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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Income (loss) from continuing operations before taxes and noncontrolling interests consists of the following components:
|  | Years ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Domestic |  | $ | 2,143 |  |  | $ | 32,493 |  |  | $ | (54,041 | )
Foreign |  |  | 328,973 |  |  |  | 373,040 |  |  |  | 14,326 |
|  | $ | 331,116 |  |  | $ | 405,533 |  |  | $ | (39,715 | )
Significant components of income taxes are as follows:
|  | Years ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 10,968 |  |  | $ | 9,823 |  |  | $ | 817 |
State and local |  |  | (801 | ) |  |  | 2,434 |  |  |  | 505 |
Foreign |  |  | 66,844 |  |  |  | 59,459 |  |  |  | 28,435 |
|  |  | 77,011 |  |  |  | 71,716 |  |  |  | 29,757 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 6,188 |  |  |  | (949 | ) |  |  | (6,332 | )
State and local |  |  | (2,286 | ) |  |  | 2,108 |  |  |  | 286 |
Foreign |  |  | 10,206 |  |  |  | (27,635 | ) |  |  | (6,911 | )
|  |  | 14,108 |  |  |  | (26,476 | ) |  |  | (12,957 | )
Total income tax expense |  | $ | 91,119 |  |  | $ | 45,240 |  |  | $ | 16,800 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
|  | December 31, |
|  | 2011 |  |  | 2010 |
Deferred tax assets: |  |  |  |  |  |
Pension and other retiree obligations |  | $ | 48,810 |  |  | $ | 44,054 |
Inventories |  |  | 10,711 |  |  |  | 11,346 |
Net operating loss carryforwards |  |  | 106,621 |  |  |  | 158,264 |
Tax credit carryforwards |  |  | 11,225 |  |  |  | 11,871 |
Other accruals and reserves |  |  | 40,494 |  |  |  | 53,369 |
Total gross deferred tax assets |  |  | 217,861 |  |  |  | 278,904 |
Less valuation allowance |  |  | (102,863 | ) |  |  | (145,201 | )
|  |  | 114,998 |  |  |  | 133,703 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Tax over book depreciation |  |  | (16,208 | ) |  |  | (20,425 | )
Earnings not permanently reinvested |  |  | (25,960 | ) |  |  | (39,074 | )
Convertible debentures |  |  | (105,830 | ) |  |  | (64,440 | )
Other - net |  |  | (2,515 | ) |  |  | (2,572 | )
Total gross deferred tax liabilities |  |  | (150,513 | ) |  |  | (126,511 | )
Net deferred tax assets (liabilities) |  | $ | (35,515 | ) |  | $ | 7,192 |
The Company makes significant judgments regarding the realizability of its deferred tax assets (principally net operating losses). The carrying value of deferred tax assets is based on the Company’s assessment that it is more likely than not that the Company will realize these assets after consideration of all available positive and negative evidence. A reconciliation of income tax expense at the U.S. federal statutory income tax rate to actual income tax provision is as follows:
|  | Years ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Tax at statutory rate |  | $ | 115,891 |  |  | $ | 141,937 |  |  | $ | (13,900 | )
State income taxes, net of U.S. federal tax benefit |  |  | (2,005 | ) |  |  | 2,952 |  |  |  | 513 |
Effect of foreign operations |  |  | (52,609 | ) |  |  | (69,034 | ) |  |  | 14,731 |
Unrecognized tax benefits |  |  | 4,869 |  |  |  | (1,823 | ) |  |  | 1,395 |
Change in valuation allowance on U.S. deferred tax asset |  |  | - |  |  |  | (36,229 | ) |  |  | - |
Change in valuation allowance on non-U.S. deferred tax assets |  |  | (5,554 | ) |  |  | (21,671 | ) |  |  | 715 |
Tax benefit of operating loss carryforwards |  |  | (1,588 | ) |  |  | (8,799 | ) |  |  | (2,158 | )
Foreign income taxable in the U.S. |  |  | 22,822 |  |  |  | 31,294 |  |  |  | 976 |
Tax on foreign dividends paid to the U.S. |  |  | 15,453 |  |  |  | 1,417 |  |  |  | - |
U.S. foreign tax credits |  |  | (12,322 | ) |  |  | - |  |  |  | - |
Effect of statutory rate changes on deferred tax assets |  |  | 9,040 |  |  |  | 1,128 |  |  |  | 1,995 |
Settlement agreement gain |  |  | - |  |  |  | - |  |  |  | (9,868 | )
Non-deductible expenses related to VPG spin-off |  |  | - |  |  |  | 1,945 |  |  |  | 1,265 |
Executive employment agreement charges |  |  | 173 |  |  |  | 222 |  |  |  | 20,238 |
Other |  |  | (3,051 | ) |  |  | 1,901 |  |  |  | 898 |
Total income tax expense |  | $ | 91,119 |  |  | $ | 45,240 |  |  | $ | 16,800 |
At December 31, 2011, the Company had the following significant net operating loss carryforwards for tax purposes:
|  |  | Expires
Austria | $7,876 |  | No expiration
Belgium | 184,610 |  | No expiration
Brazil | 19,674 |  | No expiration
Germany | 46,098 |  | No expiration
Israel | 128,425 |  | No expiration
Netherlands | 42,791 |  | 2012 - 2019
Approximately $69,144 of the carryforwards in Belgium resulted from the Company’s acquisition of BCcomponents in 2002. Valuation allowances of $23,502 and $44,790, as of December 31, 2011 and 2010, respectively, have been recorded through goodwill for these acquired net operating losses. Prior to the adoption of updated guidance in ASC Topic 805 on January 1, 2009, if tax benefits were recognized through the utilization of these acquired net operating losses, the benefits of such loss utilization were recorded as a reduction to goodwill. After the adoption of the updated guidance on January 1, 2009, the benefits of such losses are recorded as a reduction of tax expense. In 2011, 2010, and 2009, the tax benefit recognized through a reduction of acquisition-date valuation allowances recorded as a reduction of tax expense was $4,299, $567, and $980, respectively. The reduction in valuation allowances include pre-acquisition allowances for losses in Austria and Netherlands. As of December 31, 2011, pre-acquisition net operating losses in Netherlands expired, reducing the valuation allowances by $16,495. At December 31, 2011, the Company had the following significant tax credit carryforwards available:
