Good morning, my name is Leah and I will be your conference operator today. At this time I would like to welcome everyone to the Q1 2016 Earnings Conference Call. [Operator Instructions]. Thank you. Peter Henrici, you may begin.

Thank you, Leah. Good morning and welcome to Vishay Intertechnology's first quarter 2016 conference call. With me today are Dr. Gerald Paul, Vishay's President and Chief Executive Officer; and Lori Lipcaman, our Executive Vice President and Chief Financial Officer. As usual we will start today's call with the CFO who will review our first quarter financial results. Dr. Gerald Paul will then give an overview of our business and discuss operational performance as well as segment results in more detail. Finally we'll reserve time for questions and answers. This call is being webcast from the Investor Relations section of our website at ir.vishay.com. The replay for this call will be publicly available for approximately 30 days. You should be aware that in today's conference call we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking 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 Securities and Exchange Commission. In addition, during this call we may refer to adjusted or other financial measures that are not prepared according to generally accepted accounting principles. We use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures that we also provide. This morning we filed a Form 8-K that outlines the various variables that impact the diluted earnings-per-share computation. On the Investor Relations section of our website, you can find a presentation of the Q1 2016 financial information containing some of the operational metrics Dr. Paul will be discussing. On June 7 we will be presenting at the Stifel Technology Internet and Media conference in San Francisco and on June 9 at the Baird Global Consumer Technology and Services conference in New York. Now, I turn the discussion over to Chief Financial Officer, Lori Lipcaman.

Thank you, Peter. Good morning, everyone. I am sure that most of you have had a chance to review our earnings press release. I will focus on some highlights and key metrics. Vishay reported revenues for Q1 of $571 million. GAAP EPS for the quarter was $0.19. Adjusted EPS was $0.19 for the quarter. The first quarter includes a gain on early extinguishment of debt of $4 million and restructuring charges totaling $7 million. Yesterday, we announced that our Board has authorized a $100 million share repurchase program which is expected to be implemented over the next year. As previously announced on March 31, we repurchased some of our exchangeable notes in a privately negotiated transaction. The notes repurchased had been exchangeable for approximately 1.7 million shares of common stock. Revenue from the quarter was $571 million, up by 2.6% from previous quarter and down by 3.8% compared to prior year. Gross margin was 24.1%. Operating margin was 7.1%. Adjusted operating margin was 8.2%. EBITDA with $84 million or 14.7%, adjusted EBITDA with $87 million or 15.2%. Reconciling versus prior quarter, adjusted operating income quarter one 2016 compared to adjusted operating income for prior quarter, based on $15 million higher sales or $13 million excluding exchange rate impact, our adjusted operating income increased by $7 million to $47 million in Q1 2016 from $40 million in Q4 2015. The main elements were, average selling prices had a negative impact of $7 million, representing a 1.2% ASP decline, volume increased with a positive impact of $13 million, equivalent to a 3.8% increase. Variable cost decreases along with positive exchange rate impacts offset fixed cost increases. Versus prior year, adjusted operating income quarter 1 2016 compared to prior year, based on $23 million lower sales or $19 million excluding exchange rate impact,…

Thank you, Lori and good morning, everybody. I think Vishay had a promising start into 2016. We have seen a nice recovery of orders across-the-board and they helped to exceed expectations for the first quarter. We achieved a gross margin of 24% of sales, an adjusted operating margin of 8% of sales, adjusted earnings per share of $0.19 and GAAP earnings per share also of $0.19. We did better than last year in terms of free cash and we do expect a decent performance in this respect also in the year 2016. Let me talk about the economic environment we see. The world markets in general to a degree remain cautious, but there are improvements over the fourth quarter levels. The fears of a drastic drop in Asian markets may have been exaggerated, but of course growth in China continues to be a principle concern. The markets in Europe remain healthy with a relatively weak euro continuing to support exports. The automotive segment and several industrial product sectors continue to do well. The Americas were stable in general, but a very weak energy sector still burdens the industrial segment. Automotive is the bright spot of all market segments, with substantial growth expected also for the year 2016. American car sales appear healthy and also for China continued growth is foreseen. Europe is stable. The industrial market, in particular in North America, still suffers from a weak energy sector. The market for industrial automation equipment develops nicely and also solar energy equipment shows a strong recovery. In China major investments by the government in the power infrastructure and the continued push to eCars supports the market. Growth in smartphones has come down to a historically low level, maybe a sign of beginning maturity. The market for computers and computer related equipment…

Thank you, Dr. Paul. We now open the call to questions. Leah, please take the first question.

