Good morning. My name is Kathy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vishay Quarter 2 2013 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to your host, Peter Henrici. Please go ahead.

Thank you, Kathy. Good morning, and welcome to Vishay Intertechnology Second Quarter's 2013 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'll start today's call with the CFO, who will review our second 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. We expect to file our Form 10-Q for the second quarter this evening. On the Investor Relations section of our website, you can find the presentation of the Q2 2013 financial information containing some of the operational metrics Dr. Paul will be discussing. Now, I turn the discussion over to Chief Financial Officer, Lori Lipcaman.

Thank you, Peter. Good morning, everyone. I'm 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 Q2 of $598 million, above the midpoint of our guidance, although gross margin percent came in slightly below. GAAP EPS for the quarter was $0.21. The second quarter includes an adjustment of $1.8 million related to performance-based stock compensation for certain former executives. Excluding the after tax effect of this item, adjusted EPS was $0.20 for the quarter. On June 13, Vishay completed the purchase of MCB Industrie S.A., a specialty resistor company located in France. The purchase price was approximately EUR 17.3 million or $23.0 million. For the fiscal year ended March 31, 2013, sales of MCB were approximately EUR 22.6 million or $29.1 million. In Q2, MCB contributed $2.5 million sales to Vishay. We expect MCB to be accretive to earnings in Q3 and going forward. Cash generation returned to more normal levels following a slow start in Q1 with free cash flow of $46 million in Q2. Revenues in the quarter were $598 million, up by 7.8% from previous quarter and up by 1.6% compared to prior year. Gross margin was 23.9%. Operating margin was 8.7%. Adjusted operating margin was 8.4%. EPS was $0.21. Adjusted EPS was $0.20. In Q2, we recorded an adjustment of $1.8 million related to performance-based stock compensation for certain former executives following a determination that the achievement of the 3-year performance targets was no longer probable. These costs have been originally reported as a separate line item upon cessation of employment of these executives in 2011, and accordingly, this adjustment is also reported as a separate line item. Reconciling adjusted operating income of Q2 2013 compared to…

Thank you, Lori, and good morning, everybody. In the second quarter, the general economic recovery from a difficult second half of 2012 continued. Vishay's sales volume benefited from this development, but operational results were impacted by a few adverse and temporary effects. We achieved gross margin of 24% of sales, adjusted operating margin of 8% of sales and adjusted earnings per share of $0.20. We are on track in terms of free cash generation. As Lori indicated, we generated $46 million in the quarter and $50 million year-to-date. Let me talk about the economic environment as we see it. After a very slow fourth quarter, our margins began to recover in the course of the first quarter. This trend has continued also in the second quarter, driven by moderate restocking and distribution, and by an overall improving end-customer demand. Growth is positive in America. We see normal seasonal trends in Asia, and no major changes in Europe with central Europe doing well and Southern Europe suffering. This sounds a little bit simplified, but it's the truth of the matter. Automotive continues to perform well, driven by ongoing growth in vehicle sales in Asia and America and by high-end vehicle sales growth worldwide. The industrial market worldwide continues to improve further. Computing remains weak in particular for notebooks. For consumer, we continue to expect a normal seasonality this year. Distribution started to restock moderately. Inventories during the second quarter increased by 6%. Distribution turns improved further to 3.9 worldwide versus 3.7 in quarter 1, 2.6 in the Americas versus the 2.5 in Q -- in quarter 1, 5.3 in Asia versus 4.8 and 4.1 in Europe versus 4.1, so no change in Europe. The POS is up by 4% versus the first quarter. A positive book-to-bill ratio of distributors to the…

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

[Operator Instructions] The first question comes from the line of Steve Smigie. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: I was wondering if you could talk a little bit about what gross margin percent and EPS would have been if you haven't had the foundry impact.

We did this calculation, if you can imagine, so we would have come out right according to guidance to make it very simple. We would have cost -- we would have had -- we would have been instead of $0.20 at $0.22. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay, great. And if I look at your September revenue guidance, can you talk a little bit about how much we should be thinking the acquisition contributes there if I just sort of take the -- maybe an average, maybe $5 million. Even assuming that, it seems like your guide's still a decent amount ahead of at least in my...

