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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes [Abstract] |
Income Taxes | Note 5 – Income Taxes U.S. Tax Reform: Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted in the United States. The TCJA represented sweeping changes in U.S. tax law. Among the numerous changes in tax law, the TCJA permanently reduced the U.S. corporate income tax rate to 21% beginning in 2018; imposed a one-time transition tax on deferred foreign earnings; established a partial territorial tax system by allowing a 100% dividends received deduction on qualifying dividends paid by foreign subsidiaries; limited deductions for net interest expense; expanded the U.S. taxation of foreign earned income to include "global intangible low-taxed income" ("GILTI") of foreign subsidiaries; and imposed a base erosion anti-abuse minimum tax ("BEAT"). As permitted by SAB No. 118, the tax expense recorded in the fourth fiscal quarter of 2017 due to the enactment of the TCJA was considered "provisional," based on reasonable estimates. After additional analysis was completed in 2018, the Company identified additional amounts available to be repatriated to the U.S. and additional information regarding the foreign taxes payable and recorded additional provisional tax expense to accrue the incremental foreign income taxes and withholding taxes payable to foreign jurisdiction. The Company collected and analyzed detailed information about the earnings and profits of its non-U.S. subsidiaries, the related taxes paid, the amounts which could be repatriated, the foreign taxes which may be incurred on repatriation, and the associated impact of these items under the TCJA, including under regulatory guidance issued in 2018, throughout the measurement period that ended as of December 31, 2018. The Company recognized $25,496 of additional tax expense directly and indirectly related to the enactment of the TCJA in 2018. The TCJA transitioned the U.S. from a worldwide tax system to a territorial tax system. Under previous law, companies could indefinitely defer U.S. income taxation on unremitted foreign earnings. The TCJA imposed a one-time transition tax on deferred foreign earnings of 15.5% for liquid assets and 8.0% for illiquid assets, payable in defined increments over eight years. As a result of this requirement, the Company expects to pay $184,467. The first installments of $14,757 were paid in 2020, 2019, and 2018. The Company repatriated $104,091, $188,742, and $724,000 to the United States, and paid withholding and foreign taxes of $16,258, $38,814, and $156,767 in 2020, 2019, and 2018, respectively. Tax expense for these repatriation transactions was substantially recorded in 2017 upon enactment of the TCJA. Substantially all of the amounts repatriated were used to repay certain third party and intercompany indebtedness, to pay the U.S. transition tax, to fund capital expansion projects, and to fund the repurchase of convertible debt instruments (see Note 6). There are additional amounts of unremitted foreign earnings in other countries, which continue to be reinvested indefinitely, and the Company has made no provision for incremental foreign income taxes and withholding taxes payable to foreign jurisdictions related to these amounts. Determination of the amount of the unrecognized deferred foreign tax liability for these amounts is not practicable because of the complexities associated with its hypothetical calculation. Certain provisions of the TCJA had a significant impact on the Company's effective tax rate and are expected to have a significant impact in future periods. Because the various provisions of the TCJA are interrelated, and because of changes in the Company’s operations and changes in the capital structure in response to the TCJA, the impact of any specific provision of the TCJA cannot be isolated. The Company recognized a significant amount of GILTI income in 2020, 2019, and 2018, but was able to utilize related foreign tax credits to reduce the impact on the effective tax rate. The Company has elected to account for GILTI tax in the period in which it is incurred and, therefore, does not provide any deferred taxes in the consolidated financial statements at December 31, 2020, 2019, or 2018. The inclusion of significant GILTI income was a contributing factor in allowing the Company to avoid a limitation on the deductibility of its U.S. interest expense in 2020, 2019, and 2018. The Company was subject to the BEAT minimum tax of $750, $2,900, and $0 in 2020, 2019, and 2018, respectively. BEAT could increase the Company’s future tax by disallowing certain otherwise deductible payments from the U.S. to non-U.S. subsidiaries and imposing a minimum tax if greater than the regular tax. The Company's repurchase of outstanding convertible debentures (see Note 6) reduced the Company's tax rate. Income (loss) from continuing operations before taxes and noncontrolling interests consists of the following components:
|  | Years ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Domestic |  | $ | (25,884 | ) |  | $ | (10,992 | ) |  | $ | (39,861 | )
Foreign |  |  | 184,212 |  |  |  | 237,290 |  |  |  | 456,637 |
