10-Q 1 vishayintertech_10q.htm QUARTERLY REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 3, 2015

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______
Commission File Number 1-7416
VISHAY INTERTECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

Delaware |  | 38-1686453
(State or Other Jurisdiction of Incorporation) |  | (I.R.S. Employer Identification Number)
63 Lancaster Avenue Malvern, PA 19355-2143 |  | 610-644-1300
(Address of Principal Executive Offices) |  | (Registrant's Area Code and Telephone Number)

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. ý Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.
ýYes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

| Large accelerated filer ý | Accelerated filer ☐
| Non-accelerated filer ☐ (Do not check if smaller reporting company) | Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ý No
As of October 30, 2015, the registrant had 135,440,811 shares of its common stock and 12,129,227 shares of its Class B common stock outstanding.
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VISHAY INTERTECHNOLOGY, INC.
FORM 10-Q
October 3, 2015
CONTENTS

|  |  |  | Page Number
PART I. | FINANCIAL INFORMATION |  |
| Item 1. | Financial Statements |  |
|  | Consolidated Condensed Balance Sheets – October 3, 2015 (Unaudited) and December 31, 2014 |  | 4
|  | Consolidated Condensed Statements of Operations (Unaudited) – Fiscal Quarters Ended October 3, 2015 and September 27, 2014 |  | 6
|  | Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Fiscal Quarters Ended October 3, 2015 and September 27, 2014 |  | 7
|  | Consolidated Condensed Statements of Operations (Unaudited) – Nine Fiscal Months Ended October 3, 2015 and September 27, 2014 |  | 8
|  | Consolidated Condensed Statements of Comprehensive Income (Unaudited) – Nine Fiscal Months Ended October 3, 2015 and September 27, 2014 |  | 9
|  | Consolidated Condensed Statements of Cash Flows (Unaudited) – Nine Fiscal Months Ended October 3, 2015 and September 27, 2014 |  | 10
|  | Consolidated Condensed Statement of Equity (Unaudited) |  | 11
|  | Notes to the Consolidated Condensed Financial Statements (Unaudited) |  | 12
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |  | 35
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |  | 58
| Item 4. | Controls and Procedures |  | 58
PART II. | OTHER INFORMATION |  |
| Item 1. | Legal Proceedings |  | 59
| Item 1A. | Risk Factors |  | 59
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |  | 60
| Item 3. | Defaults Upon Senior Securities |  | 60
| Item 4. | Mine Safety Disclosures |  | 60
| Item 5. | Other Information |  | 60
| Item 6. | Exhibits |  | 60
|  | SIGNATURES |  | 61

3

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets
(In thousands)

|  | October 3, 2015 |  |  | December 31, 2014 |
|  | (Unaudited) |  |  |  |
Assets |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 390,305 |  |  | $ | 592,172 |
Short-term investments |  |  | 688,987 |  |  |  | 514,776 |
Accounts receivable, net |  |  | 282,228 |  |  |  | 271,554 |
Inventories: |  |  |  |  |  |  |  |
Finished goods |  |  | 113,881 |  |  |  | 113,361 |
Work in process |  |  | 207,940 |  |  |  | 185,769 |
Raw materials |  |  | 124,970 |  |  |  | 125,464 |
Total inventories |  |  | 446,791 |  |  |  | 424,594 |
Deferred income taxes |  |  | 29,160 |  |  |  | 17,815 |
Prepaid expenses and other current assets |  |  | 96,279 |  |  |  | 105,539 |
Total current assets |  |  | 1,933,750 |  |  |  | 1,926,450 |
Property and equipment, at cost: |  |  |  |  |  |  |  |
Land |  |  | 90,079 |  |  |  | 91,844 |
Buildings and improvements |  |  | 559,757 |  |  |  | 560,926 |
Machinery and equipment |  |  | 2,381,285 |  |  |  | 2,368,046 |
Construction in progress |  |  | 71,415 |  |  |  | 82,684 |
Allowance for depreciation |  |  | (2,253,961 | ) |  |  | (2,205,405 | )
|  |  | 848,575 |  |  |  | 898,095 |
Goodwill |  |  | 138,403 |  |  |  | 144,359 |
Other intangible assets, net |  |  | 107,778 |  |  |  | 186,613 |
Other assets |  |  | 143,045 |  |  |  | 143,256 |
Total assets |  | $ | 3,171,551 |  |  | $ | 3,298,773 |

Continues on following page.
4

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Balance Sheets (continued)
(In thousands)

|  | October 3, 2015 |  |  | December 31, 2014 |
|  | (Unaudited) |  |  |  |
Liabilities and equity |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Notes payable to banks |  | $ | 11 |  |  | $ | 18 |
Trade accounts payable |  |  | 148,889 |  |  |  | 174,451 |
Payroll and related expenses |  |  | 120,680 |  |  |  | 120,023 |
Other accrued expenses |  |  | 155,829 |  |  |  | 137,576 |
Income taxes |  |  | 25,646 |  |  |  | 24,671 |
Total current liabilities |  |  | 451,055 |  |  |  | 456,739 |
Long-term debt less current portion |  |  | 431,766 |  |  |  | 454,922 |
Deferred income taxes |  |  | 161,546 |  |  |  | 178,900 |
Other liabilities |  |  | 65,510 |  |  |  | 76,811 |
Accrued pension and other postretirement costs |  |  | 277,943 |  |  |  | 300,524 |
Total liabilities |  |  | 1,387,820 |  |  |  | 1,467,896 |
Stockholders' equity: |  |  |  |  |  |  |  |
Vishay stockholders' equity |  |  |  |  |  |  |  |
Common stock |  |  | 13,544 |  |  |  | 13,532 |
Class B convertible common stock |  |  | 1,213 |  |  |  | 1,213 |
Capital in excess of par value |  |  | 2,057,552 |  |  |  | 2,055,246 |
(Accumulated deficit) retained earnings |  |  | (172,770 | ) |  |  | (175,485 | )
Accumulated other comprehensive income (loss) |  |  | (121,186 | ) |  |  | (69,140 | )
Total Vishay stockholders' equity |  |  | 1,778,353 |  |  |  | 1,825,366 |
Noncontrolling interests |  |  | 5,378 |  |  |  | 5,511 |
Total equity |  |  | 1,783,731 |  |  |  | 1,830,877 |
Total liabilities and equity |  | $ | 3,171,551 |  |  | $ | 3,298,773 |

See accompanying notes.
5

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)

|  | Fiscal quarters ended |
|  | October 3, 2015 |  |  | September 27, 2014 |
Net revenues |  | $ | 560,654 |  |  | $ | 638,211 |
Costs of products sold |  |  | 430,510 |  |  |  | 479,819 |
Gross profit |  |  | 130,144 |  |  |  | 158,392 |
Selling, general, and administrative expenses |  |  | 88,995 |  |  |  | 93,837 |
Restructuring and severance costs |  |  | 2,324 |  |  |  | 3,508 |
Impairment of goodwill and long-lived assets |  |  | 62,980 |  |  |  | - |
U.S. pension settlement charges |  |  | - |  |  |  | 15,588 |
Operating income (loss) |  |  | (24,155 | ) |  |  | 45,459 |
Other income (expense): |  |  |  |  |  |  |  |
Interest expense |  |  | (6,677 | ) |  |  | (6,167 | )
Other |  |  | 3,240 |  |  |  | (474 | )
Loss related to Tianjin explosion |  |  | (5,350 | ) |  |  | - |
|  |  | (8,787 | ) |  |  | (6,641 | )
Income (loss) before taxes |  |  | (32,942 | ) |  |  | 38,818 |
Income tax expense (benefit) |  |  | (5,392 | ) |  |  | 11,841 |
Net earnings (loss) |  |  | (27,550 | ) |  |  | 26,977 |
Less: net earnings (loss) attributable to noncontrolling interests |  |  | 116 |  |  |  | 6 |
Net earnings (loss) attributable to Vishay stockholders |  | $ | (27,666 | ) |  | $ | 26,971 |
Basic earnings (loss) per share attributable to Vishay stockholders |  | $ | (0.19 | ) |  | $ | 0.18 |
Diluted earnings (loss) per share attributable to Vishay stockholders |  | $ | (0.19 | ) |  | $ | 0.17 |
Weighted average shares outstanding - basic |  |  | 147,701 |  |  |  | 147,569 |
Weighted average shares outstanding - diluted |  |  | 147,701 |  |  |  | 155,546 |
Cash dividends per share |  | $ | 0.06 |  |  | $ | 0.06 |

See accompanying notes.
6

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited - In thousands)

|  | Fiscal quarters ended |
|  | October 3, 2015 |  |  | September 27, 2014 |
Net earnings (loss) |  | $ | (27,550 | ) |  | $ | 26,977 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 3,662 |  |  |  | (55,934 | )
Pension and other post-retirement actuarial items |  |  | 2,305 |  |  |  | 10,805 |
Unrealized gain (loss) on available-for-sale securities |  |  | (253 | ) |  |  | (50 | )
Other comprehensive income (loss) |  |  | 5,714 |  |  |  | (45,179 | )
Comprehensive income (loss) |  |  | (21,836 | ) |  |  | (18,202 | )
Less: comprehensive income attributable to noncontrolling interests |  |  | 116 |  |  |  | 6 |
Comprehensive income (loss) attributable to Vishay stockholders |  | $ | (21,952 | ) |  | $ | (18,208 | )

See accompanying notes.
7

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Operations
(Unaudited - In thousands, except per share amounts)

|  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |
Net revenues |  | $ | 1,744,560 |  |  | $ | 1,882,518 |
Costs of products sold |  |  | 1,327,896 |  |  |  | 1,414,750 |
Gross profit |  |  | 416,664 |  |  |  | 467,768 |
Selling, general, and administrative expenses |  |  | 276,717 |  |  |  | 287,300 |
Restructuring and severance costs |  |  | 9,394 |  |  |  | 18,926 |
Impairment of goodwill and long-lived assets |  |  | 62,980 |  |  |  | - |
U.S. pension settlment charges |  |  | - |  |  |  | 15,588 |
Operating income |  |  | 67,573 |  |  |  | 145,954 |
Other income (expense): |  |  |  |  |  |  |  |
Interest expense |  |  | (19,774 | ) |  |  | (17,968 | )
Other |  |  | 7,860 |  |  |  | 1,046 |
Loss related to Tianjin explosion |  |  | (5,350 | ) |  |  | - |
|  |  | (17,264 | ) |  |  | (16,922 | )
Income before taxes |  |  | 50,309 |  |  |  | 129,032 |
Income taxes |  |  | 20,416 |  |  |  | 40,259 |
Net earnings |  |  | 29,893 |  |  |  | 88,773 |
Less: net earnings attributable to noncontrolling interests |  |  | 592 |  |  |  | 350 |
Net earnings attributable to Vishay stockholders |  | $ | 29,301 |  |  | $ | 88,423 |
Basic earnings per share attributable to Vishay stockholders |  | $ | 0.20 |  |  | $ | 0.60 |
Diluted earnings per share attributable to Vishay stockholders |  | $ | 0.19 |  |  | $ | 0.57 |
Weighted average shares outstanding - basic |  |  | 147,700 |  |  |  | 147,565 |
Weighted average shares outstanding - diluted |  |  | 151,607 |  |  |  | 154,142 |
Cash dividends per share |  | $ | 0.18 |  |  | $ | 0.18 |

See accompanying notes.
8

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Comprehensive Income
(Unaudited - In thousands)

|  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |
Net earnings |  | $ | 29,893 |  |  | $ | 88,773 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | (57,174 | ) |  |  | (64,373 | )
Pension and other post-retirement actuarial items |  |  | 6,496 |  |  |  | 13,665 |
Unrealized gain (loss) on available-for-sale securities |  |  | (1,368 | ) |  |  | 1,138 |
Other comprehensive loss |  |  | (52,046 | ) |  |  | (49,570 | )
Comprehensive income (loss) |  |  | (22,153 | ) |  |  | 39,203 |
Less: comprehensive income attributable to noncontrolling interests |  |  | 592 |  |  |  | 350 |
Comprehensive income (loss) attributable to Vishay stockholders |  | $ | (22,745 | ) |  | $ | 38,853 |

See accompanying notes.
9

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited - In thousands)

|  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |
Operating activities |  |  |  |  |  |
Net earnings |  | $ | 29,893 |  |  | $ | 88,773 |
Adjustments to reconcile net earnings to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 134,281 |  |  |  | 132,344 |
(Gain) loss on disposal of property and equipment |  |  | (116 | ) |  |  | (65 | )
Accretion of interest on convertible debentures |  |  | 3,167 |  |  |  | 2,930 |
Inventory write-offs for obsolescence |  |  | 15,348 |  |  |  | 15,101 |
Impairment of goodwill and long-lived assets |  |  | 62,980 |  |  |  | - |
U.S. pension settlement charges |  |  | - |  |  |  | 15,588 |
Deferred income taxes |  |  | (32,523 | ) |  |  | 6,869 |
Other |  |  | (1,939 | ) |  |  | (2,654 | )
Net change in operating assets and liabilities, net of effects of businesses acquired |  |  | (57,522 | ) |  |  | (61,875 | )
Net cash provided by operating activities |  |  | 153,569 |  |  |  | 197,011 |
Investing activities |  |  |  |  |  |  |  |
Capital expenditures |  |  | (86,767 | ) |  |  | (90,507 | )
Proceeds from sale of property and equipment |  |  | 1,989 |  |  |  | 2,345 |
Purchase of businesses, net of cash acquired |  |  | - |  |  |  | (198,186 | )
Purchase of short-term investments |  |  | (362,595 | ) |  |  | (335,341 | )
Maturity of short-term investments |  |  | 161,611 |  |  |  | 330,734 |
Sale of other investments |  |  | 400 |  |  |  | - |
Other investing activities |  |  | (3,464 | ) |  |  | 1,734 |
Net cash used in investing activities |  |  | (288,826 | ) |  |  | (289,221 | )
Financing activities |  |  |  |  |  |  |  |
Principal payments on long-term debt and capital leases |  |  | - |  |  |  | (11 | )
Net proceeds (payments) on revolving credit lines |  |  | (27,000 | ) |  |  | 73,000 |
Net changes in short-term borrowings |  |  | (7 | ) |  |  | 14 |
Dividends paid to common stockholders |  |  | (24,378 | ) |  |  | (24,358 | )
Dividends paid to Class B common stockholders |  |  | (2,184 | ) |  |  | (2,183 | )
Excess tax benefit from RSUs vested |  |  | 21 |  |  |  | - |
Proceeds from stock options exercised |  |  | - |  |  |  | 50 |
Distributions to noncontrolling interests |  |  | (725 | ) |  |  | (547 | )
Other financing activities |  |  | - |  |  |  | (1,323 | )
Net cash provided by (used in) financing activities |  |  | (54,273 | ) |  |  | 44,642 |
Effect of exchange rate changes on cash and cash equivalents |  |  | (12,337 | ) |  |  | (17,478 | )
Net increase (decrease) in cash and cash equivalents |  |  | (201,867 | ) |  |  | (65,046 | )
Cash and cash equivalents at beginning of period |  |  | 592,172 |  |  |  | 640,348 |
Cash and cash equivalents at end of period |  | $ | 390,305 |  |  | $ | 575,302 |

See accompanying notes.
10

VISHAY INTERTECHNOLOGY, INC.
Consolidated Condensed Statement of Equity
(Unaudited - In thousands, except share and per share amounts)

|  | Common Stock |  |  | Class B Convertible Common Stock |  |  | Capital in Excess of Par Value |  |  | Retained Earnings (Accumulated Deficit) |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total Vishay Stockholders' Equity |  |  | Noncontrolling Interests |  |  | Total Equity |
Balance at January 1, 2015 |  | $ | 13,532 |  |  | $ | 1,213 |  |  | $ | 2,055,246 |  |  | $ | (175,485 | ) |  | $ | (69,140 | ) |  | $ | 1,825,366 |  |  | $ | 5,511 |  |  | $ | 1,830,877 |
Net earnings |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,301 |  |  |  | - |  |  |  | 29,301 |  |  |  | 592 |  |  |  | 29,893 |
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (52,046 | ) |  |  | (52,046 | ) |  |  | - |  |  |  | (52,046 | )
Distributions to noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (725 | ) |  |  | (725 | )
Restricted stock issuances (116,498 shares) |  |  | 12 |  |  |  | - |  |  |  | (651 | ) |  |  | - |  |  |  | - |  |  |  | (639 | ) |  |  | - |  |  |  | (639 | )
Dividends declared ($ 0.18 per share) |  |  | - |  |  |  | - |  |  |  | 24 |  |  |  | (26,586 | ) |  |  | - |  |  |  | (26,562 | ) |  |  | - |  |  |  | (26,562 | )
Stock compensation expense |  |  | - |  |  |  | - |  |  |  | 2,912 |  |  |  | - |  |  |  | - |  |  |  | 2,912 |  |  |  | - |  |  |  | 2,912 |
Tax effects of stock plan |  |  | - |  |  |  | - |  |  |  | 21 |  |  |  | - |  |  |  | - |  |  |  | 21 |  |  |  | - |  |  |  | 21 |
Balance at October 3, 2015 |  | $ | 13,544 |  |  | $ | 1,213 |  |  | $ | 2,057,552 |  |  | $ | (172,770 | ) |  | $ | (121,186 | ) |  | $ | 1,778,353 |  |  | $ | 5,378 |  |  | $ | 1,783,731 |