[Operator Instructions]. Your first question comes from the line of Shawn Harrison with Longbow Research.

Just wanted to speak on the quarter and how that translates into the first half of the year. If my impression is right, it seems to be maybe there were some, I don't know if the right term is restocking or just a better feeling of distribution for Vishay and its products and fled led to a relatively strong first quarter that leads into the second quarter. So maybe if you could just comment on what you are seeing at distribution and how point of sale versus point of acquisition moved throughout the quarter?

Well, the encouraging part of all that is that the inventory at distribution contained flat and the POS went up, so we do see, as I tried to say, further improvement as we go. I must admit that we in the fourth quarter, looking at the first quarter, were more pessimistic on the situation of the supply chain, but now looking at the real numbers of the first quarter, it's quite encouraging. And we do believe that also Asia, where the POS in the first quarter was still not so good, slight decline vis-a-vis the fourth quarter, should get better there. So altogether, I believe the supply chain is in good shape, so we do expect a better second quarter and this is what we also need to guide to.

Okay, I guess on a follow-up to that, why does Asia get better into the second quarter? Is it something you are seeing in specific end-markets or there's specific booking signs that you're seeing that gives you the sign of confidence?

We basically believe that internally, especially in China, the business will get better. There are government-driven programs and I believe that they will impact the business positively. This is how we see it and I believe we're not alone in that.

Okay and then two pre-follow-ups, maybe if you could speak to the SG&A increase in terms of R&D. What products is that focused in on? And second, if memory serves me right, CapEx maybe came down by around $10 million for the year from $140 million to $130 million, it's just highlighting where that delta's tied to?

It's very true, your observation is true. We came in slightly higher than we thought in SG&A and when we traced it down, it was really in R&D for the most part. And we found that more R&D expenditures, especially for external programs and not on the semiconductor side, mainly in the sensor area, but also in diodes, made sense and we felt that this was worthwhile doing. What was the second part of your question?

I thought CapEx was a little higher for the year when you guys--

Observation is right. We reviewed the situation and we felt that this number is good enough for our growth plan, so it's a slight decline, has no big meaning in that sense. It's an adaptation to reality.

Your next question comes from the line of Matt Sheerin of Stifel.

Just a few questions for me. First on the gross margin guidance, mid-point is basically flattish, but you do have volume growth in the quarter and you also have costs coming out of the MOSFET business and other restructuring. So I'm wondering is that a reflection of mix or just trying to be conservative? Why wouldn't expect margins to go up at this point?

Well it's somewhat better. It really disappears somewhat in the rounding, as a matter of fact, we think. When you go a little deeper you see that across margins in the second quarter, vis-a-vis the first.

And on the SG&A, I know Lori talked about I think it was $360 million for the year which implies basically kind of flattish year-over-year, despite all these cost-cutting and Op Ex coming out. I know it sounds like R&D is going up, but how do you explain that flat number versus all the costs coming out?

I guess I will answer the question myself, because I decided for this increased R&D spending for the year, but there's more to it than that. It's not that our savings would meet our savings goals, but the cycle of the savings we regarded a little bit too optimistic, so this is really the reason why it's up to $360 million. There is also, it's adjusted for some impacts because of exchange rates, yes, but altogether these are the real operational reasons, number one is more R&D spending makes sense, secondly the cycle is also a little aggressive for what we assumed which does not mean we would not meet our cost target eventually and there's some impact of exchange rates also.

Okay, you mean the better demand environment means you need to put more support in place?

Yes.

Okay. So given that and it sounds like gross margin is moving in the right direction, can we assume that operating margin should be up for the year then as you move forward?

