SILI Siliconix Incorporated - Common Stock (MM)

Siliconix Reports Earnings for Third Quarter 2004 SANTA CLARA, Calif., Nov. 3 /PRNewswire-FirstCall/ -- Siliconix incorporated (NASDAQ:SILI), an 80.4% subsidiary of Vishay Intertechnology, Inc. (NYSE:VSH), announced net income of $15.9 million, or $0.53 per share, for the third quarter ended October 2, 2004. This is a 65% increase over the net income of $9.6 million, or $0.32 per share, in the third quarter of 2003 and a 4% increase over the $15.2 million, or $0.51 per share, for the second quarter ended July 3, 2004. Sales for the third quarter of 2004 were $115.2 million, 18% more than the sales of $97.4 million for the third quarter of 2003 and 5% less than the sales of $120.7 million for the second quarter of this year. Net income for the first nine months of 2004 was $45.1 million, or $1.51 per share, 56% more than the net income of $28.9 million, or $0.97 per share, for the first nine months of 2003. Sales for the first nine months of 2004 were $354.3 million, 25% more than the sales of $283.4 million for the first nine months of 2003. The gross margin for the third quarter of 2004 was 33%, compared to 29% for the third quarter of 2003 and 33% for the second quarter of 2004. The year-to-year improvement was a result of the increase in sales, better pricing, an improved product mix, and cost reduction efforts which more than offset the increased use of outside subcontractors. On a sequential basis, the company was able to maintain the same 33% margin, even with 5% lesser sales, with better pricing and a better product mix. Research and development expenses increased by $761,000 from the third quarter of 2003 and decreased by $410,000 from the second quarter of this year. The year-to-year quarterly increase was attributable to increased investment in our R&D activities, and the sequential decrease resulted from increased allocation of engineers' time to technology transfers to foundries. Dr. King Owyang, Siliconix President and CEO, said, "During the first half of this year, our distribution customers, particularly in Asia, booked orders in anticipation of increased end-customer demand. Demand did increase, but not as much as anticipated. Therefore, our third quarter results reflected inventory realignment between our distributors' order rates and their resale rates to their customers. This was particularly noticeable in our September bookings. At the end of the quarter, our backlog was 22% lower than at the end of the second quarter. We understand that our distributors' resales to their customers increased substantially in September, and they expect a strong October and November as well. This is consistent with inputs from our major OEM customers that their fourth-quarter demand should be the strongest of the year. However, our customers are definitely more cautious in their ordering patterns than earlier this year; therefore, we anticipate the possibility of further inventory corrections in the fourth quarter. In short, there is as much uncertainty in the marketplace now as we have seen in the last several years. Notwithstanding this environment, we are maintaining our share in our major markets, so it is apparent that our competitors in these markets are dealing with similar phenomena." He continued, "Our efforts to increase our capacity are yielding results, and lead times are decreasing, but this has also allowed our customers to be more conservative in their ordering. We expect distribution bookings to pick up again by the end of the year, but we are unlikely to feel the impact from this until next year." He noted, "New product introductions continue to be key in capturing the design opportunities and providing technical solutions to innovative application challenges. In the third quarter, we released a total of 40 new products in our Power IC, Power MOSFET, and Analog Switch product families. New to our portfolio is a family of SCSI Terminators to provide a second source option in the marketplace. PowerPAK(R) 1212 MOSFETs that rival the performance ratings of the SOIC-8 packages at one-third the size have been introduced for power supply and fixed telecom applications. A selection of P- channel MOSFETs for automotive load switching was introduced in a variety of packages and breakthrough performance ratings. This family offers the added advantage of reduced parts count, reduced systems cost, and increased system reliability." Dr. Owyang added, "Our third quarter design activity remains strong with the addition of 280 new design wins for graphics cards; plasma and LCD displays; consumer goods such as PDAs, digital still cameras, and games; and power supply and fixed telecom applications." He concluded, "Our consistent approach to solution-based investments will continue to enhance our leadership in key markets. At the same time, our cost reduction programs and improving manufacturing efficiencies position us to further penetrate power management applications in the telecommunications, portable computer, consumer, industrial, and automotive markets. We believe that this strategy is behind our success, both in the marketplace and financially. The Company's financial position remains very strong; we are debt-free and continue to finance our growth with internal profits." Siliconix is a leading manufacturer of power MOSFETs, power ICs, analog switches, and multiplexers for computers, cell phones, fixed communications networks, automobiles, and other consumer and industrial electronic systems. With 2003 worldwide sales of $392.1 million, the Company's facilities include a Class 1 wafer fab dedicated to the manufacture of power products in Santa