See accompanying notes.
11

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 1 – Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of Vishay Intertechnology, Inc. ("Vishay" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. The financial statements should be read in conjunction with the consolidated financial statements filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations for the fiscal quarter and nine fiscal months ended October 3, 2015 are not necessarily indicative of the results to be expected for the full year.
The Company reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first fiscal quarter, which always begins on January 1, and the fourth fiscal quarter, which always ends on December 31. The four fiscal quarters in 2015 end on April 4, 2015, July 4, 2015, October 3, 2015, and December 31, 2015, respectively. The four fiscal quarters in 2014 ended on March 29, 2014, June 28, 2014, September 27, 2014, and December 31, 2014, respectively.
Recently Issued Accounting Guidance
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU is the result of a convergence project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The ASU removes inconsistencies and weaknesses in revenue requirements; provides a more robust framework for addressing revenue issues; improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; provides more useful information to users of financial statements through expanded disclosure requirements; and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The ASU is effective for the Company for interim and annual periods beginning on or after January 1, 2018, with the ability to early adopt on January 1, 2017. Vishay is currently evaluating the effect of the ASU on its revenue contracts and its adoption alternatives.
In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The ASU is the result of the FASB's simplification initiative intended to improve GAAP by reducing costs and complexity while maintaining or enhancing the usefulness of related financial statement information. The ASU specifies that debt issuance costs related to a note shall be reported in the balance sheet as a direct reduction from the face amount of the note. The ASU is effective for the Company for interim and annual periods beginning on or after January 1, 2016. The ASU will require the Company to reclassify its capitalized debt issuance costs currently recorded as assets on the consolidated condensed balance sheets. The ASU will have no effect on the Company's results of operations or liquidity.
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The ASU is the result of the FASB's simplification initiative intended to improve GAAP by reducing costs and complexity while maintaining or enhancing the usefulness of related financial statement information. The ASU eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively, and to instead recognize measurement-period adjustments during the period in which the acquirer determines the amount, including the effect on earnings of any amounts which would have been recorded in previous periods if the accounting had been completed at the acquisition date. The ASU is effective for the Company for interim and annual periods beginning on or after January 1, 2016. The ASU will have no effect on the Company's results of operations or liquidity.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current financial statements presentation.
12

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 2 – Goodwill and Other Intangible Assets
Goodwill represents the excess of the cost of a business acquired over the fair value of the related net assets at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually. These impairment tests must be performed more frequently whenever events or changes in circumstances indicate that the asset might be impaired. The Company's business segments (see Note 10) represent its reporting units for goodwill impairment testing purposes.
In light of a sustained decline in market capitalization for Vishay and its peer group companies, and other factors (including the cost reduction programs announced during the third fiscal quarter as described in Note 3), Vishay determined that interim goodwill and indefinite-lived impairment tests were required as of the end of the third fiscal quarter of 2015.
Prior to completing the interim assessment of goodwill for impairment, the Company performed a recoverability test of certain depreciable and amortizable long-lived assets. As a result of those assessments, it was determined that the depreciable and amortizable assets associated with the Company's Capella business were not recoverable, and the Company recorded impairment charges totaling $57,600 to write-down the related assets to their fair value.
After completing step one of the goodwill impairment test, it was determined that the estimated fair value of the Capacitors reporting unit was less than the net book value of that reporting unit, requiring the completion of the second step of the impairment evaluation. The estimated fair value of the Resistors & Inductors and Optoelectronic Components reporting units exceeded the net book value of those reporting units by ratios of 2.0x and 1.3x, respectively, and no second step was required for those reporting units.
Upon completion of the step two analysis for the Capacitors reporting unit, the Company recorded a full goodwill impairment charge of $5,380.
As part of these analyses, the Company determined that its Siliconix tradenames, with a carrying value of $20,359, were not impaired and will continue to be reported as indefinite-lived intangible assets. The estimated fair value of the Siliconix tradenames exceeded the carrying value by a narrow margin. They will continue to be closely monitored for impairment.
The fair value of long-lived assets is measured primarily using present value techniques based on projected cash flows from the asset group. The evaluation of the recoverability of long-lived assets, and the determination of their fair value, requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the identification of the asset group at the lowest level of independent cash flows and the principal asset of the group; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization, and capital expenditures.
The fair value of indefinite-lived trademarks is measured as the discounted cash flow savings realized from owning such tradenames and not having to pay a royalty for their use. The evaluation of the fair value of indefinite-lived trademarks requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the assumed market-royalty rate; the discount rate; terminal growth rates; and forecasts of revenue.
The fair value of reporting units for goodwill impairment testing purposes is measured primarily using present value techniques based on projected cash flows from the reporting unit. The calculated results are evaluated for reasonableness using comparable company data. The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requires the Company to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which the Company competes; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization, and capital expenditures. The allocation requires several analyses to determine fair value of assets and liabilities including, among others, completed technology, tradenames, customer relationships, and certain property and equipment.
Due to the inherent uncertainty involved in making these estimates, actual financial results could differ from those estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge; could have a significant impact on the conclusion that an asset group's carrying value is recoverable, that an indefinite-lived asset is not impaired, or the determination of any impairment charge if it was determined that the asset values were indeed impaired.
The Company performs its annual goodwill and indefinite-lived impairment test as of the first day of the fiscal fourth quarter. The interim impairment test performed as of October 3, 2015, the last day of the third fiscal quarter, was effectively the annual impairment test for 2015. If financial conditions deteriorate, an additional interim assessment may be required in the fourth fiscal quarter.
The recorded impairment charges are noncash in nature and do not affect Vishay's liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations.
13

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
The changes in the carrying amount of goodwill by segment for the nine fiscal months ended October 3, 2015 was as follows:

|  | Optoelectronic Components |  |  | Resistors & Inductors |  |  | Capacitors |  |  | Total |
Balance at January 1, 2015 |  | $ | 96,849 |  |  | $ | 42,146 |  |  | $ | 5,364 |  |  | $ | 144,359 |
Goodwill impairment charges |  |  | - |  |  |  | - |  |  |  | (5,380 | ) |  |  | (5,380 | )
Exchange rate effects |  |  | - |  |  |  | (592 | ) |  |  | 16 |  |  |  | (576 | )
Balance at October 3, 2015 |  | $ | $96,849 |  |  | $ | 41,554 |  |  | $ | - |  |  | $ | 138,403 |

Following the impairment charges recorded in the third fiscal quarter of 2015, the other intangible assets are as follows:

|  | October 3, |  |  | December 31, |
|  | 2015 |  |  | 2014 |
Intangible Assets Subject to Amortization |  |  |  |  |  |
(Definite-lived): |  |  |  |  |  |
Patents and acquired technology |  | $ | 93,786 |  |  | $ | 108,190 |
Capitalized software |  |  | 53,197 |  |  |  | 53,369 |
Customer relationships |  |  | 85,526 |  |  |  | 153,853 |
Tradenames |  |  | 35,758 |  |  |  | 39,612 |
Non-competition agreements |  |  | 2,267 |  |  |  | 2,283 |
|  |  | 270,534 |  |  |  | 357,307 |
Accumulated amortization: |  |  |  |  |  |  |  |
Patents and acquired technology |  |  | (74,959 | ) |  |  | (71,700 | )
Capitalized software |  |  | (46,976 | ) |  |  | (45,979 | )
Customer relationships |  |  | (36,359 | ) |  |  | (50,630 | )
Tradenames |  |  | (23,052 | ) |  |  | (21,384 | )
Non-competition agreements |  |  | (1,769 | ) |  |  | (1,360 | )
|  |  | (183,115 | ) |  |  | (191,053 | )
Net Intangible Assets Subject to Amortization |  |  | 87,419 |  |  |  | 166,254 |
Intangible Assets Not Subject to Amortization |  |  |  |  |  |  |  |
(Indefinite-lived): |  |  |  |  |  |  |  |
Tradenames |  |  | 20,359 |  |  |  | 20,359 |
|  | $ | 107,778 |  |  |  | 186,613 |

Estimated annual amortization expense of intangible assets on the balance sheet at October 3, 2015 for the fourth fiscal quarter of 2015 and the next four years is as follows:

2015 |  | $ | 4,135 |
2016 |  |  | 15,314 |
2017 |  |  | 13,162 |
2018 |  |  | 9,180 |
2019 |  |  | 5,343 |

14

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 3 – Restructuring and Related Activities
The Company places a strong emphasis on controlling its costs.
Historically, the Company's primary cost reduction technique was through the transfer of production to the extent possible from high-labor-cost countries, such as the United States and Western Europe, to lower-labor-cost countries, such as the Czech Republic, Hungary, Israel, India, Malaysia, Mexico, the People's Republic of China, and the Philippines. Between 2001 and 2009, the Company recorded, in the consolidated statements of operations, restructuring and severance costs and related asset write-downs in order to reduce its cost structure going forward.
The Company also incurred significant costs to restructure and integrate acquired businesses, which were included in the cost of the acquisitions under then-applicable GAAP.
The Company did not initiate any new restructuring projects in the years ended December 31, 2012, 2011, or 2010.
On October 28, 2013, the Company announced various cost reduction programs as part of its continuous efforts to improve efficiency and operating performance. The cash costs of these programs, primarily severance, are expected to be approximately $32,000. Complete implementation of all of the programs is expected to occur before the end of the first fiscal quarter of 2016. Many of the severance costs will be recognized ratably over the required stay periods.
On August 3, 2015, the Company announced additional global cost reduction programs as part of its continuous efforts to improve efficiency and operating performance. These programs include a facility closure in the Netherlands that was previously announced in the second fiscal quarter of 2015. The cash costs of these programs, primarily severance, are expected to aggregate to approximately $30,000. Complete implementation of these programs is expected to occur before the end of 2017.
The following table summarizes restructuring and related expenses which were recognized and reported on a separate line in the accompanying consolidated statements of operations:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
MOSFETs Enhanced Competitiveness Program |  | $ | 1,445 |  |  | $ | 1,522 |  |  | $ | 3,737 |  |  | $ | 4,741 |
Voluntary Separation / Retirement Program |  |  | - |  |  |  | (94 | ) |  |  | 77 |  |  |  | 12,105 |
Modules Production Transfer Program |  |  | - |  |  |  | 2,080 |  |  |  | - |  |  |  | 2,080 |
Global Cost Reduction Programs |  |  | 879 |  |  |  | - |  |  |  | 5,580 |  |  |  | - |
Total |  | $ | 2,324 |  |  | $ | 3,508 |  |  | $ | 9,394 |  |  | $ | 18,926 |

MOSFETs Enhanced Competitiveness Program
Over a period of approximately 2 years and in a series of discrete steps, the manufacture of wafers for a substantial share of products will be transferred into a more cost-efficient fab. As a consequence, certain other manufacturing currently occurring in-house will be transferred to third-party foundries.
The total severance costs associated with these initiatives are expected to be approximately $16,000. Employees generally must remain with the Company during the production transfer period. Accordingly, the Company will accrue these severance costs ratably over the respective employees' remaining service periods.
The following table summarizes the activity to date related to this program:

Expense recorded in 2013 |  | $ | 2,328 |
Cash paid |  |  | (267 | )
Balance at December 31, 2013 |  | $ | 2,061 |
Expense recorded in 2014 |  |  | 6,025 |
Cash paid |  |  | (856 | )
Balance at December 31, 2014 |  | $ | 7,230 |
Expense recorded in 2015 |  |  | 3,737 |
Cash paid |  |  | (400 | )
Balance at October 3, 2015 |  | $ | 10,567 |

Severance benefits are generally paid in a lump sum at cessation of employment. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated condensed balance sheets.
15

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Voluntary Separation / Retirement Program
The voluntary separation / early retirement program was offered to employees worldwide who were eligible because they met job classification, age, and years-of-service criteria as of October 31, 2013. The program benefits vary by country and job classification, but generally include a cash loyalty bonus based on years of service. All employees eligible for the program have been identified, and have left or will leave the Company after the expiration of their respective transition periods.
These employees generally were not aligned with any particular segment. The effective separation / retirement date for most employees who accepted the offer was June 30, 2014 or earlier, with a few exceptions to allow for a transition period.
The following table summarizes the activity to date related to this program:

Expense recorded in 2013 |  | $ | 486 |
Cash paid |  |  | (98 | )
Foreign currency translation |  |  | 3 |
Balance at December 31, 2013 |  | $ | 391 |
Expense recorded in 2014 |  |  | 12,792 |
Cash paid |  |  | (8,054 | )
Foreign currency translation |  |  | (455 | )
Balance at December 31, 2014 |  | $ | 4,674 |
Expense recorded in 2015 |  |  | 77 |
Cash paid |  |  | (2,761 | )
Foreign currency translation |  |  | (234 | )
Balance at October 3, 2015 |  | $ | 1,756 |

The payment terms vary by country, but generally are paid in a lump sum at cessation of employment. Certain participants are being paid in installments. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated balance sheets.
Modules Production Transfer
In an effort to reduce costs and streamline production of its module products within its Diodes segment, the Company committed to two smaller cost reduction programs related to the transferring of production of certain of its products.
The following table summarizes the activity to date related to this program:

Expense recorded in 2014 |  | $ | 2,080 |
Cash paid |  |  | (464 | )
Foreign currency translation |  |  | (121 | )
Balance at December 31, 2014 |  | $ | 1,495 |
Cash paid |  |  | (567 | )
Foreign currency translation |  |  | (105 | )
Balance at October 3, 2015 |  | $ | 823 |

Severance benefits are generally paid in a lump sum at cessation of employment. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated condensed balance sheets.
16

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Global Cost Reduction Programs
The global cost reduction programs announced in 2015 include a plan to reduce selling, general, and administrative costs company-wide, and targeted streamlining and consolidation of production for certain product lines within its Capacitors and Resistors & Inductors segments.
The following table summarizes the activity to date related to this program:

Expense recorded in 2015 |  | $ | 5,580 |
Cash paid |  |  | (410 | )
Foreign currency translation |  |  | (19 | )
Balance at October 3, 2015 |  | $ | 5,151 |

The following table summarizes the expense recognized by segment related to this program:

Diodes |  | $ | 48 |
Resistors & Inductors |  |  | 480 |
Capacitors |  |  | 4,719 |
Unallocated Selling, General, and Administrative Expenses |  |  | 333 |
Total |  | $ | 5,580 |

Severance benefits are generally paid in a lump sum at cessation of employment. The entire amount of the liability is considered current and is included in other accrued expenses in the accompanying consolidated condensed balance sheets.
17

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 4 – Income Taxes
The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The effective tax rates for the periods ended October 3, 2015 and September 27, 2014 reflect the Company's expected tax rate on reported income from continuing operations before income tax and tax adjustments. The Company operates in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company's earnings and the applicable tax rates in the various jurisdictions where the Company operates.
During the nine fiscal months ended October 3, 2015, the liabilities for unrecognized tax benefits increased by $130 on a net basis, principally due to increases for tax positions taken in prior periods and interest, offset by a decrease due to foreign currency effects.
During 2014, the Company borrowed $53,000 on its revolving credit facility to achieve future flexibility given the legal entity and the financial structure utilized for the Capella Microsystems Inc. ("Capella") acquisition. Subsequent to the acquisition of the noncontrolling interests in Capella on December 31, 2014, the Company planned to repatriate cash from the 2014 earnings of non-U.S. subsidiaries to the United States primarily to repay those borrowings on the revolving credit facility, and also to realign the acquired entity structure to have Capella's U.S. subsidiary directly owned by Vishay Intertechnology, Inc. The tax provision for the year ended December 31, 2014 included all U.S. federal and state income taxes, incremental foreign income taxes, and withholding taxes payable related to that anticipated repatriation transaction. During the second fiscal quarter of 2015, we reduced the balance of the revolving credit facility by approximately $45,000 using cash that was repatriated. The final $11,000 from this repatriation transaction was repatriated in the third fiscal quarter of 2015 and used to further reduce the balance of the revolving credit facility, although some amounts were redrawn from the credit facility for other corporate purposes.
18

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 5 – Long-Term Debt
Long-term debt consists of the following:

|  | October 3, 2015 |  |  | December 31, 2014 |
Credit facility |  | $ | 173,000 |  |  | $ | 200,000 |
Exchangeable unsecured notes, due 2102 |  |  | 38,642 |  |  |  | 38,642 |
Convertible senior debentures, due 2040 |  |  | 105,719 |  |  |  | 103,841 |
Convertible senior debentures, due 2041 |  |  | 54,278 |  |  |  | 53,249 |
Convertible senior debentures, due 2042 |  |  | 60,127 |  |  |  | 59,190 |
|  |  | 431,766 |  |  |  | 454,922 |
Less current portion |  |  | - |  |  |  | - |
|  | $ | 431,766 |  |  | $ | 454,922 |

Convertible Senior Debentures
Vishay currently has three issuances of convertible senior debentures outstanding with generally congruent terms. The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for each issuance of the Company's convertible senior debentures effective as of the ex-dividend date of each cash dividend.
The following table summarizes some key facts and terms regarding the three series of outstanding convertible senior debentures following the adjustment made to the conversion rate of the debentures on the ex-dividend date of the August 31, 2015 dividend payment:

|  | Due 2040 |  |  | Due 2041 |  |  | Due 2042 |
Issuance date |  | November 9, 2010 |  |  | May 13, 2011 |  |  | May 31, 2012 |
Maturity date |  | November 15, 2040 |  |  | May 15, 2041 |  |  | June 1, 2042 |
Principal amount |  | $ | 275,000 |  |  | $ | 150,000 |  |  | $ | 150,000 |
Cash coupon rate (per annum) |  |  | 2.25 | % |  |  | 2.25 | % |  |  | 2.25 | %
Nonconvertible debt borrowing rate at issuance (per annum) |  |  | 8.00 | % |  |  | 8.375 | % |  |  | 7.50 | %
Conversion rate effective August 31, 2015 (per $1 principal amount) |  |  | 74.3326 |  |  |  | 54.2441 |  |  |  | 87.3974 |
Effective conversion price effective August 31, 2015 (per share) |  | $ | 13.45 |  |  | $ | 18.44 |  |  | $ | 11.44 |
130% of the conversion price (per share) |  | $ | 17.49 |  |  | $ | 23.97 |  |  | $ | 14.87 |
Call date |  | November 20, 2020 |  |  | May 20, 2021 |  |  | June 7, 2022 |

Prior to three months before the maturity date, the holders may only convert their debentures under the following circumstances: (1) during any fiscal quarter after the first full quarter subsequent to issuance, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the debentures falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; (3) Vishay calls any or all of the debentures for redemption, at any time prior to the close of business on the third scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.
Based on an evaluation of the conversion criteria at October 3, 2015 and December 31, 2014, none of the convertible senior debentures due 2040, due 2041, or due 2042 were convertible. The conversion criteria of the debentures will continue to be evaluated and the debentures may become convertible in the future. At the direction of the Company's Board of Directors, the Company intends, upon conversion, to repay the principal amount of the convertible debentures in cash and settle any additional amounts in shares of the Company's common stock. The Company intends to finance the principal amount of any converted debentures using borrowings under its credit facility.
19

