
(3,764)
29,902
$ (506,686)
–
(385)
–
(5,765)
395,449
39,873
39
(77,475)
(1,088)
232,020
$ (143,496)
197
(4,481)
–
–
–
–
6,752
(141,028)
(4,469)
(8,536)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
337,213
367,115
$
105,193
337,213
$
113,729
105,193
$
See accompanying notes.
F-6
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Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements
December 31, 2001
Vishay Intertechnology, Inc. is an international manufacturer and supplier of passive and active electronic
components, particularly resistors, capacitors, inductors, power MOSFETS, power conversion and motor
control integrated circuits, transistors, diodes and optoelectronic components. Electronic components
manufactured by the Company are used in virtually all types of electronic products, including those in the
computer, telecommunications, military/aerospace, instrument, automotive, medical, and consumer
electronics industries.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Vishay Intertechnology, Inc. and its majority-
owned subsidiaries, after elimination of all significant intercompany transactions, accounts, and profits.
Investments in 20%- to 50%-owned companies are accounted for on the equity method. Investments in
other companies are carried at cost.
Revenue Recognition
The Company recognizes revenue when products are shipped to customers. The Company has agreements
with distributors that provide limited rights of return and protection against price reductions initiated by the
Company. The effect of these programs is estimated based on historical experience and provisions are
recorded at the time of shipment.
Shipping and Handling Costs
Shipping and handling costs are included in costs of products sold.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ significantly from those
estimates.
Inventories
Inventories are stated at the lower of cost, determined by the first-in, first-out method, or market.
F-8
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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 $149,225,000, $126,285,000, and $125,847,000 for the years ended December 31, 2001,
2000, and 1999, respectively.
Construction in Progress
The estimated cost to complete construction in progress at December 31, 2001 was $7,531,000.
Goodwill
Goodwill represents the excess of purchase price over net assets acquired. Goodwill acquired prior to
July 1, 2001 has been amortized principally over periods ranging from 20-40 years using the straight-line
method. Goodwill acquired after June 30, 2001 has not been amortized in accordance with the transition
provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets. The recoverability of goodwill was evaluated at the operating unit level by an analysis of
operating results and consideration of other significant events or changes in the business environment. If an
operating unit had current operating losses, and based upon projections there was a likelihood that such
operating losses would continue, the Company determined whether impairment existed on the basis of
undiscounted expected future cash flows from operations before interest for the remaining amortization
period. If impairment existed, goodwill was reduced by the estimated shortfall of discounted cash flows.
Goodwill will be subject to an initial impairment test in connection with the adoption of SFAS No. 142
effective January 1, 2002, and annual impairment tests as required by SFAS No. 142 thereafter.
Accumulated amortization amounted to $69,995,000 and $60,061,000 at December 31, 2001 and 2000,
respectively.
Intangible Assets
Other intangible assets consist of trademarks ($35,000,000) and completed technology of businesses
acquired after June 30, 2001 ($48,337,000). Trademarks have an indefinite life and therefore are not
amortized. Completed technology is being amortized over estimated useful lives of seven to ten years.
F-9
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Cash Equivalents
Cash and cash equivalents includes demand deposits and all highly liquid investments with maturities of
three months or less when purchased.
Research and Development Expenses
The amount charged to expense for research and development (exclusive of purchased in-process research
and development) aggregated $30,176,000, $37,103,000, and $35,038,000, for the years ended December
31, 2001, 2000, and 1999, respectively. The Company spends additional amounts for the development of
machinery and equipment for new processes and for cost reduction measures.
Grants
Grants received by certain foreign subsidiaries from foreign governments, primarily in Israel, are
recognized as income in accordance with the purpose of the specific contract and in the period in which the
related expense is incurred. Grants from the Israeli government recognized as a reduction of costs of
products sold were $19,064,000, $15,721,000, and $14,256,000 for the years ended December 31, 2001,
2000, and 1999, respectively. Grants receivable of $14,858,000 and $23,792,000 are included in other
current assets at December 31, 2001 and 2000, respectively. Deferred grant income was $57,208,000 and
$55,162,000 at December 31, 2001 and 2000, respectively. The grants are subject to certain conditions,
including maintaining specified levels of employment for periods up to ten years. Noncompliance with
such conditions could result in the repayment of grants. However, management expects that the Company
will comply with all terms and conditions of the grants.
Minority Interest
Minority interest represents the ownership interests of third parties in the net assets and results of
operations of certain consolidated subsidiaries.
F-10
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Stock-Based Compensation
SFAS No. 123, Accounting for Stock-Based Compensation, encourages entities to record compensation
expense for stock-based employee compensation plans at fair value but provides the option of measuring
compensation expense using the intrinsic value method prescribed in Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees. The Company accounts for stock-based
compensation in accordance with APB No. 25. Note 10 presents pro forma results of operations as if SFAS
No. 123 had been used to account for stock-based compensation plans.
Derivative Financial Instruments
Effective January 1, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. SFAS No. 133 requires all derivative instruments to be recognized as either assets
or liabilities and measured at fair value. The accounting for changes in fair value depends upon the purpose
of the derivative instrument and whether it is designated and qualifies for hedge accounting. The Company
uses interest rate swap agreements to modify variable rate obligations to fixed rate obligations, thereby
reducing exposure to market rate fluctuations. The interest rate swap agreements are designated as hedges.
The effective portion of gains or losses is reported in other comprehensive income and the ineffective
portion, if any, is reported in net income.
Commitments and Contingencies
Liabilities for loss contingencies, including environmental remediation costs, arising from claims,
assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. The
costs for a specific environmental cleanup site are discounted if the aggregate amount of the obligation and
the amount and timing of the cash payments for that site are fixed or reliably determinable generally based
upon information derived from the remediation plan for that site. Recoveries from third parties that are
probable of realization and can be reasonably estimated are separately recorded, and are not offset against
the related environmental liability.
F-11
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Accounting Pronouncements Pending Adoption
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS
No. 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible
assets arising from business combinations completed after June 30, 2001. SFAS No. 142 prohibits the
amortization of goodwill and intangible assets with indefinite useful lives. SFAS No. 142 requires that
these assets be reviewed for impairment as least annually. Intangible assets with finite lives will continue to
be amortized over their estimated useful lives.
The Company will apply SFAS No. 142 beginning in the first quarter of 2002. Application of the
nonamortization provisions of SFAS No. 142 is expected to result in an increase in net income of
$10,210,000 ($0.06 per share) in 2002. The Company will test goodwill for impairment using the two-step
process prescribed in SFAS No. 142. The first step is a screen for potential impairment, while the second
step measures the amount of the impairment, if any. The Company expects to perform the first of the
required impairment tests of goodwill and indefinite-lived intangible assets as of January 1, 2002 in the first
quarter of 2002. If an impairment charge were to result from these transitional impairment tests, it would be
reflected as the cumulative effect of a change in accounting principle in the first quarter of 2002. The
Company has not yet determined what the effect, if any, of these tests will be on the earnings and financial
position of the Company.
Goodwill related to the Company’s acquisitions of General Semiconductor, Infineon and Mallory,
described in Note 2, all of which were completed after June 30, 2001, has not been amortized in accordance
with the transition provisions of SFAS No. 142. This had the effect of increasing net income by $6,485,000
($0.05 per share) in 2001.
In 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
This statement supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and provides a single accounting model for long-lived assets to be
disposed and broadens the presentation of discontinued operations to include more disposal transactions.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001, and interim periods within
those fiscal years, with early application encouraged. The Company will adopt this statement beginning
January 1, 2002.
F-12
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Reclassifications
Certain prior-year amounts have been reclassified to conform to the current financial statement
presentation.
