Segment Information

6 Months Ended

Jun. 29, 2019

Note 10 – Segment Information

Vishay is a global manufacturer and supplier of electronic components. 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. These segments represent groupings of product lines based on their functionality:

●		Metal oxide semiconductor field-effect transistors ("MOSFETs") function as solid-state switches to control power.
●		Diodes route, regulate, and block radio frequency, analog, and power signals; protect systems from surges or electrostatic discharge damage; or provide electromagnetic interference filtering.
●		Optoelectronic components emit light, detect light, or do both.
●		Resistors and inductors both impede electric current. Resistors are basic components used in all forms of electronic circuitry to adjust and regulate levels of voltage and current. Inductors use an internal magnetic field to change alternating current phase and resist alternating current.
●		Capacitors store energy and discharge it when needed.

Vishay's reporting segments generate substantially all of their revenue from product sales to the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. A small portion of revenues is from royalties.

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 Company also regularly evaluates gross profit by segment to assist in the analysis of consolidated gross profit. The Company considers segment operating income to be the more important metric because it more fully captures the business operations of the segments.

The following tables set forth business segment information:

	MOSFETs		Diodes		Optoelectronic Components		Resistors & Inductors		Capacitors		Total
Fiscal quarter ended June 29, 2019:
Net revenues	$	128,842	$	142,042	$	60,675	$	242,383	$	111,298	$	685,240

Gross profit	$	31,933	$	28,857	$	16,231	$	71,415	$	26,165	$	174,601

Segment operating income	$	22,541	$	24,010	$	12,022	$	63,443	$	21,161	$	143,177

Fiscal quarter ended June 30, 2018:
Net revenues	$	136,559	$	182,466	$	75,709	$	253,947	$	112,349	$	761,030

Gross profit	$	38,427	$	52,408	$	26,404	$	84,969	$	25,030	$	227,238

Segment operating income	$	28,517	$	47,100	$	22,165	$	76,248	$	19,710	$	193,740

Six fiscal months ended June 29, 2019:
Net revenues	$	266,183	$	309,882	$	121,237	$	502,854	$	230,243	$	1,430,399

Gross Profit	$	67,992	$	72,349	$	32,248	$	157,284	$	55,887	$	385,760

Segment Operating Income	$	49,219	$	62,138	$	23,732	$	140,430	$	45,727	$	321,246

Six fiscal months ended June 30, 2018:
Net revenues	$	264,065	$	349,483	$	147,667	$	497,993	$	218,617	$	1,477,825

Gross Profit	$	70,449	$	95,608	$	53,637	$	163,499	$	49,345	$	432,538

Segment Operating Income	$	51,075	$	85,031	$	44,959	$	146,250	$	38,603	$	365,918

	Fiscal quarters ended						Six fiscal months ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Reconciliation:
Segment Operating Income	$	143,177		$	193,740		$	321,246		$	365,918
Unallocated Selling, General, and Administrative Expenses		(63,688	)		(70,447	)		(134,022	)		(138,563	)
Consolidated Operating Income	$	79,489		$	123,293		$	187,224		$	227,355
Unallocated Other Income (Expense)		(8,601	)		(25,734	)		(16,388	)		(37,777	)
Consolidated Income Before Taxes	$	70,888		$	97,559		$	170,836		$	189,578

The Company has a broad line of products that it sells to OEMs, EMS companies, and independent distributors. The distribution of sales by customer type is shown below:

	Fiscal quarters ended				Six fiscal months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Distributors	$	368,420	$	446,016	$	779,980	$	850,076
OEMs		269,026		262,779		551,662		526,829
EMS companies		47,794		52,235		98,757		100,920
Total Revenue	$	685,240	$	761,030	$	1,430,399	$	1,477,825

Net revenues were attributable to customers in the following regions:

	Fiscal quarters ended				Six fiscal months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Asia	$	246,193	$	302,868	$	505,919	$	588,346
Europe		254,742		272,601		533,641		539,983
Americas		184,305		185,561		390,839		349,496
Total Revenue	$	685,240	$	761,030	$	1,430,399	$	1,477,825

The Company generates substantially all of its revenue from product sales to end customers in the industrial, automotive, telecommunications, computing, consumer products, power supplies, military and aerospace, and medical end markets. Sales by end market are presented below:

	Fiscal quarters ended				Six fiscal months ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Industrial	$	250,783	$	295,617	$	532,373	$	575,829
Automotive		200,580		209,858		415,366		418,252
Telecommunications		44,562		46,467		97,842		92,391
Computing		48,244		53,657		95,752		101,088
Consumer Products		30,486		40,939		64,535		78,198
Power Supplies		29,474		41,326		59,601		75,569
Military and Aerospace		47,848		40,260		95,409		75,474
Medical		33,263		32,906		69,521		61,024
Total revenue	$	685,240	$	761,030		1,430,399		1,477,825