Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

NOTE 14 EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

The Company sponsors certain 401(k) defined contribution plans. Generally, all U.S. employees are eligible to participate in and contribute to these plans. The Company makes certain matching contributions to these plans based on participating employees' contributions to the plans and their total compensation. Expense recognized for the plans totaled $4.9 million, $4.3 million and $4.1 million for 2011, 2010 and 2009, respectively.

Defined Benefit Pension Plans

The Company has defined benefit pension plans covering substantially all full-time employees in France, Germany, Israel and Japan. In addition, the Company has certain pension liabilities relating to former employees of the Company in the United Kingdom. The French and German plans are unfunded, as permitted under the plans and applicable laws. For financial reporting purposes, the calculation of net periodic pension costs was based upon a number of actuarial assumptions, including a discount rate for plan obligations, an assumed rate of return on pension plan assets and an assumed rate of compensation increase for employees covered by the plan. All of these assumptions were based upon management's judgment, considering all known trends and uncertainties. Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of the Company's pension plans.

December 31, 2011, January 1, 2011 and January 2, 2010 serve as the measurement dates for the respective amounts shown below. Net periodic benefit costs for the plans in aggregate included the following components:

	Year Ended
(In thousands)	December 31, 2011			January 1, 2011			January 2, 2010
Service cost	$	1,178		$	592		$	672
Interest cost on projected benefit obligation		832			704			705
Expected return on plan assets		(299	)		(165	)		(158	)
Curtailment loss		—			735			—
Amortization of net (gain) loss		239			107			(29	)
	$	1,950		$	1,973		$	1,190

In July 2010, the Company sold all of the outstanding capital stock of its Hilger Crystals Limited subsidiary (see Note 2 for additional detail). As a result of this transaction, employee participants in the Company's United Kingdom defined benefit pension plan became deferred participants and stopped accruing additional pension benefits under the plan. As a consequence, the Company recognized a charge of $0.7 million in the second quarter of 2010 related to this plan curtailment, consisting of $0.6 million in previously unrecognized actuarial losses, which had been included in other comprehensive income, and an increase of $0.1 million in the projected benefit obligation, which resulted from a change in actuarial assumptions due to the change in status of the employee participants to deferred membership. In addition, the Company is obligated under the terms of the sale to wind up the pension plan and has therefore accrued $0.7 million in expected costs to complete the wind up.

The changes in projected benefit obligation and plan assets, as well as the ending balance sheet amounts for the Company's defined benefit plans were as follows:

(In thousands)	December 31, 2011			January 1, 2011
Change in projected benefit obligation:
Projected benefit obligation, beginning of year	$	20,328		$	16,899
Liabilities assumed through acquisition		11,639			—
Service cost		1,178			592
Interest cost		832			704
Contributions by plan participants		—			5
Actuarial loss		466			2,637
Benefits paid		(961	)		(610	)
Curtailment loss		—			77
Currency translation adjustments		(170	)		24
Projected benefit obligation, end of year		33,312			20,328
Change in plan assets:
Fair value of plan assets, beginning of year		7,221			4,835
Assets acquired through acquisition		2,574			—
Company contributions		502			2,180
Contributions by plan participants		70			5
Gain on plan assets		149			152
Benefits paid		(682	)		(172	)
Currency translation adjustments		186			221
Fair value of plan assets, end of year		10,020			7,221
Funded status	$	(23,292	)	$	(13,107	)
Amounts recognized in the balance sheet:
Pension assets	$	1,420		$	476
Current portion of pension liabilities		(268	)		(304	)
Accrued pension liabilities		(24,444	)		(13,279	)
Accumulated other comprehensive loss		(1,005	)		(1,556	)
Net amount recognized	$	(24,297	)	$	(14,663	)

At December 31, 2011, and January 1, 2011, the United Kingdom plan was overfunded and had assets of $3.9 million and $4.3 million, respectively and a projected benefit obligation of $2.5 million and $3.8 million, respectively. The Company's Israeli plans account for the deferred vested benefits using the shut-down method of accounting, which resulted in assets of $9.5 million and projected benefit obligations of $10.8 million being reported on a gross basis as of December 31, 2011. Under the shut-down method, the liability is calculated as if it was payable as of each balance sheet date, on an undiscounted basis. The Israeli assets are not included in pension assets in the table above, as they are not included in the calculation of the net underfunded pension liability. Such assets are included in investments and other assets in the accompanying consolidated balance sheets. All other plans were underfunded and had combined assets of $6.1 million and $2.9 million at December 31, 2011 and January 1, 2011, respectively, and combined projected benefit obligations of $20.0 million and $16.5 million at December 31, 2011 and January 1, 2011, respectively.