2. Acquisitions and Divestitures
In January 2001, the Company purchased Tansitor, a manufacturer of wet tantalum electrolytic capacitors
and miniature conformal coated solid tantalum capacitors, for $18.3 million in cash. The acquisition was
accounted for as a purchase and included in the results of operations of the passives segment from January
1, 2001. Goodwill of $14,539,000 was amortized in 2001 based on a twenty-year life.
On July 27, 2001, the Company agreed to purchase from Infineon Technologies AG, Munich, the Infineon
optoelectronic infrared components business. This business produces optocouplers and optoelectric infrared
data components transceivers (IRDC). The total purchase price for this transaction was approximately $116
million in cash. A partial payment of $78 million was made on July 27, 2001. A second payment of $38
million was made on December 31, 2001. The acquisition was funded with cash on hand. Under the terms
of the agreement, the Company purchased Infineon’s U.S. development, marketing, and distribution
activities located in the San Jose, California headquarters and a manufacturing facility located in Malaysia.
The results of operations of Infineon’s U.S. infrared components business are included in the results of the
actives segment from July 27, 2001. The results of operations of the Malaysia facility are included as of
December 31, 2001. The purchase price has been preliminarily allocated, pending finalization of appraisals,
as follows:
Current assets
Property, plant, and equipment
Completed technology
Current liabilities
Goodwill
Total purchase price
$
$
35,444,000
27,575,000
12,000,000
(12,125,000)
53,179,000
116,073,000
F-13
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Divestitures (continued)
On November 7, 2001, the Company acquired Yosemite Investment, Inc. d/b/a North American Capacitor
Company, also known as Mallory, for approximately $45 million in cash. The Company borrowed funds
from its revolving credit facility to finance the acquisition. With manufacturing facilities in Greencastle,
Indiana and Glasgow, Kentucky, Mallory is a leading manufacturer of wet tantalum electrolytic capacitors,
among other businesses. The results of operations of Mallory are included in the passives segment as of
November 7, 2001. The preliminary purchase price allocation is as follows:
Current assets
Property, plant, and equipment
Current liabilities
Long-term debt
Goodwill
Total purchase price
$
$
11,033,000
6,347,000
(3,555,000)
(857,000)
31,684,000
44,652,000
On November 2, 2001, the Company acquired General Semiconductor, Inc. a leading manufacturer of
rectifiers and power management devices, following approval of the transaction and related matters by
stockholders of the two companies. Stockholders of General Semiconductor received 0.563 shares of
Vishay Common Stock for each General Semiconductor share in a tax-free exchange (21,305,127 shares).
Vested options to purchase 4,282,000 shares of Vishay Common Stock were issued in exchange for
General Semiconductor options. General Semiconductor also has outstanding $172.5 million principal
amount of 5.75% convertible notes, which as a result of the acquisition are now convertible into
approximately 6.3 million shares of Vishay Common Stock. The results of operations of General
Semiconductor are included in the results of the actives segment from November 2, 2001. The purchase
price was as follows:
Fair value of shares issued
Fair value of options issued
Acquisition expenses
Total purchase price
$
$
499,818,000
48,000,000
7,028,000
554,846,000
F-14
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Divestitures (continued)
Under purchase accounting, the total purchase price is allocated to assets acquired and liabilities assumed
based on their estimated fair values. The allocation of the purchase price is based on a preliminary
evaluation of the fair value of General Semiconductor’s tangible and identifiable intangible assets acquired
and liabilities assumed at the date of the merger based upon currently available information. There can be
no assurance that the estimated amounts represent the final purchase allocation. The purchase price has
been preliminarily allocated, pending finalization of appraisals, to the acquired assets and liabilities based
on fair values as follows:
Current assets
Property, plant, and equipment
Other assets
Trademarks
Completed technology
Current liabilities
Long-term debt
Other noncurrent liabilities
Goodwill
Total purchase price
$
$
122,111,000
189,297,000
48,963,000
35,000,000
36,337,000
(181,193,000)
(255,502,000)
(132,284,000)
692,117,000
554,846,000
In connection with the General Semiconductor acquisition, the Company recorded restructuring liabilities
of $94,643,000 in connection with an exit plan that management began to formulate prior to the acquisition
date. Approximately $88,242,000 of these liabilities relate to employee termination costs covering
approximately 1,460 technical, production, administrative and support employees located in the United
States, Europe, and the Pacific Rim. The remaining $6,401,000 relate to provisions for lease cancellations
and other costs. The liability is recorded in other accrued expenses and is expected to be paid out by the
first quarter of 2003. The exit plan is not yet finalized. Future adjustments to increase or decrease the
restructuring liabilities would increase or decrease goodwill.
Management estimated that $16,000,000 of the General Semiconductor purchase price represents
purchased in-process technology that had not reached technological feasibility and had no alternative future
use. Accordingly, this amount was expensed with no tax benefit upon consummation of the acquisition.
The value assigned to purchased in-process technology was determined by identifying research projects in
areas for which technological feasibility has not been established. The value was determined by estimating
the costs to develop the purchased in-process technology into commercially viable products, estimating the
resulting net cash flows from such projects, and discounting the net cash flows back to their present value.
The discount rate included a factor that takes into account the uncertainty surrounding the successful
F-15
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Divestitures (continued)
development of the purchased in-process technology. If these projects are not successfully developed,
future revenue and profitability of Vishay may be adversely affected. Additionally, the value of other
intangible assets acquired may become impaired.
Had the acquisitions been made at the beginning of the respective periods, the Company’s pro forma
unaudited results would have been (in thousands, except per share amounts):
Net sales
Net earnings (loss)
Year ended December 31
2000
2001
$
2,089,213
(39,335)
$
3,153,616
575,594
Basic earnings (loss) per share
Diluted earnings (loss) per share
(0.25)
(0.25)
3.68
3.46
The pro forma information includes adjustments for interest expense that would have been incurred to
finance the acquisitions, adjustments to depreciation based on the fair value of property, plant, and
equipment acquired, write-off of purchased in-process research and development, amortization of goodwill
for acquisitions prior to July 1, 2001, and related tax effects. Goodwill related to the acquisitions is not tax
deductible.
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.
During 2000, the Company acquired certain assets and assumed certain liabilities of Spectrol Electronics
Corporation and Spectrol Electronics Limited and acquired 100% of the common stock of Cera-Mite
Corporation and of Electro-Films, Inc. The combined cash purchase price was $42,384,000. The results of
operations of Electro-Films, Cera-Mite, and Spectrol have been included in the Company’s results from
June 1, 2000, August 1, 2000, and September 1, 2000, respectively. Goodwill ($19,707,000) has been
amortized over 20 years using the straight-line method. The pro forma effect of these acquisitions was not
material for 2000 or 1999.
F-16
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
2. Acquisitions and Divestitures (continued)
On May 31, 2000, the Company entered into a definitive agreement for the sale of its 65% interest in Lite-
On Power Semiconductor Corporation (LPSC) to the Lite-On Group for $40,736,000 in cash and the
transfer to the Company of the rights under the SARs (see Note 6) issued in July 1997. The fair value of the
SARs was $108,495,000 as of May 31, 2000. A pretax gain of $8,401,000 is included in other income in
2000 in connection with the sale of the Company’s 65% interest in LPSC.
On November 30, 2000, the Company sold V-Tech Latino Americana LTDA, its Brazilian distribution
subsidiary. In connection with the sale, the Company received cash proceeds of approximately $400,000
and recorded a noncash pretax loss of $2,550,000, which is included in other income (expense).
On March 26, 1999, the Company sold Nicolitch, S.A., its French manufacturer of printed circuit boards. In
connection with the sale, the Company received proceeds of approximately $9,118,000 and recorded a
noncash pretax loss of $10,073,000, which is included in other income (expense).
