Vishay Intertechnology, Inc. (VSH)

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Vishay Intertechnology Inc. (VSH)

Q4 2009 Earnings Call

February 09, 2010 10:00 am ET

Executives

Lior Yahalomi - EVP & CFO

Gerald Paul - President & CEO

Felix Zandman - Founder & Executive Chairman, CTO & CBDO

Lori Lipcaman - EVP & CAO

Analysts

Shawn Harrison - Longbow Research

Matt Sheerin - Thomas Weisel Partners

Steve Smigie - Raymond James

Presentation

Operator

Good morning. At this time, I would like to welcome everyone to the Vishay's fourth quarter 2009 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-session. (Operator Instructions).

Thank you. I would now like to turn the call over to Dr. Lior Yahalomi. Sir, you may begin your conference.

Lior Yahalomi

Thank you. This is Loir Yahalomi, Vishay's Chief Financial Officer. Good morning, ladies and gentlemen and welcome to Vishay's fourth 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, [David Tomlinson], our Senior Vice President, Corporate Controller, will read our customary opening statement. [Dave]?

Unidentified Company Representative

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 risks and uncertainties 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, [Dave]. I will make summary remarks. Dr. Paul, our CEO will add a more detailed analysis of our year and fourth quarter 2009. And finally, Dr. Zandman, our Chairman will update our R&D and acquisition activities and will make summary remarks.

Before I start, please note that the press release that we issued this morning includes a schedule which reconciles GAAP EPS and adjusted EPS. Quarterly results. For the fourth quarter of 2009 Vishay reported revenues of $607.0 million, 15.5% higher than the third quarter of 2009 and 5.5% higher than the fourth quarter of 2008.

On a GAAP basis, our consolidated gross margin for the quarter was 22.6% as compared to 19.9% for the third quarter of 2009 and 14.8% for the fourth quarter of 2008. The increase from the third quarter of 2009 reflects mainly the recovery from the historical global economic crisis with increased sales and the cost reduction initiative implemented by the company.

Selling general and administrative expense for this quarter were $98.3 million or 16.2% of revenues compared to $89.7 million or 17.1% of revenues for the third quarter of 2009 and $97.9 million or 17.0% for last year's fourth quarter. Restructuring and severance costs and related asset write downs in our fourth quarter were $4.1 million. Total cash paid out for restructuring during the fourth quarter of 2009 was $7.2 million.

Other income and expense for the fourth quarter of 2009 consist mainly of $1.2 million of interest income. The effective tax rate for the fourth quarter of 2009 was 17.2%. Capital expenditures for the quarter were $24 million as compared to $8 million for the third quarter of 2009 and $52.9 million in the fourth quarter of 2008.

Depreciation and amortization for the quarter was $60 million as compared to $59 million in the third quarter of 2009 and $55 million in the fourth quarter of 2008. As announced in our press release, Vishay reported earnings attributable to Vishay's stockholders of $0.15 per diluted share for the fourth quarter of 2009.

The net earnings attributable to Vishay's stockholders for the fiscal quarter ended December 31, 2009 was impacted by a pretax charges for restructuring and severance cost and related asset write-down of $4.1 million, these items and the related tax effects had a $0.01 per share effect on the net earnings attributable to Vishay's stockholders.

The adjusted net earnings therefore $0.16 for the fourth quarter of 2009 as compared to adjusted net earnings per share of $0.03 for the third quarter of 2009 and adjusted net loss per share of $0.07 for the fourth quarter of 2008.

Annual results. For the year of 2009 Vishay reported revenues of $2.042 billion or 27.6% lower than 2008. On a GAAP basis our consolidated gross margins for the year 2009 were19.0% as compared to 21.2% for 2008.

SG&A expense for the year 2009 were $359.2 million or17.6% of revenues compared to $450.9 million or 16.0% of revenues for the year 2008.

Restructuring and severance cost and related asset write downs for the year 2009 were $38.6 million. Total cash paid out for restructuring during the 12 months of 2009 was $48.4 million.

Other income and expense for the year 2009 consist mainly of $3.9 million interest income and $5.0 million of foreign exchange gains. The company incurred significant pretax losses in low tax rate jurisdictions during the year of 2009, which meant we could not benefit from the losses and this led to a negative effective tax rate.

As announced in our press release, Vishay reported a loss attributable to Vishay's stockholders of $0.31 per diluted share for the year of 2009. The net loss attributable to Vishay's stockholders for the fiscal year ended December 31, 2009 was impacted by pretax charges for restructuring and severance cost and related asset write downs of $38.6 million for an amended executive employment agreement of $57.8 million partially offset by a gain of $28.2 million on settlement of matters related to the acquisition of the International Rectifier's power control system business.

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