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
GAAP requires an issuer to separately account for the liability and equity components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. The resulting discount on the debt is amortized as non-cash interest expense in future periods.
The carrying values of the liability and equity components of the convertible debentures are reflected in the Company's consolidated condensed balance sheets as follows:

|  | Principal amount of the debentures |  |  | Unamortized discount |  |  | Embedded derivative |  |  | Carrying value of liability component |  |  | Equity component - net carrying value |
October 3, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 275,000 |  |  |  | (170,111 | ) |  |  | 830 |  |  | $ | 105,719 |  |  | $ | 110,094 |
Due 2041 |  | $ | 150,000 |  |  |  | (96,292 | ) |  |  | 570 |  |  | $ | 54,278 |  |  | $ | 62,246 |
Due 2042 |  | $ | 150,000 |  |  |  | (90,255 | ) |  |  | 382 |  |  | $ | 60,127 |  |  | $ | 57,874 |
Total |  | $ | 575,000 |  |  | $ | (356,658 | ) |  | $ | 1,782 |  |  | $ | 220,124 |  |  | $ | 230,214 |
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 275,000 |  |  |  | (171,685 | ) |  |  | 526 |  |  | $ | 103,841 |  |  | $ | 110,094 |
Due 2041 |  | $ | 150,000 |  |  |  | (97,092 | ) |  |  | 341 |  |  | $ | 53,249 |  |  | $ | 62,246 |
Due 2042 |  | $ | 150,000 |  |  |  | (91,048 | ) |  |  | 238 |  |  | $ | 59,190 |  |  | $ | 57,874 |
Total |  | $ | 575,000 |  |  | $ | (359,825 | ) |  | $ | 1,105 |  |  | $ | 216,280 |  |  | $ | 230,214 |

Interest is payable on the debentures semi-annually at the cash coupon rate; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company's estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, contingent interest will accrue in certain circumstances relating to the trading price of the debentures and under certain other circumstances beginning ten years subsequent to issuance.
Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:

|  | Contractual coupon interest |  |  | Non-cash amortization of debt discount |  |  | Non-cash amortization of deferred financing costs |  |  | Non-cash change in value of derivative liability |  |  | Total interest expense related to the debentures |
October 3, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 1,547 |  |  |  | 535 |  |  |  | 22 |  |  |  | 198 |  |  | $ | 2,302 |
Due 2041 |  | $ | 844 |  |  |  | 272 |  |  |  | 12 |  |  |  | 92 |  |  | $ | 1,220 |
Due 2042 |  | $ | 844 |  |  |  | 270 |  |  |  | 13 |  |  |  | 105 |  |  | $ | 1,232 |
Total |  | $ | 3,235 |  |  | $ | 1,077 |  |  | $ | 47 |  |  | $ | 395 |  |  | $ | 4,754 |
September 27, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 1,547 |  |  |  | 495 |  |  |  | 22 |  |  |  | 93 |  |  | $ | 2,157 |
Due 2041 |  | $ | 844 |  |  |  | 251 |  |  |  | 11 |  |  |  | (29 | ) |  | $ | 1,077 |
Due 2042 |  | $ | 844 |  |  |  | 251 |  |  |  | 13 |  |  |  | 13 |  |  | $ | 1,121 |
Total |  | $ | 3,235 |  |  | $ | 997 |  |  | $ | 46 |  |  | $ | 77 |  |  | $ | 4,355 |

20

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the nine fiscal months ended:

|  | Contractual coupon interest |  |  | Non-cash amortization of debt discount |  |  | Non-cash amortization of deferred financing costs |  |  | Non-cash change in value of derivative liability |  |  | Total interest expense related to the debentures |
October 3, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 4,641 |  |  |  | 1,574 |  |  |  | 66 |  |  |  | 304 |  |  | $ | 6,585 |
Due 2041 |  | $ | 2,532 |  |  |  | 800 |  |  |  | 36 |  |  |  | 229 |  |  | $ | 3,597 |
Due 2042 |  | $ | 2,532 |  |  |  | 793 |  |  |  | 40 |  |  |  | 144 |  |  | $ | 3,509 |
Total |  | $ | 9,705 |  |  | $ | 3,167 |  |  | $ | 142 |  |  | $ | 677 |  |  | $ | 13,691 |
September 27, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 4,641 |  |  |  | 1,456 |  |  |  | 66 |  |  |  | 62 |  |  | $ | 6,225 |
Due 2041 |  | $ | 2,532 |  |  |  | 737 |  |  |  | 35 |  |  |  | (35 | ) |  | $ | 3,269 |
Due 2042 |  | $ | 2,532 |  |  |  | 737 |  |  |  | 40 |  |  |  | 12 |  |  | $ | 3,321 |
Total |  | $ | 9,705 |  |  | $ | 2,930 |  |  | $ | 141 |  |  | $ | 39 |  |  | $ | 12,815 |

21

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 6 – Other Income (Expense)
On August 12, 2015, a major explosion occurred in the port of Tianjin, China. Vishay owns and operates a diodes manufacturing facility in Tianjin near the port. The shockwave of the explosion resulted in some damage to the facility and caused a temporary shutdown. Full production resumed on September 8, 2015.
As a result of this incident, through the end of the third fiscal quarter, the Company estimates that it has incurred $9,645 for inventory, property, and equipment damage (at net book value) and related repair and clean-up costs. As of October 3, 2015, the Company has recorded a receivable of $4,295 for amounts which are probable of recovery under its insurance policies. The accompanying condensed consolidated statements of operations for the fiscal quarter and nine fiscal months ended October 3, 2015 include, as a separate line item, a loss of $5,350 related to these items, which represents the insurance deductible and certain costs which are potentially not recoverable.
The Company's insurance coverage generally provides for replacement cost of damaged items. Any amount expected to be received in excess of the book value of the damaged item will be treated as a gain, but will not be recorded until contingencies are resolved. The Company also believes that it has valid claims under its business interruption insurance policies, but those claims cannot be quantified at this time. The Company will not record a receivable for business interruption claims until all contingencies have been resolved.
22

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 7 – Accumulated Other Comprehensive Income (Loss)
The cumulative balance of each component of other comprehensive income (loss) and the income tax effects allocated to each component are as follows:

|  | Pension and other post-retirement actuarial items |  |  | Currency translation adjustment |  |  | Unrealized gain (loss) on available-for-sale securities |  |  | Total |
Balance at January 1, 2015 |  | $ | (155,760 | ) |  | $ | 84,703 |  |  |  | 1,917 |  |  | $ | (69,140 | )
Other comprehensive income (loss) before reclassifications |  |  | - |  |  |  | (57,174 | ) |  |  | (1,424 | ) |  | $ | (58,598 | )
Tax effect |  |  | - |  |  |  | - |  |  |  | 498 |  |  | $ | 498 |
Other comprehensive income (loss) before reclassifications, net of tax |  |  | - |  |  |  | (57,174 | ) |  |  | (926 | ) |  | $ | (58,100 | )
Amounts reclassified out of AOCI |  |  | 9,548 |  |  |  | - |  |  |  | (680 | ) |  | $ | 8,868 |
Tax effect |  |  | (3,052 | ) |  |  | - |  |  |  | 238 |  |  | $ | (2,814 | )
Amounts reclassified out of AOCI, net of tax |  |  | 6,496 |  |  |  | - |  |  |  | (442 | ) |  | $ | 6,054 |
Net other comprehensive income (loss) |  | $ | 6,496 |  |  | $ | (57,174 | ) |  | $ | (1,368 | ) |  | $ | (52,046 | )
Balance at October 3, 2015 |  | $ | (149,264 | ) |  | $ | 27,529 |  |  | $ | 549 |  |  | $ | (121,186 | )

Reclassifications of pension and other post-retirement actuarial items out of AOCI are included in the computation of net periodic benefit cost. (See Note 8 for further information). The amount of unrealized gains (losses) on available-for-sale securities reclassified out of AOCI as a result of sales of securities held by the Company's rabbi trust used to fund a deferred compensation plan was $680 for the nine fiscal months ended October 3, 2015. These reclassifications are recorded as a component of compensation expense within Selling, General, and Administrative expenses on our consolidated condensed statements of operations.
Other comprehensive income (loss) includes Vishay's proportionate share of other comprehensive income (loss) of nonconsolidated subsidiaries accounted for under the equity method.
23

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 8 – Pensions and Other Postretirement Benefits
The Company maintains various retirement benefit plans.
Defined Benefit Pension Plans
The following table shows the components of the net periodic pension cost for the third fiscal quarters of 2015 and 2014 for the Company's defined benefit pension plans:

|  | Fiscal quarter ended October 3, 2015 |  |  | Fiscal quarter ended September 27, 2014 |
|  | U.S. Plans |  |  | Non-U.S. Plans |  |  | U.S. Plans |  |  | Non-U.S. Plans |
Net service cost |  | $ | - |  |  | $ | 812 |  |  | $ | - |  |  | $ | 826 |
Interest cost |  |  | 2,915 |  |  |  | 1,412 |  |  |  | 3,313 |  |  |  | 2,149 |
Expected return on plan assets |  |  | (3,391 | ) |  |  | (448 | ) |  |  | (3,578 | ) |  |  | (534 | )
Amortization of prior service cost (credit) |  |  | 16 |  |  |  | - |  |  |  | (23 | ) |  |  | 1 |
Amortization of losses |  |  | 2,048 |  |  |  | 1,278 |  |  |  | 1,507 |  |  |  | 677 |
Curtailment and settlement losses |  |  | - |  |  |  | - |  |  |  | 15,588 |  |  |  | - |
Net periodic benefit cost |  | $ | 1,588 |  |  | $ | 3,054 |  |  | $ | 16,807 |  |  | $ | 3,119 |

The following table shows the components of the net periodic pension cost for the nine fiscal months ended October 3, 2015 and September 27, 2014 for the Company's defined benefit pension plans:

|  | Nine fiscal months ended October 3, 2015 |  |  | Nine fiscal months ended September 27, 2014 |
|  | U.S. Plans |  |  | Non-U.S. Plans |  |  | U.S. Plans |  |  | Non-U.S. Plans |
Net service cost |  | $ | - |  |  | $ | 2,467 |  |  | $ | - |  |  | $ | 2,481 |
Interest cost |  |  | 8,743 |  |  |  | 4,263 |  |  |  | 10,981 |  |  |  | 6,525 |
Expected return on plan assets |  |  | (10,174 | ) |  |  | (1,358 | ) |  |  | (11,694 | ) |  |  | (1,591 | )
Amortization of prior service cost (credit) |  |  | 48 |  |  |  | - |  |  |  | (69 | ) |  |  | 3 |
Amortization of losses |  |  | 6,144 |  |  |  | 3,859 |  |  |  | 5,127 |  |  |  | 2,055 |
Curtailment and settlement losses |  |  | - |  |  |  | - |  |  |  | 15,588 |  |  |  | - |
Net periodic benefit cost |  | $ | 4,761 |  |  | $ | 9,231 |  |  | $ | 19,933 |  |  | $ | 9,473 |

During the third fiscal quarter of 2014, the Company executed two partial-settlement transactions to reduce the risk associated with its U.S. qualified pension obligations. These transactions included the purchase of annuity contracts for approximately 700 participants pursuant to an arrangement inherited in a past acquisition and a special limited-time voluntary lump-sum payment offer to certain former employees who were deferred vested participants of the plan not currently receiving periodic payments of their pension benefit. A total of 800 participants accepted the voluntary lump-sum offer. The plan is no longer obligated to pay any benefits to the 1,500 participants covered by these two settlement transactions. These former participants represented approximately 23% of the total participants prior to executing these transactions.
As a result of these transactions, the projected benefit obligation, plan assets, and funded status were remeasured on the dates of the respective settlements. The plan assets consisted of equity securities, fixed income securities, and real estate investments.
These transactions reduced the U.S. projected benefit obligation by approximately $59,400, and were funded entirely with plan assets. These transactions also resulted in the recognition of non-cash settlement charges aggregating $15,588, representing previously unrecognized actuarial items. These non-cash charges are presented on a separate line in the consolidated condensed statements of operations.
24

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
In the second fiscal quarter of 2015, the Company began the process of terminating the Vishay Retirement Plan, the Company's U.S. qualified pension plan. Plan participants will not be adversely affected by the plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.
The completion of this proposed termination and settlement is contingent upon the receipt of a favorable determination letter from the Internal Revenue Service ("IRS") and meeting certain IRS and Pension Benefit Guarantee Corporation ("PBGC") requirements, which is expected to take at least one year.
As of the last fiscal year-end measurement date (December 31, 2014), the Vishay Retirement Plan was fully-funded on a GAAP basis. In order to terminate the plan in accordance with IRS and PBGC requirements, the Company is required to fully fund the plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between zero and $35,000.
Other Postretirement Benefits
The following table shows the components of the net periodic benefit cost for the third fiscal quarters of 2015 and 2014 for the Company's other postretirement benefit plans:

|  | Fiscal quarter ended October 3, 2015 |  |  | Fiscal quarter ended September 27, 2014 |
|  | U.S. Plans |  |  | Non-U.S. Plans |  |  | U.S. Plans |  |  | Non-U.S. Plans |
Service cost |  | $ | 31 |  |  | $ | 69 |  |  | $ | 29 |  |  | $ | 77 |
Interest cost |  |  | 83 |  |  |  | 37 |  |  |  | 88 |  |  |  | 61 |
Amortization of prior service (credit) |  |  | (209 | ) |  |  | - |  |  |  | (206 | ) |  |  | - |
Amortization of losses (gains) |  |  | 22 |  |  |  | 19 |  |  |  | (35 | ) |  |  | 9 |
Net periodic benefit cost |  | $ | (73 | ) |  | $ | 125 |  |  | $ | (124 | ) |  | $ | 147 |

The following table shows the components of the net periodic pension cost for the nine fiscal months ended October 3, 2015 and September 27, 2014 for the Company's other postretirement benefit plans:

|  | Nine fiscal months ended October 3, 2015 |  |  | Nine fiscal months ended September 27, 2014 |
|  | U.S. Plans |  |  | Non-U.S. Plans |  |  | U.S. Plans |  |  | Non-U.S. Plans |
Service cost |  | $ | 91 |  |  | $ | 206 |  |  | $ | 87 |  |  | $ | 235 |
Interest cost |  |  | 250 |  |  |  | 110 |  |  |  | 264 |  |  |  | 187 |
Amortization of prior service (credit) |  |  | (627 | ) |  |  | - |  |  |  | (618 | ) |  |  | - |
Amortization of losses (gains) |  |  | 67 |  |  |  | 57 |  |  |  | (105 | ) |  |  | 29 |
Net periodic benefit cost |  | $ | (219 | ) |  | $ | 373 |  |  | $ | (372 | ) |  | $ | 451 |

25

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 9 – Stock-Based Compensation
The Company has various stockholder-approved programs which allow for the grant of stock-based compensation to officers, employees, and non-employee directors of the Company.
The amount of compensation cost related to stock-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Company determines compensation cost for restricted stock units ("RSUs"), phantom stock units, and restricted stock based on the grant-date fair value of the underlying common stock adjusted for expected dividends paid over the required vesting period for non-participating awards. Compensation cost is recognized over the period that an officer, employee, or non-employee director provides service in exchange for the award.
The following table summarizes stock-based compensation expense recognized:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Stock options |  | $ | - |  |  | $ | - |  |  | $ | - |  |  |  | - |
Restricted stock units |  |  | 933 |  |  |  | (42 | ) |  |  | 2,771 |  |  |  | 1,572 |
Phantom stock units |  |  | - |  |  |  | - |  |  |  | 141 |  |  |  | 131 |
Total |  | $ | 933 |  |  | $ | (42 | ) |  | $ | 2,912 |  |  |  | 1,703 |

The Company recognizes compensation cost for RSUs that are expected to vest and records cumulative adjustments in the period that the expectation changes.
The following table summarizes unrecognized compensation cost and the weighted average remaining amortization periods at October 3, 2015 (amortization periods in years):

|  | Unrecognized Compensation Cost |  |  | Weighted Average Remaining Amortization Periods |
Stock options |  | $ | - |  |  |  | 0.0 |
Restricted stock units |  |  | 8,547 |  |  |  | 1.2 |
Phantom stock units |  |  | - |  |  |  | 0.0 |
Total |  | $ | 8,547 |  |  |  |  |

Unrecognized compensation cost presented in the table above includes $2,935 of unrecognized compensation cost for performance-based RSUs that are not currently expected to vest and for which no compensation cost is currently being recognized.
26

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
2007 Stock Incentive Plan
The Company's 2007 Stock Incentive Program (the "2007 Program"), as amended and restated, permits the grant of up to 6,500,000 shares of restricted stock, unrestricted stock, RSUs, stock options, and phantom stock units, to officers, employees, and non-employee directors of the Company. Such instruments are available for grant until May 20, 2024.
Restricted Stock Units
RSU activity under the 2007 Program as of October 3, 2015 and changes during the nine fiscal months then ended are presented below (number of RSUs in thousands):

|  | Number of RSUs |  |  | Weighted Average Grant-date Fair Value per Unit |
Outstanding: |  |  |  |  |  |
January 1, 2015 |  |  | 1,147 |  |  | $ | 12.75 |
Granted |  |  | 349 |  |  |  | 13.60 |
Vested* |  |  | (162 | ) |  |  | 11.34 |
Cancelled or forfeited |  |  | (276 | ) |  |  | 12.88 |
Outstanding at October 3, 2015 |  |  | 1,058 |  |  | $ | 13.21 |
Expected to vest at October 3, 2015 |  |  | 836 |  |  |  |  |

* The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.
The number of performance-based RSUs that are scheduled to vest increases ratably based on the achievement of defined performance criteria between the established target and maximum levels. RSUs with performance-based vesting criteria are expected to vest as follows (number of RSUs in thousands):

Vesting Date |  | Expected to Vest |  |  | Not Expected to Vest |  |  | Total |
January 1, 2016 |  |  | - |  |  |  | 222 |  |  |  | 222 |
January 1, 2017 |  |  | 192 |  |  |  | - |  |  |  | 192 |
January 1, 2018 |  |  | 202 |  |  |  | - |  |  |  | 202 |