3. Restructuring Expense
Restructuring expense was $61,908,000 for the year ended December 31, 2001. Restructuring of European,
Asia Pacific, and Israeli operations included $27,064,000 of employee termination costs covering
approximately 3,778 technical, production, administrative and support employees located in France,
Hungary, Portugal, Austria, the Philippines, Germany, and Israel. The European operations also recorded
$2,191,000 of noncash costs associated with the writedown of buildings and equipment that are no longer
in use. In the United States, $13,870,000 of restructuring expense relates to termination costs for
approximately 1,885 technical, production, administrative and support employees. The remaining
$18,783,000 of restructuring expense relates to the noncash writedown of buildings and equipment that are
no longer in use.
The restructuring expense reflects the cost reduction programs currently being implemented by the
Company. As of December 31, 2001, $23,838,000 of severance costs has been paid. The remaining
$17,096,000 of severance costs, currently shown in other accrued expenses, should be paid by December
31, 2002.
F-17
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4.
Income Taxes
Earnings before income taxes and minority interest consists of the following components:
Domestic
Foreign
2001
Year ended December 31
2000
(In thousands)
1999
$
$
(55,598)
65,701
10,103
$
$
177,852
512,373
690,225
$
26,717
107,994
$ 134,711
Significant components of income taxes are as follows:
Current:
U.S.
Foreign
State
Deferred:
U.S.
Foreign
State
2001
Year ended December 31
2000
(In thousands)
1999
$
$
6,194
9,197
641
16,032
(12,392)
4,031
(1,976)
(10,337)
5,695
$
$
51,965
11,936
4,744
68,645
62,156
17,540
(155)
79,541
148,186
$
$
1,685
6,810
728
9,223
21,957
5,333
427
27,717
36,940
F-18
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4.
Income Taxes (continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant
components of the Company’s deferred tax assets and liabilities are as follows:
Deferred tax assets:
Pension and other retiree obligations
Net operating loss carryforwards
Tax credit carryforwards
Restructuring reserves
Other accruals and reserves
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Tax over book depreciation
Non-amortizable intangible assets
Other – net
Total deferred tax liabilities
Net deferred tax assets (liabilities)
December 31
2001
2000
(In thousands)
$
$
41,500
38,869
13,080
23,678
51,348
168,475
(10,256)
158,219
88,377
26,412
16,284
131,073
27,146
$
$
18,393
32,406
2,143
3,412
32,595
88,949
(19,658)
69,291
83,489
–
16,966
100,455
(31,164)
F-19
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4.
Income Taxes (continued)
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to actual income tax
expense is as follows:
Tax at statutory rate
State income taxes, net of U.S. federal tax benefit
Effect of foreign operations
Purchased research and development
Other
2001
Year ended December 31
2000
(In thousands)
1999
$
$
3,536
(382)
(4,894)
5,600
1,835
5,695
$
$
241,579
3,064
(99,520)
–
3,063
148,186
$
$
47,149
606
(13,717)
–
2,902
36,940
At December 31, 2001, the Company had the following significant net operating loss carryforwards for tax
purposes (in thousands):
Czech Republic
France
Germany
Israel
Portugal
United States
$
3,411
4,594
44,972
2,471
6,680
51,151
Expires
2005 – 2007
2006
No expiration
No expiration
2002 – 2007
2021
Approximately $22,486,000 of the carryforward in Germany resulted from the Company’s acquisition of
Roederstein, GmbH in 1993. Valuation allowances of $7,324,000 and $19,068,000 have been recorded at
December 31, 2001 and 2000, respectively, for deferred tax assets related to foreign net operating loss
carryforwards. In 2001 and 2000, respectively, tax benefits recognized through reductions of the valuation
allowance had the effect of reducing goodwill of acquired companies by $4,901,000 and $2,693,000. If
additional tax benefits are recognized in the future through further reduction of the valuation allowance,
$2,547,000 of such benefits will reduce goodwill.
F-20
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
4.
Income Taxes (continued)
At December 31, 2001, the Company had the following tax credit carryforwards available (in thousands):
Federal Alternative Minimum Tax
California Investment Credit
California Research Credit
$
7,625
6,094
2,169
Expires
No expiration
2007 – 2010
No expiration
At December 31, 2001, no provision had been made for U.S. federal and state income taxes on
approximately $937,880,000 of foreign earnings, which are expected to be reinvested indefinitely. Upon
distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S.
income taxes (subject to an adjustment for foreign tax credits), state income taxes, and withholding taxes
payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S.
income tax liability is not practicable because of the complexities associated with its hypothetical
calculation.
Income taxes paid were $72,953,000, $45,703,000, and $5,463,000 for the years ended December 31, 2001,
2000, and 1999, respectively.
5. Long-Term Debt
Long-term debt consists of the following:
Multicurrency revolving credit loans
Convertible subordinated notes, LYONs, due 2021
Other debt and capital lease obligations
Convertible subordinated notes, GSI,
due 2006
Less current portion
December 31
2001
2000
(In thousands)
$
$
125,000
308,506
1,390
170,502
605,398
367
605,031
$
$
140,000
–
617
–
140,617
150
140,467
F-21
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt (continued)
The Company has a $660,000,000 long-term revolving credit and swing line facility which matures on June
1, 2005, subject to the Company’s right to request year-to-year renewals. Interest on the long-term facility
is payable at prime or other variable interest rate options. The Company is required to pay facility fees on
the long-term facility. As of December 31, 2001, the Company had $125,000,000 outstanding under the
long-term revolving credit facility (interest rate of 2.43%; 5.77% after giving effect to interest rate swaps).
Borrowings under the loan agreement are secured by pledges of stock in certain significant subsidiaries and
certain guaranties by significant subsidiaries. The credit facility restricts the Company from paying cash
dividends and requires the Company to comply with other covenants, including the maintenance of specific
financial ratios.
On June 4, 2001, the Company completed a private placement of $550,000,000 face amount Liquid Yield
Option Notes (LYONs) due 2021. In connection with the sale of the LYONs, the Company received net
proceeds of $294,096,000 and used the proceeds to pay down existing bank debt. Each LYON has a $1,000
face amount and was offered at a price of $551.26 (55.126% of the principal amount at maturity). The
Company will not pay interest on the LYONs prior to maturity unless contingent interest becomes payable.
Instead, on June 4, 2021, the maturity date of the LYONs, the holders will receive $1,000 per LYON. The
issue price of each LYON represents a yield to maturity of 3.00%, excluding any contingent interest. The
LYONs are subordinated in right of payment to all of the Company’s existing and future senior
indebtedness.
At any time on or before the maturity date, the LYONs are convertible into Vishay Common Stock at a rate
of 17.6686 shares of Common Stock per $1,000 principal amount at maturity. The conversion rate may be
adjusted under certain circumstances, but it will not be adjusted for accrued original issue discount.
The Company is required to pay contingent interest to the holders of the LYONs during the six-month
period commencing June 4, 2006 and during any six-month period thereafter if the average market price of
a LYON for a certain measurement period immediately preceding the applicable six-month period equals
120% or more of the sum of the issue price and accrued original issue discount for such LYON. The
amount of contingent interest payable during any six-month period will be the sum of any contingent
interest payable in the first and second three-month periods during such six-month period. During any
three-month period in which contingent interest becomes payable, the contingent interest payable per
LYON for such period will be equal to the greater of (1) 0.0625% of the average market price of a LYON
for the measurement period referred to above or (2) the sum of all regular cash dividends paid by the
Company per share on its common stock during such three-month period multiplied by the number of
shares of common stock issuable upon conversion of a LYON at the then-applicable conversion rate.