The sales impact of this new acquisition would be $5 million to $6 million approximately. Maybe that's -- okay, $7 -- let's say $7 million would be the best guess, I think, $7 million and the gross million of around 25%. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay, great. And then if we look at the color you gave on what's working well, it seems like distributors are ordering, but then you also had some decent end-demand, it sounded like. So can you add a little bit more color on what type of book-to-bill for distribution should we be worried about, or restocking? And then on the portion of end-demand recovering, is it just kind of modest recovery or a little bit weaker or a little bit stronger type of recovery? How should we think about that?

Normally, obviously, we ask ourselves the same question as you can imagine. Really the business with Asian distribution was completely underground in the fourth quarter. So it affected half of last year, and it started to recover already in quarter 1 and continued now. But the inventory levels Asian distribution has is -- are very reasonable. They were very low in the first quarter still. They're catching up to normal, and as you have heard, the POS in particular, the POS is up by 4% in general, and more so in Asia. So I'm not worrying at this point in time. Of course, if you -- we'll have to keep an eye on it, but at this point in time, I would not say that any inventory increase, neither the one that happened in quarter 2 or the other one, which were modestly foreseeable for quarter 3, is in dangerous a situation. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: And just the color on the relative strength of end-demand? Is it low [indiscernible] and then it picked up, or is it just kind of...

No, no. It is end-demand pick up as far as we can judge.

Your next question comes from the line of Chris Danely. Sameer Kalucha - JP Morgan Chase & Co, Research Division: This is Sameer Kalucha calling in for Chris Danely. Just hoping you can add a little more sort of color on the end market trends, particularly in Asia, and maybe you can tell us a little bit more about China. What you're seeing over there, the talks of maybe potential slowdowns and how do you see the economic trends in China right now?

Well, everybody talks like that. On the other hand, even a 7% growth is more than you Americans [indiscernible]. It's the indication that really Europeans can dream about, so to speak. So Vishay is not suffering from that, not foreseeably, I believe. But of course, you never know. We are trying to extend our market position in China. Even we are putting more sales people on the ground because we do feel that we are underrepresented there. So we do feel that there's a chance to improve our market share especially in industrial, which is the strength of Vishay in Europe and in Americas in particular, and this is really our weak spot in Asia. So we are working on that. So we want to look ahead, and we're not so afraid if the economic growth in China goes from, say, 9%, or 10% down to 7%. So we will try the best, and I think Vishay has major chances to grow its market share. It's just not an overnight thing, unfortunately, but we work on it. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Okay. Okay. It makes sense. And how's the linearity of the orders during the quarter? Was it stable?

They're very steady. Very steady. Sameer Kalucha - JP Morgan Chase & Co, Research Division: Okay. And then in the last quarter, you mentioned there was some slight lead time extension in between the active components. I was wondering how that has trended during the quarter. Has it been addressed, or you're still working to address the lead times?

Yes, we do. As a matter of fact, we are putting capacity online. We are putting capacity online in critical product lines. So this is just also in line with what we wanted to do for the growth plan anyway to keep lead times under control better than we managed and maybe the whole industry managed to do so in 2010, where we really created a mess, we producers of components. I think this time we will be more successful. But of course, if demand shoots up like in Diodes unexpectedly within a few weeks, there is a lead time extension, and we fight it. We do our best. Sameer Kalucha - JP Morgan Chase & Co, Research Division: But then, did the lead times extend this quarter or they are at similar levels or lower as compared to what you saw last quarter?

No, no. The backlog went up. So lead times went up. But no comparison to what we have seen a few years, in 2010.

Your next question comes from the line of Shawn Harrison.

This is Gausia Chowdhury calling on behalf of Shawn. I have a question about the $0.02 figure that you've quoted. Was that an all-in gross margin impact of the onetime items? Or what was the cumulative impact of the palladium in mix had been...

We add it thoroughly together, and it really gave additional variable cost impact, additional variable cost, which had a negative impact if you bring it down -- if you brought it down to the bottom line of $0.02.