|  |  | Expires
U.S. alternative minimum tax | $4,696 |  | No expiration
U.S. foreign tax credit | 1,198 |  | 2020
California research credit | 6,834 |  | No expiration
At December 31, 2011, no provision has been made for U.S. federal and state income taxes on approximately $2,493,797 of foreign earnings, which the Company continues to expect to be reinvested outside of the United States indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits), state income taxes, incremental foreign income taxes, and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation. As of December 31, 2008, the Company recorded additional tax expense for an expected repatriation of $112,500 because such earnings are not deemed to be indefinitely reinvested outside of the United States. As of December 31, 2011, the remaining balance of these not permanently reinvested earnings is $72,110. At the present time, the Company expects that the remaining cash and profits generated by foreign subsidiaries will continue to be reinvested indefinitely. Net income taxes paid (refunded) were $126,918, $23,322, and ($4,714) for the years ended December 31, 2011, 2010, and 2009, respectively. The Company and its subsidiaries are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite the Company’s belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances and the provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. These accruals for tax-related uncertainties are based on management’s best estimate of potential tax exposures. When particular matters arise, a number of years may elapse before such matters are audited by tax authorities and finally resolved. Favorable resolution of such matters could be recognized as a reduction to the Company’s effective tax rate in the year of resolution. Unfavorable resolution of any particular issue could increase the effective tax rate and may require the use of cash in the year of resolution. Until the spin-off of VPG on July 6, 2010, VPG was included in the Company’s consolidated federal income tax returns and will be included with the Company and/or certain of the Company’s subsidiaries in applicable combined or unitary state and local income tax returns. In conjunction with the spin-off, the Company and VPG entered a tax matters agreement under which the Company generally will be liable for all U.S. federal, state, local, and foreign income taxes attributable to VPG with respect to taxable periods ending on or before the distribution date except to the extent that VPG has a liability for such taxes on its books at the time of the spin-off. The Company is also principally responsible for managing any income tax audits by the various tax jurisdictions for pre-spin-off periods. The Company has fully indemnified VPG of tax exposures arising prior to the spin-off. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2011 and 2010, the Company had accrued interest and penalties related to the unrecognized tax benefits of $5,764 and $2,962, respectively. During the years ended December 31, 2011, 2010, and 2009, the Company recognized $3,795, $1,081, and $1,139, respectively, in interest and penalties. The following table summarizes changes in the liabilities associated with unrecognized tax benefits:
|  | Years ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Balance at beginning of year |  | $ | 54,285 |  |  | $ | 54,463 |  |  | $ | 47,778 |
Addition based on tax positions related to the current year |  |  | 2,459 |  |  |  | 1,916 |  |  |  | 2,491 |
Addition based on tax positions related to prior years |  |  | 10,918 |  |  |  | 3,090 |  |  |  | 4,684 |
Currency translation adjustments |  |  | (922 | ) |  |  | 451 |  |  |  | 417 |
Reduction based on tax positions related to prior years |  |  | (3,293 | ) |  |  | (670 | ) |  |  | - |
Reduction for settlements |  |  | (9,604 | ) |  |  | (3,289 | ) |  |  | (737 | )
Reduction for lapses of statute of limitation |  |  | (35 | ) |  |  | (1,676 | ) |  |  | (170 | )
Balance at end of year |  | $ | 53,808 |  |  | $ | 54,285 |  |  | $ | 54,463 |
The amount of unrecognized tax benefits as of December 31, 2011 that if recognized would affect the effective tax rate is $53,808. The Company expects that the unrecognized tax benefits will decrease in the next year by $6,262 due to the settlement of tax audits, principally in Germany. The Company and its subsidiaries file U.S. federal income tax returns, as well as income tax returns in multiple U.S. state and foreign jurisdictions. The U.S. Internal Revenue Service concluded its examinations of Vishay’s U.S. federal tax returns for all tax years through 2002. Because of net operating losses, which were fully utilized on the 2010 tax return, the Company’s U.S. federal tax returns for 2003 and later years remain subject to examination. Examinations of most principal subsidiaries in Israel through the 2007 tax year were concluded in 2010, and the Company has been notified that an audit of the 2008 through 2010 tax years will commence in early 2012. The tax returns of significant non-U.S. subsidiaries are currently under examination in Germany (2005 through 2008), India (2004 through 2009), China (2006), and the Republic of China (Taiwan) (2006 through 2010). The Company and its subsidiaries are also subject to income taxes in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examinations.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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