F-22
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt (continued)
The holders of the LYONs may require the Company to repurchase all or a portion of their LYONs on June
4, 2004, 2006, 2011, and 2016 at various prices set forth in the notes. The Company may choose to pay the
purchase price in cash, Common Stock, or a combination of both. The Company may redeem for cash all or
a portion of the LYONs at any time on or after June 4, 2006 at the prices set forth in the notes.
General Semiconductor, which was acquired by the Company on November 2, 2001, has outstanding
$172.5 million principal amount of 5.75% convertible subordinated notes due December 15, 2006. The
notes were recorded at their fair value of $170.5 million as of the November 2, 2001 acquisition date.
Interest on the convertible notes is payable semiannually on June 15 and December 15 of each year. As a
consequence of the Company’s acquisition of General Semiconductor, the convertible notes became
convertible into approximately 6.3 million shares of the Company’s Common Stock. The convertible notes
are redeemable at the Company’s option, in whole or in part, at any time on or after December 15, 2002 at
a premium of 103.286% of par value declining annually to 100.821% at December 15, 2005 and thereafter.
Aggregate annual maturities of long-term debt, assuming that the Company is required to repurchase the
LYONs in 2004, are as follows: 2002 – $367,000; 2003 – $255,000; 2004 – $308,755,000; 2005 –
$214,000; 2006 – $295,664,000; and thereafter – $143,000.
At December 31, 2001, the Company had committed and uncommitted short-term credit lines with various
U.S. and foreign banks aggregating $78,516,000, of which $67,275,000 was unused. The weighted average
interest rate on short-term borrowings outstanding as of December 31, 2001 and 2000 was 2.53% and
6.57%, respectively.
Interest paid was $15,685,000, $29,930,000, and $53,605,000 for the years ended December 31, 2001,
2000, and 1999, respectively.
F-23
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
6. Stockholders’ Equity
The Company’s Class B Common 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 into shares of
Common Stock.
The Company completed a public offering of its Common Stock on May 15, 2000, selling 8,392,500 shares
at a price of $49.00 (adjusted for the June 9, 2000 three-for-two stock split). The total net proceeds to the
Company from the offering, after deducting the underwriting discount and estimated expenses, were
approximately $395,449,000. These proceeds were used to repay a portion of the debt outstanding under its
long-term revolving credit facility.
In connection with the Company’s acquisition of 65% of LPSC in July 1997, the Company issued stock
appreciation rights (SARs) to the Lite-On Group (former owners of LPSC). The SARs represented the right
to receive, in stock, the increase in value on the equivalent of 3,200,000 shares of the Company’s Common
Stock, above $11.68 per share. On January 24, 2000, the Company exercised its right to call the SARs.
Based on the call price of $26.43 per share and the average closing price of Vishay shares for the thirty
days prior to January 24, 2000, the Company would have had to issue 2,294,000 shares of Common Stock
to settle the SARs. In connection with the sale of its 65% interest in LPSC to the Lite-On Group (see Note
2), the Lite-On Group transferred its rights under the SARs to Vishay.
On November 2, 2001, the stockholders approved an increase in the authorized capital stock of the
Company. The total authorized Common Stock was increased from 150,000,000 to 300,000,000 shares and
the Class B Common Stock was increased from 20,000,000 to 40,000,000 shares.
On August 10, 2000, the Board of Directors of the Company authorized the repurchase of up to 5,000,000
shares of its Common Stock from time to time in the open market. As of December 31, 2001, the Company
had repurchased 248,500 shares for a total of $6,616,000.
Unearned compensation relating to Common Stock issued under employee stock plans is being amortized
over periods ranging from three to five years. At December 31, 2001, 305,126 shares were available for
issuance under stock plans.
F-24
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
7. Other Income (Expense)
Other income (expense) consists of the following:
2001
Year ended December 31
2000
(In thousands)
1999
Foreign exchange gains (losses)
Loss on ineffective interest rate swap
Interest income
Equity in net income of affiliates
Gain on termination of interest rate swap agreements
Gains (losses) on sale of subsidiaries
Gains (losses) on disposal of property and equipment
Other
$
$
611
(3,668)
15,092
–
–
–
1,472
(806)
12,701
$
$
(7,305)
–
9,652
2,577
8,919
5,851
(2,320)
1,530
18,904
$
$
86
–
3,968
2,195
–
(10,073)
(1,179)
(734)
(5,737)
In connection with repayments of debt in 2000, the Company terminated $200,000,000 notional amount of
interest rate swap agreements (see Note 12) and recognized pretax gains of $8,919,000.
During the year ended December 31, 2000, the Company sold its 65% interest in LPSC and all of the assets
of V-Tech Latino American LTDA. The sale of LPSC resulted in a pretax gain of $8,401,000 and the sale
of V-Tech resulted in a pretax loss of $2,550,000. During the year ended December 31, 1999, the Company
sold Nicolitch S.A. and recorded a pretax loss of $10,073,000 (see Note 2).
F-25
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
8. Other Comprehensive Income
The income tax effects allocated to and the cumulative balance of each component of other comprehensive
income (loss) are as follows:
December 31, 2001
Pension liability adjustment
Currency translation adjustment
Loss on derivative financial
instruments
December 31, 2000
Pension liability adjustment
Currency translation adjustment
December 31, 1999
Pension liability adjustment
Currency translation adjustment
Beginning
Balance
Before-Tax
Amount
Tax
Benefit
(Expense)
(In thousands)
Net-of-Tax
Amount
Ending
Balance
$
(5,137)
(108,434)
–
$ (113,571)
$
(5,043)
(75,966)
$ (81,009)
$
$
(8,386)
587
(7,799)
$
$
$
$
$
$
(13,281)
(7,638)
(1,019)
(21,938)
1,258
(32,468)
(31,210)
6,177
(76,553)
(70,376)
$
$
$
$
$
$
4,724
–
374
5,098
$
(8,557)
(7,638)
$ (13,694)
(116,072)
(645)
$ (16,840)
(645)
$(130,411)
(1,352)
–
(1,352)
$
(94)
(32,468)
$(32,562)
$
(5,137)
(108,434)
$ (113,571)
(2,834)
–
(2,834)
$
3,343
(76,553)
$ (73,210)
$
(5,043)
(75,966)
$ (81,009)
F-26
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Pensions and Other Postretirement Benefits
The Company maintains several defined benefit pension and nonpension postretirement plans which cover
substantially all full-time U.S. employees. The U.S. pension plans of General Semiconductor are included
as of November 2, 2001. The following table sets forth a reconciliation of the benefit obligation, plan
assets, and accrued benefit cost related to these plans:
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Employee contributions
Actuarial losses (gains)
Plan amendments
Benefits paid
Acquisition of General Semiconductor
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning
of year
Actual return on plan assets
Company contributions
Plan participants’ contributions
Benefits paid
Acquisition of General Semiconductor
Fair value of plan assets at end of year
Funded status
Unrecognized net actuarial loss (gain)
Unrecognized transition obligation (asset)
Unamortized prior service cost
Additional minimum liability
Net amount recognized
Pension Benefits
2001
2000
Other Benefits
2001
2000
(In thousands)
$ 116,008
3,092
9,023
2,019
(169)
–
(7,565)
70,865
$ 193,273
$ 104,447
2,528
7,858
2,067
6,152
–
(7,044)
–
$ 116,008
$
7,964
240
678
–
325
–
(523)
11,602
$ 20,286
$
$
7,331
225
545
–
104
314
(555)
–
7,964
$ 102,918
(1,078)
5,113
2,019
(7,565)
63,779
$ 165,186
$ (28,087)
26,812
(302)
–
(8,864)
$ (10,441)
$ 99,440
2,982
5,473
2,067
(7,044)
–
$ 102,918
$ (13,090)
15,772
(193)
8
–
2,497
$
$ (20,286)
(671)
2,128
639
–
$ (18,190)
$ (7,964)
(187)
2,322
732
–
$ (5,097)
F-27
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Pensions and Other Postretirement Benefits (continued)
Amounts recognized in the consolidated
balance sheets consist of:
Prepaid benefit cost
Accrued benefit liability
Accumulated other comprehensive loss
Net amount recognized
Weighted-average assumptions
as of December 31:
Discount rate
Expected return on plan assets
Rate of compensation increase
Pension Benefits
2001
2000
Other Benefits
2001
2000
(In thousands)
$
–
(19,305)
8,864
$ (10,441)
$
$
7,018
(4,521)
–
2,497
$
$
–
(18,190)
–
(18,190)
$
$
–
(5,097)
–
(5,097)
7.25%
8.50%-9.50%
4.50%
7.25%
8.50%-9.50%
4.50%
7.25%
7.25%
Components of net periodic
benefit cost:
Annual service cost
Less expected employee
contributions
Net service cost
Interest cost
Expected return on plan
Amortization of prior
service cost
Amortization of
transition obligation
Amortization of (gains)
losses
Net periodic benefit cost
assets
(10,048)
(8,703)
(8,259)
Pension Benefits
2000
2001
1999
2001
(In thousands)
Other Benefits
2000
1999
$ 5,388
$ 4,595
$ 5,255
$
240
$
225
$
264
2,296
3,092
9,023
2,067
2,528
7,858
1,959
3,296
6,981
6
311
67
110
98
110
–
240
678
–
93
194
–
225
545
–
93
–
264
496
–
31
194
214
514
$ 2,898
556
$ 2,416
461
$ 2,687
–
$ 1,205
(17)
$ 1,040
6
$ 1,011
F-28
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Pensions and Other Postretirement Benefits (continued)
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the
pension plans with accumulated benefit obligations in excess of plan assets were $121,472,000,
$107,553,000, and $99,210,000, respectively, as of December 31, 2001 and $21,829,000, $21,355,000, and
$15,899,000, respectively, as of December 31, 2000.