Okay. All right. And then my second question was just a little bit more on end-demand. What has your view been on the ramp or a possibility of a ramp for Siliconix in the third quarter? Specifically you mentioned computers improving a little bit, so is there any PC recovery expected at all?

In terms of if we expect this recovery, we have it already in the books, obviously, in the order books, and we are prepared from a manufacturing standpoint. So I do have no doubt that Siliconix will improve sales in this current quarter. It's not an easy thing.

Your next question comes from the line of Ruben [indiscernible].

This is Ruben Acherio [ph] from Bank of America. Dr. Paul, I wanted to start by asking a big picture question. So as we go into the second half of '13 and when you compare that to the second half of '12 and second half of '11, I mean, how would you categorize the end markets especially in autos, for example, in Europe? Are you seeing the same level of shutdowns that we typically see, or how are the end markets versus the last 2 years?

First of all, in the last 2 years, the second half was always a major disappointment vis-a-vis the first half. But we saw this happening already in May, historically. It became really evident in May. Orders broke down in 2011 and in 2012. This is absolutely not the case this year, really not. So the orders remained on this improved level, which we have seen building up in the first quarter. They remain throughout the second quarter and continue also now. That means the picture -- if you want to have a global view, the picture for the second half is much better than in the recent 2 years, and we do believe that this year will not provide us a surprise, a negative surprise is the last 2 years and I believe also that Vishay is not alone in this judgment.

Right. Right. And the same question is you talked about some mix effects that affected margins this quarter. Can you just be a little bit -- can you elaborate on that? What was that mix, and do you see that improving in the next quarter?

I can give you an example, at least, because Vishay's product portfolio is very broad. See -- I'll take tantalum capacitors. Tantalum capacitors in Vishay is not an unimportant product line and consists of commodity products, as well as of highly specialized products. We, in the second quarter, have seen a drastic swing to the commodity products, but we know already from the order book that, in the third quarter, the opposite will happen. So it's just -- it happens. It happens, and we don't have a big influence on that. So well this is -- I make an example, but it happened in a few product lines like that. May be not as drastic as in tantalum caps, but still.

Got it. Got it. And the last one for me, can you just give us what the book-to-bill is now currently?

Slightly above 1. I have to ask even for a slightly above 1.

Your next question comes from the line of Jim Suva.

A quick question on margins. You've mentioned, first of all, operating margins should improve quarter-over-quarter. Is that a function of gross margins improving quarter-over-quarter, or is there something also with SG&A that we should be conscious of?

No, no, no. It's really -- it boils down to the variable margin even. We expect to return in terms of various contributive margin back to our normal level of between 46% and 48%, and this was -- this quarter was below out of this. Singularities in variable costs, and this is the reason of the whole thing. Neither in all the fixed cost segments, there will be no surprises. We will not squeeze further. We just feel we have a better performance in terms of sales, which we guide to. And we also, in terms of contributive margin percent, totally return to normal if you want so.

Great. And then my follow-up question is on gross margins. Is that primarily -- when you mentioned an improvement quarter-over-quarter, is that primarily due to this quarter? Just for quarter, Q2, was it softer than expected, or is it more a function of sale connects and other items doing better? Or what specifically are you controlling that causes the gross margin improvement?

First of all, you have more sales, more volume helps. And secondly, we are going to see, as I said, a better contributive margin percent, and all this leads to a better gross margin.

Your next question comes from the line of Matt Sheerin. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: So your typical -- your margin contribution, contributive margin is in the mid-40s. And that's what you're expecting?

Yes.

Okay. And I'm trying to get a gauge of seasonality on both businesses. Of course, the last 3 or 4 years, we really haven't seen seasonality because of all these swings in the markets, et cetera. But typically, your passives business is flat to down because of the European exposure and the automotive exposure, and industrial and then Asia is up. It sounds like you feel a little bit better on both sides of the business. So are you still expecting those seasonal patterns, or a little bit better than that?

