Good morning. My name is Elisha, and I will be your conference operator today. At this time. At this time, I would like to welcome everyone to the Vishay's Fourth Quarter Earnings Result Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions) Thank you. Dr. Yahalomi you may begin your conference.

Thank you. Good morning ladies and gentlemen, and welcome to Vishay's Fourth Quarter 2008 Earnings Call. On the line with me today are Dr. Gerald Paul, Vishay's President and CEO; Dr. Felix Zandman, Vishay's Executive Chairman and Chief Technical and Business Development Officer; and Lori Lipcaman, Vishay's Executive Vice President of Finance and Chief Accounting Officer. Before I start, Bill Clancy, Vishay's Senior Vice President and Corporate Controller will read our customary opening statement. Bill?

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

Thank you, Bill. I will make summary comments; Dr. Paul will add a more detailed analysis of our fourth quarter and our 2008 year. And finally, Dr. Zandman will update our R&D and acquisition activities and will make summary remarks. For the fourth quarter of 2008, Vishay reported revenues of $575 million, approximately 22% lower than the third quarter of 2008 and 21% lower than the fourth quarter of 2007. The decline in our revenues is attributed to the significant and rapid downturn in all Vishay's end markets. On a GAAP basis, our consolidated gross margins for the quarter were 14.8% as compared to 21.6% for the third quarter of 2008, and 22.9% for the fourth quarter of 2007. This was mainly the result of the lack of overall volume. The GAAP number for the fourth quarter of 2008 includes $6 million of losses on adverse purchase commitments primarily for copper and palladium. Excluding this charge, the gross margin would be 15.9%. SG&A expenses for this quarter were $98 million, or 17% of revenues compared to $112.8 million, or 15.3% of revenues for the third quarter of 2008, and $109.7 million or 15% for last year's fourth quarter. This quarter includes a net gain on sales of fixed asset of $4.5 million, compared to a net gain of $3.1 million for the fourth quarter of 2007. Restructuring and severance cost in our fourth quarter were $28.6 million. Total cash paid out for restructuring during Q4 2008 was $31 million. Other income consists mainly of $6.7 million interest income and $1.9 million foreign exchange gains. The effective adjusted tax rate for the year ended December 31, 2008 was 28%, an increase from the 26%, we expected at the end of our third quarter of 2008. The increase in annual tax rate…

Thank you, Lior, good morning everybody, as you could hear from Lior, Vishay's 2008 results have been impacted by economically extremely difficult fourth quarter, which due to an unprecedented decrease of demand showed negative operating profit and earnings per share. The earnings for the entire year remained on the level of 2005. Thanks to good discipline and quick reaction, Vishay again generated free cash in the respectable way and unprecedented measures, and I will report more about it, unprecedented measures for cutting fixed costs have been implemented or are under way. Let me talk about the economic environment, starting in September the world economy step-by-step went into a deep recession. The problem really was not caused by electronics but our industry clearly is one of the victims. All geographies and most of the market statements are hurt by an unprecedented decline of demand. In particular laptops, mobile phones and automotive suffer. Avionics, military and space and industrial, especially in Europe are still holding up to a degree. The inventory turns distribution are low due to drastically reduced POS levels. Worldwide inventory turns and distribution dropped to 3.0, Americas at 2.7, Europe at 3.1, and Asia dropped to 3.1. There is of course a strong push to decrease inventories, and this burdens the POL. All together Asia by far concerning distribution is the most problematic. Management for cash became a broad trend, we see plant shutdowns at suppliers and customers. We see layoffs, reduction of inventories into supply chain. This is a difficult time for projections. We have not reached the bottom yet, at least as it relates to shipments. Our business development was quite disappointing. In quarter four sales and orders are far below our original expectations. We have seen substantial cancellations and push outs of orders. It has to…

Good morning. This is Felix Zandman, just a few words to summarize that. Due to the present economic crisis, we revised many of our plans. The main focus will be on creation of free cash. We want to hold as much liquidity as possible. Free cash this quarter was $30 million and $133 million for 2008. We will push into this direction. Presently, there will be no major acquisitions. All activities in this direction of major acquisitions have been stopped temporarily, small acquisitions only, if it pays back within a very short period of time and if they are absolutely necessary. R&D programs will continue as in the past, except that some long-term programs with fruition longer than five years will be postponed. However, the focus continues on R&D and the rollout of new products. We have announced fixed cost savings of $150 million you heard Gerald talking about it, and we will be evaluating additional savings by pushing more and more cost reductions. Holding on, Vishay is well positioned to weather the crisis and will come out of it stronger then ever. Thank you We are open now for questions.

