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,
	2016			2015

Included in "Other assets":
U.S. pension plans	$	-		$	21,202
Non-U.S. pension plans		248			159
Total included in other assets	$	248		$	21,361
Included in "Payroll and related expenses":
U.S. pension plans	$	(35	)	$	(51	)
Non-U.S. pension plans		(6,405	)		(6,089	)
U.S. other postretirement plans		(717	)		(701	)
Non-U.S. other postretirement plans		(322	)		(224	)
Total included in payroll and related expenses	$	(7,479	)	$	(7,065	)
Accrued pension and other postretirement costs:
U.S. pension plans	$	(38,879	)	$	(37,181	)
Non-U.S. pension plans		(194,180	)		(203,361	)
U.S. other postretirement plans		(6,930	)		(7,208	)
Non-U.S. other postretirement plans		(6,303	)		(6,264	)
Other retirement obligations		(11,497	)		(10,604	)
Total accrued pension and other postretirement costs	$	(257,789	)	$	(264,618	)
Accumulated other comprehensive loss:
U.S. pension plans	$	7,313		$	76,141
Non-U.S. pension plans		82,360			73,216
U.S. other postretirement plans		(2,287	)		(3,129	)
Non-U.S. other postretirement plans		1,474			1,446
Total accumulated other comprehensive loss*	$	88,860		$	147,674

* - 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 the Employee Retirement Income 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.

The Society of Actuaries Retirement Plans Experience Committee issued new mortality tables and a new mortality improvement scale in 2014. The new mortality tables and mortality improvement scale are based on a recent study of mortality experience in the United States, and reflect improved retiree longevity. The use of the new mortality tables and mortality improvement scale increased the Company's projected benefit obligations by approximately $24,000 in 2014 and will increase future net periodic pension cost. An updated mortality improvement scale issued by the Society of Actuaries in 2015 reduced the Company's benefit obligation by approximately $8,000, which mitigates the increased future net periodic pension cost resulting from the new mortality tables. An updated mortality improvement scale issued by the Society of Actuaries in 2016 did not have a material effect.

Note 11 – Pensions and Other Postretirement Benefits (continued)

Qualified U.S. Pension Plans

The qualified U.S. pension plans historically included 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.

In 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 could participate in the plan, no further participant contributions were required or permitted, and no further benefits accrued after December 31, 2008. Benefits accumulated as of December 31, 2008 will be paid to employees upon retirement, and the Company has made 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. All of the Company's qualified U.S. pension plans have been merged into the Vishay Retirement Plan.

During the third fiscal quarter of 2014, the Company executed two partial-settlement transactions to reduce the risk associated with its U.S. qualified pension obligations. These transactions included the purchase of annuity contracts for approximately 700 participants pursuant to an arrangement inherited in a past acquisition and a special limited-time voluntary lump-sum payment offer to certain former employees who were deferred vested participants of the plan not currently receiving periodic payments of their pension benefit. A total of 800 participants accepted the voluntary lump-sum offer. The plan is no longer obligated to pay any benefits to the 1,500 participants covered by these two settlement transactions. These former participants represented approximately 23% of the total participants prior to executing these transactions. These partial-settlement transactions were funded entirely with plan assets and resulted in the recognition of non-cash settlement charges aggregating $15,588, representing previously unrecognized actuarial items. These non-cash charges are presented on a separate line in the accompanying consolidated statements of operations.

In the second fiscal quarter of 2015, the Company began the process of terminating the Vishay Retirement Plan. During the third fiscal quarter of 2016, the Company received a favorable determination letter from the U.S. Internal Revenue Service ("IRS"), and met all other applicable IRS and Pension Benefit Guarantee Corporation requirements. The termination and settlement occurred in December 2016. Plan participants had their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier. The settlement resulted in a non-cash charge of $79,321 to recognize the unrecognized actuarial items related to the Vishay Retirement Plan recorded in accumulated other comprehensive income. These non-cash charges are presented on a separate line in the accompanying consolidated statements of operations. The termination and settlement required no additional cash contributions. Excess plan assets will be transferred to a qualified defined contribution retirement plan, and are presented on the accompanying reconciliation as a negative Company contribution.

Note 11 – Pensions and Other Postretirement Benefits (continued)

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 $22,896 and $21,137 at December 31, 2016 and 2015, respectively.

In 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 $2,389 and $2,995 at December 31, 2016 and 2015, respectively.

In 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.