No. First of all, you're right. These are the main drivers and the normal seasonality, which we have seen for many years. But a little bit remark on that one. The last 2 years, we had a little breakdown everywhere, across the board. This is not to be seen this year. It's just the opposite. It continues strong. But now from a segment standpoint, the geographic segment, Asia will show, as it appears, its full seasonality. That means you will have a better second half than first half. This is very normal and seems now to come back in this year. And Europe is not doing so badly especially in Central Europe. The automotive industry continues very strong, very strong. So we also hope that in passives, it maybe a little better than normal in the second half. You're right. And America is steady, by the way. America is steady, never has shown some big seasonality. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then looking at the end markets in Asia, and you talked a little bit -- the computing market certainly is unique. What gives you confidence there? And then also could you talk about the Siliconix or the power MOSFET exposure to the mobility segment? Where can you see the BRICs [indiscernible] be very volatile right now?

Well, as a matter of fact, I believe in Asia we do not expect miracles for the second half. We believe that maybe have been brought down in the last 2 years in particular by Asian distribution stepping on the BRICs territory. This is not exactly the case this year. But of course, whatever you said is true. That means our left [indiscernible] business, we do not expect a major recovery there. But of course, there are differences between even in an adverse situation, which we have seen in the -- [indiscernible] step on the BRICs scenario, which have seen the last 2 years. So I'm not super confident that the laptop business will improve again like it was. It may never come back to that extent. But just the normalization in combination with what we want to do in the Chinese market on the industrial side should give us a better outcome. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then in terms of the smartphone and tablet exposure there?

Asian exposure of course, but we expect a more normal picture than in the last 2 years. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And just lastly, on the commentary about the execution issues with the foundry ramping for you. Could you be more specific about those issues, and what gives you confidence that that's going to work out this quarter?

What gives me confidence is the fact that it's going better already now, so to speak. So we started something, and it happens from time to time in real life that when you start something new, that in the beginning your views are not right, the productivity is not right. And it has improved through the quarter, so I'm confident that, based on what we see today, things in the third quarter will look more decent.

[Operator Instructions] We do have a follow-up question from Steve Smigie. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Dr. Paul, in Q3, is there anything unusual that would happen to inventory or obsolescence that would change potential gross margin?

You mean in Vishay? Really no. Nothing to Vishay. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay. It seems there was a thinking about tax rate as we get into next year. Would you expect that to sort of remain at the same or sort of more basic type level, or would that potentially go down?

I think I should pass this on to my CFO. Just a second.

So as we said several times, tax rate is obviously influenced by the mix of our income in the various taxing jurisdictions. So as the -- in particular, the MOFSETs segment would improve, we will expect a reduction in those tax rates. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay. And do you think the MOSFET improvement -- how much of that is Vishay doing a better job versus I think corporate [indiscernible] for account has emphasized computing less? So how much of it is sort of action they're taking? How much of it is seasonality, or maybe better computing versus or folks maybe focusing more on the business.

So you say to which -- maybe I didn't follow completely. You said that most of MOSFETs' situation is a seasonal thing you ask? Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: I'm just asking -- you said that you thought maybe MOSFETs have been improving such that tax rate could can go down. And that assumption about improving MOSFETs, what's driving that?

First of all, it is exactly these new platforms, which we are producing, which we are bringing to production, which brought us some negative variable impacts -- cost impacts this quarter, which carry our trust for you. It's the next step of development, right? As a matter of fact, you know that we are on the way to introduce high-voltage sales, talked about it quite often. But there are also new generations of a low-voltage MOSFETs, and this was just the starting point, which will give us a better profitability, very simple. But secondly, also Siliconix, we expect the volume to come up as we go. We have seen very low volumes in the last, say, 3 quarters, and we do believe that based on what we have done at Siliconix that we will see better market shares, better sales and also better margins, therefore. And this will positively impact, or might positive -- should positively impact our tax rate as explained before. Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Okay. And then just a look at order patterns. I'm sorry if I missed this. But did you give any comments yet on how orders have been so far this quarter versus the last quarter?

Yes in the first quarter you mean? Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division: Correct.

The continuation of the second quarter, continuation of the second quarter, and you see our guidance. It fully supports the guidance.

At this time, there are no further questions. I will now turn the call over to Peter Henrici for closing remarks.

This concludes our call. Thank you for your interest in Vishay Intertechnology. Kathy?