|  | $ | 158,328 |  |  | $ | 226,298 |  |  | $ | 416,776 |
Significant components of income taxes are as follows:
|  | Years ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 7,327 |  |  | $ | 9,137 |  |  | $ | 18,756 |
State and local |  |  | 218 |  |  |  | 415 |  |  |  | 209 |
Foreign |  |  | 55,399 |  |  |  | 113,779 |  |  |  | 263,247 |
|  |  | 62,944 |  |  |  | 123,331 |  |  |  | 282,212 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (6,068 | ) |  |  | (13,731 | ) |  |  | (58,386 | )
State and local |  |  | (538 | ) |  |  | (802 | ) |  |  | (3,117 | )
Foreign |  |  | (21,793 | ) |  |  | (47,290 | ) |  |  | (150,470 | )
|  |  | (28,399 | ) |  |  | (61,823 | ) |  |  | (211,973 | )
Total income tax expense |  | $ | 34,545 |  |  | $ | 61,508 |  |  | $ | 70,239 |
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, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |
Pension and other retiree obligations |  | $ | 53,585 |  |  | $ | 48,434 |
Inventories |  |  | 19,539 |  |  |  | 19,318 |
Net operating loss carryforwards |  |  | 124,251 |  |  |  | 119,420 |
Tax credit carryforwards |  |  | 85,651 |  |  |  | 76,140 |
Other accruals and reserves |  |  | 31,347 |  |  |  | 29,273 |
Total gross deferred tax assets |  |  | 314,373 |  |  |  | 292,585 |
Less valuation allowance |  |  | (206,950 | ) |  |  | (194,797 | )
|  |  | 107,423 |  |  |  | 97,788 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (1,604 | ) |  |  | (2,391 | )
Earnings not permanently reinvested |  |  | - |  |  |  | (16,448 | )
Convertible debentures |  |  | (12,777 | ) |  |  | (25,219 | )
Other - net |  |  | (6,364 | ) |  |  | (6,499 | )
Total gross deferred tax liabilities |  |  | (20,745 | ) |  |  | (50,557 | )
Net deferred tax assets (liabilities) |  | $ | 86,678 |  |  | $ | 47,231 |
The Company makes significant judgments regarding the realizability of its deferred tax assets (principally net operating losses and tax credits). 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. As of December 31, 2020, the Company has generated an excess U.S. foreign tax credit of $68,874. Because the Company does not anticipate sufficient U.S. foreign source income during the carryforward period, the Company has not recognized the benefit of the carryforward as of December 31, 2020. 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, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Tax at statutory rate |  | $ | 33,249 |  |  | $ | 47,523 |  |  | $ | 87,523 |
State income taxes, net of U.S. federal tax benefit |  |  | (252 | ) |  |  | (301 | ) |  |  | (2,298 | )
Effect of foreign operations |  |  | (9,896 | ) |  |  | 9,242 |  |  |  | 5,736 |
Tax on earnings not permanently reinvested |  |  | 4,227 |  |  |  | 6,256 |  |  |  | 9,304 |
Unrecognized tax benefits |  |  | 4,351 |  |  |  | 5,584 |  |  |  | 2,669 |
Repurchase of senior convertible debentures |  |  | (1,358 | ) |  |  | (1,461 | ) |  |  | (52,312 | )
TCJA - remeasurement of net deferred tax liabilities |  |  | - |  |  |  | - |  |  |  | (1,211 | )
TCJA - transition tax on unremitted foreign earnings |  |  | - |  |  |  | - |  |  |  | 7,425 |
Foreign income taxable in the U.S. |  |  | 4,155 |  |  |  | 6,090 |  |  |  | 15,055 |
Deferred tax rate impact of corporate reorganization |  |  | - |  |  |  | (12,121 | ) |  |  | - |
Other |  |  | 69 |  |  |  | 696 |  |  |  | (1,652 | )
Total income tax expense |  | $ | 34,545 |  |  | $ | 61,508 |  |  | $ | 70,239 |
Income tax expense for the years ended December 31, 2020, 2019, and 2018 includes certain discrete tax items for changes in uncertain tax positions, valuation allowances, tax rates, and other related items. These items total $1,998, $799 (tax benefit), and $39,428 (tax benefit) in 2020, 2019, and 2018, respectively. For the year ended December 31, 2020, the discrete items include a tax benefit of $1,563 resulting from the early extinguishment of convertible senior debentures, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the debentures and $190 (tax benefit) of adjustments to remeasure of deferred taxes related to the cash repatriation program described above, and $3,751 of tax expense for changes in uncertain tax positions. For the year ended December 31, 2019, the discrete items include $7,554 related to a tax-basis foreign exchange gain on the settlement of an intercompany loan, which previously had been accounted for at the historical foreign exchange rate (akin to an equity contribution) because the debtor entity did not have the intent or ability to repay such intercompany loan. Currency translation adjustments were recorded in accumulated other comprehensive income, and were not included in U.S. GAAP pre-tax income. The Company’s cash repatriation activity resulted in the ability to repay such intercompany loan. Upon settlement of this intercompany loan, the foreign entity realized a taxable gain. Discrete tax items also include a tax benefit of $1,601 resulting from the early extinguishment of convertible senior debentures, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the debentures, $9,583 (tax benefit) of adjustments to remeasure of deferred taxes related to the cash repatriation program described above, and $2,831 of tax expense for changes in uncertain tax positions. For the year ended December 31, 2018, the discrete items include $25,496 related to the enactment of the TCJA, as previously described, a tax benefit of $54,877 resulting from the early extinguishment of convertible senior debentures, reflecting the reduction in deferred tax liabilities related to the special tax attributes of the debentures, and $10,047 (tax benefit) of adjustments to remeasure the deferred taxes related to the cash repatriation program described above. At December 31, 2020, the Company had the following significant net operating loss carryforwards for tax purposes:
