Pensions and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2011

Pensions and Other Postretirement Benefits [Abstract]

Pensions and Other Postretirement Benefits

Note 11 – Pensions and Other Postretirement Benefits

The Company maintains various retirement benefit plans.  GAAP requires employers to recognize the funded status of a benefit plan, measured as the difference between plan assets at fair value and the benefit obligation, in its balance sheet.  The recognition of the funded status on the balance sheet requires employers to recognize actuarial items (such as actuarial gains and losses, prior service costs, and transition obligations) as a component of other comprehensive income, net of tax.

The following table summarizes amounts recorded on the consolidated balance sheets associated with these various retirement benefit plans:

	December 31,
	2011			2010
Included in "Other Assets":
Non-U.S. pension plans	$	802		$	1,741
Total included in other assets	$	802		$	1,741
Accrued pension and other postretirement costs:
U.S. pension plans	$	(83,482	)	$	(65,090	)
Non-U.S. pension plans		(209,224	)		(201,150	)
U.S. other postretirement plans		(10,924	)		(10,633	)
Non-U.S. other postretirement plans		(5,972	)		(5,801	)
Other retirement obligations		(9,534	)		(8,443	)
Total accrued pension and other postretirement costs	$	(319,136	)	$	(291,117	)
Accumulated other comprehensive loss:
U.S. pension plans	$	135,009		$	108,239
Non-U.S. pension plans		41,494			28,454
U.S. other postretirement plans		(4,142	)		(5,516	)
Total accumulated other comprehensive loss*	$	172,361		$	131,177

* - Amounts included in accumulated other comprehensive loss are presented in this table pre-tax.

Defined Benefit Pension Plans

U.S. Pension Plans

The Company maintains several defined benefit pension plans which covered most full-time U.S. employees.   These include pension plans which are “qualified” under Employee Retirement Security Act of 1974 (“ERISA”) and the Internal Revenue Code, and “non-qualified” pension plans which provide defined benefits primarily to U.S. employees whose benefits under the qualified pension plan would be limited by ERISA and the Internal Revenue Code.  Pension benefits earned are generally based on years of service and compensation during active employment.

Qualified U.S. Pension Plans

The qualified U.S. pension plans include both contributory and non-contributory plans.  The Company’s principal qualified U.S. pension plan (the Vishay Retirement Plan) was funded through Company and participant contributions to an irrevocable trust fund.  The Company’s other qualified U.S. pension plans, which were assumed as a result of past acquisitions, were funded only through Company contributions.

During the fourth quarter of 2008, the Company adopted amendments to the Vishay Retirement Plan such that effective January 1, 2009, the plan was frozen.  Pursuant to these amendments, no new employees may participate in the plan, no further participant contributions were required or permitted, and no further benefits shall accrue after December 31, 2008.  Benefits accumulated as of December 31, 2008 will be paid to employees upon retirement, and the Company will likely need to make additional cash contributions to the plan to fund this accumulated benefit obligation.  To mitigate the loss in benefits of these employees, effective January 1, 2009, the Company increased the Company-match portion of its 401(k) defined contribution savings plan for employees impacted by the pension freeze.

The Company’s other qualified U.S. pension plans had all been effectively frozen in prior years.

Non-qualified U.S. Pension Plans

The Company’s principal non-qualified U.S. pension plan (the Vishay Non-qualified Retirement Plan) was a contributory pension plan designed to provide similar defined benefits to covered U.S. employees whose benefits under the Vishay Retirement Plan would be limited by ERISA and the Internal Revenue Code.  The Vishay Non-qualified Retirement Plan is identical in construction to the Vishay Retirement Plan, except that the plan is not qualified under ERISA.

The Vishay Non-qualified Retirement Plan, like all non-qualified plans, is considered to be unfunded.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund benefit payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to the non-qualified pension plan were $14,423 and $14,922 at December 31, 2011 and 2010, respectively.