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the
pension plans with projected benefit obligations in excess of plan assets were $121,472,000, $107,553,000,
and $99,210,000, respectively, as of December 31, 2001 and $116,008,000, $102,340,000, and
$102,918,000, respectively, as of December 31, 2000.
The Company maintains two unfunded nonpension postretirement plans funded as costs are incurred. One
plan, which covers the Company’s employees, is contributory, with employee contributions adjusted for
general inflation or inflation in costs under the plan. The plan was amended in 1993 to cap employer
contributions at 1993 levels. The second plan covers all full-time U.S. General Semiconductor employees
not covered by a collective bargaining agreement who meet defined age and service requirements. This
plan is the primary provider of benefits for retirees up to age 65, after which Medicare becomes the primary
provider. The impact of a one-percentage-point change in assumed health care cost trend rates on the net
periodic benefit cost and postretirement benefit obligation is immaterial.
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 $3,182,000, $3,161,000, and $3,196,000 for the years ended December 31, 2001, 2000, and 1999,
respectively.
The Company provides pension and similar benefits to employees of certain foreign subsidiaries consistent
with local practices. German subsidiaries of the Company have defined benefit pension plans. The German
pension plans of General Semiconductor are included as of November 2, 2001. The following table sets
forth a reconciliation of the benefit obligation, plan assets, and accrued benefit cost related to the German
plans:
F-29
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Pensions and Other Postretirement Benefits (continued)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gains
Benefits paid
Foreign currency translation
Acquisition of General Semiconductor
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid
Foreign currency translation
Fair value of plan assets at end of year
Funded status
Unrecognized net actuarial losses
Unrecognized transition asset
Unamortized prior service cost
Net amount recognized
2001
2000
(In thousands)
$
$
$
$
90,548
391
5,301
(26)
(4,845)
(3,845)
5,873
93,397
13,417
1,019
1,947
(2,440)
(806)
13,137
$
$
$
$
98,108
440
5,755
(915)
(4,871)
(7,969)
–
90,548
13,726
677
2,408
(2,514)
(880)
13,417
$ (80,260)
1,560
18
(6)
$ (78,688)
$ (77,131)
4,347
(9)
58
$ (72,735)
F-30
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
9. Pensions and Other Postretirement Benefits (continued)
Amounts recognized in the consolidated balance
sheets consist of:
Accrued benefit liability
Accumulated other comprehensive income
Net amount recognized
2001
2000
(In thousands)
$ (84,298)
5,610
$ (78,688)
$ (78,742)
6,007
$ (72,735)
Weighted-average assumptions as of December 31:
Discount rate
Rate of compensation increase
6.50%
3.00%
6.50%
3.00%
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of transition asset
Amortization of losses
Net periodic benefit cost
2001
2000
(In thousands)
1999
$
$
391
5,301
(444)
36
(3)
97
5,378
$
$
440
5,755
(440)
45
(4)
151
5,947
$
$
554
6,501
(488)
65
(6)
250
6,876
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the
German pension plans with accumulated benefit obligations and projected benefit obligations in excess of
plan assets were $81,463,000, $81,646,000, and $13,137,000, respectively, as of December 31, 2001 and
$90,548,000, $89,064,000, and $13,417,000, respectively, as of December 31, 2000.
F-31
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
10. Stock Options
The Company has three stock option programs. Under the 1995 Stock Option Program, certain key
executives of the Company were granted options on March 19, 1995, to purchase 2,283,000 shares of the
Company’s Common Stock. The options were fully vested on the date of grant and expired March 1, 2000,
with one-third exercisable at $12.21, one-third exercisable at $15.36, and one-third exercisable at $21.94.
As of December 31, 2000, options to purchase 2,010,000 shares had been exercised under this plan and the
remaining options had been canceled.
Under the 1997 Stock Option Program, certain executive officers, key employees, and consultants of the
Company were granted options on May 21, 1998, to purchase 2,687,000 shares of the Company’s Common
Stock. The options were fully vested on the date of grant and expire June 1, 2008, with one-third
exercisable at $10.89, one-third exercisable at $12.53, and one-third exercisable at $13.61. As of December
31, 2001, options to purchase 528,000 shares have been exercised under this plan.
Under the 1998 Stock Option Program, certain executive officers and key employees were granted options,
as summarized in the following table:
Date of Grant
# of Options
October 6, 1998
October 8, 1999
August 4, 2000
1,598,000
1,334,000
50,000
Exercise
Price
$ 5.60
15.33
30.00
October 12, 2000
1,114,000
25.13
Vesting
Expiration
Evenly over 6 years
Evenly over 6 years
Evenly over 5 years, beginning
August 4, 2003
Evenly over 6 years
March 16, 2008
October 8, 2009
August 4, 2010
October 12, 2010
On May 18, 2000, the stockholders of the Company approved an increase in the number of shares available
for grant under Vishay’s 1998 Stock Option Program. As a result, the number of shares available for grant
under this program increased from 2,953,500 to 4,453,500. As of December 31, 2001, options to purchase
278,000 shares have been exercised under this plan.
F-32
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
10. Stock Options (continued)
On November 2, 2001, Vishay acquired General Semiconductor and General Semiconductor became a
wholly owned subsidiary of the Company. As a result of the acquisition, each outstanding option to acquire
General Semiconductor common stock became exercisable for shares of Vishay Common Stock. Based on
the conversion ratio in the acquisition of 0.563 of a Vishay share for each General Semiconductor share, the
former General Semiconductor options become exercisable in the aggregate for 4,282,000 shares of Vishay
Common Stock. All such options were immediately vested and exercisable as a result of the merger but the
terms of the options otherwise remained unchanged.
