Retirement Plans

12 Months Ended

Dec. 31, 2011

Retirement Plans [Abstract]

Retirement Plans

12. Retirement Plans

Pension Benefits

Certain of the Company's U.S. employees participate in a defined benefit pension plan that closed to new participants effective January 1, 1995. Benefits under the plan for most eligible employees are calculated using the highest five-year average salary of the employee. Employees participate in this plan by means of salary reduction contributions. Vested benefits are based on an employee's expected date of retirement. Retirement plan funding amounts are based on independent consulting actuaries' determination of the Employee Retirement Income Security Act of 1974 funding requirements.

For purposes of measuring the Company's benefit obligation as of December 31, 2011, and 2010, a discount rate of 4.41% and 5.09%, respectively, was used. These discount rates were chosen using an analysis of the Hewitt Bond Universe yield curve that reflects the plan's projected cash flows. The fair value of plan assets increased by $1.6 million as of December 31, 2011, as compared to December 31, 2010, as employer contributions and investment gains exceeded benefits paid during the year. The plan's projected benefit obligation increased by a net amount of $7.6 million, due primarily to the use of a lower discount rate as of December 31, 2011. The Company's projected benefit obligations exceeded plan assets by $15.8 million and $9.8 million as of December 31, 2011, and 2010, respectively. Pension cost, excluding any pension settlement charges incurred during the year, was $1.9 million, $1.5 million and $1.5 million for 2011, 2010, and 2009, respectively.

The Company's projected benefit obligation was estimated using an expected long-term rate of return on assets of 8.0%. The Company employs a total return investment approach whereby a mix of equities and fixed income investments is used to maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The Company's investment strategy is to diversify assets so that adverse results from one asset or asset class will not have an unduly detrimental effect on the entire portfolio. Diversification includes by type, by characteristic, and by number of investments, as well as by investment style of management organization.

The investment portfolio contains a diversified blend of common collective trust fund investments, which include both equity and fixed income type investments. Equity investments are diversified across U.S. and non-U.S. stocks, as well as growth and value stocks. Fixed income investments are diversified across asset-backed and mortgage-backed securities, U.S. treasury securities, and corporate bonds. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and periodic investment performance reviews.

The Financial Accounting Standards Board provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 — Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 — Inputs to the valuation methodology include:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets or liabilities in inactive markets;

• Inputs other than quoted prices that are observable for the asset or liability;

• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following is a description of the valuation methodologies used for pension plan assets measured at fair value.

Money market fund: The investment in the money market fund is valued at the net asset value of shares held at year end.

Collective investment funds: Investments in collective investment funds are valued at the last reported transaction price per unit.

The fair values of the Company's pension plan assets at December 31, 2011, and 2010, by asset category are as follows (in thousands):

	As of December 31, 2011
	Total Fair Value		Quoted prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Asset Category
Collective investment funds
Fixed income (a)	$	11,062	$	—	$	11,062	$	—
U.S. equity growth		6,945		—		6,945		—
U.S. equity value		6,952		—		6,952		—
Foreign equity		2,810		—		2,810		—
Money market fund		702		702		—		—
Pension assets at December 31, 2011	$	28,471	$	702	$	27,769	$	—

(a) As of December 31, 2011, the fixed income fund consisted of a 34% investment in asset and mortgage-backed securities, a 41% investment in U.S. treasury securities, and a 25% investment in corporate bonds.

	As of December 31, 2010
	Total Fair Value		Quoted prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Asset Category
Collective investment funds
Fixed income (b)	$	10,626	$	—	$	10,626	$	—
U.S. equity growth		6,607		—		6,607		—
U.S. equity value		6,622		—		6,622		—
Foreign equity		2,658		—		2,658		—
Money market fund		345		345		—		—
Pension assets at December 31, 2010	$	26,858	$	345	$	26,513	$	—

(b) As of December 31, 2010, the fixed income fund consisted of a 35% investment in asset and mortgage-backed securities, a 41% investment in U.S. treasury securities, and a 24% investment in corporate bonds.