Note 11 – Pensions and Other Postretirement Benefits (continued)

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, 2016						December 31, 2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Change in benefit obligation:
Benefit obligation at beginning of year	$	274,122		$	260,554		$	301,475		$	289,663
Service cost		-			3,291			-			3,265
Interest cost		11,788			5,475			11,657			5,636
Plan amendments		-			291			-			267
Transfer from equity affiliate		-			358			-			-
Actuarial (gains) losses		19,916			17,202			(23,099	)		(1,871	)
Benefits paid		(15,625	)		(12,607	)		(15,911	)		(12,230	)
Curtailments and settlements		(251,287	)		-			-			-
Currency translation		-			(8,137	)		-			(24,176	)
Benefit obligation at end of year	$	38,914		$	266,427		$	274,122		$	260,554

Change in plan assets:
Fair value of plan assets at beginning of year	$	258,092		$	51,263		$	273,644			49,156
Actual return on plan assets		14,068			2,588			(5,439	)		1,159
Transfer from equity affiliate		-			358			-			-
Company contributions		(5,248	)		27,311			5,798			15,621
Benefits paid		(15,625	)		(12,607	)		(15,911	)		(12,230	)
Curtailments and settlements		(251,287	)		-			-			-
Currency translation		-			(2,823	)		-			(2,443	)
Fair value of plan assets at end of year	$	-		$	66,090		$	258,092		$	51,263

Funded status at end of year	$	(38,914	)	$	(200,337	)	$	(16,030	)	$	(209,291	)

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

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

	December 31, 2016						December 31, 2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Other assets	$	-		$	248		$	21,202		$	159
Accrued benefit liability - currrent		(35	)		(6,405	)		(51	)		(6,089	)
Accrued benefit liability - non-current		(38,879	)		(194,180	)		(37,181	)		(203,361	)
Accumulated other comprehensive loss		7,313			82,360			76,141			73,216
	$	(31,601	)	$	(117,977	)	$	60,111		$	(136,075	)

Note 11 – Pensions and Other Postretirement Benefits (continued)

Actuarial items consist of the following:

	December 31, 2016				December 31, 2015
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans

Unrecognized net actuarial loss	$	6,241	$	82,360	$	74,926	$	73,216
Unamortized prior service cost		1,072		-		1,215		-
	$	7,313	$	82,360	$	76,141	$	73,216

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

	December 31, 2016				December 31, 2015
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans

Accumulated benefit obligation, all plans	$	38,914	$	247,838	$	274,122	$	242,054

Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation	$	38,914	$	253,390	$	37,232	$	247,960
Accumulated benefit obligation		38,914		240,793		37,232		234,910
Fair value of plan assets		-		56,649		-		39,463

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

	Years ended December 31,
	2016						2015						2014
	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	$	-		$	3,291		$	-		$	3,265		$	-		$	3,275
Interest cost		11,788			5,475			11,657			5,636			13,821			8,555
Expected return on plan assets		(11,302	)		(2,117	)		(13,566	)		(1,798	)		(14,892	)		(2,109	)
Amortization of actuarial losses		6,513			4,733			8,175			5,131			7,166			2,700
Amortization of prior service cost (credit)		144			261			64			(282	)		(56	)		(5	)
Curtailment and settlement losses		79,321			841			-			452			15,588			1,137
Net periodic pension cost	$	86,464		$	12,484		$	6,330		$	12,404		$	21,627		$	13,553

Note 11 – Pensions and Other Postretirement Benefits (continued)

See Note 10 for the pretax, tax effect and after tax amounts included in other comprehensive income during the years ended December 31, 2016, 2015, and 2014. 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 2017 is $6,400.

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

	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		4.25	%		1.76	%		4.50	%		2.30	%
Rate of compensation increase		0.00	%		2.12	%		0.00	%		1.99	%

The following weighted average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2016 and 2015:

	Years ended December 31,
	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		4.50	%		2.30	%		4.00	%		2.15	%
Rate of compensation increase		0.00	%		1.99	%		0.00	%		1.97	%
Expected return on plan assets		4.50	%		3.38	%		5.00	%		3.86	%

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 and is adjusted for the expected duration of the obligation and the funded status of the plan. At December 31, 2015, the Company's U.S. defined benefit plans were invested in diversified portfolios of fixed income securities and cash due to the pending termination and settlement of the plans. Investment allocations are made across a range of securities, maturities and credit quality. 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. See Note 18 for further information on the fair value of the plan assets by asset category.