The following table summarizes the Company’s stock option activity (options in thousands):
2001
2000
1999
Number
of
Options
Weighted
Average
Exercise
Price
Number
of
Options
Weighted
Average
Exercise
Price
Number
of
Options
Weighted
Average
Exercise
Price
Outstanding at beginning of
year
Granted
Exercised
Forfeited
Canceled
Acquisition of General
Semiconductor
Outstanding at end of year
5,646
–
(86)
–
(273)
4,282
9,569
$14.29
–
9.99
–
17.82
18.10
15.97
7,493
1,164
(2,656)
–
(355)
–
5,646
$12.67
25.34
15.08
–
10.41
–
14.29
6,295
1,334
(88)
–
(48)
–
7,493
$11.96
15.33
5.60
–
6.05
–
12.67
Exercisable at end of year
7,358
15.74
2,651
11.96
4,866
13.83
Available for future grants
958
760
69
F-33
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
10. Stock Options (continued)
The following table summarizes information concerning stock options outstanding and exercisable at
December 31, 2001 (options in thousands) :
Options Outstanding
Weighted
Average
Remaining
Contractual
Life
Weighted
Average
Exercise Price
Options Exercisable
Number of
Options
Weighted
Average
Exercise Price
2.57
6.76
6.39
6.36
2.34
7.77
8.56
6.87
4.20
8.50
7.08
$ 2.64
5.60
11.76
13.23
14.43
15.33
15.97
18.95
22.42
25.91
$15.97
3
445
1,289
1,387
93
362
1,394
1,368
593
424
7,358
$ 2.64
5.60
11.76
13.23
14.43
15.33
15.97
18.95
22.42
26.96
$15.74
Range of
Exercise Prices
Number of
Options
$2.64
$5.60
$10.89 - $12.53
$12.54 - $13.61
$14.32 - $14.99
$15.33
$15.43 - $16.41
$16.52 - $20.86
$21.43 - $24.30
$25.13 - $34.52
Total
3
1,039
1,289
1,387
93
1,097
1,394
1,368
593
1,306
9,569
The following is provided to comply with the disclosure requirements of SFAS No. 123. If compensation
cost for the Company’s stock option programs had been determined using the fair-value method prescribed
by SFAS No. 123, the Company’s results would have been reduced to the pro forma amounts indicated
below (in thousands, except per share amounts):
Year ended December 31
2000
1999
2001
Net earnings
Basic earnings per share
Diluted earnings per share
$(3,229)
(0.02)
(0.02)
$515,296
3.81
3.75
$82,103
0.65
0.64
F-34
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
10. Stock Options (continued)
The weighted average fair value of the options granted was estimated using the Black-Scholes option
pricing model, with the assumptions presented below. All options granted in 2000 had a weighted average
fair value of $11.64 and a weighted average exercise price of $25.34. All options granted in 1999 had an
exercise price equal to the market value and a weighted average fair value of $6.21.
2000
1998 Stock Option
Program
1999
1998 Stock Option
Program
Expected dividend yield
Risk-free interest rate
Expected volatility
Expected life (in years)
–
5.8%
58.2%
4.7
–
6.0%
51.3%
4.5
11. Commitments and Contingencies
Total rental expense under operating leases was $22,994,000, $21,431,000, and $21,390,000 for the years
ended December 31, 2001, 2000, and 1999, respectively.
Future minimum lease payments for operating leases with initial or remaining noncancelable lease terms in
excess of one year are as follows: 2002 – $19,252,000; 2003 – $17,230,000; 2004 – $12,904,000; 2005 –
$11,007,000; 2006 – $10,465,000; and thereafter – $42,507,000.
F-35
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
11. Commitments and Contingencies (continued)
Environmental Matters
The Company is subject to various federal, state, local and foreign laws and regulations governing
environmental matters, including the use, discharge and disposal of hazardous materials. The Company’s
manufacturing facilities are believed to be in substantial compliance with current laws and regulations.
Complying with current laws and regulations has not had a material adverse effect on the Company’s
financial condition. As part of the acquisition of General Semiconductor by Vishay on November 2, 2001,
the Company assumed ongoing environmental matters.
The Company has engaged independent consultants to assist management in evaluating potential liabilities
related to environmental matters. Management assesses the input from these independent consultants along
with other information known to the Company in its effort to continually monitor these potential liabilities.
Management assesses its environmental exposure on a site-by-site basis, including those sites where the
Company has been named as a “potentially responsible party.” Such assessments include the Company’s
share of remediation costs, information known to the Company concerning the size of the hazardous waste
sites, their years of operation and the number of past users and their financial viability. The Company has a
reserve recorded at December 31, 2001 for environmental matters relating to General Semiconductor.
While the ultimate outcome of these matters cannot be determined, management does not believe that the
final disposition of these matters will have a material adverse effect on the Company’s financial position,
results of operations, or cash flows beyond the amounts previously provided for in the financial statements.
The Company’s present and past facilities have been in operation for many years, and over that time in the
course of those operations, such facilities have used substances which are or might be considered
hazardous, and the Company has generated and disposed of wastes which are or might be considered
hazardous. Therefore, it is possible that additional environmental issues may arise in the future, which the
Company cannot now predict.
F-36
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
11. Commitments and Contingencies (continued)
Litigation
In February and March 2001, several purported class action complaints were filed in the Delaware Court of
Chancery and the California Superior Court against the Company, Siliconix and the directors of Siliconix
in connection with a proposal announced by the Company in February 2001 to purchase all issued and
outstanding shares of Siliconix that the Company did not already own. The class actions alleged that the
Company’s proposed offer was unfair and a breach of fiduciary duty. One of the Delaware class actions
also alleged that the Company had usurped Siliconix inventory and patents, appropriated Siliconix’s
separate corporate identity, and obtained a below-market loan from Siliconix. The actions sought
injunctive relief, damages and other relief. The Delaware Chancery Court denied a preliminary injunction
motion seeking to enjoin the Company’s tender offer, which was commenced in May 2001 but not
successfully completed. Motions of the Company and Siliconix to dismiss the actions in Delaware and for
summary judgment are pending. The actions in California have been stayed.
The Company is not a party to any other pending legal proceedings other than various claims and lawsuits
arising in the normal course of business and those for which the Company is indemnified. The Company is
of the opinion that these litigations or claims will not have a material negative effect on its consolidated
financial position, results of operations, or cash flows.
12. Financial Instruments
The Company uses financial instruments in the normal course of its business, including derivative financial
instruments, for purposes other than trading. These financial instruments include debt and interest rate swap
agreements. The notional or contractual amounts of these commitments and other financial instruments are
discussed below.
Concentration of Credit Risk
Financial instruments with potential credit risk consist principally of cash and cash equivalents and
accounts receivable. The Company maintains cash and cash equivalents with various major financial
institutions. Concentrations of credit risk with respect to receivables are generally limited due to the
Company’s large number of customers and their dispersion across many countries and industries. At
December 31, 2001, the Company had no significant concentrations of credit risk. At December 31, 2000,
the Company had one customer that represented 13.7% of accounts receivable. The customer’s accounts
receivable balance has been collected as of December 31, 2001.