Cash held and intended to pay benefits is considered to be a residual asset in the asset mix, and therefore, compliance with the ranges and targets specified shall be calculated excluding such assets. Assets of the plan do not include securities issued by the Company. The target allocation for each asset class is 60% equity securities and 40% debt securities.

The components of net periodic cost and other comprehensive loss (income) for the years ended December 31, 2011, 2010, and 2009, are as follows (in thousands):

	2011			2010			2009
Net periodic cost
Service cost of benefits	$	774		$	731		$	790
Interest cost		1,819			1,883			1,847
Expected return on plan assets		(2,051	)		(2,118	)		(2,172	)
Amortization of net actuarial loss		1,370			1,052			992
Amortization of prior service cost		—			—			22
Total	$	1,912		$	1,548		$	1,479
Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss (income)
Net actuarial loss (gain) arising this year		7,449			281			(2,295	)
Actuarial loss charged to expense due to settlement		—			—			(1,521	)
Net actuarial loss amortized this year		(1,370	)		(1,052	)		(992	)
Prior service cost amortized this year		—			—			(22	)
Recognized in other comprehensive loss (income)		6,079			(771	)		(4,830	)
Recognized in net periodic pension cost and other comprehensive loss (income)	$	7,991		$	777		$	(3,351	)

The Company's estimate for contributions to be paid in 2012 is $2.6 million. The expected benefit payments are as follows (in thousands):

2012	$	2,053
2013	$	2,192
2014	$	2,144
2015	$	2,127
2016	$	2,790
2017 - 2021	$	13,973

The accumulated benefit obligation for the defined benefit pension plan was $40.3 million and $32.6 million as of December 31, 2011, and 2010, respectively.

The funded status of the plan as of the measurement dates of December 31, 2011, and 2010, and the change in funded status for the measurement periods ended December 31, 2011, and 2010, are shown in the accompanying table for the Company's pension plan, along with the assumptions used in the calculations (dollars in thousands):

	Pension Plan
	2011			2010
Change in projected benefit obligation
At beginning of year	$	36,690		$	34,760
Service cost		774			731
Interest cost		1,819			1,883
Plan participants' contributions		238			231
Actuarial loss		6,122			965
Benefits paid		(1,397	)		(1,880	)
At end of year	$	44,246		$	36,690
Change in fair value of plan assets
At beginning of year	$	26,858		$	24,587
Actual return on plan assets		724			2,802
Employer contribution		2,048			1,118
Plan participants' contributions		238			231
Benefits paid		(1,397	)		(1,880	)
At end of year	$	28,471		$	26,858
Funded status - net pension liability at year end	$	(15,775	)	$	(9,832	)
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	19,744		$	13,665
Estimated amounts of accumulated other comprehensive loss to be recognized as net periodic cost during the subsequent year
Net actuarial loss	$	1,885		$	1,370
Weighted-average assumptions
Discount rate - components of cost		5.09	%		5.52	%
Discount rate - benefit obligations		4.41	%		5.09	%
Expected return on plan assets		8.00	%		8.00	%
Rate of compensation increase		N/A			N/A

Supplemental Retirement Benefits

During the years ended December 31, 2011, 2010, and 2009, the Company sponsored the Benefit Equalization Plan ("BEP"), the purpose of which is to ensure that pension plan participants will not be deprived of benefits otherwise payable under the pension plan but for the operation of the provisions of Internal Revenue Code sections 415 and 401. The accumulated benefit obligation for the BEP as of December 31, 2011, and 2010, was $3.3 million and $2.9 million, respectively.