Phantom Stock Units
The 2007 Program authorizes the grant of phantom stock units to the extent provided for in the Company's employment agreements with certain executives. Each phantom stock unit entitles the recipient to receive a share of common stock at the individual's termination of employment or any other future date specified in the applicable employment agreement. Phantom stock units participate in dividend distribution on the same basis as the Company's common stock and Class B common stock. Dividend equivalents are issued in the form of additional units of phantom stock. The phantom stock units are fully vested at all times.
Phantom stock unit activity under the phantom stock plan as of October 3, 2015 and changes during the nine fiscal months then ended are presented below (number of phantom stock units in thousands):

|  | Number of units |  |  | Grant-date Fair Value per Unit |
Outstanding: |  |  |  |  |  |
January 1, 2015 |  |  | 119 |  |  |  |
Granted |  |  | 10 |  |  | $ | 14.09 |
Dividend equivalents issued |  |  | 2 |  |  |  |  |
Redeemed for common stock |  |  | - |  |  |  |  |
Outstanding at October 3, 2015 |  |  | 131 |  |  |  |  |

27

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Stock Options
In addition to stock options outstanding pursuant to the 2007 Program, during the periods presented, the Company had stock options outstanding under previous stockholder-approved stock option programs. These programs are more fully described in Note 12 to the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014. No additional options may be granted pursuant to these programs.
At December 31, 2014 and October 3, 2015, there were 105,000 options outstanding with a weighted average exercise price of $15.38. At October 3, 2015, the weighted average remaining contractual life of all outstanding options was 1.57 years.
At October 3, 2015, there were no unvested options outstanding.
The pretax aggregate intrinsic value (the difference between the closing stock price on the last trading day of the third fiscal quarter of 2015 of $9.81 per share and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on October 3, 2015 was zero because all outstanding options have exercise prices in excess of market value. This amount changes based on changes in the market value of the Company's common stock. During the nine fiscal months ended October 3, 2015, no options were exercised.
28

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 10 – Segment Information
Vishay operates, and its chief operating decision maker makes strategic and operating decisions with regards to assessing performance and allocating resources based on, five reporting segments: MOSFETs, Diodes, Optoelectronic Components, Resistors & Inductors, and Capacitors.
The Company evaluates business segment performance on operating income, exclusive of certain items ("segment operating income"). Only dedicated, direct selling, general, and administrative expenses of the segments are included in the calculation of segment operating income. The Company's calculation of segment operating income excludes such selling, general, and administrative costs as global operations, sales and marketing, information systems, finance and administration groups, as well as restructuring and severance costs, goodwill and long-lived asset impairment charges, and other items. Management believes that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the Company. These items represent reconciling items between segment operating income and consolidated operating income. Business segment assets are the owned or allocated assets used by each business.
The following tables set forth business segment information:

|  | MOSFETs |  |  | Diodes |  |  | Optoelectronic Components |  |  | Resistors & Inductors |  |  | Capacitors |  |  | Total |
Fiscal quarter ended October 3, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product Sales |  | $ | 109,446 |  |  | $ | 123,922 |  |  | $ | 70,008 |  |  | $ | 172,995 |  |  | $ | 83,547 |  |  | $ | 559,918 |
Royalty Revenues |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 736 |  |  |  | - |  |  | $ | 736 |
Total Revenue |  | $ | 109,446 |  |  | $ | 123,922 |  |  | $ | 70,008 |  |  | $ | 173,731 |  |  | $ | 83,547 |  |  | $ | 560,654 |
Gross Margin |  | $ | 16,795 |  |  | $ | 27,508 |  |  | $ | 22,969 |  |  | $ | 49,843 |  |  | $ | 13,029 |  |  | $ | 130,144 |
Fiscal quarter ended September 27, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product Sales |  | $ | 121,631 |  |  | $ | 151,444 |  |  | $ | 67,549 |  |  | $ | 189,419 |  |  | $ | 107,105 |  |  | $ | 637,148 |
Royalty Revenues |  |  | 28 |  |  |  | - |  |  |  | - |  |  |  | 1,035 |  |  |  | - |  |  | $ | 1,063 |
Total Revenue |  | $ | 121,659 |  |  | $ | 151,444 |  |  | $ | 67,549 |  |  | $ | 190,454 |  |  | $ | 107,105 |  |  | $ | 638,211 |
Gross Margin |  | $ | 17,384 |  |  | $ | 36,135 |  |  | $ | 24,585 |  |  | $ | 59,581 |  |  | $ | 20,707 |  |  | $ | 158,392 |

Nine fiscal months ended October 3, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product Sales |  | $ | 322,553 |  |  | $ | 399,155 |  |  | $ | 211,610 |  |  | $ | 538,173 |  |  | $ | 270,474 |  |  | $ | 1,741,965 |
Royalty Revenues |  |  | 11 |  |  |  | - |  |  |  | - |  |  |  | 2,584 |  |  |  | - |  |  | $ | 2,595 |
Total Revenue |  | $ | 322,564 |  |  | $ | 399,155 |  |  | $ | 211,610 |  |  | $ | 540,757 |  |  | $ | 270,474 |  |  | $ | 1,744,560 |
Gross Margin |  | $ | 45,261 |  |  | $ | 88,998 |  |  | $ | 69,483 |  |  | $ | 162,034 |  |  | $ | 50,888 |  |  | $ | 416,664 |
Nine fiscal months ended September 27, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product Sales |  | $ | 358,715 |  |  | $ | 437,944 |  |  | $ | 188,305 |  |  | $ | 569,944 |  |  | $ | 324,360 |  |  | $ | 1,879,268 |
Royalty Revenues |  |  | 127 |  |  |  | - |  |  |  | - |  |  |  | 3,123 |  |  |  | - |  |  | $ | 3,250 |
Total Revenue |  | $ | 358,842 |  |  | $ | 437,944 |  |  | $ | 188,305 |  |  | $ | 573,067 |  |  | $ | 324,360 |  |  | $ | 1,882,518 |
Gross Margin |  | $ | 48,872 |  |  | $ | 100,606 |  |  | $ | 68,610 |  |  | $ | 181,096 |  |  | $ | 68,584 |  |  | $ | 467,768 |

29

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Operating margin reconciliation: |  |  |  |  |  |  |  |  |  |  |  |
MOSFETs |  | $ | 6,839 |  |  | $ | 7,824 |  |  | $ | 16,506 |  |  | $ | 19,804 |
Diodes |  |  | 21,628 |  |  |  | 29,720 |  |  |  | 70,641 |  |  |  | 80,908 |
Optoelectronic Components |  |  | 17,673 |  |  |  | 20,571 |  |  |  | 53,923 |  |  |  | 56,920 |
Resistors & Inductors |  |  | 41,404 |  |  |  | 50,194 |  |  |  | 135,399 |  |  |  | 152,499 |
Capacitors |  |  | 7,618 |  |  |  | 14,482 |  |  |  | 33,968 |  |  |  | 49,945 |
Restructuring and Severance Costs |  |  | (2,324 | ) |  |  | (3,508 | ) |  |  | (9,394 | ) |  |  | (18,926 | )
Impairment of goodwill and long-lived assets |  |  | (62,980 | ) |  |  | - |  |  |  | (62,980 | ) |  |  | - |
U.S. pension settlement charges |  |  | - |  |  |  | (15,588 | ) |  |  | - |  |  |  | (15,588 | )
Unallocated Selling, General, and Administrative Expenses |  |  | (54,013 | ) |  |  | (58,236 | ) |  |  | (170,490 | ) |  |  | (179,608 | )
Consolidated Operating Income |  | $ | (24,155 | ) |  | $ | 45,459 |  |  | $ | 67,573 |  |  | $ | 145,954 |

30

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 11 – Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share attributable to Vishay stockholders (shares in thousands):

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Numerator: |  |  |  |  |  |  |  |  |  |  |  |
Numerator for basic earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |
Net earnings (loss) |  | $ | (27,666 | ) |  | $ | 26,971 |  |  | $ | 29,301 |  |  | $ | 88,423 |
Adjustment to the numerator for continuing operations and net earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest savings assuming conversion of dilutive convertible and exchangeable notes, net of tax |  |  | - |  |  |  | 14 |  |  |  | 50 |  |  |  | 44 |
Numerator for diluted earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings (loss) |  | $ | (27,666 | ) |  | $ | 26,985 |  |  | $ | 29,351 |  |  | $ | 88,467 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Denominator for basic earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted average shares |  |  | 147,570 |  |  |  | 147,451 |  |  |  | 147,570 |  |  |  | 147,447 |
Outstanding phantom stock units |  |  | 131 |  |  |  | 118 |  |  |  | 130 |  |  |  | 118 |
Adjusted weighted average shares |  |  | 147,701 |  |  |  | 147,569 |  |  |  | 147,700 |  |  |  | 147,565 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Convertible and exchangeable debt instruments |  |  | - |  |  |  | 7,702 |  |  |  | 3,692 |  |  |  | 6,332 |
Restricted stock units |  |  | - |  |  |  | 267 |  |  |  | 213 |  |  |  | 237 |
Other |  |  | - |  |  |  | 8 |  |  |  | 2 |  |  |  | 8 |
Dilutive potential common shares |  |  | - |  |  |  | 7,977 |  |  |  | 3,907 |  |  |  | 6,577 |
Denominator for diluted earnings (loss) per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Adjusted weighted average shares |  |  | 147,701 |  |  |  | 155,546 |  |  |  | 151,607 |  |  |  | 154,142 |
Basic earnings (loss) per share attributable to Vishay stockholders |  | $ | (0.19 | ) |  | $ | 0.18 |  |  | $ | 0.20 |  |  | $ | 0.60 |
Diluted earnings (loss) per share attributable to Vishay stockholders |  | $ | (0.19 | ) |  | $ | 0.17 |  |  | $ | 0.19 |  |  | $ | 0.57 |

31

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Diluted earnings per share for the periods presented do not reflect the following weighted average potential common shares that would have an antidilutive effect or have unsatisfied performance conditions (in thousands):

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Convertible and exchangeable notes: |  |  |  |  |  |  |  |  |  |  |  |
Convertible Senior Debentures, due 2040 |  |  | 20,364 |  |  |  | - |  |  |  | 13,537 |  |  |  | - |
Convertible Senior Debentures, due 2041 |  |  | 8,106 |  |  |  | 7,925 |  |  |  | 8,063 |  |  |  | 7,927 |
Convertible Senior Debentures, due 2042 |  |  | 13,060 |  |  |  | - |  |  |  | 4,353 |  |  |  | - |
Exchangeable Unsecured Notes, due 2102 |  |  | 2,512 |  |  |  | - |  |  |  | - |  |  |  | - |
Weighted average employee stock options |  |  | 105 |  |  |  | 77 |  |  |  | 96 |  |  |  | 77 |
Weighted average other |  |  | 1,059 |  |  |  | 710 |  |  |  | 768 |  |  |  | 705 |

In periods in which they are dilutive, if the potential common shares related to the exchangeable notes are included in the computation, the related interest savings, net of tax, assuming conversion/exchange is added to the net earnings used to compute earnings per share.
The Company's convertible debt instruments are only convertible for specified periods upon the occurrence of certain events. None of the conversion criteria were met for the periods presented. In periods that the debentures are not convertible, the certain conditions which could trigger conversion of the remaining debentures have been deemed to be non-substantive, and accordingly, the Company has always assumed the conversion of these instruments in its diluted earnings per share computation during periods in which they are dilutive.
At the direction of its Board of Directors, the Company intends, upon conversion, to repay the principal amounts of the convertible senior debentures, due 2040, due 2041, and due 2042, in cash and settle any additional amounts in shares of Vishay common stock. Accordingly, the debentures are included in the diluted earnings per share computation using the "treasury stock method" (similar to options and warrants) rather than the "if converted method" otherwise required for convertible debt. Under the "treasury stock method," Vishay calculates the number of shares issuable under the terms of the debentures based on the average market price of Vishay common stock during the period, and that number is included in the total diluted shares figure for the period. If the average market price is less than $13.45, no shares are included in the diluted earnings per share computation for the convertible senior debentures due 2040, if the average market price is less than $18.44, no shares are included in the diluted earnings per share computation for the convertible senior debentures due 2041, and if the average market price is less than $11.44, no shares are included in the diluted earnings per share computation for the convertible senior debentures due 2042.
32

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 12 – Fair Value Measurements
The fair value measurement accounting guidance establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the Company's own assumptions.
An asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There have been no changes in the classification of any financial instruments within the fair value hierarchy in the periods presented.
The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis:

|  | Total Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
October 3, 2015: |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Assets held in rabbi trusts |  | $ | 38,623 |  |  | $ | 25,064 |  |  | $ | 13,559 |  |  | $ | - |
Available for sale securities |  | $ | 3,971 |  |  |  | 3,971 |  |  |  | - |  |  |  | - |
|  | $ | 42,594 |  |  | $ | 29,035 |  |  | $ | 13,559 |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Embedded derivative - convertible debentures due 2040 |  | $ | (830 | ) |  | $ | - |  |  | $ | - |  |  | $ | (830 | )
Embedded derivative - convertible debentures due 2041 |  | $ | (570 | ) |  |  | - |  |  |  | - |  |  |  | (570 | )
Embedded derivative - convertible debentures due 2042 |  | $ | (382 | ) |  |  | - |  |  |  | - |  |  |  | (382 | )
|  | $ | (1,782 | ) |  | $ | - |  |  | $ | - |  |  | $ | (1,782 | )
December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets held in rabbi trusts |  | $ | 40,270 |  |  | $ | 26,853 |  |  |  | 13,417 |  |  | $ | - |
Available for sale securities |  | $ | 15,432 |  |  |  | 4,439 |  |  |  | 10,993 |  |  |  | - |
|  | $ | 55,702 |  |  | $ | 31,292 |  |  | $ | 24,410 |  |  | $ | - |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Embedded derivative - convertible debentures due 2040 |  | $ | (526 | ) |  | $ | - |  |  | $ | - |  |  | $ | (526 | )
Embedded derivative - convertible debentures due 2041 |  | $ | (341 | ) |  |  | - |  |  |  | - |  |  |  | (341 | )
Embedded derivative - convertible debentures due 2042 |  | $ | (238 | ) |  |  | - |  |  |  | - |  |  |  | (238 | )
|  | $ | (1,105 | ) |  | $ | - |  |  | $ | - |  |  | $ | (1,105 | )

In accordance with ASC Subtopic 350-20, and as described in Note 2, the Company performed a nonrecurring fair value measurement of its Capacitors segment goodwill balance. As a result of the fair value measurement, the goodwill of the Capacitors segment with a carrying value of was $5,380 was written down to its implied value of zero, resulting in an impairment charge of $5,380, recorded in the accompanying consolidated condensed statement of operations.
In accordance with ASC Subtopic 360-10, and as described in Note 2, the Company performed a nonrecurring fair value measurement of its Capella business long-lived assets. As a result of the fair value measurement, the long-lived assets of its Capella business with carrying values of $68,500, were written down to their fair values of $10,900, resulting in a total impairment charge of $57,600, recorded in the accompanying consolidated condensed statement of operations.
The Company's nonrecurring fair value measurements of goodwill and long-lived assets held and used are considered Level 3 measurements. See Note 2 for further information on the measurements and inputs.
The Company maintains non-qualified trusts, referred to as "rabbi" trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale and company-owned life insurance assets. The marketable securities held in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company's insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.
33

NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
The Company holds available for sale investments in debt securities that are intended to fund a portion of its pension and other postretirement benefit obligations outside of the United States. The investments are valued based on quoted market prices on the last business day of the year. The fair value measurement of the investments is considered a Level 1 measurement within the fair value hierarchy.
The convertible senior debentures, due 2040, due 2041, and due 2042, issued by the Company on November 9, 2010, May 13, 2011, and May 31, 2012, respectively, contain embedded derivative features that GAAP requires to be bifurcated and remeasured each reporting period. Each quarter, the change in the fair value of the embedded derivative features, if any, is recorded in the consolidated condensed statements of operations. The Company uses a derivative valuation model to derive the value of the embedded derivative features. Key inputs into this valuation model are the Company's current stock price, risk-free interest rates, the stock dividend yield, the stock volatility, and the debentures' credit spread over LIBOR. The first three aforementioned inputs are based on observable market data and are considered Level 2 inputs while the last two aforementioned inputs are unobservable and thus require management's judgment and are considered Level 3 inputs. The fair value measurement is considered a Level 3 measurement within the fair value hierarchy.
The Company enters into forward contracts with a highly-rated financial institution to mitigate the foreign currency risk associated with intercompany loans denominated in a currency other than the legal entity's functional currency. The notional amount of the forward contracts was $29,000 as of October 3, 2015. The forward contracts settle monthly and are expected to be renewed at the Company's discretion on a monthly basis until the intercompany loans are repaid. The forward contracts were renewed on the last day of the third fiscal quarter. We have not designated the forward contracts as hedges for accounting purposes, and as such the change in the fair value of the contracts is recognized in the consolidated condensed statements of operations as a component of other income (expense). The Company estimates the fair value of the forward contracts based on applicable and commonly used pricing models using current market information and is considered a Level 2 measurement within the fair value hierachy. Due to the timing of the renewal of the forward contracts, the value of the forward contracts was immaterial as of October 3, 2015. The Company does not utilize derivatives or other financial instruments for trading or other speculative purposes.
The fair value of the long-term debt, excluding the derivative liabilities, at October 3, 2015 and December 31, 2014 is approximately $665,000 and $853,500, respectively, compared to its carrying value, excluding the derivative liabilities, of $429,984, and $453,817, respectively. The Company estimates the fair value of its long-term debt using a combination of quoted market prices for similar financing arrangements and expected future payments discounted at risk-adjusted rates, which are considered Level 2 inputs.
At October 3, 2015 and December 31, 2014, the Company's short-term investments were comprised of time deposits with financial institutions that have maturities that exceed 90 days from the date of acquisition; however they all mature within one year from the respective balance sheet dates. The short-term investments acquired in the 2014 Capella acquisition fully matured in the third fiscal quarter of 2015. The assets were accounted for as available for sale instruments, at fair value. The Company's remaining short-term investments are accounted for as held-to-maturity debt instruments, at amortized cost, which approximates their fair value. The investments are funded with excess cash not expected to be needed for operations prior to maturity; therefore, the Company believes it has the intent and ability to hold the short-term investments until maturity. At each reporting date, the Company performs an evaluation to determine if any unrealized losses are other-than-temporary. No other-than-temporary impairments have been recognized on these securities, and there are no unrecognized holding gains or losses for these securities during the periods presented. There have been no transfers to or from the held-to-maturity classification. All decreases in the account balance are due to returns of principal at the securities' maturity dates. Interest on the securities is recognized as interest income when earned.
At October 3, 2015 and December 31, 2014, the Company's cash and cash equivalents were comprised of demand deposits, time deposits with maturities of three months or less when purchased, and money market funds. The Company estimates the fair value of its cash, cash equivalents, and short-term investments using level 2 inputs. Based on the current interest rates for similar investments with comparable credit risk and time to maturity, the fair value of the Company's cash, cash equivalents, and held-to-maturity short-term investments approximate the carrying amounts reported in the consolidated condensed balance sheets.
The Company's financial instruments also include accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values.
34

Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview
Vishay Intertechnology, Inc. ("Vishay," "we," "us," or "our") is a global manufacturer and supplier of discrete semiconductors and passive components, including power MOSFETs, power integrated circuits, transistors, diodes, optoelectronic components, resistors, capacitors, and inductors. Discrete semiconductors and passive components manufactured by Vishay are used in virtually all types of electronic products, including those in the industrial, computing, automotive, consumer electronic products, telecommunications, power supplies, military/aerospace, and medical industries.
We operate in five product segments: MOSFETs; Diodes; Optoelectronic Components; Resistors & Inductors; and Capacitors.
Since 1985, we have pursued a business strategy of growth through focused research and development and acquisitions. Through this strategy, we have grown to become one of the world's largest manufacturers of discrete semiconductors and passive components. We expect to continue our strategy of acquisitions while also maintaining a prudent capital structure.
We are focused on enhancing stockholder value and improving earnings per share. We plan to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while at the same time maintaining a prudent capital structure. To foster intensified internal growth, we have increased our R&D and engineering technical staff and plan to further increase it; we are expanding critical manufacturing capacities; we are increasing our technical field sales force in Asia to increase our market access to the industrial segment and increase the design-in of our products in local markets; and we are directing increased funding and focus on developing products to capitalize on the connectivity, mobility, and sustainability growth drivers of our business. In 2014, our Board of Directors instituted a quarterly dividend payment program. We also have opportunistically repurchased our stock. The permitted capacity to repurchase shares of stock or pay dividends under our credit facility increases each quarter by an amount equal to 20% of net income. At October 3, 2015, our total permitted capacity to repurchase shares of stock or pay dividends under our credit facility is $172.0 million. Although we have no current plans, we will continue to evaluate attractive stock repurchase opportunities.
Our business and operating results have been and will continue to be impacted by worldwide economic conditions. Our revenues are dependent on end markets that are impacted by consumer and industrial demand, and our operating results can be adversely affected by reduced demand in those global markets. For several years, we implemented aggressive cost reduction programs. We continue to monitor the current economic environment and its potential effects on our customers and the end markets that we serve. Additionally, we continue to closely monitor our costs, inventory, and capital resources to respond to changing conditions and to ensure we have the management, business processes, and resources to meet our future needs. In response to the economic environment, we began implementing targeted cost reduction programs in the fourth fiscal quarter of 2013 to support our profitability without jeopardizing our growth plan. Complete implementation of these targeted cost reduction programs is expected to occur before the end of the first fiscal quarter of 2016. We initiated additional cost reduction programs in 2015, as more fully described in Note 3 to the consolidated condensed financial statements included in Item 1, and in "Cost Management" below. See additional information regarding our competitive strengths and key challenges as disclosed in Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (the "SEC") on February 19, 2015.
In light of a sustained decline in market capitalization for Vishay and our peer group companies, and other factors (including the cost reduction programs announced during the third fiscal quarter of 2015 as described above and more fully in Note 2 to the consolidated condensed financial statements included in Item 1), we determined that interim goodwill and indefinite-lived impairment tests were required as of the end of the third fiscal quarter of 2015. Prior to completing the interim assessment of goodwill for impairment, we performed a recoverability test of certain depreciable and amortizable long-lived assets. As a result of those assessments, it was determined that the depreciable and amortizable assets associated with our Capella business were not recoverable, and we recorded impairment charges totaling $57.6 million to write-down the related assets to their fair value. After completing step one of the goodwill impairment test, it was determined that the estimated fair value of the Capacitors reporting unit was less than the net book value of that reporting unit, requiring the completion of the second step of the impairment evaluation. Upon completion of the step two analysis for the Capacitors reporting unit, we recorded a full goodwill impairment charge of $5.4 million. As part of these analyses, we determined that our indefinite-lived Siliconix tradenames were not impaired and will continue to be reported as indefinite-lived intangible assets. The recorded impairment charges are noncash in nature and do not affect our liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations. If financial conditions deteriorate, an additional interim assessment may be required in the fourth fiscal quarter.
On August 12, 2015, a major explosion occurred in the port of Tianjin, China. We own and operate a diodes manufacturing facility in Tianjin near the port. The shockwave of the explosion resulted in some damage to the facility and caused a temporary shutdown. As more fully described in Note 6 to our consolidated condensed financial statements included in Item 1, we recorded a loss of $5.4 million related to this incident. The temporary shutdown adversely impacted revenues and margins of our Diodes segment (and total Vishay) for the third fiscal quarter of 2015.
35

We utilize several financial metrics, including net revenues, gross profit margin, segment operating income, end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business. (See further discussion in "Financial Metrics" and "Financial Condition, Liquidity, and Capital Resources.") Revenues continued to be negatively impacted by foreign currency exchange rates in the third fiscal quarter of 2015. As described above, the temporary shutdown of our diodes manufacturing facility in Tianjin negatively impacted revenues in the third fiscal quarter of 2015. Revenues decreased versus the prior fiscal quarter and the third fiscal quarter of 2014. Operating results met our expectations at this relatively low revenue level. Lower revenues and orders resulted in a decrease in key financial metrics compared to the prior fiscal quarter and the third fiscal quarter of 2014.
Net revenues for the fiscal quarter ended October 3, 2015 were $560.7 million, compared to $638.2 million for the fiscal quarter ended September 27, 2014. The net loss attributable to Vishay stockholders for the fiscal quarter ended October 3, 2015 was $(27.7) million, or $(0.19) per share, compared to net earnings attributable to Vishay stockholders of $27.0 million, or $0.17 per diluted share for the fiscal quarter ended September 27, 2014.
Net revenues for the nine fiscal months ended October 3, 2015 were $1,744.6 million, compared to $1,882.5 million for the nine fiscal months ended September 27, 2014. The net earnings attributable to Vishay stockholders for the nine fiscal months ended October 3, 2015 were $29.3 million, or $0.19 per diluted share, compared to $88.4 million, or $0.57 per diluted share for the nine fiscal months ended September 27, 2014.
Net earnings attributable to Vishay stockholders for the fiscal quarters and nine fiscal months ended October 3, 2015 and September 27, 2014 include items affecting comparability. The reconciliation below includes certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings and adjusted earnings per share. These non-GAAP measures should not be viewed as an alternative to GAAP measures of performance. Non-GAAP measures such as adjusted net earnings and adjusted earnings per share do not have uniform definitions. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies. Management believes that these measures are meaningful because they provide insight with respect to our intrinsic operating results. Reconciling items to arrive at adjusted net earnings represent significant charges or credits that are important to understanding our intrinsic operations.
The items affecting comparability are (in thousands, except per share amounts):

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
GAAP net earnings (loss) attributable to Vishay stockholders |  | $ | (27,666 | ) |  | $ | 26,971 |  |  | $ | 29,301 |  |  | $ | 88,423 |
Reconciling items affecting operating margin: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Restructuring and severance costs |  | $ | 2,324 |  |  | $ | 3,508 |  |  | $ | 9,394 |  |  | $ | 18,926 |
Impairment of goodwill and long-lived assets |  |  | 62,980 |  |  |  | - |  |  |  | 62,980 |  |  |  | - |
U.S. pension settlement charges |  |  | - |  |  |  | 15,588 |  |  |  | - |  |  |  | 15,588 |
Reconciling items affecting other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss related to Tianjin explosion |  | $ | 5,350 |  |  | $ | - |  |  | $ | 5,350 |  |  | $ | - |
Reconciling items affecting tax expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax effects of items above and other one-time tax expense (benefit) |  | $ | (16,831 | ) |  | $ | (6,011 | ) |  | $ | (19,327 | ) |  | $ | (10,855 | )
Adjusted net earnings |  | $ | 26,157 |  |  | $ | 40,056 |  |  | $ | 87,698 |  |  | $ | 112,082 |
Adjusted weighted average diluted shares outstanding |  |  | 150,455 |  |  |  | 155,546 |  |  |  | 151,607 |  |  |  | 154,142 |
Adjusted earnings per diluted share * |  | $ | 0.17 |  |  | $ | 0.26 |  |  | $ | 0.58 |  |  | $ | 0.73 |

* Includes add-back of interest on exchangeable notes in periods where the notes are dilutive.
Our results for the fiscal quarter and nine fiscal months ended October 3, 2015 represent the effects of a weaker business environment in several of our customer end markets versus the prior year periods. The business environment was improving in the first fiscal quarter of 2015, but unexpectedly weakened in the second fiscal quarter and failed to recover in the third fiscal quarter. Our revenue results for the fiscal quarter and the nine fiscal months ended October 3, 2015 were negatively affected by foreign currency effects, especially from the euro, and the temporary shutdown of our diodes manufacturing facility in Tianjin, China. Despite the negative foreign currency effect on revenues, we were able to maintain our profitability. Our percentage of euro-based sales approximates our percentage of euro-based expenses so the negative foreign currency impact on revenues was substantially offset by the positive impact on expenses. Despite revenues below our expected run-rate and the anticipated range for the third fiscal quarter of 2015, our pre-tax results were consistent with expectations based on our business model.
36

Financial Metrics
We utilize several financial metrics to evaluate the performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, operating margin, segment operating income, end-of-period backlog, and the book-to-bill ratio. We also monitor changes in inventory turnover and our or publicly available average selling prices ("ASP").
Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but also deducts certain other period costs, particularly losses on purchase commitments and inventory write-downs. Losses on purchase commitments and inventory write-downs have the impact of reducing gross profit margin in the period of the charge, but result in improved gross profit margins in subsequent periods by reducing costs of products sold as inventory is used. Gross profit margin is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.
Operating margin is computed as gross profit less operating expenses as a percentage of net revenues. We evaluate business segment performance on segment operating margin. Only dedicated, direct selling, general, and administrative expenses of the segments are included in the calculation of segment operating income. Segment operating margin is computed as operating income less items such as restructuring and severance costs, asset write-downs, goodwill and indefinite-lived intangible asset impairments, inventory write-downs, gains or losses on purchase commitments, global operations, sales and marketing, information systems, finance and administrative groups, and other items, expressed as a percentage of net revenues. We believe that evaluating segment performance excluding such items is meaningful because it provides insight with respect to intrinsic operating results of the segment. Operating margin is clearly a function of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.
End-of-period backlog is one indicator of future revenues. We include in our backlog only open orders that we expect to ship in the next twelve months. If demand falls below customers' forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, the backlog is not necessarily indicative of the results to be expected for future periods.
An 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 backlog is 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 may foretell declining revenues.
We focus on our inventory turnover as a measure of how well we are managing our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each fiscal quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.
Pricing in our industry can be volatile. We analyze trends and changes in average selling prices to evaluate likely future pricing. The erosion of average selling prices of established products is typical for semiconductor products. We attempt to offset this deterioration with ongoing cost reduction activities and new product introductions. Our specialty passive components are more resistant to average selling price erosion.
37

The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following table shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the third fiscal quarter of 2014 through the third fiscal quarter of 2015 (dollars in thousands):

|  | 3rd Quarter 2014 |  |  | 4th Quarter 2014 |  |  | 1st Quarter 2015 |  |  | 2nd Quarter 2015 |  |  | 3rd Quarter 2015 |
Net revenues |  | $ | 638,211 |  |  | $ | 610,764 |  |  | $ | 593,436 |  |  | $ | 590,470 |  |  | $ | 560,654 |
Gross profit margin |  |  | 24.8 | % |  |  | 23.5 | % |  |  | 24.4 | % |  |  | 24.0 | % |  |  | 23.2 | %
Operating margin (1) |  |  | 7.1 | % |  |  | 7.1 | % |  |  | 8.0 | % |  |  | 7.5 | % |  |  | -4.3 | %
End-of-period backlog |  | $ | 598,000 |  |  | $ | 554,700 |  |  | $ | 559,600 |  |  | $ | 556,100 |  |  | $ | 535,500 |
Book-to-bill ratio |  |  | 0.91 |  |  |  | 0.95 |  |  |  | 1.05 |  |  |  | 0.99 |  |  |  | 0.96 |
Inventory turnover |  |  | 4.18 |  |  |  | 4.21 |  |  |  | 4.20 |  |  |  | 4.11 |  |  |  | 3.82 |
Change in ASP vs. prior quarter |  |  | -0.9 | % |  |  | -0.9 | % |  |  | -0.9 | % |  |  | -1.3 | % |  |  | -1.2 | %

(1) Operating margin for the third and fourth fiscal quarters of 2014 and the first, second, and third fiscal quarters of 2015 includes $3.5 million, $2.0 million, $1.4 million, $5.7 million, and $2.3 million, respectively, of restructuring and severance expenses (see Note 3 to our consolidated condensed financial statements). Operating margin for the third fiscal quarter of 2014 includes $15.6 million of U.S. pension settlement charges. Operating margin for the third fiscal quarter of 2015 includes $63.0 million of goodwill and depreciable and amortizable long-lived asset impairment charges.
See "Financial Metrics by Segment" below for net revenues, book-to-bill ratio, and gross profit margin broken out by segment.
Revenues were below our expected range and decreased versus the prior fiscal quarters and third fiscal quarter of 2014. Foreign currency exchange rates and the temporary shutdown of our diodes manufacturing facility in Tianjin, China negatively impacted revenues. The order level in the third fiscal quarter of 2015 decreased compared to the prior fiscal quarter, which reduced the backlog and negatively impacted the book-to-bill ratio. Our average selling prices continue to decline primarily due to our commodity semiconductor products and the effects of growing our Resistors & Inductors business in Asia.
Gross margins decreased versus the prior fiscal quarter and third fiscal quarter of 2014. The decreases are primarily due to volume decreases. Gross margins have been negatively impacted by additional depreciation associated with our cost reduction programs beginning with the fourth fiscal quarter of 2013 and will continue to be negatively impacted until the complete implementation of our cost reduction programs.
The book-to-bill ratio in the third fiscal quarter of 2015 decreased to 0.96 from 0.99 in the second fiscal quarter of 2015. The book-to-bill ratios for distributors and original equipment manufacturers ("OEM") were 0.96 and 0.96, respectively, versus ratios of 0.98 and 1.00, respectively, during the second fiscal quarter of 2015.
For the fourth fiscal quarter of 2015, we anticipate revenues between $540 million and $580 million and gross margins of 21% to 23%.
38

Financial Metrics by Segment
The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal quarters beginning with the third fiscal quarter of 2014 through the third fiscal quarter of 2015 (dollars in thousands):

|  | 3rd Quarter 2014 |  |  | 4th Quarter 2014 |  |  | 1st Quarter 2015 |  |  | 2nd Quarter 2015 |  |  | 3rd Quarter 2015 |
MOSFETs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 121,659 |  |  | $ | 111,695 |  |  | $ | 106,770 |  |  | $ | 106,348 |  |  | $ | 109,446 |
Book-to-bill ratio |  |  | 0.83 |  |  |  | 0.95 |  |  |  | 0.99 |  |  |  | 1.04 |  |  |  | 0.91 |
Gross profit margin |  |  | 14.3 | % |  |  | 9.6 | % |  |  | 12.9 | % |  |  | 13.8 | % |  |  | 15.3 | %
Segment operating margin |  |  | 6.4 | % |  |  | 1.2 | % |  |  | 4.2 | % |  |  | 4.8 | % |  |  | 6.2 | %
Diodes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 151,444 |  |  | $ | 141,344 |  |  | $ | 136,511 |  |  | $ | 138,722 |  |  | $ | 123,922 |
Book-to-bill ratio |  |  | 0.89 |  |  |  | 0.83 |  |  |  | 1.01 |  |  |  | 0.97 |  |  |  | 1.05 |
Gross profit margin |  |  | 23.9 | % |  |  | 22.2 | % |  |  | 21.9 | % |  |  | 22.8 | % |  |  | 22.2 | %
Segment operating margin |  |  | 19.6 | % |  |  | 17.8 | % |  |  | 17.2 | % |  |  | 18.4 | % |  |  | 17.5 | %
Optoelectronic Components |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 67,549 |  |  | $ | 69,943 |  |  | $ | 68,625 |  |  | $ | 72,977 |  |  | $ | 70,008 |
Book-to-bill ratio |  |  | 0.96 |  |  |  | 0.99 |  |  |  | 1.09 |  |  |  | 1.02 |  |  |  | 0.95 |
Gross profit margin |  |  | 36.4 | % |  |  | 32.2 | % |  |  | 32.3 | % |  |  | 33.3 | % |  |  | 32.8 | %
Segment operating margin |  |  | 30.5 | % |  |  | 23.7 | % |  |  | 24.9 | % |  |  | 26.3 | % |  |  | 25.2 | %
Resistors & Inductors |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 190,454 |  |  | $ | 186,549 |  |  | $ | 187,494 |  |  | $ | 179,532 |  |  | $ | 173,731 |
Book-to-bill ratio |  |  | 0.98 |  |  |  | 1.02 |  |  |  | 1.05 |  |  |  | 0.99 |  |  |  | 0.95 |
Gross profit margin |  |  | 31.3 | % |  |  | 32.2 | % |  |  | 31.4 | % |  |  | 29.7 | % |  |  | 28.7 | %
Segment operating margin |  |  | 26.4 | % |  |  | 27.3 | % |  |  | 26.4 | % |  |  | 24.8 | % |  |  | 23.8 | %
Capacitors |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 107,105 |  |  | $ | 101,233 |  |  | $ | 94,036 |  |  | $ | 92,891 |  |  | $ | 83,547 |
Book-to-bill ratio |  |  | 0.90 |  |  |  | 0.94 |  |  |  | 1.15 |  |  |  | 0.92 |  |  |  | 0.93 |
Gross profit margin |  |  | 19.3 | % |  |  | 18.9 | % |  |  | 21.6 | % |  |  | 18.8 | % |  |  | 15.6 | %
Segment operating margin |  |  | 13.5 | % |  |  | 12.7 | % |  |  | 15.5 | % |  |  | 12.7 | % |  |  | 9.1 | %