At December 31, 2011, the aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $33.3 million, $29.8 million and $10.0 million, respectively. At January 1, 2011, the aggregate projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $20.3 million, $16.0 million and $7.2 million, respectively.

At December 31, 2011, the estimated benefit payments for the next 10 years were as follows:

(In thousands)	Estimated Benefit Payments
2012	$	1,276
2013		875
2014		932
2015		1,127
2016		2,149
Thereafter		24,875
	$	31,234

The Company expects to contribute $1.8 million to the plans during 2012.

The weighted-average rates used to determine the net periodic benefit costs were as follows:

	December 31, 2011			January 1, 2011			January 2, 2010
Discount rate		2.44	%		4.10	%		4.30	%
Rate of increase in salary levels		2.25	%		3.15	%		2.80	%
Expected long-term rate of return on assets		1.59	%		1.86	%		2.50	%

The weighted-average rates used to determine projected benefit obligations at the respective periods were as follows:

	December 31, 2011			January 1, 2011
Discount rate		2.29	%		3.03	%
Rate of increase in salary levels		2.38	%		2.34	%
Expected long-term rate of return on assets		1.59	%		1.86	%

In determining the expected long-term rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance.

Plan assets were held in the following categories as a percentage of total plan assets:

	December 31, 2011					January 1, 2011
	Amount		Percentage			Amount		Percentage
Cash	$	2,888		29	%	$	3,293		45	%
Bonds		1,294		13			984		14
Insurance contracts		5,838		58			2,944		41
	$	10,020		100	%	$	7,221		100	%

In general, the Company's asset management objectives included maintaining an adequate level of diversification to reduce interest rate and market risk while providing adequate liquidity to meet immediate and future benefit payment requirements. In Japan, assets are primarily invested in pooled funds of insurance companies. The expected long-term rate of return on these assets is 1.5%, which is based on the general yield environment for high quality instruments in Japan. The United Kingdom pension plan invests in a combination of high yield cash accounts and bond funds. The bond funds are split between a fixed interest fund and an index linked fund, which are subject to interest rate risk. The allocation mix is designed to minimize risk while providing liquidity and earning a reasonable rate of return. The expected long-term rate of return on these assets is 4.3%, which is based on Government gilt yields and bank base rates. In France, assets are invested in group insurance contracts and the expected long-term rate of return on these assets is 2.5% to 3.0%, which is based on the expected return on the underlying assets. The Company's Israeli plans are accounted for using the shut-down method of accounting. As a result, plan assets are reported separate from the net underfunded pension liability and were not included in the Company's plan assets shown above. The Israeli assets are invested in a variety of assets, a large portion of which are bonds, and the investment return is based on the performance of the underlying assets. There are two pension plans in Germany, in which the related assets are not part of the plan, as discussed below. The Company does not invest in derivative instruments, although the pooled funds it owns may use such instruments in a risk management capacity.

The carrying amount of cash and cash equivalents approximates fair value due to the short-term maturities of these instruments. The fair value of bond funds is based on quoted prices provided by the fund issuer and the fair value of insurance contracts is based on quoted prices provided by the insurance provider. Since the bond funds and insurance contracts are not actively traded but are valued using observable inputs, they fall within Level 2 of the fair value hierarchy.

Other Pension-Related Assets

As of December 31, 2011 and January 1, 2011, the Company had assets with an aggregate market value of $6.6 million, which it has set aside in connection with its German pension plans. These assets are invested in group insurance contracts through the insurance companies administering these plans, in accordance with applicable pension laws. The German contracts have a guaranteed minimum rate of return ranging from 2.25% to 4.0%, depending on the contract. Because these assets were not separate legal assets of the pension plan, they were not included in the Company's plan assets shown above. However, the Company has designated such assets to pay pension benefits. Such assets are included in investments and other assets in the accompanying consolidated balance sheets.