Vishay Intertechnology, Inc. (VSH)

VSH 
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Vishay Intertechnology, Inc. (VSH)

Q1 2009 Earnings Call

April 28, 2009 10:00 am ET

Executives

Lior Yahalomi - EVP and CFO

Bill Clancy - SVP, Corporate Controller and Corporate Secretary

Gerald Paul - President and CEO

Felix Zandman - Founder and Executive Chairman of the Board, CTO and CBDO

Analysts

Matt Sheerin - Thomas Weisel Partners

Steve Smigie - Raymond James

Jim Suva - Citigroup

Shawn Harrison - Longbow Research

Presentation

Operator

At this time, I would like to welcome everyone to the Vishay's first quarter 2009 earnings results conference call. (Operator Instructions)

Thank you. Dr. Yahalomi, you may begin your conference.

Lior Yahalomi

Thank you. This is Loir Yahalomi, the Chief Financial Officer. Good morning, ladies and gentlemen, and welcome to Vishay's first quarter 2009 earning call.

On the line with me today are Dr. Felix Zandman, Vishay's Executive Chairman and Chief Technical and Business Development Officer; Dr. Gerald Paul, Vishay's President and Chief Executive Officer; and Lori Lipcaman, Vishay's Executive Vice President of Finance and Chief Accounting Officer.

Before I start, Bill Clancy, Vishay's Senior Vice President and Corporate Controller, will read our customary opening statement. Bill?

Bill Clancy

You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risk and uncertainty that could cause actual results to differ from the forward-looking statement. For a discussion of factors that could cause results to differ, please see today's press release and Vishay's Form 10-K and Form 10-Q filings with the SEC.

Lior Yahalomi

Thank you, Bill. I will make summary comments. Dr. Paul will add a more detailed analysis of our first quarter 2009. And finally, Dr. Zandman will update our R&D and acquisition activities and will make summary remarks.

For the first quarter of 2009, Vishay reported revenues of $450 million, 22% lower than the fourth quarter of 2008 and 39% lower than the first quarter of 2008. The decline in our revenues is attributed to the significant and rapid downturn in virtually all Vishay's end market.

On a GAAP basis, our consolidated gross margins for the quarter were 15.1% as compared to 14.8% for the fourth quarter of 2008 and 23.5% for the first quarter of 2008. This was mainly the result of lack of overall volume.

SG&A expense for this quarter was $87.5 million, a decline of over 10% compared to $98 million for the fourth quarter of 2008 and a decline of 26% compared to the $119 million for last year's first quarter.

Restructuring and severance costs in our first quarter of 2009 were $18.9 million. Total cash paid out for restructuring during Q1 2009 was $16 million. Our income for the first quarter of 2009 consists mainly of $1 million of interest income and $11.8 million of foreign exchange gains.

Despite our pre-tax losses, we recorded a tax expense for the first quarter. This is attributable to the fact that a significant portion of these losses occurred in low tax jurisdictions where we recognize no substantial benefit.

Capital expenditures for the quarter were $11 million compared to $53 million in our fourth quarter of 2008 and $26 million in the first quarter of 2008. Depreciation and amortization for the quarter were $54 million, the same amount as in our fourth quarter of 2008 and in the first quarter of 2008.

As announced in our press release, Vishay reported a loss from continuing operations of $0.16 per diluted share for the first quarter of 2009. A loss of $0.08 is attributed to the after-tax impact of the restructuring and severance cost of $18.9 million. The adjusted net loss is $0.08 for the first quarter of 2009 as compared to adjusted net loss per share of $0.07 for the first quarter of 2008 and adjusted net earnings of $0.16 for the first quarter of 2008.

As previously disclosed, Vishay was required to adopt two new accounting standards on January 1, 2009, which required retrospective adjustment of previously issued financial statement. The retrospective application of FSP APB 14-1 increased previously reported interest expense by $6.1 million or $0.03 per diluted share for the first quarter of 2008.

Vishay had a total debt of $361 million and cash and cash equivalent of $365 million as of March 28, 2009. The debt to be repaid within five years was $253 million, of which $112.5 million of term loan maturing on July 1, 2011, with payments spread over the next two-and-a-half years with interest rate of 30-day LIBOR plus 2.5%; $125 million of revolving debt maturing on 2012 with an interest rate of 30-day LIBOR plus 1%. At quarter-end, $125 million of the revolving credit commitment of up to $250 million were not drawn upon. And $15 million of long-term loan maturing on 2014 with payment spread over five years with interest rate of 30-day LIBOR plus 3.45%.

Additionally, we have $105 million of exchangeable and secured notes with 100 years maturity due on 2102 with interest rate of 90-day LIBOR plus 0%. Total available credit line, including the $125 million unused revolver in the U.S., was $167.8 million at March 28, 2009. Vishay's total available liquidity measured by cash plus all available credit lines as of March 28, 2009, was $533 million.

Some other key summary financials are: Total inventory at quarter-end was $505 million compared to $538 million at quarter-end of the fourth quarter 2008. Working capital at quarter-end was $855 million. Free cash flow was $42 million for the first quarter of 2009 as compared to $30 million for the fourth quarter of 2008 and $13 million for the first quarter of 2008. Vishay's liquidity remains strong, and our focus has been and will be conserving and generating cash.

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