During the fourth quarter of 2008, the Company adopted amendments to the Vishay Non-Qualified Retirement Plan such that effective January 1, 2009, the plan was frozen.  Pursuant to these amendments, no new employees may participate in the plans, no further participant contributions were required or permitted, and no further benefits shall accrue after December 31, 2008.  Benefits accumulated as of December 31, 2008 will be paid to employees upon retirement, and the Company will likely need to make additional cash contributions to the rabbi trust to fund this accumulated benefit obligation.  To mitigate the loss in benefits of these employees, effective January 1, 2009, the Company increased the Company-match portion of its 401(k) defined contribution savings plan for employees impacted by the pension freeze.

The Company also maintains other pension plans which provide supplemental defined benefits primarily to former U.S. employees whose benefits under qualified pension plans were limited by ERISA.  These non-qualified plans are all non-contributory plans, and are considered to be unfunded.

In 2004, the Company entered into an employment agreement with Dr. Felix Zandman, its Executive Chairman and then-Chief Executive Officer.  Pursuant to this agreement, the Company is providing an annual retirement benefit of approximately $614 to his surviving spouse.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund benefit payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to this non-qualified pension plan were $5,445 at December 31, 2011.  Prior to 2011, these pension benefits were unfunded.

On June 16, 2010, the Compensation Committee determined to modify Dr. Gerald Paul’s and the Compensation Committee recommended to the Board of Directors, and the Board of Directors determined to modify Mr. Marc Zandman’s employment arrangements such that upon any termination (other than for cause) after attaining age 62, the executive would be entitled to the same payments and benefits he would have received if his respective employment was terminated by Vishay without cause or by the respective executive for good reason.  These modifications were included in formal amendments signed on August 8, 2010.  The expense associated with the modifications to the employment arrangements of Dr. Gerald Paul and Mr. Marc Zandman effectively represents a defined retirement benefit that will be recognized over the remaining service period of the individuals.

Non-U.S. Pension Plans

The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local practices.  Pension benefits earned are generally based on years of service and compensation during active employment.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to U.S. and non-U.S. pension plans:

	December 31, 2011						December 31, 2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in benefit obligation:
Benefit obligation at beginning of year	$	303,613		$	231,870		$	289,430		$	231,416
Service cost		-			3,197			-			3,027
Interest cost		16,332			10,366			16,341			10,774
Plan amendments		-			531			8,777			163
Spin-off of VPG		-			-			(1,255	)		(13,882	)
Actuarial (gains) losses		20,320			14,986			7,379			20,899
Benefits paid		(17,738	)		(12,764	)		(17,059	)		(10,991	)
Currency translation		-			(4,220	)		-			(9,536	)
Benefit obligation at end of year	$	322,527		$	243,966		$	303,613		$	231,870
Change in plan assets:
Fair value of plan assets at beginning of year	$	238,523		$	32,461		$	216,641		$	34,762
Actual return on plan assets		1,117			830			26,116			2,376
Spin-off of VPG		-			-			-			(8,939	)
Company contributions		17,143			15,325			12,825			14,427
Benefits paid		(17,738	)		(12,763	)		(17,059	)		(10,991	)
Currency translation		-			(309	)		-			826
Fair value of plan assets at end of year	$	239,045		$	35,544		$	238,523		$	32,461
Funded status at end of year	$	(83,482	)	$	(208,422	)	$	(65,090	)	$	(199,409	)

The plan assets are stated at fair value.  See Note 18 for further discussion of the valuation of the plan assets.

Amounts recognized in the consolidated balance sheet consist of the following:

	December 31, 2011						December 31, 2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Other assets	$	-		$	802		$	-		$	1,741
Accrued benefit liability		(83,482	)		(209,224	)		(65,090	)		(201,150	)
Accumulated other comprehensive loss		135,009			41,494			108,239			28,454
	$	51,527		$	(166,928	)	$	43,149		$	(170,955	)

Actuarial items consist of the following:

	December 31, 2011				December 31, 2010
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Unrecognized net actuarial loss	$	130,608	$	41,494	$	101,236	$	28,454
Unamortized prior service cost		4,401		-		7,003		-
	$	135,009	$	41,494	$	108,239	$	28,454

The following table sets forth additional information regarding the projected and accumulated benefit obligations:

	December 31, 2011				December 31, 2010
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Accumulated benefit obligation, all plans	$	322,527	$	225,381	$	303,613	$	213,893
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation	$	322,527	$	236,323	$	303,613	$	225,291
Accumulated benefit obligation		322,527		221,637		303,613		210,786
Fair value of plan assets		239,045		27,098		238,523		24,178

