Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans

9. Employee Benefit Plans

The Company maintains a pension plan in the United Kingdom that consists of two components: the Final Salary Plan (the “U.K. Plan”), which is a defined benefit plan, and the Retirement Savings Plan, which is a defined contribution plan. In 1997, membership to the U.K. Plan was closed and in 2003 the Company was allowed to stop accruing additional benefits to the participants. Benefits under the U.K. Plan were based on the employees’ years of service and compensation. Most of the beneficiaries of this plan are no longer employed by the Company.

The Company also maintains a tax qualified pension plan in Japan (the “Japan Plan”) that covers certain of the Company’s Japanese employees. Benefits are based on years of service and compensation at retirement. Employees with less than twenty years of service to the Company receive a lump sum benefit payout. Employees with twenty or more years of service to the Company receive a benefit that is guaranteed for a certain number of years. Participants may, under certain circumstances, receive a benefit upon termination of employment.

Pension and other benefit costs reflected in the accompanying consolidated statements of operations are based on a projected benefit method of valuation. The funded status of pension plan liabilities are included in accrued pension liabilities in the accompanying consolidated balance sheets. The Company continues to fund each plan sufficient to meet current benefits as well as fund a portion of future benefits as permitted by regulatory authorities.

The net periodic pension cost for the U.K. Plan and the Japan Plan includes the following components (in thousands):

	U.K. Plan									Japan Plan
	2011			2010			2009			2011		2010			2009
Components of the net periodic pension cost:
Service cost	$	—		$	—		$	—		$	207	$	194		$	251
Interest cost		1,486			1,447			1,334			30		24			32
Expected return on plan assets		(1,576	)		(1,467	)		(1,310	)		—		(1	)		(2	)
Amortization of the unrecognized transition obligation		—			—			—			78		70			70
Amortization of prior service cost		—			—			—			4		—			—
Amortization of loss		224			204			146			—		—			—
Settlement gain		—			—			—			—		—			(14	)
Curtailment loss		—			—			—			—		—			130
Net periodic pension cost	$	134		$	184		$	170		$	319	$	287		$	467

The actuarial assumptions used to compute the net periodic pension cost for the U.K. Plan and the Japan Plan were as follows:

	U.K. Plan									Japan Plan
	2011			2010			2009			2011			2010			2009
Weighted-average discount rate		5.3	%		5.8	%		6.0	%		1.3	%		1.3	%		1.6	%
Weighted-average rate of compensation increase		—			—			—			3.0	%		3.0	%		3.0	%
Weighted-average long-term rate of return on plan assets		5.9	%		6.5	%		6.7	%		—			0.1	%		0.3	%

The actuarial assumptions used to compute the funded status for the U.K. Plan and the Japan Plan were as follows:

	U.K. Plan						Japan Plan
	2011			2010			2011			2010
Weighted-average discount rate		4.9	%		5.3	%		1.2	%		1.3	%
Weighted-average rate of compensation increase		—			—			3.0	%		3.0	%
Rate of inflation		2.2	%		3.2	%		—			—

The discount rates used are derived on (AA) corporate bonds that have a maturity approximating the terms of the related obligations. In estimating the expected return on plan assets, the Company considered the historical performance of the major asset classes held, or anticipated to be held, by the applicable pension plans and current forecasts of future rates of return for these asset classes.

The following table provides a reconciliation of benefit obligations and plan assets of the U.K. Plan and the Japan Plan (in thousands):

	U.K. Plan						Japan Plan
	2011			2010			2011			2010
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	27,341		$	25,947		$	2,142		$	1,805
Service cost		—			—			207			194
Interest cost		1,486			1,447			30			24
Actuarial (gains) losses		(767	)		1,297			95			(22	)
Benefits paid		(645	)		(603	)		(18	)		(101	)
Foreign currency exchange rate changes		(80	)		(747	)		150			242
Projected benefit obligation at end of year	$	27,335		$	27,341		$	2,606		$	2,142
Accumulated benefit obligation at end of year	$	27,335		$	27,341		$	2,086		$	1,698
Change in plan assets:
Fair value of plan assets at beginning of year	$	25,710		$	22,372		$	729		$	543
Actual return (loss) on plan assets		(1,247	)		2,366			(16	)		(9	)
Employer contributions		802			2,212			349			216
Benefits paid		(645	)		(603	)		(18	)		(101	)
Foreign currency exchange rate changes		(30	)		(637	)		42			80
Fair value of plan assets at end of year	$	24,590		$	25,710		$	1,086		$	729
Funded status at end of year	$	(2,745	)	$	(1,631	)	$	(1,520	)	$	(1,413	)
Amount recognized in the financial statements consists of:
Accrued pension liabilities	$	2,745		$	1,631		$	1,520		$	1,413
Amounts included in accumulated other comprehensive loss not yet recognized in net periodic pension cost
Net actuarial gain (loss)	$	(7,301	)	$	(5,555	)	$	(42	)	$	67
Prior service cost	$	—		$	—		$	(35	)	$	—
Net transition obligation	$	—		$	—		$	(550	)	$	(600	)
Amounts expected to be amortized from accumulated other comprehensive loss into net periodic pension cost over the next fiscal year consists of:
Net actuarial loss	$	381		$	217		$	—		$	—
Prior service cost	$	—		$	—		$	4		$	—
Net transition obligation	$	—		$	—		$	79		$	75

