Pension And Other Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2011

Pension And Other Postretirement Benefit Plans [Abstract]

Pension And Other Postretirement Benefit Plans

Note 12—Pension and Other Postretirement Benefit Plans

Foreign Plan

The Compensation—Retirement Benefits Subtopic of the FASB ASC requires balance sheet recognition of the total over funded or under funded status of pension and postretirement benefit plans. Under the guidance, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized as a component of accumulated other comprehensive income (loss) within stockholders' equity, net of tax effects, until they are amortized as a component of net periodic benefit cost.

The Company's plan is regulated by the Swiss Government and is funded by the employees and the Company. The pension benefit is based on compensation, length of service and credited investment earnings. The plan guarantees both a minimum rate of return as well as minimum annuity purchase rates. The Company's funding policy with respect to the pension plan is to contribute the amount required by Swiss law, using the required percentage applied to the employee's compensation. In addition, participating employees are required to contribute to the pension plan. The Company made pension contributions of $778,000, $635,000 and $589,000 in 2011, 2010 and 2009, respectively, and 45% of the contributions to the plan are made by the employees. This plan has a measurement date of December 31. The Company does not have any rights to the assets of the plan.

The reported pension asset increased from $5.3 million to $6.4 million during the year ended December 31, 2011. The asset increase is a combination of an actuarial gain due to participant experience, an actuarial loss due to assumption changes, and a higher than expected overall asset return rate which resulted in a gain.

The accumulated benefit obligation was approximately $25.2 million and $24.0 million as of December 31, 2011 and 2010, respectively.

The following table reflects changes in the pension benefit obligation and plan assets, and the amounts recognized in the consolidated balance sheets for the years ended and as of December 31, 2011 and 2010 (in thousands):

	Pension Benefits
	Year ended December 31,
	2011			2010
	(in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	25,340		$	19,542
Service cost		793			629
Interest cost		717			614
Plan participant contributions		637			519
Benefits paid		(1,254	)		(444	)
Actuarial loss		735			2,068
Administrative expenses paid		(79	)		(77	)
Effect of foreign currency translation		(166	)		2,489
Projected benefit obligation at end of year		26,723			25,340
Changes in plan assets:
Fair value of plan assets at beginning of year		30,662			27,195
Actual return (loss) on plan assets		2,581			(162	)
Company contributions		778			635
Plan participant contributions		637			519
Benefits paid		(1,254	)		(444	)
Administrative expenses paid		(79	)		(77	)
Effect of foreign currency translation		(243	)		2,995
Fair value of plan assets at end of year		33,082			30,661
Funded status at end of year	$	6,359		$	5,321

Amounts recognized in the consolidated balance sheets consist of:

	As of December 31,
	2011		2010
Net long-term pension asset	$	6,359	$	5,321
Accumulated other comprehensive loss consists of the following:
Net transition obligation	$	—	$	—
Net prior service cost		262		279
Net loss		4,851		5,419
Accumulated other comprehensive loss before taxes	$	5,113	$	5,698

The components of benefit cost (income) and other amounts recognized in other comprehensive income (loss) before income taxes are as follows (in thousands):

	Year ended December 31,
	2011			2010			2009
	(in thousands)
Components of benefit cost (income):
Service cost	$	793		$	629		$	690
Interest cost		717			614			629
Expected return on plan assets		(1,616	)		(1,491	)		(1,298	)
Prior service cost amortization		46			39			38
Net loss amortization		309			—			365
Settlement cost		—			—			150
Net benefit cost (income)	$	249		$	(209	)	$	574
Other amounts recognized in other comprehensive income (loss) before income taxes are as follows:
Prior service cost amortization	$	(46	)	$	(39	)	$	(38	)
Loss (gain) on value of plan assets		(965	)		1,592			(402	)
Actuarial loss (gain) on benefit obligation		735			2,068			(4,473	)
Net loss amortization		(309	)		—			—
Total recognized in other comprehensive income (loss), before taxes	$	(585	)	$	3,621		$	(4,913	)
Total recognized in net benefit cost (income) and other comprehensive income (loss)	$	(336	)	$	3,412		$	(4,339	)

Assumptions used to determine the benefit obligation and net periodic benefit cost are as follows:

	Pension Benefits
	Year ended December 31,
	2011			2010
Weighted-average assumptions used to determine benefit obligations:
Discount rate		2.50	%		2.75	%
Rate of compensation increase		2.50	%		2.50	%
Measurement date		12/31/2011			12/31/2010
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate		2.75	%		2.75	%
Expected long-term return on plan assets		5.00	%		5.00	%
Rate of compensation increase		2.50	%		2.50	%
Percentage of the fair value of total plan assets held in each major category of plan assets:
Equity securities		82	%		34	%
Debt securities		4	%		21	%
Real estate		12	%		37	%
Other		2	%		8	%
Total		100	%		100	%

The pension plan's overall strategy and investment policy is managed by the board of the plan. The overall long-term rate is based on the target asset allocation of 10% Swiss bonds, 15% non-Swiss bonds (10% unhedged and 5% hedged), 8% Swiss equities, 14% global equities, 45% real estate, 3% alternative investments and 5% cash and other short-term investments.

The 2012 expected future long-term rate of return is estimated to be 4.25%, which is based on historical asset rate of returns for each asset allocation classification at a 1.8% rate for Swiss bonds, 2.0% for unhedged foreign bonds, 1.5% for hedged foreign bonds, 4.3% for real property, 5.6% for Swiss equities, 6.9% for unhedged global equities, 4.6% for hedge funds and 1.3% for cash. The 2011 expected long-term rate of return was 5.0% and was based on the historical asset rates of return of 1.9% for Swiss bonds, 2.9% for unhedged foreign bonds, 1.3% for hedged foreign bonds, 5.6% for real property, 7.6% for Swiss equities and 8.4% for global equities, 5.6% for alternative investments and 1.9% for cash.

	(in thousands)
Expected amortization during the year ended December 31, 2012:
Amortization of net transition obligation	$	—
Amortization of net prior service costs		44
Amortization of net loss		216

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

2012	$	1,375
2013		1,474
2014		1,723
2015		1,599
2016		1,683
Years 2017 through 2021		7,256
Total	$	15,110

The Company expects to contribute approximately $669,000 to the pension plan in 2012.

Investment objectives:

The primary investment goal of the pension plan is to achieve a total annualized return of 4.25% over the long-term. The investments are evaluated, compared and benchmarked to plans with similar investment strategies. The plan also attempts to minimize risk by not having any single security or class of securities with a disproportionate impact on the plan. As a guideline, assets are diversified by asset classes (equity, fixed income, real estate, and alternative investments).

The fair value of the plans assets at December 31, 2011, by asset category, are as follows:

			Fair Value Measurements at December 31, 2011
(in thousands)	Total		Active Market Prices (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset category
Cash:
Held in Swiss Franc, Euro and USD	$	690	$	690	$	—	$	—
Equity securities:
Investment funds		17,100		17,100		—		—
Real estate investment fund		9,961		—		—		9,961
Fixed income / Bond securities:
Fixed income / Bond securities		1,268		1,268		—		—
Real estate investments:
Real estate investment in specific properties 100% owned by the plan		3,895		—		—		3,895
Other assets (accounts receivable, assets at real estate management company Structured product)		168		—		168		—
Net assets of pension plan	$	33,082	$	19,058	$	168	$	13,856

Fair Value of Assets

Level 1: Observable inputs such as quoted prices in active markets for identical assets.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity's own assumptions. These investments can include; real estate owned by the Pension Plan stated at appraised value obtained from an independent source to the Plan and the Company; real estate investment that has potential long term investment liquidation processes; hedge funds that might have monthly, quarterly or annual restraints on redemptions or may require advance notice for a redemption

For those financial instruments with significant Level 3 inputs, the following table summarizes the activity for the prior year period by investment type:

Description	Real estate investments
Beginning balance, December 31, 2010	$	11,217
Total unrealized gains included in net gain1		2,834
Foreign currency translation adjustments		(195	)
Ending balance, December 31, 2011	$	13,856

¹  Total unrealized gains are reported as a component of the pension adjustment in accumulated other comprehensive income in the consolidated statement of stockholders' equity.

U.S. Plan

The Company has postretirement benefit plans covering its employees in the United States. Substantially all U.S. employees are eligible to elect coverage under a contributory employee savings plan which provides for Company matching contributions based on one-half of employee contributions up to certain plan limits. The Company's matching contributions under this plan totaled $415,000, $379,000 and $384,000 for the years ended December 31, 2011, 2010 and 2009, respectively.