F-37
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
12. Financial Instruments (continued)
Interest Rate Swap Agreements
In August 1998, the Company entered into six interest rate swap agreements, maturing in 2003, with a total
notional amount of $300,000,000 to manage interest rate risk related to its multicurrency revolving line of
credit. These interest rate swap agreements required the Company to make payments to the counterparties
at the fixed rate stated in the agreements, and in return to receive payments from the counterparties at
variable rates. During fiscal 2000, the Company terminated $200,000,000 notional amount of interest rate
swap agreements and recognized a pretax gain of $8,919,000. At December 31, 2001, the Company had
outstanding one interest rate swap agreement with a notional amount of $100,000,000. At December 31,
2001 and 2000, the Company paid a weighted average fixed rate of 5.77%, respectively, and received a
weighted average variable rate of 1.93% and 6.66%, respectively. The fair value of the interest rate swap
agreements, based on current market rates, approximated a net payable of $4,686,000 at December 31,
2001 and a net receivable of $51,000 at December 31, 2000. During the year ended December 31, 2001, the
Company recorded a pretax loss of $3,668,000 relating to an ineffective hedge for a portion of time relating
to an interest rate swap agreement (see Note 7).
Cash and Cash Equivalents, Notes Payable, and Long-Term Debt
The carrying amounts reported in the consolidated balance sheets approximate fair value.
13. Current Vulnerability Due to Certain Concentrations
Customer Concentrations
A material portion of the Company’s revenues are derived from the worldwide communications and
computer markets. These markets have historically experienced wide variations in demand for end
products. If demand for these end products should decrease significantly, the producers thereof could
reduce their purchases of the Company’s products, which could have a material adverse effect on the
Company’s results of operations and financial position.
F-38
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
13. Current Vulnerability Due to Certain Concentrations (continued)
Sources of Supply
Although most materials incorporated in the Company’s products are available from a number of sources,
certain materials (particularly tantalum and palladium) are available only from a relatively limited number
of suppliers.
Many of Vishay’s products require the use of raw materials that are produced in only a limited number of
regions around the world or are available from only a limited number of suppliers. Vishay’s results of
operations may be materially and adversely affected if Vishay has difficulty obtaining these raw materials,
the quality of available raw materials deteriorates or there are significant price increases for these raw
materials. For example, the prices for tantalum and palladium, two raw materials that Vishay uses in its
capacitors, are subject to fluctuation. For periods in which the prices of these raw materials are rising,
Vishay may be unable to pass on the increased cost to Vishay’s customers, which would result in decreased
margins for the products in which they are used. For periods in which the prices are declining, Vishay may
be required to write down its inventory carrying cost of these raw materials which, depending on the extent
of the difference between market price and its carrying cost, could have a material adverse effect on
Vishay’s net earnings.
Vishay is a major consumer of the world’s annual production of tantalum. Tantalum, a metal purchased in
powder or wire form, is the principal material used in the manufacture of tantalum capacitors. There are
currently three major suppliers that process tantalum ore into capacitor grade tantalum powder. Due to the
strong demand for its tantalum capacitors and difficulty in obtaining sufficient quantities of tantalum
powder from its suppliers, Vishay stockpiled tantalum ore in 2000 and early 2001. During the year ended
December 31, 2001, Vishay experienced a significant decrease in sales due to declining orders and the
deferral or cancellation of existing orders. Vishay’s tantalum capacitor business was particularly impacted
by the slowdown in sales. Prices for tantalum ore and powder decreased during this period. As a result,
Vishay recorded in costs of products sold writedowns of $52,000,000 on tantalum inventories during the
year ended December 31, 2001. If the downward pricing trend were to continue, Vishay could again be
required to write down the carrying amount of its inventory of tantalum ore. In addition, during the period
of shortage, the Company entered into long-term take or pay contracts to purchase specified quantities of
tantalum powder and wire at fixed prices through 2005. Under the terms of these contracts, the tantalum
purchase commitments are approximately $145,000,000 for 2002 and approximately $150,000,000 annually
F-39
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
13. Current Vulnerability Due to Certain Concentrations (continued)
Sources of Supply (continued)
for 2003 through 2005. The fixed prices under these contracts may exceed the market price at various
times during the term of the contracts. Also, the quantities of powder and wire committed to under the
contracts may exceed the Company’s production demands. In addition, Vishay may make purchases of
tantalum from its other suppliers at prices that are subject to periodic adjustment. Any of these factors
could have a material adverse effect on Vishay’s net earnings.
Palladium, a metal used to produce multi-layer ceramic capacitors, is currently found primarily in South
Africa and Russia. Palladium is a commodity product that is subject to price volatility. The price of
palladium fluctuated in the range of approximately $201 to $1,110 per troy ounce during the three years
ended December 31, 2001, and as of December 31, 2001, the price of palladium was $446 per troy ounce.
During the year ended December 31, 2001, the Company recorded in costs of products sold a writedown of
$18,000,000 on palladium inventories.
From time to time there have been short-term market shortages of raw material utilized by Vishay. While
these shortages have not historically adversely affected Vishay’s ability to increase production of products
containing tantalum and palladium, they have historically resulted in higher raw material cost for Vishay.
Vishay cannot assure that any of these market shortages in the future would not adversely affect Vishay’s
ability to increase production, particularly during periods of growing demand for Vishay’s products.
Geographic Concentration
To address the increasing demand for its products and to lower its costs, the Company has expanded, and
plans to continue to expand, its manufacturing operations in Israel in order to take advantage of that
country’s lower wage rates, highly skilled labor force, government-sponsored grants, and various tax
abatement programs. Israeli incentive programs have contributed substantially to the growth and
profitability of the Company. The Company might be materially and adversely affected if these incentive
programs were no longer available to the Company or if events were to occur in the Middle East that
materially interfered with the Company’s operations in Israel.
F-40
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
14. Business Segment and Geographic Area Data
Vishay designs, manufactures, and markets electronic components that cover a wide range of products and
technologies. The Company has two reportable segments: Passive Electronic Components (Passives)
consisting principally of fixed resistors, solid tantalum surface mount chip capacitors, solid tantalum leaded
capacitors, wet/foil tantalum capacitors, multi-layer ceramic chip capacitors, film capacitors and inductors,
and Active Electronic Components (Actives) consisting principally of diodes, transistors, power
MOSFETS, power conversion, motor control integrated circuits, optoelectronic components and IRDCs.
The Company evaluates performance and allocates resources based on several factors, of which the primary
financial measure is business segment operating income excluding amortization of intangibles and special
charges. The accounting policies of the business segments are the same as those described in the summary
of significant accounting policies (see Note 1). The operating results of Actives reflect the acquisitions of
General Semiconductor as of November 2, 2001 and Infineon U.S. as of July 27, 2001, and include LPSC
from July 1, 1997 through its divestiture in 2000. Business segment assets are the owned or allocated assets
used by each business.
The corporate component of operating income represents corporate selling, general, and administrative
expenses. Corporate assets include corporate cash, property, plant, and equipment, and certain other assets.
During the year 2000, one North American distributor accounted for 14% of total net sales. During the
years 2001 and 1999, no individual customer accounted for more than 10% of net sales.
F-41
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
14. Business Segment and Geographic Area Data (continued)
Business segment information
Net sales:
Passives
Actives
Operating income:
Passives
Actives
Corporate
Restructuring expense
Purchased research and development
Amortization of goodwill
Depreciation expense:
Passives
Actives
Corporate
Total assets:
Passives
Actives
Corporate
Capital expenditures:
Passives
Actives
Corporate
2001
2000
(In thousands)
1999
$
$
$
$
$
$
$
$
$
$
1,010,634
644,712
1,655,346
60,137
65,181
(21,970)
(61,908)
(16,000)
(11,190)
14,250
83,735
61,238
4,252
149,225
1,876,282
1,980,841
94,400
3,951,523
91,028
68,463
3,002
162,493
$
$
$
$
$
$
$
$
$
$
1,627,860
837,206
2,465,066
547,156
204,640
(43,829)
–
–
(11,469)
696,498
73,803
52,250
232
126,285
1,931,610
809,360
42,688
2,783,658
131,318
95,343
3,120
229,781
$
$
$
$
$
$
$
$
$
$
1,008,266
751,825
1,760,091
104,655
119,510
(18,061)
–
–
(12,360)
193,744
75,798
49,826
223
125,847
1,429,177
882,296
12,308
2,323,781
52,903
61,409
5,326
119,638
F-42
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
14. Business Segment and Geographic Area Data (continued)
The amount of investment in equity method investees included in the Actives total assets above was $0, $0,
and $12,495,000 for 2001, 2000, and 1999, respectively.
