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, 2015 2014 Included in "Other assets": U.S. pension plans $ 21,202 $ 12,964 Non-U.S. pension plans 159 212 Total included in other assets $ 21,361 $ 13,176 Included in "Payroll and related expenses": U.S. pension plans $ (51 ) $ (51 ) Non-U.S. pension plans (6,089 ) (6,624 ) U.S. other postretirement plans (701 ) (666 ) Non-U.S. other postretirement plans (224 ) (349 ) Total included in payroll and related expenses $ (7,065 ) $ (7,690 ) Accrued pension and other postretirement costs: U.S. pension plans $ (37,181 ) $ (40,744 ) Non-U.S. pension plans (200,406 ) (231,278 ) U.S. other postretirement plans (7,208 ) (8,011 ) Non-U.S. other postretirement plans (6,264 ) (6,934 ) Other retirement obligations (13,559 ) (13,557 ) Total accrued pension and other postretirement costs $ (264,618 ) $ (300,524 ) Accumulated other comprehensive loss: U.S. pension plans $ 76,141 $ 88,474 Non-U.S. pension plans 73,216 88,076 U.S. other postretirement plans (3,129 ) (3,325 ) Non-U.S. other postretirement plans 1,446 1,750 Total accumulated other comprehensive loss* $ 147,674 $ 174,975 * - 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. 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 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 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 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. Plan participants will not be adversely affected by the plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier. The completion of this proposed termination and settlement is contingent upon the receipt of a favorable determination letter from the Internal Revenue Service ("IRS") and meeting certain IRS and Pension Benefit Guarantee Corporation ("PBGC") requirements, which is expected to take at least one year. As of the last fiscal year-end measurement date (December 31, 2015), the Vishay Retirement Plan was fully-funded on a GAAP basis. In order to terminate the plan in accordance with IRS and PBGC requirements, the Company is required to fully fund the plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between zero and $35,000. 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 $21,137 and $21,757 at December 31, 2015 and 2014, 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 $2,995 and $3,607 at December 31, 2015 and 2014, 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. Note 11 – Pensions and Other Postretirement Benefits (continued) 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, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Change in benefit obligation: Benefit obligation at beginning of year $ 301,475 $ 286,846 $ 315,373 $ 280,526 Service cost - 3,265 - 3,275 Interest cost 11,657 5,636 13,821 8,555 Acquisitions - - - 465 Plan amendments - 267 - - Actuarial (gains) losses (23,099 ) (2,012 ) 50,584 40,021 Benefits paid (15,911 ) (12,230 ) (18,940 ) (15,888 ) Curtailments and settlements - - (59,363 ) (486 ) Currency translation - (24,173 ) - (29,622 ) Benefit obligation at end of year $ 274,122 $ 257,599 $ 301,475 $ 286,846 Change in plan assets: Fair value of plan assets at beginning of year $ 273,644 $ 49,156 $ 295,633 48,859 Actual return on plan assets (5,439 ) 1,159 38,688 1,858 Acquisitions - - - 10 Company contributions 5,798 15,621 17,626 17,015 Benefits paid (15,911 ) (12,230 ) (18,940 ) (15,888 ) Curtailments and settlements - - (59,363 ) (486 ) Currency translation - (2,443 ) - (2,212 ) Fair value of plan assets at end of year $ 258,092 $ 51,263 $ 273,644 $ 49,156 Funded status at end of year $ (16,030 ) $ (206,336 ) $ (27,831 ) $ (237,690 ) 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, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Other assets $ 21,202 $ 159 $ 12,964 $ 212 Accrued benefit liability - currrent (51 ) (6,089 ) (51 ) (6,624 ) Accrued benefit liability - non-current (37,181 ) (200,406 ) (40,744 ) (231,278 ) Accumulated other comprehensive loss 76,141 73,216 88,474 88,076 $ 60,111 $ (133,120 ) $ 60,643 $ (149,614 ) Note 11 – Pensions and Other Postretirement Benefits (continued) Actuarial items consist of the following: December 31, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Unrecognized net actuarial loss $ 74,926 $ 73,216 $ 87,195 $ 88,076 Unamortized prior service cost 1,215 - 1,279 - $ 76,141 $ 73,216 $ 88,474 $ 88,076 The following table sets forth additional information regarding the projected and accumulated benefit obligations: December 31, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Accumulated benefit obligation, all plans $ 274,122 $ 239,099 $ 301,475 $ 269,069 Plans for which the accumulated benefit obligation exceeds plan assets: Projected benefit obligation $ 37,232 $ 245,005 $ 40,795 $ 272,977 Accumulated benefit obligation 37,232 231,955 40,795 261,996 Fair value of plan assets - 39,463 - 37,634 The following table sets forth the components of net periodic pension cost: Years ended December 31, 2015 2014 2013 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 $ - $ 3,265 $ - $ 3,275 $ - $ 3,499 Interest cost 11,657 5,636 13,821 8,555 13,882 8,150 Expected return on plan assets (13,566 ) (1,798 ) (14,892 ) (2,109 ) (19,124 ) (2,084 ) Amortization of actuarial losses 8,175 5,131 7,166 2,700 14,566 3,407 Amortization of prior service cost (credit) 64 (282 ) (56 ) (5 ) 978 (12 ) Curtailment and settlement losses - 452 15,588 1,137 - 959 Net periodic pension cost $ 6,330 $ 12,404 $ 21,627 $ 13,553 $ 10,302 $ 13,919 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, 2015, 2014, and 2013. 