Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Leases

The Company uses various leased facilities and equipment in its operations.  In the normal course of business, operating leases are generally renewed or replaced by other leases.  Certain operating leases include escalation clauses.

Total rental expense under operating leases was $26,351, $28,194, and $29,631 for the years ended December 31, 2011, 2010, and 2009, respectively.  VPG accounted for $1,789 and $3,624 of rental expense for the years ended December 31, 2010 and 2009, respectively.

Future minimum lease payments for operating leases with initial or remaining noncancelable lease terms in excess of one year are as follows:

2012	$23,565
2013	18,272
2014	14,970
2015	11,960
2016	10,318
Thereafter	17,989

The Company also has capital lease obligations of $38 at December 31, 2011.

Environmental Matters

The Company is subject to various federal, state, local, and foreign laws and regulations governing environmental matters, including the use, discharge, and disposal of hazardous materials. The Company’s manufacturing facilities are believed to be in substantial compliance with current laws and regulations. Complying with current laws and regulations has not had a material adverse effect on the Company’s financial condition.

The Company has engaged environmental consultants and attorneys to assist management in evaluating potential liabilities related to environmental matters.  Management assesses the input from these consultants along with other information known to the Company in its effort to continually monitor these potential liabilities.  Management assesses its environmental exposure on a site-by-site basis, including those sites where the Company has been named as a “potentially responsible party.”  Such assessments include the Company’s share of remediation costs, information known to the Company concerning the size of the hazardous waste sites, their years of operation, and the number of past users and their financial viability.

The Company has accrued environmental liabilities of $14,546 as of December 31, 2011 relating to environmental matters related to its General Semiconductor subsidiary.  The Company has also accrued approximately $10,611 at December 31, 2011 for other environmental matters.  The liabilities recorded for these matters total $25,157, of which $10,283 is included in other accrued liabilities on the consolidated balance sheet, and $14,874 is included in other noncurrent liabilities on the consolidated balance sheet.

While the ultimate outcome of these matters cannot be determined, management does not believe that the final disposition of these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows beyond the amounts previously provided for in the consolidated financial statements.  The Company’s present and past facilities have been in operation for many years.  These facilities have used substances and have generated and disposed of wastes which are or might be considered hazardous. Therefore, it is possible that additional environmental issues may arise in the future, which the Company cannot now predict.

Litigation

The Company is a party to various claims and lawsuits arising in the normal course of business. The Company is of the opinion that these litigations or claims will not have a material negative effect on its consolidated financial position, results of operations, or cash flows.

Semiconductor Foundry Agreements

The Company’s Siliconix subsidiary maintains long-term foundry agreements with subcontractors to ensure access to external front-end capacity.

In 2004, Siliconix signed a definitive long-term foundry agreement for semiconductor manufacturing with Tower Semiconductor (the “Tower agreement”), pursuant to which Siliconix would purchase semiconductor wafers from and transfer certain technology to Tower Semiconductor.  The foundry agreement with Tower was amended in 2008 and further amended in March 2009 to reduce the quantity of commitments.  As consideration, Siliconix paid $3,000 to Tower, which was recorded as a component of cost of products sold in 2009.  During the year ended December 31, 2010 Siliconix was refunded the full amount of this payment, which was recorded as a reduction of costs of products sold.  In 2010, Siliconix amended its agreement with Tower to extend through the second quarter of 2015.

Management estimates its purchase commitments under the Tower agreement as follows:

2012	$22,569
2013	7,106
2014	6,890
2015	6,890

Siliconix has granted Tower an option to produce additional wafers under this agreement, as needed by Siliconix, and accordingly, actual purchases from Tower may be different than the commitments disclosed above.  Actual purchases from Tower during the year ended December 31, 2011 were approximately $36,407.

Product Quality Claims

The Company is a party to various product quality claims in the normal course of business.  The Company provides warranties for its products which offer replacement of defective products.  Annual warranty expenses are generally not significant.  The Company periodically receives claims which arise from consequential damages which result from a customer’s installation of an alleged defective Vishay component into the customer’s product.  Although not covered by its stated warranty, Vishay may occasionally reimburse the customer for these consequential damages in limited circumstances.

Executive Employment Agreements

The Company has employment agreements with certain of its senior executives.  These employment agreements provide incremental compensation in the event of termination.  The Company does not provide any severance or other benefits specifically upon a change in control.

On May 13, 2009, the Company entered into an amended and restated employment agreement with Dr. Felix Zandman (the “2009 Agreement”).  This agreement amended and restated the employment agreement between the Company and Dr. Zandman that was previously amended and restated as of January 1, 2004 (the “2004 Agreement”).

The purpose of the 2009 Agreement was to eliminate the right of Dr. Zandman to receive a royalty during the ten years following his termination of employment equal to 5% of gross sales, less returns and allowances, of Vishay products incorporating inventions and any other form of technology created, discovered or developed by him or under his direction.  The royalty was payable in the event Dr. Zandman was terminated without “cause” or resigned for “good reason,” as defined in the 2004 Agreement.  This provision was carried over from Dr. Zandman’s original employment agreement of March 1985, and could not be modified or eliminated without Dr. Zandman’s consent.  It was a reflection, among other things, of Dr. Zandman’s key role in the founding of the Company and in creating, developing and commercializing the Company’s technologies and the absence of any compensation to Dr. Zandman for the core intellectual property that he contributed to the Company over the years from its inception.

The Company engaged a consultant in 2007 to assist its evaluation of the royalties to which Dr. Zandman would be entitled were his employment to be terminated.  Based in part upon the work of this consultant and management’s own updated computations, management estimated that the present value of the royalties to which Dr. Zandman would be entitled were his employment terminated at December 31, 2008 would have been between approximately $370,000 and $445,000, with a possible tax gross-up if the royalties were payable in connection with a change of control and deemed subject to an excise tax.  (This present value does not factor in any assessment of the probability of payment.)

Pursuant to the 2009 Agreement, Dr. Zandman’s right to the royalty payments was terminated.  Dr. Zandman received a payment of $10,000 as of the effective date of the amended and restated agreement, and his estate is entitled to receive annual payments of $10,000 each through 2014.  Dr. Zandman’s passing in June 2011 has no effect on the timing of these payments.  The Company recognized compensation expense of $57,824 during the second quarter of 2009, representing the present value of these payments.  This amount is presented on a separate line in the accompanying consolidated statements of operations.  The Company recognized no tax benefit associated with the executive employment agreement charge.  At December 31, 2011, the Company had approximately $19,400 and $10,000 accrued in other liabilities and other accrued expenses, respectively, for this liability.

The Company recognized compensation expense of $3,889 reported as a component of the executive compensation charges in the accompanying consolidated statement of operations for the year ended December 31, 2011 for other elements of compensation that accelerated upon the passing of Dr. Zandman.  (See also Note 12.)

The Company recognized compensation expense of $1,873 reported as a component of the executive compensation charges in the accompanying consolidated statement of operations for the year ended December 31, 2011 for elements of compensation payable to the Company’s former Chief Financial Officer, Dr. Lior Yahalomi, in connection with his resignation.  (See also Note 12.)