39

Acquisition Activity
As part of our growth strategy, we seek to expand through targeted acquisitions 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. This includes exploring opportunities to acquire targets to gain market share, penetrate different geographic markets, enhance new product development, round out our existing product lines, or grow our high margin niche market businesses. Acquisitions of passive components businesses would likely be made to strengthen and broaden our position as a specialty product supplier; acquisitions of discrete semiconductor businesses would be made to increase market share and to generate synergies. To limit our financial exposure, we have implemented a policy not to pursue acquisitions if our post-acquisition debt would exceed 2.5x our pro forma earnings before interest, taxes, depreciation, and amortization ("EBITDA"). For these purposes, we calculate pro forma EBITDA as the adjusted EBITDA of Vishay and the target for Vishay's four preceding fiscal quarters, with a pro forma adjustment for savings which management estimates would have been achieved had the target been acquired by Vishay at the beginning of the four fiscal quarter period.
Our growth plan targets adding, through acquisitions, an average of approximately $100 million of revenues per year. Depending on the opportunities available, we might make several smaller acquisitions or a few larger acquisitions. We intend to make such acquisitions using mainly cash, rather than debt or equity, although we do have capacity on our revolving credit facility if necessary. We are not currently targeting acquisitions with a purchase price larger than $500 million.
Since 2011, we have acquired the specialty product businesses of Huntington Electric, HiRel Systems, LLC, and MCB Industrie. In 2014, we made strategic acquisitions of Holy Stone Polytech and Capella and plan to use the technology and engineering capabilities acquired to further grow our business. We continue to explore additional acquisition opportunities despite the current economic volatility.
There is no assurance that we will be able to identify and acquire suitable acquisition candidates at price levels and on terms and conditions we consider acceptable.
40

Cost Management
We place a strong emphasis on controlling our costs, and use various measures and metrics to evaluate our cost structure.
We define variable costs as expenses that vary with respect to quantity produced. Fixed costs do not vary with respect to quantity produced over the relevant time period. Contributive margin is calculated as net revenue less variable costs. It may be expressed in dollars or as a percentage of net revenue. Management uses this measure to determine the amount of profit to be expected for any change in revenues. While these measures are typical cost accounting measures, none of these measures are recognized in accordance with GAAP. The classification of expenses as either variable or fixed is judgmental and other companies might classify such expenses differently. These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies.
We closely monitor variable costs and seek to achieve the contributive margin in our business model. Over a period of many years, we have generally maintained a contributive margin of between 46% - 48% of revenues. The erosion of average selling prices, particularly of our semiconductor products, that is typical of our industry and inflation negatively impact contributive margin and drive us to continually seek ways to reduce our variable costs. Our variable cost reduction efforts include increasing the efficiency in our production facilities by expending capital for automation, reducing materials costs, materials substitution, increasing wafer size and shrinking dies to maximize efficiency in our semiconductor production processes, and other yield improvement activities.
Our cost management strategy also includes a focus on controlling fixed costs recorded as costs of products sold or selling, general, and administrative expenses and maintaining our break-even point (adjusted for acquisitions). We seek to limit increases in selling, general, and administrative expenses to the rate of inflation, excluding foreign currency exchange effects and substantially independent of sales volume changes. At constant fixed costs, we would expect each $1 million increase in revenues to increase our operating margin by approximately $460,000 to $480,000. Sudden changes in the business conditions, however, may not allow us to quickly adapt our manufacturing capacity and cost structure.
Historically, our primary cost reduction technique was through the transfer of production to the extent possible from high-labor-cost countries, such as the United States and Western Europe, to lower-labor-cost countries, such as the Czech Republic, Hungary, Israel, India, Malaysia, Mexico, the People's Republic of China, and the Philippines. Between 2001 and 2009, we recorded, in the consolidated condensed statements of operations, restructuring and severance costs totaling $320 million and related asset write-downs totaling $89 million in order to reduce our cost structure going forward. We also incurred significant costs to restructure and integrate acquired businesses, which was included in the cost of the acquisitions under then-applicable GAAP.
We did not initiate any new restructuring projects in 2010, 2011, or 2012 and thus did not record any restructuring and severance expenses during such periods. Occasionally, our ongoing cost containment activities are not adequate and we must take actions to maintain our cost competitiveness. On October 28, 2013, we announced various cost reduction programs as part of our continuous efforts to improve efficiency and operating performance. We recorded $1.4 million of restructuring and severance expenses in the third fiscal quarter of 2015 for expenses related to these programs that were recognizable under GAAP during the period and $27.5 million of restructuring and severance expenses since these cost reduction programs were implemented. The remaining expenses associated with these programs will be recorded as they become recognizable under GAAP.
The programs initiated in 2013 primarily focus on a plan to enhance the competitiveness of our MOSFETs segment and a voluntary separation / early retirement offer to certain employees Company-wide. We also implemented two other smaller cost reduction programs concerning the manufacturing of products within our Diodes segment. The programs in total are expected to lower costs by approximately $36 million per year when fully implemented at expected cash costs of approximately $32 million.
The project for the MOSFETs segment is occurring over a period of approximately two years, to be completed in the first fiscal quarter of 2016. The manufacture of wafers for a substantial share of products will be transferred into a more cost-efficient fab. As a consequence, certain other wafer manufacturing currently occurring in-house will be transferred to third-party foundries.
The total cash costs associated with the MOSFETs initiatives, principally severance, are expected to be approximately $16 million. Once fully implemented, we anticipate that the MOSFETs programs will result in an annual reduction in variable and fixed manufacturing costs of approximately $23 million at current volumes.
41

The voluntary separation / early retirement offer was made to employees worldwide who were eligible because they met job classification, age, and/or years-of-service criteria as of October 31, 2013. The program was substantially completed in 2014. The total costs associated with the voluntary separation / early retirement program were approximately $13.3 million. We will realize an annual reduction in fixed costs of approximately $10 million, split approximately 35% in manufacturing and 65% in selling, general, and administrative expenses.
Two other smaller cost reduction programs relate to the transfer of production of certain products within our Diodes segment, which were initiated in the third fiscal quarter of 2014. Both programs are connected to production moves, in order to take advantage of lower labor costs in one program and from the consolidation of manufacturing locations in the other. We expect annual cost savings of approximately $3 million when fully implemented.
Additional programs were initiated in 2015. The programs initiated in 2015 include a plan to reduce selling, general, and administrative costs company-wide, and targeted streamlining and consolidation of production for certain product lines within our Capacitors and Resistors & Inductors segments. The programs in total are expected to lower costs by approximately $35 million annually (at current volumes) when fully implemented, at expected cash costs of approximately $30 million. The implementation of these programs will not impact planned R&D activities, or our growth initiatives in Asian markets. We recorded $0.9 million of restructuring and severance expenses in the third fiscal quarter of 2015 for expenses related to these programs that were recognizable under GAAP during the period and $5.6 million of restructuring and severance expenses since these global cost reduction programs began. The remaining expenses associated with these programs will be recorded as they become recognizable under GAAP.
The programs announced in 2015 are expected to reduce selling, general, and administrative costs by approximately $17 million annually. These selling, general, and administrative cost reductions should be fully achieved by the end of 2016. We are first soliciting volunteers to accept a voluntary separation / early retirement offer. The voluntary separation benefits vary by country and job classification, but generally offer a cash loyalty bonus. Additional involuntary terminations will likely be necessary to achieve the cost reduction targets.
The targeted plans to streamline and consolidate production of certain product lines are expected to decrease costs of products sold by approximately $18 million annually (at current volumes). These plans include the Zwolle, Netherlands aluminum capacitors facility closure announced on June 30, 2015. Except for the Zwolle facility, no other facility closures are currently expected pursuant to these programs. These production transfers will be completed in steps by the end of 2017. These newly announced programs do not alter or expand the MOSFETs Enhanced Competitiveness Program, announced in 2013 and currently being implemented by the Company.
We believe that our manufacturing footprint is generally suitable to serve our customers and end markets, while maintaining lower manufacturing costs. Although the current cost reduction plans include streamlining and consolidating production of certain product lines, only one facility closure is currently expected pursuant to these programs. Except for the distinct and targeted programs noted above, we do not anticipate any other material restructuring activities in 2015 or 2016. We believe that we can substantially maintain our trained workforce, even at lower manufacturing activity levels, by reducing hours and limiting the use of subcontractors and foundries. However, a continued sluggish business environment for the electronics industry or the recurrence of a significant economic downturn may require us to implement additional restructuring initiatives.
Our long-term strategy includes growth through the integration of acquired businesses, and GAAP requires plant closure and employee termination costs that we incur in connection with our acquisition activities to be recorded as expenses in our consolidated statement of operations, as such expenses are incurred. We have not incurred any material plant closure or employee termination costs related to our acquisitions of Huntington Electric, HiRel Systems, LLC, MCB Industrie, Holy Stone Polytech, or Capella, but we expect to have some level of future restructuring expenses due to acquisitions.
Even as we seek to manage our costs, we continue to pursue our growth plans through investing in capacities for strategic product lines, and through increasing our resources for R&D, technical marketing, and field application engineering; supplemented by opportunistic acquisitions of specialty businesses.
Pension and Other Postretirement Benefits
As more fully described in our annual report on Form 10-K for the year ended December 31, 2014, we continue to seek to de-risk our pension exposures, especially given the frozen status of the U.S. plans and the current funded status. Such actions could result in increased net periodic pension cost due to lower expected rates of return on plan assets and/or possible additional charges to recognize unamortized actuarial items if all or a portion of the obligations were to be settled.
In the second fiscal quarter of 2015, we began the process of terminating the Vishay Retirement Plan, our U.S. qualified pension plan. Plan participants will not be adversely affected by the plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.
The completion of this proposed termination and settlement is contingent upon the receipt of a favorable determination letter from the Internal Revenue Service ("IRS") and meeting certain IRS and Pension Benefit Guarantee Corporation ("PBGC") requirements, which is expected to take at least one year.
As of the last fiscal year-end measurement date (December 31, 2014), the Vishay Retirement Plan was fully-funded on a GAAP basis. In order to terminate the plan in accordance with IRS and PBGC requirements, we are required to fully fund the plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between zero and $35 million.
42

Goodwill
See Note 2 to our consolidated condensed financial statements for a description of our interim goodwill impairment test.
In light of a sustained decline in market capitalization for Vishay and our peer group companies, and other factors (including the cost reduction programs announced during the third fiscal quarter of 2015 as described above and more fully in Note 3 to our consolidated condensed financial statements), we determined that interim goodwill and indefinite-lived impairment tests were required as of the end of the third fiscal quarter of 2015.
After completing step one of the goodwill impairment test, it was determined that the estimated fair value of the Capacitors reporting unit was less than the net book value of that reporting unit, requiring the completion of the second step of the impairment evaluation. The estimated fair value of the Resistors & Inductors and Optoelectronic Components reporting units exceeded the net book value of those reporting units by ratios of 2.0x and 1.3x, respectively, and no second step was required for those reporting units.
Upon completion of the step two analysis for the Capacitors reporting unit, we recorded a full goodwill impairment charge of $5.4 million.
The determination of the fair value of the reporting units and the allocation of that value to individual assets and liabilities within those reporting units requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies; control premiums appropriate for acquisitions in the industries in which we compete; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization, and capital expenditures. The allocation requires several analyses to determine fair value of assets and liabilities including, among others, completed technology, tradenames, customer relationships, and certain property and equipment.
Due to the inherent uncertainty involved in making these estimates, actual financial results could differ from those estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the reporting unit or the amount of the goodwill impairment charge.
We perform our annual goodwill impairment test as of the first day of the fiscal fourth quarter. The interim impairment test performed as of October 3, 2015, the last day of the fiscal third quarter, was effectively the annual impairment test for 2015. If financial conditions deteriorate, an additional interim assessment may be required in the fourth fiscal quarter.
The recorded impairment charges are noncash in nature and do not affect our liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations.
43

Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets
See Note 2 to our consolidated condensed financial statements for a description of our interim long-lived assets and indefinite-lived intangible assets impairment tests.
In light of a sustained decline in market capitalization for Vishay and our peer group companies, and other factors (including the cost reduction programs announced during the third fiscal quarter of 2015 as described above and more fully in Note 2 to our consolidated condensed financial statements), we determined that interim goodwill and indefinite-lived impairment tests were required as of the end of the third fiscal quarter of 2015.
Prior to completing the interim assessment of goodwill for impairment, we performed a recoverability test of certain depreciable and amortizable long-lived assets. As a result of those assessments, it was determined that the depreciable and amortizable assets associated with our Capella business were not recoverable, and we recorded impairment charges totaling $57.6 million to write-down the related assets to their fair value.
As part of our impairment analyses, we determined that our Siliconix tradenames, with a carrying value of $20.4 million, were not impaired and will continue to be reported as indefinite-lived intangible assets. The estimated fair value of the Siliconix tradenames exceeded the carrying value by a narrow margin. They will continue to be closely monitored for impairment.
The evaluation of the recoverability of long-lived assets, and the determination of their fair value, requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the identification of the asset group at the lowest level of independent cash flows and the principal asset of the group; the discount rate; terminal growth rates; and forecasts of revenue, operating income, depreciation and amortization, and capital expenditures.
The evaluation of the fair value of indefinite-lived trademarks requires us to make significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to: the assumed market-royalty rate; the discount rate; terminal growth rates; and forecasts of revenue.
Due to the inherent uncertainty involved in making these estimates, actual financial results could differ from those estimates. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on the conclusion that an asset group's carrying value is recoverable, that an indefinite-lived asset is not impaired, or the determination of any impairment charge if it was determined that the asset values were indeed impaired.
We perform our annual indefinite-lived asset impairment test as of the first day of the fiscal fourth quarter. The interim impairment test performed as of October 3, 2015, the last day of the fiscal third quarter, was effectively the annual impairment test for 2015. If financial conditions deteriorate, an additional interim assessment may be required in the fourth fiscal quarter.
The recorded impairment charges are noncash in nature and do not affect our liquidity, cash flows from operating activities, or debt covenants, and will not have a material impact on future operations.
44

Foreign Currency Translation
We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. We occasionally use forward exchange contracts to economically hedge a portion of these exposures.
GAAP requires that we identify the "functional currency" of each of our subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary's functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company's operations generally would have the parent company's currency as its functional currency. We have both situations among our subsidiaries.
Foreign Subsidiaries which use the Local Currency as the Functional Currency
We finance our operations in Europe and certain locations in Asia in local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of stockholders' equity.
For those subsidiaries where the local currency is the functional currency, revenues and expenses incurred in the local currency are translated at the average exchange rate for the year. While the translation of revenues and expenses incurred in the local currency into U.S. dollars does not directly impact the statements of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies. The dollar generally was significantly stronger during the third fiscal quarter and first nine fiscal months of 2015 compared to the prior year periods, with the translation of foreign currency revenues and expenses into U.S. dollars decreasing reported revenues and expenses versus the prior year periods.
Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency
Our operations in Israel and most significant locations in Asia are largely financed in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly payroll-related, which are incurred in the local currency. The cost of products sold and selling, general, and administrative expense for the third fiscal quarter and first nine fiscal months of 2015 have been favorably impacted (compared to the prior year periods) by local currency transactions of subsidiaries which use the U.S. dollar as their functional currency.
We enter into forward contracts with a highly-rated financial institution to mitigate the foreign currency risk associated with intercompany loans denominated in a currency other than the legal entity's functional currency. The notional amount of the forward contracts was $29 million as of October 3, 2015. The forward contracts settle monthly and are expected to be renewed at our discretion on a monthly basis until the intercompany loans are repaid. The forward contracts were renewed on the last day of the third fiscal quarter. The forward contracts are carried at fair value in our consolidated condensed balance sheets. We have not designated the forward contracts as hedges for accounting purposes, and as such the change in the fair value of the contracts is recognized in our consolidated condensed statements of operations as a component of other income (expense). We do not utilize derivatives or other financial instruments for trading or other speculative purposes.
45

Results of Operations
Statements of operations' captions as a percentage of net revenues and the effective tax rates were as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Cost of products sold |  |  | 76.8 | % |  |  | 75.2 | % |  |  | 76.1 | % |  |  | 75.2 | %
Gross profit |  |  | 23.2 | % |  |  | 24.8 | % |  |  | 23.9 | % |  |  | 24.8 | %
Selling, general & administrative expenses |  |  | 15.9 | % |  |  | 14.7 | % |  |  | 15.9 | % |  |  | 15.3 | %
Operating income (loss) |  |  | -4.3 | % |  |  | 7.1 | % |  |  | 3.9 | % |  |  | 7.8 | %
Income (loss) before taxes and noncontrolling interest |  |  | -5.9 | % |  |  | 6.1 | % |  |  | 2.9 | % |  |  | 6.9 | %
Net earnings (loss) attributable to Vishay stockholders |  |  | -4.9 | % |  |  | 4.2 | % |  |  | 1.7 | % |  |  | 4.7 | %
________ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Effective tax rate |  |  | 16.4 | % |  |  | 30.5 | % |  |  | 40.6 | % |  |  | 31.2 | %