(Operator Instructions). Your first question comes from the line of Shawn Harrison.

Hi, good morning this is Joe Whitene on the line for Shawn. Can you hear me, okay.

Yes, I can.

I wanted to talk about the restructuring. Specifically, I am trying to understand first off the split in the P&L, how we should be modeling it versus as far as cost of goods sold versus SG&A. I think you mentioned that SG&A you are focusing on a 19% year-on-year decline. So, my quick math is about $85 million, $86 million.

I guess you are right. Yes if you did the math, 19% correct.

So little bit half of it on the SG&A line and the remainder on cost of goods sold.

Right. Joe Whitten – Longbow Research: And then what about the timing, if anything you can add to that, SG&A dollars came down in the fourth quarter, has any of that been incurred three year end and then how should we expect the time it should take to?

So if you compare over the savings quarter-by-quarter going forward and compare to the equivalent quarter of prior year this is how to do it, right. Approximately 60% of the savings below curve within the first six months.

Okay. I would assume of that relatively minimal impact in the March quarter?

You will see something in the March quarter already. It's not exactly equal but it has already a substantial contribution in the March quarter.

Okay. Any idea I mean once all the actions are complete which will be in six months like you said substantially, 60% of it will be complete.

But 40% stand still, it will all be completed by the end of the year obviously, but it's approximately 60% in the first half and 40% in the second.

Okay, maybe just jumping off of that, gross margin. I mean what's a good target to focus on maybe -- any kind of guide along the way would be helpful, maybe what kind of gross margins could you maybe generate, once the 60% is achieved and how much after?

It totally depends on the sales level, which I am not ready to project at this point, it totally depends. But it’s a very major contribution to stabilize gross margin, no question.

Okay. And then my follow-up, I guess, I want to move over to inventory, I mean you are focusing on $50 million to $100 million of inventory reduction. How much of that if any will be centered around tantalum powder reduction?

Approximately, I would say $20 million will come from the tantalum powder sale, approximately, good guess so to speak.

Okay and then lastly on inventory, Lior I mean you mentioned your Asia distribution channel continues to be problematic. I mean what's your general thoughts on how long that inventory will take you, if you worked down based on the current booking rate?

For Vishay, they have approximately 60 million too much inventory.

68?

Approximately 60 million too much inventory, a loan for the actives, but this is the Lion's share of our business in Asia. I would say this will take at least a quarter, maybe two. It all depends of course on their orders and their book-to-bill is below 1 also, so let's count I would say on half a year.

Okay. And then lastly maybe a quick modeling question, interest expense jumped during the quarter is that 6.7, I guess the net interest expense is that what we should expect going forward?

Lior?

About the same, yes.

Okay, I will jump out and let someone else get in, thank you.

Thank you.

Your next question comes from the line of Ingrid Aja.

Good morning. Do you mind if we can go back to the inventory, how much of the inventory work down will impact gross margins this year?

Approximately $10 million P&L-wise.

10 million P&L-wise, okay, great. And then in terms budgeting SG&A dollar is down next couple of quarters, do you have in a map besides the restructuring in manner, you are also budgeting down those dollars?

Now we are going to reduce according to our plan year-over-year by 19%.

And that's both, restructuring and just reducing?

This is just SG&A. This is the SG&A portion.

Okay, and that’s not just restructuring, that’s just cutting cost as well?

It is restructuring, we call it restructuring, in fact this is really cutting people, most of it.

Okay, cutting people. And then, I guess the lastly, are you getting, or do you expect pricing pressures will increase as you see some restocking, is that your expectation?

The characteristics of Vishay's business will remain the same also in the crisis. You may remember that approximately half of our volume, which is the passives and measurements group, is not really subject to price pressure because it's a high share of specialty products, which we sell. In this case, I expect no change, I don’t think there will be price pressure on specialties, It never has been like that past five, six years. But what do we have to expect of course is an increased price pressure on the discretes on the actives side. But at least in quarter four, we haven't seen it yet. There will be some more, but I don’t think it will be chaotic.

Okay, great. Thank you.

Your next question comes from the line of Steve Smigie.

Great, thank you. I was hoping you could talk about the difference between the active and passive in terms of the book-to-bill ratios, and what you think explains that, is it having reliance and distribution in Asia for actives, I was hoping you could characterize it a little bit?