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 2016 is $11,500. The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years: 2015 2014 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 % The following weighted average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2015 and 2014: Years ended December 31, 2015 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 4.00 % 2.15 % 4.85 % 3.11 % Rate of compensation increase 0.00 % 1.97 % 0.00 % 1.99 % Expected return on plan assets 5.00 % 3.86 % 5.29 % 3.85 % 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 qualified U.S. pension plan was remeasured during 2014 concurrent with the two partial settlement transactions. 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. Given the pending termination and settlement, the Company's U.S. defined benefit plans are currently invested in diversified portfolios of fixed income securities and cash. Investment allocations are made across a range of securities, maturities and credit quality. Based on market interest rate conditions and the current market value of the plan assets at December 31, 2015, the qualified defined benefit plan in the U.S. is fully-funded. 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 2016 $ 16,019 $ 13,310 2017 16,331 14,552 2018 16,708 13,741 2019 23,229 14,860 2020 18,715 14,571 2021-2025 96,997 73,867 These estimates do not reflect the planned settlement of the U.S. qualified defined benefit plan. The Company anticipates making contributions to U.S. defined benefit pension plans of between zero and $35,000 in 2016. The Company's anticipated 2016 contributions for non-U.S. defined benefit pension plans will approximate $30,000, which includes contributions of $16,000 to the Company's Taiwanese pension plans to improve the funded status of those plans. 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. One of these plans was amended effective January 1, 2012, which reduced the benefit obligations of the Company. 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, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Change in benefit obligation: Benefit obligation at beginning of year $ 8,677 $ 7,283 $ 7,341 $ 7,504 Service cost 121 273 115 307 Interest cost 333 147 351 244 Plan curtailments and settlements - (25 ) - - Actuarial (gains) losses (550 ) (50 ) 1,492 752 Benefits paid (672 ) (389 ) (622 ) (565 ) Currency translation - (751 ) - (959 ) Benefit obligation at end of year $ 7,909 $ 6,488 $ 8,677 $ 7,283 Fair value of plan assets at end of year $ - $ - $ - $ - Funded status at end of year $ (7,909 ) $ (6,488 ) $ (8,677 ) $ (7,283 ) Amounts recognized in the consolidated balance sheet consist of the following: December 31, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Accrued benefit liability - current $ (701 ) $ (224 ) $ (666 ) $ (349 ) Accrued benefit liability - non-current (7,208 ) (6,264 ) (8,011 ) (6,934 ) Accumulated other comprehensive income (3,129 ) 1,446 (3,325 ) 1,750 $ (11,038 ) $ (5,042 ) $ (12,002 ) $ (5,533 ) Note 11 – Pensions and Other Postretirement Benefits (continued) Actuarial items consist of the following: December 31, 2015 December 31, 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Unrecognized net actuarial loss (gain) $ (1,308 ) $ 1,446 $ (668 ) $ 1,750 Unamortized prior service (credit) cost (1,821 ) - (2,657 ) - $ (3,129 ) $ 1,446 $ (3,325 ) $ 1,750 The following table sets forth the components of net periodic benefit cost: Years ended December 31, 2015 2014 2013 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Service cost $ 121 $ 273 $ 115 $ 307 $ 111 $ 299 Interest cost 333 147 351 244 314 257 Amortization of actuarial (gains) losses 90 76 (140 ) 38 4 8 Amortization of prior service credit (837 ) - (824 ) - (798 ) - Net periodic benefit cost (benefit) $ (293 ) $ 496 $ (498 ) $ 589 $ (369 ) $ 564 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 2015 are not material and approximate the amounts amortized in 2014. The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years: 2015 2014 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 following weighted average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2015 and 2014: Years ended December 31, 2015 2014 U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans Discount rate 4.00 % 2.25 % 5.00 % 3.44 % Rate of compensation increase 0.00 % 2.87 % 0.00 % 3.19 % 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 2016 $ 701 $ 224 2017 718 302 2018 710 307 2019 693 405 2020 680 661 2021-2025 2,887 2,714 As the plans are unfunded, the Company's anticipated contributions for 2016 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, 2015 and 2014, the consolidated balance sheets include $13,559 and $13,557, 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 $5,369, $5,285, and $5,276 for the years ended December 31, 2015, 2014, and 2013, respectively. No material amounts are included in the consolidated balance sheets at December 31, 2015 and 2014 related to unfunded 401(k) contributions. Certain key employees participate in a deferred compensation plan. During the years ended December 31, 2015, 2014, and 2013, 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, 2015 and 2014 were approximately $15,717 and $14,906, respectively. |