Benefit Obligations

9 Months Ended

Oct. 02, 2011

Benefit Obligations [Abstract]

Benefit Obligations

Note 5 — Benefit Obligations

The Company has pension plans covering substantially all former Agere Systems Inc. (“Agere”) U.S. employees, excluding management employees hired after June 30, 2003. Retirement benefits are offered under defined benefit pension plans, which include a management plan and a represented plan. The payments under the management plan are based on an adjusted career-average-pay formula or a cash-balance program. The cash-balance program provides for annual company contributions based on a participant’s age, compensation and interest on existing balances. It covers employees of certain companies acquired by Agere since 1996 and management employees hired after January 1, 1999 and before July 1, 2003. The payments under the represented plan are based on a dollar-per-month formula. Since February 2009, there have been no active participants under the represented plan. The Company also has a non-qualified supplemental pension plan in the U.S. that principally provides benefits based on compensation in excess of amounts that can be considered under a tax qualified plan. The Company also provides post-retirement life insurance coverage under a group life insurance plan for former Agere employees excluding participants in the cash-balance program and management employees hired after June 30, 2003. The Company also has pension plans covering certain international employees.

Effective April 6, 2009, the Company froze the U.S. management defined benefit pension plan. Participants in the adjusted career-average-pay program will not earn any future service accruals after that date. Participants in the cash-balance program will not earn any future service accruals, but will continue to earn 4% interest per year on their cash-balance accounts.

The following table summarizes the components of the net periodic benefit cost/(credit):

	Three Months Ended
	October 2, 2011						October 3, 2010
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	141		$	19		$	112		$	20
Interest cost		16,891			702			17,577			610
Expected return on plan assets		(16,999	)		(1,032	)		(17,864	)		(1,149	)
Amortization of transition asset		(5	)		—			—			—
Amortization of prior service cost		10			—			9			—
Amortization of net actuarial loss		1,688			237			540			—
Total benefit cost/(credit)	$	1,726		$	(74	)	$	374		$	(519	)

	Nine Months Ended
	October 2, 2011						October 3, 2010
	Pension Benefits			Post-retirement Benefits			Pension Benefits			Post-retirement Benefits
	(In thousands)
Service cost	$	416		$	57		$	343		$	61
Interest cost		50,670			1,948			52,747			1,830
Expected return on plan assets		(50,998	)		(3,097	)		(53,597	)		(3,447	)
Amortization of transition asset		(15	)		—			—			—
Amortization of prior service cost		31			—			29			—
Amortization of net actuarial loss		5,064			414			1,614			—
Total benefit cost/(credit)	$	5,168		$	(678	)	$	1,136		$	(1,556	)

During the nine months ended October 2, 2011, the Company contributed $53.9 million to its pension plans. The Company expects to contribute an additional $11.5 million to its pension plans for the remainder of 2011. The Company does not expect to contribute to its post-retirement benefit plan in 2011.