Yes, it's very true what you are saying. The share of actives in Asia for Vishay is much higher than for the passives, and this is exactly where our distribution has too much inventories, so it goes hand-in-hand. But in the end it's the industry. In passives, we're quite strong in European industrial, quite strong there. And in the fourth quarter, the decline of the overall economy was much stronger in laptops, in cars, etcetera, in mobile phones than in especially European part of industrial. So, it's not necessarily the difference between actives and passives. It is really the industry where we sell to.

Okay, great. If I look at your book-to-bill, I think overall, if I remember correct, I think it was a 0.75?

It was 0.74, yes.

Okay, sorry. So I mean I know you didn’t give revenue guidance, but if I look at sort of a comparable companies who you have guided, it's been roughly down 25% from March, you have got a book-to-bill 0.74. Is it something in order of a down 25%, plus or minus 4 points, is that sort of reasonable to think that way?

Don’t want to comment but 25% is of course a lot.

Yeah, its lot as in too much or as in those unfortunately yes, I'm sorry?

As you said.

Okay. And than I guess this finally in terms of Siliconix business, do you think you are substantially under shipping demand there. And I think if you look generally at some of the OEMs, they are not down as much in terms of their end demand, or there have been shipping, so obviously there is the distributors in there, do you think they are having distributors that creates that? Thanks a lot.

Absolutely right. I mean Siliconix is very much focused on Asia, and also they are focused on distribution. So, they are at the most by this mechanism that Asian distributors have too much.

Okay, so is there a quarter that comes where you have an up 20% revenue quarter is that snapback quarter or something like that? I mean I guess obviously we can't predict.

I think it will go like that. This will come back gradually when nobody knows really.

Okay.

But what we have seen really is kind of a stabilization of orders since December, and things are not as bad anymore as they looked in December, so to speak in terms of orders.

Okay. And to follow-up, apologies, one more question just to follow-up on that, is that any special change in orders post Chinese New Year, and do you think it's just restocking the channel in certain instances or do you think there is some actual demand out there?

Really hard to say, because what can be seen -- a small change is matter of fact, but restocking, I don't know whether this is needed. I think they are very, very quick these days.

Okay, all right. Thanks very much.

Thank you.

Your next question comes from the line of Jim Suva.

Hi, this is Asiya Merchant on behalf of Jim. Can you hear me?

Yes.

Great.

Good morning.

Good morning. Can you talk a little bit about just a raw pricing environment, please? particularly it relates to tantalum.

Raw material pricing, yes. Principally speaking, raw material especially metals year-over-year came down last year substantially. And I think things have normalized except for the gold as a matter of fact. Gold keeps up and we all understand why. So in this case there is no real release in the gold, but altogether metal prices in particular came down. Of course we expect more success this time in talking to our vendors than we had in the two years before, no question.

Okay. And one other follow-up on the end market, any color you can provide on the auto and consumer end markets going forward if you had any design wins there?

Well, we are quite strong in this case, what we are suffering from is not a lack of design wins. You know that even Europe in automobiles, which was always a stabilizing factor in the past has dropped enormously. We had plant shutdowns at all the major end users there, and so we suffered like everybody suffered, even there. What is relatively good as I am trying to say, relatively good is European industrial. This is especially in Germany, so this is the backbone of the economy and this is still doing relatively well, I am not saying well, but relatively well. On the other side, laptops and mobile phones, I can not see any turnaround at this point.

Okay, thank you.

(Operator Instructions) your next question is a follow-up from the line of Shawn Harrison.

Hi, back to me again, this is Joe Whitene for Shawn, my only additional question, and I suppose just asking the guidance question in a different way, but I mean based on the bookings you have seen in January, you said you have seen slight sequential improvements in December, if you were to multiply January by 3, maybe what kind of sequential decline in sales we will be looking at for the March quarter? Thank you.

I don't want to project that. One thing is for sure, as I said in my presentation, concerning shipment at least, the fourth quarter was not the low point. We expect in concerning shipments in the first quarter based on the very low orders of Q4 decline in shipments no question about it. It was estimated before 25% down and I said this was aggressive. Hello.

Okay. Thank you very much.

There are no further questions at this time. Dr. Yahalomi, do you have any closing remarks.

Thank you. I want to thank you for participating in our call. We appreciate the interest in Vishay, and we look forward to a continued the interest in the future. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.