|  |  |  |  | Expires |
Austria |  | $ | 19,490 |  |  | No expiration |
Belgium |  |  | 172,952 |  |  | No expiration |
Israel |  |  | 10,706 |  |  | No expiration |
Italy |  |  | 16,779 |  |  | No expiration |
Japan |  |  | 8,490 |  |  |  | 2023 - 2030 |
Netherlands |  |  | 13,216 |  |  |  | 2021 - 2026 |
The Republic of China (Taiwan) |  |  | 18,184 |  |  |  | 2026 - 2028 |
California |  |  | 27,893 |  |  |  | 2021 - 2040 |
Pennsylvania |  |  | 614,410 |  |  |  | 2021 - 2040 |
At December 31, 2020, the Company had the following significant tax credit carryforwards available:
|  |  |  |  | Expires |
U.S. Foreign Tax Credit |  | $ | 68,874 |  |  |  | 2028 - 2030 |
California Research Credit |  |  | 16,478 |  |  | No expiration |
Net income taxes paid were $69,706, $185,654, and $248,958 for the years ended December 31, 2020, 2019, and 2018, respectively. Net income taxes paid for the years ended December 31, 2020, 2019, and 2018 include $16,258, $38,814 and $156,767, respectively, for repatriation activity and $14,757 in each period for the TCJA transition tax. See Note 19 for a discussion of the tax-related uncertainties for the pre-spin-off period of Vishay Precision Group, Inc. (“VPG”), which was spun off on July 6, 2010. The following table summarizes changes in the liabilities associated with unrecognized tax benefits:
|  | Years ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance at beginning of year |  | $ | 36,868 |  |  | $ | 21,241 |  |  | $ | 17,056 |
Addition based on tax positions related to the current year |  |  | 663 |  |  |  | 2,383 |  |  |  | 4,332 |
Addition based on tax positions related to prior years |  |  | 8,358 |  |  |  | 16,190 |  |  |  | 2,066 |
Currency translation adjustments |  |  | 1,361 |  |  |  | 1,211 |  |  |  | (984 | )
Reduction based on tax positions related to prior years |  |  | (3,152 | ) |  |  | - |  |  |  | - |
Reduction for settlements |  |  | (3,446 | ) |  |  | (3,121 | ) |  |  | (1,229 | )
Reduction for lapses of statute of limitation |  |  | - |  |  |  | (1,036 | ) |  |  | - |
Balance at end of year |  | $ | 40,652 |  |  | $ | 36,868 |  |  | $ | 21,241 |
All of the unrecognized tax benefits of $40,652 and $36,868, as of December 31, 2020 and 2019, respectively, would reduce the effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. At December 31, 2020 and 2019, the Company had accrued interest and penalties related to the unrecognized tax benefits of $3,239 and $3,561, respectively. During the years ended December 31, 2020, 2019, and 2018, the Company recognized $128, $1,201, and $1,470, respectively, in interest and penalties. The Company and its subsidiaries file U.S. federal income tax returns, as well as tax returns in multiple states and foreign jurisdictions. The Company's U.S. federal income tax returns are under examination for the years ended December 31, 2017 and 2018. The IRS may, however, ask for supporting documentation for net operating losses for the years ended December 31, 2013 - 2016, which were utilized in the year ended December 31, 2017. During the years ended December 31, 2020, 2019, and 2018, certain tax examinations were concluded and certain statutes of limitations lapsed. The tax provision for those years includes adjustments related to the resolution of these matters, as reflected in the table above. The tax returns of significant non-U.S. subsidiaries currently under examination are located in the following jurisdictions: Germany (2013 through 2016), India (2004 through 2017), and Singapore (2015 through 2019). The Company and its subsidiaries also file income tax returns in other taxing jurisdictions in the U.S. and around the world, many of which are still open to examination. The timing of the resolution of income tax examinations is highly uncertain, as are the amounts and timing of tax payments that result from such examinations. These events could cause large fluctuations in the balance sheet classification of current and non-current unrecognized tax benefits. The Company believes that in the next 12 months it is reasonably possible that certain income tax examinations will conclude or the statutes of limitation on certain income tax periods open to examination will expire, or both. Given the uncertainties described above, the Company can only determine an estimate of potential decreases in unrecognized tax benefits ranging from $4,506 to $9,249.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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