Stronger after the Recession – Financial Results and Outlook

Thanks to sustainable restructuring measures, Vishay has significantly increased revenues: The consolidated gross margin for Q3/2010 was approximately 31% of sales, compared to 29% in Q2/2010 and 20% in Q3/2009. These results do not include the foil resistors and Measurements Group businesses, which were spun off and listed on the New York Stock Exchange as an independent company as of July 6, 2010. Given the all-time high order backlog and the continuing strong demand Vishay also expects good results for the current quarter.

“The economic recovery of our industry, as well as that of the entire economy, has been as unexpected and as sharp as the economic downturn of two years ago,” said Vishay CEO and President Dr. Gerald Paul. “During the crisis, Vishay made significant efforts to restructure and reduce its costs. These are primarily of a permanent nature and have significantly strengthened the Company’s profitability.”

Per share profit in Q3/ 2010 was $0.47, compared to $0.38 in the previous quarter and only $0.03 in the third quarter of the previous year. In addition, Vishay has continued to generate free cash flow throughout and after the crisis. Commenting on the current business situation, Dr. Gerald Paul explained, “During the third quarter alone, we generated $90 million. Since the beginning of the year we have seen an increasingly strong demand for our products across all the relevant market segments and this steep upturn has caused supply shortages. The rapid recovery of the European automotive industry, as well as the constant upturn in the industrial electronics segment, has been particularly noteworthy. Naturally, both trends are very important to Vishay.”

The company’s strategy has proved beneficial in combating the economic crisis. Traditionally, Vishay has always been, and continues to be, a technology-oriented, innovative, and financially sound enterprise and is by now an industry market leader. For more than two decades, Vishay’s founder and majority shareholder, Dr. Zandman, has placed strong emphasis on acquisitions, which have resulted in the company’s steady growth of 11 percent in 20 years.

Thanks to its conservative financial strategy, Vishay has been debt-free for some time despite its numerous acquisitions, and fulfills most market requirements with its product range. As a respected partner to a broad customer base in finding solutions to technical problems, the company offers a wide range of customer-specific components — one of Vishay’s main strengths — particularly in a crisis. In addition, the Company has local representation worldwide, as well as a dense network of distribution channels.

The broad positioning of the Company with respect to its products and markets, together with its technological competence and its financial soundness, has helped Vishay master the deepest post-war crisis. At Vishay, the recession has been seen as an opportunity for renewal and not as a threat to its business.

Acquisition strategy
“Emerging stronger from the crisis, a situation further characterized by its strong cash flow, Vishay continues to strive to complement its product portfolio via acquisitions to outgrow the market,” confirms Vishay Executive Chairman of the Board and Chief Business Development Officer Dr. Felix Zandman. “We will continue to make acquisitions and stimulate our organic growth through intensified R&D efforts. We want to become an even more indispensable supplier to our customers.”

Outlook
Vishay continues to focus on the competence and customer proximity of its global organization, of which the German locations will play an important role in the future. The company will enter 2011 with confidence. Investment in the current year is approximately $150 million and the same high level is expected in FY 2011. The focus will be on creation or expansion of production capacities for specialty products or discrete semiconductor products, as well as on permanent efforts to improve production efficiency. Vishay is proudly pioneering an innovative diode technology based on the Trench process that doubles the effectiveness of these components.