Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

(16)   Employee Benefit Plans

We have a defined benefit pension plan covering substantially all of our domestic employees hired before January 1, 2004. The benefits are based upon years of service and qualifying compensation. Our funding is calculated using the actuarially determined unit credit cost method. Contributions are intended to provide not only for benefits attributed to services to date, but also for those expected to be earned in the future.

In addition to the qualified plan, we sponsor a supplementary pension plan (SERP) that provides benefits in excess of qualified plan limitations for certain employees.

The following tables set forth our pension obligations and funded status at December 31:

	Pension Benefits
	Defined Benefit Pension Plan						Supplementary Pension Plan
	2011			2010			2011			2010
Change in benefit obligations:
Beginning projected benefit obligation	$	48,018		$	42,829		$	9,220		$	9,029
Service cost		1,516			1,400			196			320
Interest cost		2,607			2,493			485			533
Actuarial (gain)/loss		7,239			2,510			2,043			(516	)
Benefits paid		(1,273	)		(1,214	)		(376	)		(146	)
Ending projected benefit obligation		58,107			48,018			11,568			9,220
Change in plan assets:
Beginning fair value		35,755			31,455			-			-
Actual return		(1,516	)		4,014			-			-
Company contribution		1,500			1,500			376			146
Benefits paid		(1,273	)		(1,214	)		(376	)		(146	)
Ending fair value		34,466			35,755			-			-
Funded status of the plan		(23,641	)		(12,263	)		(11,568	)		(9,220	)

The liabilities associated with our SERP plan and our defined benefit pension plan (net of the defined benefit plan assets) are included within Pension liabilities in our Consolidated Balance Sheet. Included within Other Noncurrent Assets within our Consolidated Balance Sheet are invested assets for the benefit of the employees covered by the supplemental pension plan.

Pension cost in each of the following years was comprised of:

	Defined Benefit Pension Plan									Supplementary Pension Plan
	2011			2010			2009			2011		2010		2009
Service cost – benefits earned during the year	$	1,516		$	1,400		$	1,647		$	196	$	320	$	216
Interest cost on accumulated benefit obligation		2,607			2,493			2,605			485		533		450
Expected return on plan assets		(2,858	)		(2,618	)		(2,146	)		-		-		-
Net amortization and deferral		65			64			490			88		131		74
Net periodic pension cost		1,330			1,339			2,596			769		984		740

The following table summarizes the assumptions used in determining our pension obligations at the end of each of our last two years:

	Defined Benefit Pension Plan			Supplementary Pension Plan
	2011		2010		2011	2010
Discount rate		4.70%	5.51%		4.63%		5.36%
Rate of compensation increase		4.00%	4.00%		4.00%		4.00%
Long-term rate of return on plan assets		7.50%	8.00%		N/A		N/A

The following table summarizes the assumptions used in determining our net periodic benefit cost in the years ended December 31:

	Defined Benefit Pension Plan				Supplementary Pension Plan
		2011	2010	2009		2011	2010	2009
Discount rate		5.51%	5.91%	6.25%		5.36%	5.95%		6.25%
Rate of compensation increase		4.00%	4.00%	5.75%		4.00%	4.00%		4.00%
Long-term rate of return on plan assets		8.00%	8.25%	8.25%		N/A	N/A		N/A

We expect to contribute up to $1,693 to the defined benefit pension plan in 2012. The accumulated benefit obligation (ABO) for our defined benefit pension plan was $49,301 and $40,949 at December 31, 2011 and 2010, respectively. The ABO for our supplementary pension plan was $8,537 and $7,606 at December 31, 2011 and 2010, respectively.

The estimated future benefit payments contemplated under these plans, reflecting expected future service, as appropriate, are presented in the following table:

	Defined Benefit Pension Plan		Supplementary Pension Plan
2012	$	1,687	$	379
2013		1,853		378
2014		2,113		394
2015		2,307		451
2016		2,575		448
2017 through 2021		16,457		3,598

Note 3 shows the amounts included within accumulated other comprehensive income as of December 31, 2011 and 2010 that have not yet been recognized as components of net periodic benefit cost. Of these balances at December 31, 2011, the amounts expected to be amortized in the next fiscal year are $59 and $1,153 for the unrecognized prior service cost and unrecognized net actuarial loss, respectively. Excluding the effect of income taxes, the amounts recognized within other comprehensive income and the prior service cost for 2011 and 2010, are as follows:

	2011			2010
Recognized in Other Comprehensive Income:
Net actuarial loss (gain)	$	13,657		$	597
Amortization of net actuarial loss (gain)		(96	)		(137	)
Amortization of prior service cost (credit)		(59	)		(59	)
Total change in other comprehensive income		13,502			401

Defined Benefit Pension Plan

Fair values of our defined benefit pension plan assets at December 31, by asset category, are as follows:

	Fair Value Measurements as of December 31, 2011
			Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Short term investment funds	$	727	$	-	$	727	$	-
Equity securities:
US equity securities		11,244		-		11,244		-
International equity securities		5,959		2,028		3,931		-
AMCOL International common stock		1,880		1,880		-		-
Fixed income securities and bonds
Governmental agencies		1,011		1,011		-		-
Corporate bonds		4,981		4,981		-		-
Guaranteed investment contracts		2,473		-		2,473		-
Other investments
Real estate index funds		601		-		601		-
Commodities linked funds		1,693		1,693		-		-
Hedge funds		3,897		-		-		3,897
Total		34,466		11,593		18,976		3,897

	Fair Value Measurements as of December 31, 2010
			Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Short term investment funds	$	612	$	-	$	612	$	-
Equity securities:
US equity securities		10,781		-		10,781		-
International equity securities		9,489		3,367		6,122		-
AMCOL International common stock		2,170		2,170		-		-
Fixed income securities and bonds
Governmental agencies		1,774		831		943		-
Corporate bonds		2,477		2,477		-		-
Guaranteed investment contracts		3,633		-		3,633		-
Other investments
Real estate index funds		656		-		656		-
Commodities linked funds		1,996		1,996		-		-
Hedge funds		2,167		-		-		2,167
Total		35,755		10,841		22,747		2,167

Assets classified as Level 1 are valued using quoted prices on the major stock exchange on which individual assets are traded. Our Level 2 assets are valued using net asset value. The net asset value is quoted on a private market that is not active; however, the unit price is based on underlying investments that are traded on an active market. Our Level 3 assets are estimated at fair value based on the most recent financial information available for the underlying securities, which are not traded on active market, and represents significant unobservable input.

The following is a reconciliation of changes in fair value measurements of plan assets using significant unobservable inputs (Level 3):

	Hedge Funds
Beginning balance at December 31, 2009		1,596
Purchases, sales, and settlements		500
Actual return on plan assets still held at reporting date		71
Ending balance at December 31, 2010		2,167
Purchases, sales, and settlements		1,815
Actual return on plan assets still held at reporting date		(85	)
Ending balance at December 31, 2011		3,897

We employ a total return investment approach whereby we use a mix of equities and fixed income investments to maximize the long-term return of plan assets with a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and our corporate financial condition. The investment portfolio contains a diversified blend of equity, fixed-income investments and alternative investments. The investment objectives emphasize maximizing returns consistent with ensuring that sufficient assets are available to meet liabilities, and minimizing corporate cash contributions. Our defined benefit plan assets are managed so as to include investments that balance income and capital appreciation.

Our defined benefit plan has a target range for different types of investments: equity securities (between 41% and 69%), fixed income securities and bonds (between 18% and 31%), alternative investments (between 5% and 23%), and cash (between 0% and 10%). This allocation takes into account factors such as the average age of employees covered by the Plan (benefit obligations) as well as overall market conditions. Interim portfolio reviews result in investment allocations being evaluated at least twice a year by the Pension Committee and rebalancing takes place as needed. Equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Fixed income securities and bonds include both government and corporate investment vehicles. These include a series of laddered debt securities as well as bond funds.

Historical markets are studied and long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term rate of return for plan assets is established via a building block approach with proper consideration of diversification and rebalancing.

Defined Contribution Plan

Employees hired on or after January 1, 2004 do not participate in our defined benefit pension plan or SERP. Instead, they participate in a defined contribution plan whereby we make a retirement contribution into the employee's savings plan equal to 3% of their compensation. We made total contributions to this plan of $1,778, $1,248 and $1,021 in 2011, 2010 and 2009, respectively.

401(k) Savings Plan

We also have a savings plan for our U.S. personnel. In 2011, we made a contribution in an amount equal to an employee's contributions up to a maximum of 4% of the employee's annual earnings. We make contributions to this plan using either cash or our own common stock which we purchase in the open market. Our contributions under the savings plan were $3,422 in 2011, $2,842 in 2010 and $2,803 in 2009.

Other

We also have a deferred compensation plan and a 401(k) restoration plan for our executives.