The following table reflects the total expected benefit payments to plan participants and have been estimated based on the same assumptions used to measure the Company’s benefit obligations as of December 31, 2011 (in thousands):

	U.K. Plan		Japan Plan
2012	$	458	$	197
2013		487		175
2014		858		266
2015		762		182
2016		896		187
2017-2021		6,457		1,239
Total	$	9,918	$	2,246

In the U.K., funding valuations are conducted every three years in order to determine the future level of contributions. The Company’s latest funding valuation was completed in October 2010. Based on the results of the valuation, the Company increased its annual contributions to the U.K. Plan from approximately $0.6 million to $0.8 million for a period of 10 years and 5 months beginning September 2010, including an additional one-time lump-sum payment of approximately $1.6 million which was paid in 2010. The Company anticipates that contributions for 2012 will be $0.8 million for the U.K. Plan and $0.4 million for the Japan Plan.

Fair Value of Plan Assets

In the U.K., the Company’s overall objective is to invest plan assets in a portfolio of diversified assets, primarily through the use of institutional collective funds, to achieve long-term growth. The strategic asset allocation uses a combination of risk controlled and index strategies in fixed income and global equities. The target allocations are approximately 50% to funds investing in global equities, approximately 30% to funds investing in global bonds, approximately 16% to alternative assets (including commodities, private equity and debt, real estate, infrastructure, hedge funds and currency funds), and approximately 4% in cash.

In Japan, the investment strategy is primarily focused on the preservation of principal invested in insurance contracts.

The following table summarizes the fair values of the Company’s plan assets as of December 31, 2011 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
U.K. Plan
Mutual Funds:
Balanced(1)	$	12,353	$	—	$	12,353	$	—
Growth(2)		12,136		—		12,136		—
Cash		101		101		—		—
Total	$	24,590	$	101	$	24,489	$	—
Japan Plan
Insurance contracts(3)	$	1,086	$	—	$	1,086	$	—
Total	$	1,086	$	—	$	1,086	$	—

(1) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated as follows: equities (40%), debt (36%), other assets (17%) and cash (7%).

(2) This class comprises a diversified portfolio of global investments which seeks long-term capital growth and is allocated as follows: equities (60%), other assets (16%), debt (18%), and cash (6%).

(3) This class represents funds invested in insurance contracts.

The following table summarizes the fair values of Plan assets as of December 31, 2010 by asset category (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
U.K. Plan
Equity:
Equity securities(1)	$	1,477	$	—	$	1,477	$	—
Mutual Funds:
Balanced(2)		11,022		—		11,022		—
Growth(3)		11,144		—		11,144		—
Fixed Income:
Debt securities(4)		350		—		350		—
Cash		1,717		1,717		—		—
Total	$	25,710	$	1,717	$	23,993	$	—
Japan Plan
Insurance contracts(5)	$	729	$	—	$	729	$	—
Total	$	729	$	—	$	729	$	—

(1) This class comprises a diversified portfolio of global equities in various industries which seeks long-term growth to match the long-term nature of pension fund liabilities.

(2) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated as follows: equities (44%-49%), debt (28%-29%), other assets (18%-23%) and cash (4%-5%).

(3) This class comprises a diversified portfolio of global investments which seeks long-term capital growth and is allocated as follows: equities (56%-65%), other assets (18%-28%), debt (14%), and cash (2%-3%).

(4) This class represents a passively managed index fund investing primarily in government or other public securities issued by the government of the U.K.

(5) This class represents funds invested in insurance contracts.

The tables above present the fair value of plan assets in accordance with the fair value hierarchy. Certain pension plan assets are measured using net asset value per share (or its equivalent) and are reported as a level 2 investment above due to the Company’s ability to redeem its investments either at the balance sheet date or within limited time restrictions.

Defined Contribution Plans

The Company has defined contribution employee savings plans in the U.K. and the U.S. The Company matches the contributions of participating employees on the basis of percentages specified in each plan. Company matching contributions to the plans were $2.0 million, $1.6 million and $1.6 million in 2011, 2010 and 2009, respectively.