As of December 31, 2011, and 2010, prepaid pension cost related to the BEP of $0.3 million and $0.2 million, respectively, was held in a benefit protection trust and included in other noncurrent assets in the consolidated balance sheets. The Company's estimate for contributions to be paid for the BEP in 2012 is $0.2 million. The expected benefit payments for the BEP are as follows (in thousands):

2012	$	161
2013	$	161
2014	$	161
2015	$	191
2016	$	192
2017 - 2021	$	966

For the years ended December 31, 2010 and 2009, in addition to the BEP, the Company also sponsored a Supplemental Executive Retirement Plan ( "SERP" individually or "Supplemental Plans" when combined with the BEP). The SERP was a supplemental retirement plan for a former chief executive officer, who retired from the Company on December 31, 2009. The Company's $0.7 million SERP obligation was paid during 2010.

The Supplemental Plans are nonqualified, unfunded supplemental retirement plans. The components of net periodic Supplemental Plan cost and other comprehensive (income) loss for the years ended December 31, 2011, 2010, and 2009 are as follows (in thousands):

	2011			2010			2009
Net periodic cost
Service cost of benefits	$	20		$	16		$	93
Interest cost		159			192			318
Amortization of net actuarial loss		153			148			431
Amortization of prior service credit		—			—			(16	)
Total	$	332		$	356		$	826
Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss (income)
Net actuarial loss (gain) arising this year	$	464		$	493		$	(1,104	)
Net actuarial loss amortized this year		(153	)		(148	)		(431	)
Actuarial loss due to settlement		—			(1,222	)		(267	)
Prior service credit due to curtailment		—			—			6
Prior service credit amortized this year		—			—			16
Recognized in other comprehensive loss (income)	$	311		$	(877	)	$	(1,780	)
Recognized in net periodic cost and other comprehensive loss (income)	$	643		$	(521	)	$	(954	)

The funded status and the change in funded status for the measurement periods ended December 31, 2011, and 2010 are shown in the accompanying table for the Company's supplemental retirement plans, along with the assumptions used in the calculations (dollars in thousands):

	Supplemental Plans
	2011			2010
Change in projected benefit obligation
At beginning of year	$	3,204		$	5,720
Service cost		20			16
Interest cost		159			192
Plan participants' contributions		11			6
Actuarial loss		464			493
Benefits paid		(158	)		(3,223	)
At end of year	$	3,700		$	3,204
Change in fair value of plan assets
At beginning of year		—			—
Actual return on plan assets		—			—
Employer contribution		147			3,217
Plan participants' contributions		11			6
Benefits paid		(158	)		(3,223	)
At end of year	$	—		$	—
Funded status - net liability at year end	$	3,700		$	3,204
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	1,863		$	1,552
Estimated amounts of accumulated other comprehensive loss to be recognized as net periodic cost during the subsequent year
Net actuarial loss	$	192		$	153
Weighted-average assumptions
Discount rate
Components of cost		5.09	%		5.52	%
Benefit obligations		4.41	%		5.09	%
Expected return on plan assets		N/A			N/A
Rate of compensation increase		N/A			N/A

Recognition of Retirement Plan Settlements

In accordance with our retirement plan provisions, participants may elect, at their option, to receive their retirement benefits either in a lump sum payment or an annuity. If the lump sum distributions paid during the plan year exceed the total of the service cost and interest cost for the plan year, any unrecognized gain or loss in the plan should be recognized for the pro rata portion equal to the percentage reduction of the projected benefit obligation.

No settlement charges were incurred or recognized during 2011. The following table shows the income statement line items impacted by the recognition of the settlement charges in 2010 and 2009 (in thousands):

	2010		2009
Cost of revenue	$	—	$	—
Selling, general, and administrative		1,222		—
Research and development		—		—
Restructuring and reorganization		—		1,803
Total costs and expenses	$	1,222	$	1,803

Postretirement Benefits

The Company provides health care benefits for eligible retired employees who participate in the pension plan and were hired before January 1, 1992. These postretirement benefits are provided by several health care plans in the United States for both pre-age 65 retirees and certain grandfathered post-age 65 retirees. Employer contributions to these plans differ for various groups of retirees and future retirees. Employees hired before January 1, 1992 and retiring after that date may enroll in plans for which a Company subsidy is provided through age 64. As of December 31, 2011, and 2010, the Company's discount rate on its actuarially determined benefit obligations was 3.91% and 4.56%, respectively. The discount rates for 2011 and 2010 were chosen using an analysis of the Hewitt Bond Universe yield curve that reflects the plan's projected cash flows.