Estimated future benefit payments are as follows:

	U.S. Plans		Non-U.S. Plans

2017	$	1,765	$	14,754
2018		1,776		13,659
2019		7,664		14,860
2020		2,929		14,373
2021		2,959		14,624
2022-2026		15,435		77,493

The Company's anticipated 2017 contributions for defined benefit pension plans will approximate the expected benefit payments disclosed above.

Note 11 – Pensions and Other Postretirement Benefits (continued)

Other Postretirement Benefits

In the U.S., the Company maintains unfunded non-pension postretirement plans, including medical benefits for certain executives and their surviving spouses, which are funded as costs are incurred. The Company also maintains two unfunded non-pension postretirement plans at two European subsidiaries.

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, 2016						December 31, 2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Change in benefit obligation:
Benefit obligation at beginning of year	$	7,909		$	6,488		$	8,677		$	7,283
Service cost		126			268			121			273
Interest cost		340			143			333			147
Plan curtailments and settlements		-			-			-			(25	)
Actuarial (gains) losses		(25	)		171			(550	)		(50	)
Benefits paid		(703	)		(221	)		(672	)		(389	)
Currency translation		-			(224	)		-			(751	)
Benefit obligation at end of year	$	7,647		$	6,625		$	7,909		$	6,488

Fair value of plan assets at end of year	$	-		$	-		$	-		$	-

Funded status at end of year	$	(7,647	)	$	(6,625	)	$	(7,909	)	$	(6,488	)

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

	December 31, 2016						December 31, 2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Accrued benefit liability - current	$	(717	)	$	(322	)	$	(701	)	$	(224	)
Accrued benefit liability - non-current		(6,930	)		(6,303	)		(7,208	)		(6,264	)
Accumulated other comprehensive income		(2,287	)		1,474			(3,129	)		1,446
	$	(9,934	)	$	(5,151	)	$	(11,038	)	$	(5,042	)

Note 11 – Pensions and Other Postretirement Benefits (continued)

Actuarial items consist of the following:

	December 31, 2016					December 31, 2015
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans

Unrecognized net actuarial loss (gain)	$	(1,303	)	$	1,474	$	(1,308	)	$	1,446
Unamortized prior service (credit) cost		(984	)		-		(1,821	)		-
	$	(2,287	)	$	1,474	$	(3,129	)	$	1,446

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

	Years ended December 31,
	2016					2015					2014
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans

Service cost	$	126		$	268	$	121		$	273	$	115		$	307
Interest cost		340			143		333			147		351			244
Amortization of actuarial (gains) losses		(30	)		68		90			76		(140	)		38
Amortization of prior service credit		(837	)		-		(837	)		-		(824	)		-
Net periodic benefit cost (benefit)	$	(401	)	$	479	$	(293	)	$	496	$	(498	)	$	589

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 2017 are not material and approximate the amounts amortized in 2016.

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

	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Discount rate		4.25	%		1.50	%		4.50	%		2.31	%
Rate of compensation increase		0.00	%		2.58	%		0.00	%		2.69	%

The following weighted average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2016 and 2015:

	Years ended December 31,
	2016						2015
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans

Discount rate		4.50	%		2.31	%		4.00	%		2.25	%
Rate of compensation increase		0.00	%		2.69	%		0.00	%		2.87	%

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.

Note 11 – Pensions and Other Postretirement Benefits (continued)

Estimated future benefit payments are as follows:

	U.S. Plans		Non-U.S. Plans

2017	$	717	$	322
2018		709		275
2019		699		378
2020		681		580
2021		656		414
2022-2026		2,695		2,456

As the plans are unfunded, the Company's anticipated contributions for 2017 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, 2016 and 2015, the consolidated balance sheets include $11,497 and $10,604, respectively, within accrued pension and other postretirement costs related to these plans.

The Company's U.S. employees are eligible to participate in 401(k) savings plans, which provide for Company matching under various formulas. The Company's matching expense for the plans was $5,039, $5,369, and $5,285 for the years ended December 31, 2016, 2015, and 2014, respectively. No material amounts are included on the consolidated balance sheets at December 31, 2016 and 2015 related to unfunded 401(k) contributions.

Certain key employees participate in a deferred compensation plan. During the years ended December 31, 2016, 2015, and 2014, 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, 2016 and 2015 were approximately $16,632 and $15,717, respectively.