The following table sets forth the components of net periodic pension cost:

	Years ended December 31,
	2011						2010						2009
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Service cost net of employee contributions	$	-		$	3,197		$	-		$	3,027		$	-		$	2,991
Interest cost		16,332			10,366			16,341			10,774			16,745			11,174
Expected return on plan assets		(19,082	)		(1,651	)		(18,098	)		(1,629	)		(14,955	)		(1,689	)
Amortization of actuarial losses		9,006			993			9,315			160			11,300			70
Amortization of prior service cost		2,361			531			1,477			163			34			94
Curtailment and settlement losses (gains)		148			-			-			-			-			405
Net periodic benefit cost	$	8,765		$	13,436		$	9,035		$	12,495		$	13,124		$	13,045

See Note 10 for the pretax, tax effect and after tax amounts included in other comprehensive income during the years ended December 31, 2011, 2010, and 2009.  The estimated actuarial items for the defined benefit pensions plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost during 2012 is $16,300.

The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years:

	2011						2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		5.00	%		3.96	%		5.50	%		4.50	%
Rate of compensation increase		0.00	%		2.31	%		0.00	%		2.19	%

The following weighted average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2011 and 2010:

	Years ended December 31,
	2011						2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		5.50	%		4.50	%		5.75	%		5.19	%
Rate of compensation increase		0.00	%		2.19	%		0.00	%		2.34	%
Expected return on plan assets		8.00	%		4.26	%		8.50	%		4.89	%

The plans’ expected return on assets is based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions.

The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities.  The Company’s U.S. defined benefit plans are invested in diversified portfolios of public-market equity and fixed income securities. Investment allocations are made across a range of markets, industry sectors, capitalization sizes, and, in the case of fixed income securities, maturities and credit quality.  The target allocation has historically been approximately 60% invested in equity securities and 40% invested in fixed income securities.  The Company’s non-U.S. defined benefit plan investments are based on local laws and customs.  Most plans invest in cash and local government fixed income securities, although plans in certain countries have investments in equity securities.  The plans do not invest in securities of Vishay or its subsidiaries. Negative investment returns could ultimately affect the funded status of the plans, requiring additional cash contributions.

Plan assets are comprised of:

	December 31, 2011						December 31, 2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Equity securities		61	%		19	%		63	%		24	%
Fixed income securities		39	%		29	%		36	%		26	%
Cash and cash equivalents		0	%		52	%		1	%		50	%
Total		100	%		100	%		100	%		100	%

Estimated future benefit payments are as follows:

	U.S. Plans	Non-U.S. Plans
2012	$18,121	$11,524
2013	18,592	12,984
2014	25,359	14,026
2015	20,737	12,950
2016	21,096	13,522
2017-2021	106,408	77,915

The Company anticipates making contributions to U.S. defined benefit pension plans of between $12,000 and $16,000 in 2012.

The Company’s anticipated 2012 contributions for non-U.S. defined benefit pension plans will approximate the expected benefit payments disclosed above.

Other Postretirement Benefits

In the U.S., the Company maintains two unfunded non-pension postretirement plans which are funded as costs are incurred.  One of these plans was amended effective January 1, 2009, which reduced the benefit obligations of the Company.  The Company also maintains two unfunded non-pension postretirement plans at two European subsidiaries.

In 2004, the Company entered into formal employment agreements with six of its executives.  These employment agreements provide medical benefits for these executives and their surviving spouses for life, up to a stated maximum annual premium value per person.  The Company subsequently entered into similar agreements with additional executives.  These benefits are fully vested, and accordingly, the obligations represented prior service costs which will be amortized over the average remaining expected services period for these executives.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and accrued benefit cost related to U.S. and non-U.S. non-pension defined benefit postretirement plans:

	December 31, 2011						December 31, 2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in benefit obligation:
Benefit obligation at beginning of year	$	10,633		$	5,801		$	13,617		$	5,841
Service cost		77			275			95			255
Interest cost		547			282			640			291
Spin-off of VPG		-			-			(2,493	)		-
Actuarial (gains) losses		675			341			(148	)		778
Benefits paid		(1,008	)		(618	)		(1,078	)		(854	)
Currency translation		-			(109	)		-			(510	)
Benefit obligation at end of year	$	10,924		$	5,972		$	10,633		$	5,801
Fair value of plan assets at end of year	$	-		$	-		$	-		$	-
Funded status at end of year	$	(10,924	)	$	(5,972	)	$	(10,633	)	$	(5,801	)

Amounts recognized in the consolidated balance sheet consist of the following:

	December 31, 2011						December 31, 2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Accrued benefit liability	$	(10,924	)	$	(5,972	)	$	(10,633	)	$	(5,801	)
Accumulated other comprehensive income		(4,142	)		-			(5,516	)		-
	$	(15,066	)	$	(5,972	)	$	(16,149	)	$	(5,801	)

Actuarial items consist of the following:

	December 31, 2011					December 31, 2010
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Unrecognized net actuarial gain	$	(2,309	)	$	-	$	(3,299	)	$	-
Unamortized prior service (credit) cost		(1,865	)		-		(2,296	)		-
Unrecognized net transition obligation		32			-		79			-
	$	(4,142	)	$	-	$	(5,516	)	$	-

The following table sets forth the components of net periodic benefit cost:

	Years ended December 31,
	2011					2010					2009
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Service cost	$	77		$	275	$	95		$	255	$	113		$	330
Interest cost		547			282		640			291		810			391
Amortization of actuarial gains		(315	)		-		(244	)		-		(300	)		-
Amortization of prior service credit		(431	)		-		(434	)		-		(441	)		-
Amortization of transition obligation		47			-		61			-		74			-
Net periodic benefit cost	$	(75	)	$	557	$	118		$	546	$	256		$	721

The estimated actuarial items for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2012 are not material and approximate the amounts amortized in 2011.

The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years:

	2011						2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		5.00	%		5.09	%		5.50	%		4.80	%
Rate of compensation increase		0.00	%		3.22	%		0.00	%		3.00	%

The following weighted average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2011 and 2010:

	Years ended December 31,
	2011						2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		5.50	%		4.80	%		5.75	%		5.50	%
Rate of compensation increase		0.00	%		3.00	%		0.00	%		3.46	%

The impact of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material.

Estimated future benefit payments are as follows:

	U.S. Plans	Non-U.S. Plans
2012	$1,024	$581
2013	1,018	221
2014	1,010	331
2015	1,012	376
2016	1,000	509
2017-2021	4,369	3,090

As the plans are unfunded, the Company’s anticipated contributions for 2012 are equal to its estimated benefits payments.

Other Retirement Obligations

The Company participates in various other defined contribution and government-mandated retirement plans based on local law or custom.  The Company periodically makes required contributions for certain of these plans, whereas other plans are unfunded retirement bonus plans which will be paid at the employee's retirement date.  At December 31, 2011 and 2010, the consolidated balance sheets include $9,534 and $8,443, respectively, within accrued pension and other postretirement costs related to these plans.

Many of the Company’s U.S. employees are eligible to participate in 401(k) savings plans, some of which provide for Company matching under various formulas. The Company’s matching expense for the plans was $4,985, $5,399, and $5,004 for the years ended December 31, 2011, 2010, and 2009, respectively.  No material amounts are included in the consolidated balance sheets at December 31, 2011 and 2010 related to unfunded 401(k) contributions.

Certain key employees participate in a deferred compensation plan.  During the years ended December 31, 2011, 2010, and 2009, these employees could defer a portion of their compensation until retirement, or elect shorter deferral periods. The Company maintains a liability within other noncurrent liabilities on its consolidated balance sheets related to these deferrals.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to the deferred compensation plan at December 31, 2011 and 2010 were approximately $11,830 and $10,663, respectively.

The Company is obligated to pay post-employment benefits to certain terminated employees related to acquisitions.  The liabilities recorded for these obligations total $6,818 and $9,222 as of December 31, 2011 and 2010, respectively.  Of these amounts, $1,823 and $2,126 are included in accrued liabilities as of December 31, 2011 and 2010, respectively, with the remaining amounts included in other noncurrent liabilities.