Yes, sure.

Okay. And just looking, well first of all in the book-to-bill, I know you talked about book-to-bills in various regions in the quarter, here we're a month later into the June quarter. The book-to-bill level is similar to that? Or are they better? Could you tell us where they are now generally?

It's a continuation. Let's say in March. In March, book-to-bill became less attractive, but in April it looks good again.

Okay and then lastly, looking at the last four years, relative to what you had last year -- but you had relatively strong margins June quarters and then September, inevitably becomes a miss, I think three or four years in a row here, particularly on Asia. Do you think maybe it's the seasonality has changed and looking at the back half of the year, you may not have as much growth? Or any opinions on that at this point?

Matt, this is exactly the question we're dealing with ourselves. I'm totally aware of the cycle of the last years, but I do believe it could be better this year. It could be better this year because Asia may come a little later this time and that there are these governmental programs which may help. We see no signs of weakening in our very important industry, especially in automotive, so could be better this year, but I don't have the crystal ball, unfortunately. So I don't know exactly.

Your next question comes from the line of Steve Smigie of Raymond James.

This [indiscernible] in for Steve. So you seem pretty optimistic about the outlook for auto in 2016. So can you talk a little more about your prominent applications within the space and what areas are you trying to expand more into at this point?

They're not much places we're not, so to speak, in components in automotive. In reality of course, it's very fashionable these days to mention the eCars. In China in particular, I do believe there will be a push into eCars. When it will come exactly, I'm not sure, but for sure we will be there. But we're traditionally and practically all the applications, not only in Germany which of course is our strongest market, but also in Japan. So any increase of the car sales or electronic content, we're brought to. So I don't want to highlight any of them specifically, I think. If yes, that a new trend could be eCars, charging stations which could help us in China.

And then as far as the new share repurchase program, it looks like you had repurchased shares in the past year, I think 2012 was around the last time. So wondering kind of what's changed in your outlook and does this impact any kind of dividend increase that you see going forward?

No, at this point we recently increased our dividend. And at this point in time, it's not impacted at all.

Your next question comes from the line of Jim Suva of Citi.

I have two questions and I will ask them at the same time. First on gross margins and outlook, can you give us a little bit of color of what are the pluses or minuses to your gross margin? I'm only assuming it's volume-based is the big driver or is it more mix now? It seems like the mix of smartphone seeing basically low growth and PCs declined, that mix may not be as important going forward and maybe it's more volumes. And then second follow-up and then can you talk about the ASP trend you are seeing in your different components or your different products? Thank you.

Absolutely. Well, Jim, the following is true for us, the product mix is not the most relevant thing for the gross margin. You imagine that the variable margin, contributive margin of our products, is not so dissimilar. So we're not that mix-sensitive. It is really what drives us, the gross margin is mainly the volume. This is number one, as you have said yourself. But secondly our cost reduction programs, we do have cost reduction across the board, also in manufacturing, as we just had by finalizing our MOSFET program and by moving the MOSFETs from Santa Clara, the fab manufacturing to German and a more modern fab. This has an impact, obviously. This is straight cost reduction. So fixed cost, manufacturing fixed cost, as well as variable efficiency, as a matter of fact. What was your second question, Jim, sorry?

On average selling prices of your various products? The trends?

Well it's always falls in Vishay into two parts, really. It's not new. I mean in passives, it's a very moderate price pressure which we see. Of course if you expand what we do to the far East and add new customers, I think this has also been discussed before, when you add new customers which we see as profitable, but not as profitable as some of our Western customers, you may see something which looks like a price decline which effectively is the only area which shows like a price decline. Overall, in passives we have a relatively stable environment since many years. On the active side, it's very clear. On the active side, I believe we have quite normal conditions everywhere, as a matter of fact. In MOSFETs, this is a very competitive market and we also have more cost reduction there. Otherwise, I would not comment that what we see today is really especially harsh for us.

There are no further questions at this time.

Thank you for your interest in Vishay Intertechnology. This ends our first quarter 2016 conference call.

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