Net Revenues
Net revenues were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 560,654 |  |  | $ | 638,211 |  |  | $ | 1,744,560 |  |  | $ | 1,882,518 |
Change versus comparable prior year period |  | $ | (77,557 | ) |  |  |  |  |  | $ | (137,958 | ) |  |  |  |
Percentage change versus comparable prior year period |  |  | -12.2 | % |  |  |  |  |  |  | -7.3 | % |  |  |  |

Changes in net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Decrease in volume |  |  | -5.5 | % |  |  | -0.2 | %
Decrease in average selling prices |  |  | -3.3 | % |  |  | -2.8 | %
Foreign currency effects |  |  | -5.1 | % |  |  | -5.9 | %
Acquisitions |  |  | 1.1 | % |  |  | 1.6 | %
Other |  |  | 0.6 | % |  |  | 0.0 | %
Net change |  |  | -12.2 | % |  |  | -7.3 | %

Our revenue results for the fiscal quarter and nine fiscal months ended ended October 3, 2015 were negatively affected by foreign currency effects and the temporary shutdown of our diodes manufacturing facility in Tianjin, China. Demand for our products in the third fiscal quarter of 2015 was lower compared to the third fiscal quarter of 2014.
We deduct, from the sales that we record to distributors, allowances for future credits that we expect to provide for returns, scrapped product, and price adjustments under various programs made available to the distributors. We make deductions corresponding to particular sales in the period in which the sales are made, although the corresponding credits may not be issued until future periods. We estimate the deductions based on sales levels to distributors, inventory levels at the distributors, current and projected market trends and conditions, recent and historical activity under the relevant programs, changes in program policies, and open requests for credits. We recorded deductions from gross revenues under our distributor incentive programs of $61.0 million and $67.1 million for the nine fiscal months ended October 3, 2015 and September 27, 2014, respectively, or 3.4% of gross revenues for both periods. Actual credits issued under the programs during the nine fiscal months ended October 3, 2015 and September 27, 2014 were $67.9 million and $67.6 million, respectively. Increases and decreases in these incentives are largely attributable to the then-current business climate.
Royalty revenues, included in net revenues in the consolidated condensed statements of operations, were approximately $2.6 million and $3.3 million for the nine fiscal months ended October 3, 2015 and September 27, 2014, respectively.
Gross Profit and Margins
Gross profit margins for the fiscal quarter and nine fiscal months ended October 3, 2015 were 23.2% and 23.9%, respectively, versus 24.8% and 24.8%, respectively, for the comparable prior year periods. The decrease in gross profit margins for the fiscal quarter and nine fiscal months ended October 3, 2015 versus the prior year periods is primarily due to the decrease in sales volume.
46

Segments
Analysis of revenues and gross profit margins for our segments is provided below.
MOSFETs
Net revenues of the MOSFETs segment were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 109,446 |  |  | $ | 121,659 |  |  | $ | 322,564 |  |  | $ | 358,842 |
Change versus comparable prior year period |  | $ | (12,213 | ) |  |  |  |  |  | $ | (36,278 | ) |  |  |  |
Percentage change versus comparable prior year period |  |  | -10.0 | % |  |  |  |  |  |  | -10.1 | % |  |  |  |

Changes in MOSFETs segment net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Decrease in volume |  |  | -2.8 | % |  |  | -3.3 | %
Decrease in average selling prices |  |  | -5.7 | % |  |  | -4.9 | %
Foreign currency effects |  |  | -2.0 | % |  |  | -2.4 | %
Other |  |  | 0.5 | % |  |  | 0.5 | %
Net change |  |  | -10.0 | % |  |  | -10.1 | %

Gross profit as a percentage of net revenues for the MOSFETs segment was as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Gross profit margin |  |  | 15.3 | % |  |  | 14.3 | % |  |  | 14.0 | % |  |  | 13.6 | %

In the fiscal quarter and nine fiscal months ended October 3, 2015, Vishay's MOSFETs segment continued to run on a lower revenue level versus the prior year. Revenues were negatively impacted by weak demand from distributors especially in Asia, negative impacts from declining average selling prices, and the change in the euro foreign currency exchange rate. The decrease in revenues was partially offset by growth in the business selling IC products directly to end customers in Asia.
The gross profit margin increased slightly versus the prior year periods. The increase is primarily due to inventory build associated with the restructuring program. The negative foreign currency exchange rate impact on revenues was offset by the positive impact on corresponding costs. Gross profit declined as the cost reduction activities and the inventory build could not fully offset the decline in average selling prices.
The pricing pressure for our established MOSFETs products continues. We have experienced a significant decline in average selling prices versus the prior year quarter, a moderate decline versus the prior year year-to-date, and a slight decline versus the prior fiscal quarter.
In 2013, we announced a cost reduction program to enhance the competitiveness of our MOSFETs segment. We continue to implement the program, which is long-term in nature and will not provide significant improvement until the program is close to full implementation. See "Cost Management" above.
We continue to be optimistic about the long-term prospects of the MOSFETs segment and continue to make capital and R&D investments in this business.
47

Diodes
Net revenues of the Diodes segment were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 123,922 |  |  | $ | 151,444 |  |  | $ | 399,155 |  |  | $ | 437,944 |
Change versus comparable prior year period |  | $ | (27,522 | ) |  |  |  |  |  | $ | (38,789 | ) |  |  |  |
Percentage change versus comparable prior year period |  |  | -18.2 | % |  |  |  |  |  |  | -8.9 | % |  |  |  |

Changes in Diodes segment net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Decrease in volume |  |  | -12.0 | % |  |  | -1.4 | %
Decrease in average selling prices |  |  | -3.6 | % |  |  | -3.0 | %
Foreign currency effects |  |  | -4.0 | % |  |  | -4.7 | %
Other |  |  | 1.4 | % |  |  | 0.2 | %
Net change |  |  | -18.2 | % |  |  | -8.9 | %

Gross profit as a percentage of net revenues for the Diodes segment was as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Gross profit margin |  |  | 22.2 | % |  |  | 23.9 | % |  |  | 22.3 | % |  |  | 23.0 | %

Diodes segment revenues for the fiscal quarter and nine fiscal months ended October 3, 2015 decreased significantly versus the prior quarter and prior year periods. Revenues were impacted by a significant decline in volume, lower average selling prices, and foreign currency exchange rate effects, especially from the euro. Revenues were particularly impacted by a reduction in sales to Asian distributors. Revenues to end customers in America increased.
The gross profit margin decreased slightly versus the prior year periods. The cost reduction programs could not fully offset the negative impacts from decreased average selling prices, decreased sales volume, and the effects of general cost inflation.
The slightly reduced pricing pressure for our established Diodes products especially in the first fiscal quarter of this year did not continue. We have experienced a moderate price decline versus the prior year periods and a slight price decline versus the prior fiscal quarter.
On August 12, 2015, a major explosion occurred in the port of Tianjin, China. We own and operate a diodes manufacturing facility in Tianjin near the port. The shockwave of the explosion resulted in some damage to the facility and caused a temporary shutdown. The temporary shutdown adversely impacted revenues and margins of our Diodes segment (and total Vishay) for the third fiscal quarter of 2015.
The cost reduction programs announced in 2013 include two smaller projects to improve the results of the Diodes segment. These projects, which were initiated in the third fiscal quarter of 2014 and substantially implemented in the fourth fiscal quarter of 2014, demonstrate our ongoing effort to improve the results of this segment. See "Cost Management" above.
48

Optoelectronic Components
Net revenues of the Optoelectronic Components segment were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 70,008 |  |  | $ | 67,549 |  |  | $ | 211,610 |  |  | $ | 188,305 |
Change versus comparable prior year period |  | $ | 2,459 |  |  |  |  |  |  | $ | 23,305 |  |  |  |  |
Percentage change versus comparable prior year period |  |  | 3.6 | % |  |  |  |  |  |  | 12.4 | % |  |  |  |

Changes in Optoelectronic Components segment net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Increase in volume |  |  | 1.2 | % |  |  | 9.8 | %
Decrease in average selling prices |  |  | -2.9 | % |  |  | -3.6 | %
Foreign currency effects |  |  | -5.3 | % |  |  | -6.9 | %
Acquisition |  |  | 10.6 | % |  |  | 14.2 | %
Other |  |  | 0.0 | % |  |  | -1.1 | %
Net change |  |  | 3.6 | % |  |  | 12.4 | %

Gross profit as a percentage of net revenues for the Optoelectronic Components segment was as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Gross profit margin |  |  | 32.8 | % |  |  | 36.4 | % |  |  | 32.8 | % |  |  | 36.4 | %

The Optoelectronic Components segment experienced a moderate decrease in revenues in the fiscal quarter ended October 3, 2015, versus the prior fiscal quarter, which still results in a moderate increase versus the prior year quarter. The increase from the Capella acquisition (see below) and a growing business with end customers in Asia offset negative foreign currency exchange rate effects, especially from the euro, and declining average selling prices. Sales to distribution declined in the third fiscal quarter.
The increase in revenues did not lead to an increase in gross profit margin versus the prior year periods due to lower average selling prices and general cost inflation. The Capella acquisition also contributed at a lower gross margin percentage than our existing Optoelectronic Components businesses. Gross profit margin was positively impacted by favorable foreign currency exchange rate in Asia.
We have experienced a reduced and therefore only slight decline in the average selling prices in the third fiscal quarter of 2015 versus the prior year periods and prior fiscal quarter.
In 2014, we acquired Capella, a fabless IC design company specializing in optoelectronic products, in a two step transaction completed on December 31, 2014. Capella is included in the Optoelectronic Components segment results from the date we obtained control in September 2014. Although the Capella business has not performed as expected, we still believe that the addition of Capella has strengthened the in-house design capabilities of our entire Optoelectronic Components business.
In the third fiscal quarter of 2015, we recorded long-lived depreciable and amortizable asset impairment charges of $57.6 million in the Optoelectronic Components segment. See "Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets" above.
49

Resistors & Inductors
Net revenues of the Resistors & Inductors segment were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 173,731 |  |  | $ | 190,454 |  |  | $ | 540,757 |  |  | $ | 573,067 |
Change versus comparable prior year period |  | $ | (16,723 | ) |  |  |  |  |  | $ | (32,310 | ) |  |  |  |
Percentage change versus comparable prior year period |  |  | -8.8 | % |  |  |  |  |  |  | -5.6 | % |  |  |  |

Changes in Resistors & Inductors segment net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Increase in volume |  |  | 0.6 | % |  |  | 4.7 | %
Decrease in average selling prices |  |  | -2.5 | % |  |  | -1.9 | %
Foreign currency effects |  |  | -7.0 | % |  |  | -7.9 | %
Other |  |  | 0.1 | % |  |  | -0.5 | %
Net change |  |  | -8.8 | % |  |  | -5.6 | %

Gross profit as a percentage of net revenues for the Resistors & Inductors segment was as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Gross profit margin |  |  | 28.7 | % |  |  | 31.3 | % |  |  | 30.0 | % |  |  | 31.6 | %

Net revenues in the fiscal quarter and nine fiscal months ended October 3, 2015 for the Resistors & Inductors Segment decreased versus the prior year periods. The increase in sales volume was not enough to offset the unfavorable impact of foreign currency exchange rates and a decline of average selling prices. Region Europe experienced the largest decrease in revenues versus the prior year periods mainly due to the unfavorable foreign currency exchange rate change. The decrease in revenues versus the prior year periods was experienced in all industry segments. The automotive and military and aerospace end markets have been least affected.
The gross profit margin for the segment has decreased slightly primarily due to lower revenues and inflationary effects. The successfully implemented cost reduction measures were not sufficient to offset the unfavorable impact from lower revenues.
Average selling prices have declined slightly versus the prior quarter and prior year quarter, consistent with our historical experience.
In 2015, we announced global cost reduction programs which include targeted plans to streamline and consolidate certain product lines, including within our Resistors & Inductors segment. See "Cost Management" above.
50

Capacitors
Net revenues of the Capacitors segment were as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Net revenues |  | $ | 83,547 |  |  | $ | 107,105 |  |  | $ | 270,474 |  |  | $ | 324,360 |
Change versus comparable prior year period |  | $ | (23,558 | ) |  |  |  |  |  | $ | (53,886 | ) |  |  |  |
Percentage change versus comparable prior year period |  |  | -22.0 | % |  |  |  |  |  |  | -16.6 | % |  |  |  |

Changes in Capacitors segment net revenues were attributable to the following:

|  | vs. Prior Year Quarter |  |  | vs. Prior Year-to-Date |
Change attributable to: |  |  |  |  |  |
Decrease in volume |  |  | -15.1 | % |  |  | -10.2 | %
Decrease in average selling prices |  |  | -1.9 | % |  |  | -1.1 | %
Foreign currency effects |  |  | -6.6 | % |  |  | -7.4 | %
Acquisition |  |  | 0.0 | % |  |  | 1.1 | %
Other |  |  | 1.6 | % |  |  | 1.0 | %
Net change |  |  | -22.0 | % |  |  | -16.6 | %

Gross profit as a percentage of net revenues for the Capacitors segment was as follows:

|  | Fiscal quarters ended |  |  | Nine fiscal months ended |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Gross profit margin |  |  | 15.6 | % |  |  | 19.3 | % |  |  | 18.8 | % |  |  | 21.1 | %

The Capacitors segment revenues for the fiscal quarter and nine fiscal months ended October 3, 2015 have decreased significantly versus the prior year periods. Unfavorable foreign currency exchange rate significantly impacted revenues. All regions experienced a decline in revenues with region Europe experiencing the sharpest decline. Revenues to distribution and the automotive and industrial end markets were most significantly reduced. The segment was also significantly impacted by the reduced activity level in the oil and gas industry, especially in the U.S. Revenues to the medical end market increased versus prior year period. Revenues to the industrial and medical end markets increased versus the prior quarter, while revenues to the other end markets decreased.
The gross profit margin decreased versus prior year periods. The unfavorable impact of lower sales on margins could not be offset by cost reductions in variable and fixed costs.
The average selling prices declined slightly versus the prior quarter and prior year periods, in line with expectations.
On June 11, 2014, we acquired Holy Stone Polytech, a Japanese manufacturer of tantalum capacitors and formerly a subsidiary of Holy Stone Enterprise Co. Ltd., for $20.6 million, net of cash acquired. We plan to use the technology acquired to develop new products and enter new product markets.
In 2015, we announced global cost reduction programs which include targeted plans to streamline and consolidate certain product lines, including within our Capacitors segment. See "Cost Management" above.
In the third fiscal quarter of 2015, we recorded goodwill impairment charges of $5.4 million in the Capacitors segment. See "Goodwill" and "Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets" above.
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Selling, General, and Administrative Expenses
Selling, general, and administrative ("SG&A") expenses are summarized as follows (dollars in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Total SG&A expenses |  | $ | 88,995 |  |  | $ | 93,837 |  |  | $ | 276,717 |  |  | $ | 287,300 |
as a percentage of revenues |  |  | 15.9 | % |  |  | 14.7 | % |  |  | 15.9 | % |  |  | 15.3 | %

The overall decrease in SG&A expenses is primarily attributable to foreign currency exchange rate effects, the benefits of our voluntary separation / early retirement program (see "Cost Management" above), and the non-repetition of additional SG&A expenses incurred in 2014 to close acquisitions, partially offset by SG&A expenses of acquired companies and additional compensation costs in general. SG&A expenses decreased sequentially in the third fiscal quarter due to cost reduction and containment efforts, some of which are temporary.
In 2015, we announced additional cost reduction programs which are expected to decrease SG&A expenses by approximately $17 million annually, when fully implemented. See "Cost Management" above.
Several items included in SG&A expenses impact the comparability of these amounts, as summarized below (in thousands):

| Fiscal quarters ended |  | Nine fiscal months ended |
| October 3, 2015 |  | September 27, 2014 |  | October 3, 2015 |  | September 27, 2014 |
Amortization of intangible assets |  | $ | 5,888 |  |  | $ | 4,667 |  |  | $ | 18,260 |  |  | $ | 12,293 |
Net loss (gain) on sales of assets |  |  | (1 | ) |  |  | (88 | ) |  |  | (116 | ) |  |  | (65 | )

The acquisitions of Capella and Holy Stone Polytech in 2014 increased our amortizable intangible assets balance by $78.2 million. We recorded amortizable intangible asset impairment charges of $57.6 million in the third fiscal quarter of 2015 (see "Impairment of Long-Lived Assets and Indefinite-Lived Intangible Assets" above), which will decrease our future amortization expense.
Other Income (Expense)
Interest expense for the fiscal quarter ended October 3, 2015 increased $0.5 million versus the fiscal quarter ended September 27, 2014. Interest expense for the nine fiscal months ended October 3, 2015 increased by $1.8 million versus the nine fiscal months ended September 27, 2014. The increases are primarily due to higher average outstanding balances on our revolving credit facility and increases in the estimated values of the embedded derivatives associated with our convertible senior debentures.
The following tables analyze the components of the line "Other" on the consolidated condensed statements of operations (in thousands):

|  | Fiscal quarters ended |  |  |  |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | Change |
Foreign exchange gain (loss) |  | $ | 2,125 |  |  | $ | 145 |  |  | $ | 1,980 |
Interest income |  |  | 1,115 |  |  |  | 1,172 |  |  |  | (57 | )
Other |  |  | - |  |  |  | (1,791 | ) |  |  | 1,791 |
|  | $ | 3,240 |  |  | $ | (474 | ) |  | $ | 3,714 |

|  | Nine fiscal months ended |  |  |  |
|  | October 3, 2015 |  |  | September 27, 2014 |  |  | Change |
Foreign exchange gain (loss) |  | $ | 3,873 |  |  | $ | (968 | ) |  | $ | 4,841 |
Interest income |  |  | 3,340 |  |  |  | 3,656 |  |  |  | (316 | )
Other |  |  | 647 |  |  |  | (1,642 | ) |  |  | 2,289 |
|  | $ | 7,860 |  |  | $ | 1,046 |  |  | $ | 6,814 |