The following geographic area data include net sales based on revenues generated by subsidiaries located
within that geographic area and property, plant, and equipment based on physical location:
Geographic area information
Net sales:
United States
Germany
Asia Pacific
France
Israel
Other
Property, plant, and equipment – net:
United States
Germany
Israel
Asia Pacific
France
Other
15. Earnings per Share
2001
2000
(In thousands)
1999
$
$
$
$
638,326
452,839
315,550
85,046
32,646
130,939
1,655,346
345,602
116,435
351,375
221,819
33,745
98,557
1,167,533
$
$
$
$
1,034,985
678,398
279,645
85,686
296,704
89,648
2,465,066
355,291
116,910
317,840
77,337
24,272
81,904
973,554
$
$
$
$
706,049
574,629
273,921
88,975
20,290
96,227
1,760,091
333,594
127,727
268,916
97,060
25,758
77,490
930,545
Basic earnings per share is computed using the weighted average number of common shares outstanding
during the periods presented. Diluted earnings per share is computed using the weighted average number of
common shares outstanding adjusted to include the potentially dilutive effect of stock options granted
under the Company’s 1995, 1997, and 1998 stock option plans (see Note 10), stock appreciation rights
issued in connection with the LPSC acquisition (see Note 6), and other potentially dilutive securities.
F-43
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
15. Earnings per Share (continued)
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except
per share amounts):
Numerator:
Numerator for basic earnings per share – net
income
Denominator:
Year ended December 31
2000
1999
2001
$
513
$
517,864
$
83,237
Denominator for basic earnings per share –
weighted average shares
141,171
135,295
126,678
Effect of dilutive securities:
Employee stock options
Stock appreciation rights
Other
Dilutive potential common shares
1,201
–
142
1,343
1,831
144
193
2,168
809
567
179
1,555
Denominator for diluted earnings per share –
adjusted weighted average shares
142,514
137,463
128,233
Basic earnings per share
Diluted earnings per share
$
$
0.00
0.00
$
$
3.83
3.77
$
$
0.66
0.65
For the years ended December 31, 2001, 2000, and 1999, respectively, options to purchase 1,164,000
shares of common stock at prices ranging from $25.13 to $30.00 per share, 1,114,000 shares of common
stock at $25.13 per share, and 716,000 shares of common stock at $21.94 per share were not included in the
computation of diluted earnings per share because the options’ exercise prices were greater than the
average market price of the common shares.
F-44
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F
Vishay Intertechnology, Inc.
Notes to Consolidated Financial Statements (continued)
17. Subsequent Events
On January 31, 2002, the Company announced the acquisition of the transducer and strain gage businesses of
Sensortronics, Inc. Sensortronics is a leading manufacturer of load cells and torque transducers for domestic and
international customers in a wide range of industries with manufacturing facilities in Covina, California, Costa Rica,
and India. The acquisition includes the wholly owned subsidiary of Sensortronics, JP Technologies, a manufacturer
of strain gages, located in San Bernardino, California. In the calendar year ended December 31, 2001, the acquired
businesses had sales of approximately $16 million.
On February 13, 2002, a fire occurred at the Electro-Films, Inc. (EFI) facility located in Providence, Rhode Island
causing a production stoppage of this product line. The Company is currently evaluating the extent of the damage
and preparing a plan of recovery.
F-46
CORPORATE INFORMATION
BOARD OF DIRECTORS
SHAREHOLDERS’ INFORMATION
Independent Auditors
Ernst & Young LLP
Philadelphia, PA
Transfer Agent and Registrar
American Stock Transfer & Trust Company
40 Wall St., 46th Floor
New York, NY 10055
Phone: 800-937-5449
Stock Exchange Listings
New York Stock Exchange
Symbol: VSH
Midwest Stock Exchange
Chicago Board of Options Exchange
Investor Relations Contact
Robert A. Freece
Senior Vice President
Vishay Intertechnology, Inc.
Phone: 610-644-1300
QUARTERLY REPORT MAILINGS
Shareholders owning Vishay stock indirectly
(through a bank, broker, or nominee who is
a registered holder) can receive our reports
directly and promptly from the Company
at the same time we mail to shareholders of
record. To be placed on Vishay’s mailing list,
call 610-644-1300, extension 7483. Share-
holders with access to the Internet can find
quarterly reports, press releases, SEC filings,
and all other financial documents at
www.vishay.com.
SEC FORM 10-K
A copy of the Company’s Form 10-K Annual
Report for the year ended December 31,
2001, filed with the Securities and Exchange
Commission, may be obtained by
shareholders without charge by writing to
the Investor Relations Department, Vishay
Intertechnology, Inc., 63 Lincoln Highway,
Malvern, PA 19355-2120 or through
Vishay’s website at www.vishay.com.
Dr. Felix Zandman
Chairman of the Board
Chief Executive Officer
Vishay Intertechnology, Inc.
Avi D. Eden
Vice Chairman of the Board
Executive Vice President, General Counsel
Vishay Intertechnology, Inc.
Robert A. Freece
Senior Vice President
Vishay Intertechnology, Inc.
Richard N. Grubb
Executive Vice President,
Treasurer, Chief Financial Officer
Vishay Intertechnology, Inc.
Eliyahu Hurvitz
President and Chief Executive Officer
Teva Pharmaceutical Industries, Ltd.
VISHAY INTERTECHNOLOGY, INC.
Corporate Headquarters
Vishay Intertechnology, Inc.
63 Lincoln Highway
Malvern, PA 19355-2143 USA
Phone 610-644-1300
Fax 610-296-0657
www.vishay.com
CORPORATE OFFICERS
Dr. Felix Zandman
Chairman of the Board
Chief Executive Officer
Avi D. Eden
Vice Chairman of the Board
Executive Vice President, General Counsel
Dr. Gerald Paul
President
Chief Operating Officer
Vishay Intertechnology, Inc.
Dr. Gerald Paul
President
Chief Operating Officer
Richard N. Grubb
Executive Vice President,
Treasurer, Chief Financial Officer
Robert A. Freece
Senior Vice President
William J. Spires
Vice President, Secretary
ANNUAL MEETING
May 23, 2002 at 10:30 a.m.
Four Seasons Hotel
South Ballroom
Lobby Level
One Logan Square
Philadelphia, PA 19103
Dr. Edward B. Shils
George W. Taylor Professor Emeritus of
Entrepreneurial Studies
The Wharton School
University of Pennsylvania
Ziv Shoshani
Executive Vice President, Capacitor Group
Vishay Intertechnology, Inc.
Mark I. Solomon
Founder and Chairman
CMS Companies
Jean-Claude Tiné
Investor and
Former Chairman of the Board
Sfernice, S.A.
Marc Zandman
President
Vishay Israel Ltd.
Ruta Zandman
Public Relations Associate
Vishay Intertechnology, Inc.
HONORARY CHAIRMAN OF THE BOARD
Alfred P. Slaner
(Deceased March 14, 1996)
V I S H A Y I N T E R T E C H N O L O G Y, I N C .
CORPORATE HEADQUARTERS
6 3 L i n c o l n H i g h w a y
M a l v e r n , P A 1 9 3 5 5 - 2 1 43
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® R e g i s t e r e d Tr a d e m a r k s o f V i s h a y I n t e r t e c h n o l o g y, I n c .
A l l r i g h t s r e s e r v e d .