The Company's postretirement benefit liability was $1.9 million and $1.8 million as of December 31, 2011, and 2010, respectively. The Company's postretirement benefit expense was $0.1 million for the year ended December 31, 2011, and $0.2 million for each of the years ended December 31, 2010, and 2009. The postretirement plan is unfunded.

The Company expects to make $0.1 million in contributions in 2012. The expected benefit payments are as follows (in thousands):

2012	$	120
2013	$	128
2014	$	146
2015	$	157
2016	$	139
2017-2021	$	763

The components of net periodic postretirement plan cost and other comprehensive loss (income) for the years ended December 31, 2011, 2010, and 2009, are as follows (in thousands):

	2011			2010			2009
Net periodic cost
Service cost of benefits	$	38		$	38		$	49
Interest cost		81			89			92
Amortization of net actuarial loss		28			36			43
Total	$	147		$	163		$	184
Other changes in plan assets and projected benefit obligation recognized in other comprehensive loss (income)
Net actuarial loss (gain) arising this year	$	(35	)	$	(79	)	$	(41	)
Net actuarial loss amortized this year		(28	)		(36	)		(43	)
Recognized in other comprehensive loss (income)	$	(63	)	$	(115	)	$	(84	)
Recognized in net periodic cost and other comprehensive loss (income)	$	84		$	48		$	100

The accompanying table presents the balances of and changes in the postretirement benefit obligation as of the measurement dates of December 31, 2011, and 2010 (dollars in thousands):

	Postretirement Plan
	2011			2010
Change in projected benefit obligation
At beginning of year	$	1,837		$	1,783
Service cost		38			38
Interest cost		81			89
Plan participants' contributions		55			59
Actuarial gain		(35	)		(79	)
Benefits paid		(69	)		(53	)
At end of year	$	1,907		$	1,837
Change in fair value of plan assets
At beginning of year	$	—		$	—
Employer contribution		14			(6	)
Plan participants' contributions		55			59
Benefits paid		(69	)		(53	)
At end of year	$	—		$	—
Funded status - net liability at year end	$	1,907		$	1,837
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	348		$	411
Estimated amounts of accumulated other comprehensive loss to be recognized as net periodic cost during the subsequent year
Net actuarial loss	$	21		$	25
Weighted-average assumptions
Discount rate
Components of cost		4.56	%		5.17	%
Benefit obligations		3.91	%		4.56	%
Expected return on plan assets		N/A			N/A
Rate of compensation increase		N/A			N/A

The assumed health care cost trend rate used in measuring the post retirement benefit obligation was 8.50% for pre-age 65 and post-age 65 in 2011, with pre-age and post-age 65 rates declining to an ultimate rate of 5.00% in 2018. A 1.0% change in this rate would change the benefit obligation by up to approximately $0.2 million and the aggregate service and interest cost by less than $0.1 million.

401(k) Plan

The Company's employees may participate in a defined contribution plan sponsored by the Company. For the period ended December 31, 2011, there was no plan limitation on the percentage of eligible earnings a participant could contribute to the plan, other than those limitations set by the Internal Revenue Code. For the period ended December 31, 2010, the plan generally provided for employee salary deferral contributions of up to 17% of eligible employee compensation.

Under the terms of the plan, the Company contributes a matching contribution of 50% up to a maximum of 3% of eligible employee compensation related to employees who are pension participants and up to a maximum of 6% of eligible employee compensation related to employees who are not pension participants. The Company may also make an additional discretionary matching contribution of up to 30% up to the maximum eligible employee compensation. The Company's costs with respect to its contributions to the defined contribution plan were $2.7 million, $2.1 million and $2.0 million in 2011, 2010, and 2009, respectively.