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Income Taxes
For the fiscal quarter and nine fiscal months ended October 3, 2015, our effective tax rate was 16.4% and 40.6%, respectively, as compared to 30.5% and 31.2%, respectively, for the fiscal quarter and nine fiscal months ended September 27, 2014. The effective tax rate is generally less than the U.S. statutory rate primarily because of earnings in foreign jurisdictions. While our effective tax rate is generally less than the U.S. statutory rate, the effective tax rates the fiscal quarter and nine fiscal months ended October 3, 2015 are impacted by a write-off of non-deductible goodwill and an impairment charge in a lower tax rate jurisdiction.
We operate in a global environment with significant operations in various jurisdictions outside the United States. Accordingly, our consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various jurisdictions where we operate. Part of our strategy is to achieve cost savings by operating in countries where we can take advantage of lower labor costs and available tax and other government-sponsored incentives. Accordingly, our effective tax rate is generally less than the U.S. statutory tax rate. Changes in our effective tax rate are largely attributable to changes in the mix of pretax income among our various taxing jurisdictions.
During the nine fiscal months ended October 3, 2015, the liabilities for unrecognized tax benefits increased by $0.1 million on a net basis, principally due to increases for tax positions taken in prior periods and interest, offset by a decrease due to foreign currency effects.
53

Financial Condition, Liquidity, and Capital Resources
We focus on our ability to generate cash flows from operations. The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition strategy, to reduce debt levels, and to pay dividends and repurchase stock. We have generated cash flows from operations in excess of $200 million in each of the past 13 years, and cash flows from operations in excess of $100 million in each of the past 20 years.
We refer to the amount of cash generated from operations in excess of our capital expenditure needs and net of proceeds from the sale of assets as "free cash," a measure which management uses to evaluate our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends. Vishay has generated positive "free cash" in each of the past 18 years, and "free cash" in excess of $80 million in each of the past 13 years. In this volatile economic environment, we continue to focus on the generation of free cash, including an emphasis on cost controls.
We generated positive cash flows from operations and free cash during the fiscal quarter ended October 3, 2015. Despite a slow start in terms of free cash generation, we continue to expect cash generation in 2015 in line with our history. There is no assurance, however, that we will be able to continue to generate cash flows from operations and free cash at the same levels, or at all, going forward if the current economic environment worsens.
Beginning in the fourth fiscal quarter of 2010, we have reacted to favorable market conditions to significantly reshape the company's capital structure. We have completed three issuances of low-coupon convertible debentures utilizing the proceeds of those debenture offerings to repurchase 44.3 million shares of our common stock.
We also entered into a new, larger, revolving credit facility in 2010, which was amended and restated on August 8, 2013. The total revolving commitment of our credit facility is currently $640 million, and we have the ability to request up to an additional $50 million of incremental commitments, subject to the satisfaction of certain conditions. At October 3, 2015 and December 31, 2014, $173 million and $200 million, respectively, were outstanding under our credit facility. The credit facility provides a revolving commitment through August 8, 2018.
Borrowings under the credit facility bear interest at LIBOR plus an interest margin. The applicable interest margin is based on our leverage ratio. Based on our current leverage ratio, borrowings bear interest at LIBOR plus 1.75%. The interest rate on our borrowings will increase to LIBOR plus 2.00% if our leverage ratio equals or exceeds 2.50 to 1 and will decrease to LIBOR plus 1.50% if our leverage ratio decreases below 1.50 to 1. We are also required to pay facility fees on the entire commitment amount based on our leverage ratio. Based on our current leverage ratio, the facility fee is 0.35% per annum. Such facility fee will increase to 0.50% per annum if our leverage ratio equals or exceeds 2.50 to 1 and will decrease to 0.30% per annum if our leverage ratio decreases below 1.50 to 1.
The borrowings under the credit facility are secured by a lien on substantially all assets, including accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed for use in, or arising under the laws of, any country other than the United States, assets located outside of the United States and deposit and securities accounts), of Vishay and certain significant subsidiaries located in the United States, and pledges of stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries. Certain of our subsidiaries are permitted to borrow under the credit facility, subject to the satisfaction of specified conditions. Any borrowings by these subsidiaries under the credit facility will be guaranteed by Vishay and certain subsidiaries.
The credit facility also limits or restricts us, from, among other things, incurring indebtedness, incurring liens on assets, making investments and acquisitions, and making asset sales, and making other restricted payments, and requires us to comply with other covenants, including the maintenance of specific financial ratios.
The financial maintenance covenants include (a) an interest expense coverage ratio of not less than 2.00 to 1; and (b) a leverage ratio of not more than 3.25 to 1 (and a pro forma ratio of 2.75 to 1 on the date of incurrence of additional debt). The computation of these ratios is prescribed in Article VI of the Credit Agreement between Vishay Intertechnology, Inc. and JPMorgan Chase Bank, N.A., which has been filed with the SEC as Exhibit 10.1 to our current report on Form 8-K filed August 8, 2013.
We were in compliance with all financial covenants under the credit facility at October 3, 2015. Our interest expense coverage ratio and leverage ratio were 11.06 to 1 and 2.0 to 1, respectively. We expect to continue to be in compliance with these covenants based on current projections.
If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable. Additionally, our exchangeable unsecured notes due 2102 and our convertible senior debentures due 2040, due 2041, and due 2042 have cross-default provisions that could accelerate repayment in the event the indebtedness under the credit facility is accelerated.
54

Our permitted capacity to repurchase shares of our outstanding common stock or pay cash dividends under the credit facility increases each quarter by an amount equal to 20% of net income. At October 3, 2015, our credit facility allowed us to repurchase our common stock or pay cash dividends up to $172.0 million. In 2014, our Board of Directors instituted a quarterly dividend payment program and declared the first cash dividend in the history of Vishay. Cash dividends of $0.06 per share of common stock and Class B common stock were paid each quarter in 2014 and the first three fiscal quarters of 2015. The amount and timing of any future stock repurchases or cash dividend payments remains subject to authorization of our Board of Directors.
The balance of our revolving credit facility was $200 million at December 31, 2014. We borrowed $113 million and repaid $140 million on our credit facility during the nine fiscal months ended October 3, 2015. We borrowed $53 million in 2014 to partially fund the Capella acquisition while achieving future flexibility given the legal entity and financial structure utilized for the acquisition. During the second fiscal quarter of 2015, we reduced the balance of the revolving credit facility by approximately $45 million using cash that was repatriated. An additional $11 million was repatriated in the third fiscal quarter of 2015 and used to further reduce the balance of the revolving credit facility, although some amounts were redrawn from the facility for other corporate purposes. The average outstanding balance on our credit facility calculated at fiscal month-ends was $192.2 million and the highest amount outstanding on our credit facility at a month end was $215 million during the nine fiscal months ended October 3, 2015.
Prior to three months before the maturity date, our convertible senior debentures are convertible by the holders under certain circumstances. The convertible senior debentures are not currently convertible, but the conversion criteria of the debentures will continue to be evaluated and the debentures may become convertible in the future. At the direction of our Board of Directors, we intend, upon conversion, to repay the principal amount of the convertible debentures in cash and settle any additional amounts in shares of our common stock. We intend to finance the principal amount of any converted debentures using borrowings under our credit facility.
Management expects to periodically pay down the balance of our revolving credit facility with available cash or use the credit facility to meet short-term financing needs. We expect that cash on-hand and cash flows from operations will be sufficient to meet our longer-term financing needs related to normal operating requirements, regular dividend payments, and our research and development and capital expenditure plans. Additional acquisition activity, share repurchases, or conversion of our convertible debentures may require additional borrowing under our credit facility or may otherwise require us to incur additional debt. No principal payments on our outstanding debt are due before the maturity of our revolving credit facility in August 2018.
Substantially all of our October 3, 2015 cash and cash equivalents and short-term investments balances were held by our non-U.S. subsidiaries. At the present time, we expect that cash and profits generated by our non-U.S. subsidiaries prior to 2014, cash generated in 2014 which is not funding the dividend program or the Capella acquisition, and cash generated in 2015 which is not funding the dividend program will continue to be reinvested outside of the United States indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes, incremental foreign income taxes, and withholding taxes payable to various foreign countries.
We expect to fund the quarterly dividend program initiated in 2014, by, at least in part, repatriating current year income of certain non-U.S. subsidiaries and providing appropriate U.S. federal and state income taxes, incremental foreign income taxes, and withholding taxes payable on that current period non-U.S. income.
Additionally, our substantially undrawn credit facility provides us with significant liquidity in the United States.
We invest a portion of our excess cash in highly liquid, high-quality instruments with maturities greater than 90 days, but less than 1 year, which we classify as short-term investments on our consolidated balance sheets. As these investments were funded using a portion of excess cash and represent a significant aspect of our cash management strategy, we include the investments in the calculation of net cash and short-term investments (debt).
The interest rates on our short-term investments average 0.5% and are approximately 37 basis points higher than interest rates on our cash accounts. Transactions related to these investments are classified as investing activities on our consolidated statements of cash flows.
55

The following table summarizes the components of net cash and short-term investments (debt) at October 3, 2015 and December 31, 2014 (in thousands):

|  | October 3, 2015 |  |  | December 31, 2014 |
Credit facility |  | $ | 173,000 |  |  | $ | 200,000 |
Exchangeable unsecured notes, due 2102 |  |  | 38,642 |  |  |  | 38,642 |
Convertible senior debentures, due 2040* |  |  | 105,719 |  |  |  | 103,841 |
Convertible senior debentures, due 2041* |  |  | 54,278 |  |  |  | 53,249 |
Convertible senior debentures, due 2042* |  |  | 60,127 |  |  |  | 59,190 |
Total debt |  |  | 431,766 |  |  |  | 454,922 |
Cash and cash equivalents |  |  | 390,305 |  |  |  | 592,172 |
Short-term investments |  |  | 688,987 |  |  |  | 514,776 |
Net cash and short-term investments (debt) |  | $ | 647,526 |  |  | $ | 652,026 |

*Represents the carrying amount of the convertible debentures, which is comprised of the principal amount of the debentures, net of the unamortized discount and the associated embedded derivative liability.
Measurements such as "free cash" and "net cash and short-term investments (debt)" do not have uniform definitions and are not recognized in accordance with GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or liquidity. However, management believes that "free cash" is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends, and that an analysis of "net cash and short-term investments (debt)" assists investors in understanding aspects of our cash and debt management. These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.
Our financial condition as of October 3, 2015 continued to be strong, with a current ratio (current assets to current liabilities) of 4.3 to 1, as compared to 4.2 to 1 as of December 31, 2014. The increase in the ratio is primarily due to an increase in inventory and a decrease in accounts payable. Our ratio of total debt to Vishay stockholders' equity was 0.24 to 1 at October 3, 2015 as compared to a ratio of 0.25 to 1 at December 31, 2014. The decrease in the ratio is primarily due to credit facility repayments.
Cash flows provided by operating activities were $153.6 million for the nine fiscal months ended October 3, 2015, as compared to cash flows provided by operations of $197.0 million for the nine fiscal months ended September 27, 2014. The decrease is primarily due to lower net earnings and changes in deferred taxes in 2015.
Cash paid for property and equipment for the nine fiscal months ended October 3, 2015 was $86.8 million, as compared to $90.5 million for the nine fiscal months ended September 27, 2014. We expect capital spending of approximately $145 million in 2015. Our expectation has been adjusted based on the current business environment.
Cash paid for dividends to our common and Class B common stockholders totalled $26.6 million and $26.5 million for the nine fiscal months ended October 3, 2015 and September 27, 2014, respectively. We expect dividend payments in 2015 to total approximately $35.4 million. However, any future dividend declaration and payment remains subject to authorization by our Board of Directors.
56

Contractual Commitments and Off-Balance Sheet Arrangements
Our Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 19, 2015, includes a table of contractual commitments. Except as described below, there were no material changes to these commitments since the filing of our Annual Report on Form 10-K.
In the second fiscal quarter of 2015, we began the process of terminating the Vishay Retirement Plan, our U.S. qualified pension plan. In order to terminate the plan in accordance with IRS and PBGC requirements, we are required to fully fund the plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between zero and $35 million. While possibly requiring an up-front payment, the termination and settlement of all obligations related to the Vishay Retirement Plan is expected to significantly reduce our annual amounts for "expected pension and postretirement funding" disclosed in the contractual commitments table included in our Annual Report on Form 10-K for the year ended December 31, 2014.
We do not participate in nor have we created any off-balance sheet variable interest entities or other off-balance sheet financing, other than the operating leases described in our Annual Report on Form 10-K for the year ended December 31, 2014.
Dividends
In 2014, our Board of Directors approved the initiation of a quarterly cash dividend program. Cash dividends of $0.06 per share of common stock and Class B common stock were paid in each quarter of 2014 and the first three fiscal quarters of 2015. We expect to continue to pay quarterly dividends, although each dividend is subject to approval by our Board of Directors.
The following table summarizes the quarterly cash dividends declared (in thousands):

Fiscal Period |  | Amount |  | Month of Payment
Three fiscal months ended April 4, 2015 |  | $ | 8,854 |  | March
Three fiscal months ended July 4, 2015 |  |  | 8,854 |  | June
Three fiscal months ended October 3, 2015 |  |  | 8,854 |  | September

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. Words such as "believe," "estimate," "will be," "will," "would," "expect," "anticipate," "plan," "project," "intend," "could," "should," or other similar words or expressions often identify forward-looking statements.
Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions, many of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements 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; difficulties in identifying suitable acquisition candidates, consummating a transaction on terms which we consider acceptable, and integration and performance of acquired businesses; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; an inability to attract and retain highly qualified personnel, particularly in respect of our acquired businesses; uncertainty related to the effects of changes in foreign currency exchange rates; delays or difficulties in implementing our cost management strategies; and other factors affecting our operations, markets, products, services, and prices that are set forth in our filings with the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Our 2014 Annual Report on Form 10-K listed various important factors that could cause actual results to differ materially from projected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them in Part I, Item 1A, of that filing under the heading "Risk Factors." You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
57

Item 3. | Quantitative and Qualitative Disclosures About Market Risk

Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 19, 2015, describes our exposure to market risks. There have been no material changes to our market risks since December 31, 2014.

Item 4. | Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION

Item 1. | Legal Proceedings

Item 3 of Part I of our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 19, 2015 and Item 1 of Part II of our Quarterly Report on Form 10-Q for the quarter ended July 4, 2015, filed with the SEC on August 4, 2015, describe certain of our legal proceedings. Except as set forth below, there have been no material developments to the legal proceedings previously disclosed.
Since August 26, 2015, the Company has been named as a defendant in purported antitrust class action complaints filed by 1) Microsystems Development Technologies, Inc., Nebraska Dynamics, Inc., MakersLED LLC, Chip-Tech, LTD., Michael Brooks, Top Floor Home Improvements, and Schuster Electronics, Inc., each in the United States District Court for the Northern District of California; 2) Sean Allott in the Ontario Superior Court of Justice; and 3) Daniel Klein in the Supreme Court of British Columbia. The complaints allege restraints of trade in resistors by the Company and other manufacturers, and seek injunctive relief and unspecified joint and several treble damages. The Company intends to defend vigorously against the complaints.

Item 1A. | Risk Factors

Except as set forth below, there have been no material changes to the risk factors we previously disclosed under Item 1A of Part II of our Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2015, and Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 19, 2015.
Certain acquisitions will increase the risks inherent in our business.
Our acquisition of Capella Microsystems (Taiwan) Inc. is unique compared to our past acquisitions. Most of our previous acquisitions were established businesses with substantial tangible assets. As a fabless design business, most of the assets acquired in the Capella transaction are intangible. The Capella business has not performed as expected. As a result, it was determined that the depreciable and amortizable long-lived assets of Capella were not recoverable, and we recorded impairment charges of $57.6 million to write-down the related assets to their fair value. If the acquired business continues to not perform as expected, we may be required to record further impairment charges related to those intangible assets, with limited ability to monetize any of those assets. There are significant risks specific to the acquired business that could result in it continuing to not perform as expected.
As a fabless design business, Capella is substantially dependent on independent third-party foundries and subcontractors to manufacture its products. If Capella cannot obtain sufficient capacity commitments, if Capella's foundries and subcontractors suffer financial instability, liquidity issues, or insolvency proceedings affecting their ability to manufacture our products, or if Capella's foundries and subcontractors experience production delays for other reasons, the supply of its products could be disrupted, which could adversely affect our business. If demand for its products increases significantly, we have no assurances that Capella's third-party foundries and subcontractors will be able to increase their manufacturing capacity to a level that meets our requirements, potentially preventing us from meeting our customer demand and harming our business and customer relationships. Also, even if Capella's foundries and subcontractors are able to meet our increased demand, those third-party manufacturers may decide to charge significantly higher wafer prices to us, which could reduce our gross margin or require us to offset the increased prices by increasing prices to our customers, either of which could harm our business and operating results.
Capella's future success is substantially dependent on our ability to attract and retain highly qualified technical personnel. We could be materially adversely affected if the turnover rates for engineers and other key personnel increases significantly or we are unsuccessful in attracting, motivating and retaining qualified personnel. Should we lose one or more engineers who are key to a project's completion during the course of a particular project, the completion of such project may be delayed which could negatively affect customer relationships and goodwill and have a material adverse effect on our results of operations.
Capella's historical customer base is concentrated among a few key customers, and is focused on end-users in the consumer products industry. The delay, significant reduction in, or loss of, orders from these large customers or the consumer products industry, or demands of price concessions from these customers could have a material adverse effect on our net revenues and results of operations, or could result in significant volatility in our results of operations.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. | Defaults Upon Senior Securities

Not applicable.

Item 4. | Mine Safety Disclosures

Not applicable.

Item 5. | Other Information

Not applicable.

Item 6. | Exhibits

3.1 | First Amendment to Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K, filed on August 11, 2015.
31.1 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Dr. Gerald Paul, Chief Executive Officer.
31.2 | Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Lori Lipcaman, Chief Financial Officer.
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Dr. Gerald Paul, Chief Executive Officer.
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Lori Lipcaman, Chief Financial Officer.
101 | Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended October 3, 2015, furnished in XBRL (eXtensible Business Reporting Language)).

____________
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SIGNATURES
Pursuant to the requirements 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.

| VISHAY INTERTECHNOLOGY, INC.
| /s/ Lori Lipcaman |
| Lori Lipcaman |
| Executive Vice President and Chief Financial Officer
| (as a duly authorized officer and principal financial and
| accounting officer)

Date: November 3, 2015
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