Clara, California, and an affiliated Class 1 wafer fab located in Itzehoe, Germany. The Company's products are also fabricated by subcontractors in Japan, Germany, China, Taiwan, and the United States. Assembly and test facilities include a company-owned facility in Taiwan, a joint venture in Shanghai, China, and subcontractors in the Philippines, China, Taiwan and Israel. Vishay Intertechnology, Inc., a Fortune 1,000 Company listed on the NYSE (VSH), is one of the world's largest manufacturers of discrete semiconductors (diodes, rectifiers, transistors, and optoelectronics) and selected ICs, and passive electronic components (resistors, capacitors, inductors, and transducers). Vishay's components can be found in products manufactured in a very broad range of industries worldwide. Vishay is headquartered in Malvern, Pennsylvania, and has operations in 17 countries employing over 26,000 people. Vishay can be found on the Internet at http://www.vishay.com/. These results will be discussed during the Vishay Intertechnology, Inc. conference call scheduled for today, November 3, 2004 at 11:00 AM (EST). The dial-in number for the conference call is 888-428-4474 (612-332-0630 if calling from outside the United States or Canada). The conference operator will require the following information in order to admit you into the call: Company Name: Vishay Intertechnology, Inc. and Moderators: Vishay Executives. There will be a replay of the conference call from 2:30 PM (EST) on Wednesday, November 3, 2004 through 11:59 PM (EST) on Monday, November 8, 2004. The telephone number for the replay is 800-475-6701 (320-365-3844 if calling from outside the United States or Canada). The access code is 751217. There will also be a live audio webcast of the conference call. This can be accessed directly from the Investor Relations section for Siliconix at http://ir.siliconix.com/. Statements contained herein that relate to the Company's future performance, including statements with respect to anticipated improvements in the Company's business and business climate, future product innovation, and implementation of cost savings strategies, are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, particularly in the markets that we serve, cancellation of orders in our backlog, difficulties in new product development, and other factors affecting the Company's operations, markets, products, services, and prices that are set forth in its December 31, 2003 Report on Form 10-K filed with the Securities and Exchange Commission. You are urged to refer to the Company's Form 10-K for a detailed discussion of these factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Siliconix incorporated Consolidated Balance Sheets (Unaudited, in thousands) October 2, December 31, 2004 2003 Assets Current assets: Cash and cash equivalents $311,312 $279,464 Accounts receivable, net 47,402 49,807 Accounts receivable from affiliates 21,271 27,800 Inventories 64,672 63,229 Other current assets 22,287 24,429 Deferred income taxes 3,508 3,508 Total current assets 470,452 448,237 Property and equipment, at cost: Land 1,715 1,715 Buildings and improvements 58,704 57,761 Machinery and equipment 393,581 369,350 454,000 428,826 Less accumulated depreciation 308,149 284,735 145,851 144,091 Goodwill 7,445 7,445 Other assets 25,657 1,397 Total assets $649,405 $601,170 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $33,823 $31,196 Accounts payable to affiliates 18,669 32,256 Accrued payroll and related compensation 11,185 8,776 Other accrued liabilities 33,461 30,843 Total current liabilities 97,138 103,071 Accrued pension benefits 3,320 3,137 Deferred income taxes 15,498 15,498 Other non-current liabilities 60,862 52,161 Minority interest 3,323 3,143 Total liabilities 180,141 177,010 Commitments and contingencies Stockholders' equity: Common stock 299 299 Additional paid-in-capital 59,373 59,373 Retained earnings 410,704 365,619 Accumulated other comprehensive loss (1,112) (1,131) Total stockholders' equity 469,264 424,160 Total liabilities and stockholders' equity $649,405 $601,170 Siliconix incorporated Consolidated Statements of Fiscal Quarter Nine Fiscal Months Operations Ended Ended (Unaudited, In thousands, except Oct. 2, Sept. 27, Oct. 2, Sept. 27, for per share information) 2004 2003 2004 2003 Net sales $115,207 $97,411 $354,283 $283,444 Cost of products sold 77,636 69,555 241,674 200,234 Gross profit 37,571 27,856 112,609 83,210 Operating expenses: Research and development 5,467 4,706 16,638 14,419 Selling, marketing, and administrative expenses 12,359 11,460 39,366 33,518 Operating income 19,745 11,690 56,605 35,273 Interest income 1,034 610 2,331 1,810 Other (expense) income net (372) 92 (954) 117 Income before taxes and minority interest 20,407 12,392 57,982 37,200 Income tax provision (4,477) (2,722) (12,717) (8,146) Minority interest in income of consolidated subsidiary (60) (60) (180) (180) Net income $15,870 $9,610 $45,085 $28,874 Net income per share (basic and diluted) $0.53 $0.32 $1.51 $0.97 Shares used to compute net income per share 29,879 29,879 29,879 29,879 Contact: Peter G. Henrici, Vice President, Investor Relations, Siliconix incorporated (NASDAQ:SILI) 408-567-8400 Robert A. Freece, Executive Vice President Vishay Intertechnology, Inc. (NYSE:VSH) 610-251-5252 DATASOURCE: Siliconix incorporated CONTACT: Peter G. Henrici, Vice President, Investor Relations, Siliconix incorporated, +1-408-567-8400; or Robert A. Freece, Executive Vice President, Vishay Intertechnology, Inc., +1-610-251-5252 Web site: http://ir.siliconix.com/ Web site: http://www.vishay.com/ Web site: http://www.siliconix.com/

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