6. Employee Benefit Plan Obligations

The Company provides full-time employees with pension benefits under defined benefit and defined contribution plans. The measurement date for all plans is December 31. The Company's expense for its defined contribution plans amounted to $7.8 million in 2011, $5.3 million in 2010 and $3.3 million in 2009. The Company also provides certain health insurance benefits to employees as well as retirees.

The Company has both funded and unfunded noncontributory defined benefit pension plans. The plans provide defined benefits based on years of service and average monthly compensation using a career average formula. Pension benefits for the retail line of business employees were frozen at December 31, 2006. Pension benefits for the non-retail line of business employees were frozen at July 1, 2010.

The Company also has postretirement health care benefit plans covering substantially all of its full time employees hired prior to January 1, 2003. These plans are generally contributory and include a cap on the Company's share for most retirees.

In March 2010, the Patient Protection and Affordable Care Act ("PPACA") was signed into law. One of the provisions of the PPACA eliminates the tax deductibility of retiree health care costs to the extent of federal subsidies received by plan sponsors that provide retiree prescription drug benefits equivalent to Medicare Part D coverage. As a result, the Company was required to make an adjustment to its deferred tax asset associated with its postretirement benefit plan in the amount of $1.4 million for the year ended December 31, 2010. The offset to this adjustment was included in the provision for income taxes on the Company's Consolidated Statements of Income.

Obligation and Funded Status

Following are the details of the obligation and funded status of the pension and postretirement benefit plans


(in thousands)	Pension Benefits						Postretirement Benefits
Change in benefit obligation	2011			2010			2011			2010
Benefit obligation at beginning of year	$	90,603		$	74,875		$	24,593		$	21,294
Service cost		—			1,614			555			465
Interest cost		4,578			4,339			1,285			1,213
Actuarial (gains)/losses		16,363			12,120			6,020			2,383
Participant contributions		—			—			478			444
Retiree drug subsidy received		—			—			202			118
Benefits paid		(1,568	)		(2,345	)		(1,575	)		(1,324	)

Benefit obligation at end of year	$	109,976		$	90,603		$	31,558		$	24,593


(in thousands)	Pension Benefits						Postretirement Benefits
Change in plan assets	2011			2010			2011			2010
Fair value of plan assets at beginning of year	$	84,097		$	70,423		$	—		$	—
Actual gains (loss) on plan assets		(91	)		9,852			—			—
Company contributions		5,167			6,167			1,097			880
Participant contributions		—			—			478			444
Benefits paid		(1,568	)		(2,345	)		(1,575	)		(1,324	)

Fair value of plan assets at end of year	$	87,605		$	84,097		$	—		$	—


Funded status of plans at end of year	$	(22,371	)	$	(6,506	)	$	(31,558	)	$	(24,593	)

:Amounts recognized in the Consolidated Balance Sheets at December 31, 2011 and 2010 consist of:


	Pension Benefits						Postretirement Benefits
(in thousands)	2011			2010			2011			2010
Accrued expenses	$	(213	)	$	(210	)	$	(1,211	)	$	(1,196	)
Employee benefit plan obligations		(22,158	)		(6,296	)		(30,347	)		(23,397	)

Net amount recognized	$	(22,371	)	$	(6,506	)	$	(31,558	)	$	(24,593	)

Following are the details of the pre-tax amounts recognized in accumulated other comprehensive loss at December 31, 2011:


	Pension Benefits					Postretirement Benefits
(in thousands)	Unamortized Actuarial Net Losses			Unamortized Prior Service Costs		Unamortized Actuarial Net Losses			Unamortized Prior Service Costs
Balance at beginning of year	$	39,161		$	—	$	10,761		$	(3,070	)
Amounts arising during the period		22,691			—		6,020			—
Amounts recognized as a component of net periodic benefit cost		(940	)		—		(901	)		543

Balance at end of year	$	60,912		$	—	$	15,880		$	(2,527	)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows:


(in thousands)	Pension		Postretirement			Total
Prior service cost	$	—	$	(543	)	$	(543	)
Net actuarial loss		1,799		1,306			3,105

The accumulated benefit obligations related to the Company's defined benefit pension plans are $110.0 million and $90.4 million as of December 31, 2011 and 2010, respectively.

Amounts applicable to the Company's defined benefit plans with accumulated benefit obligations in excess of plan assets are as follows:


	December 31,
(in thousands)	2011		2010
Projected benefit obligation	$	109,976	$	90,603
Accumulated benefit obligation	$	109,976	$	90,357

The combined benefits expected to be paid for all Company defined benefit plans over the next ten years (in thousands) are as follows:


Year	Expected Pension Benefit Payout		Expected Postretirement Benefit Payout		Medicare Part D Subsidy
2012	$	3,784	$	1,372	$	(161	)
2013		3,980		1,455		(187	)
2014		4,346		1,547		(209	)
2015		5,036		1,638		(236	)
2016		5,279		1,723		(267	)
2017-2021		31,164		10,040		(1,903	)

Following are components of the net periodic benefit cost for each year:


	Pension Benefits									Postretirement Benefits
(in thousands)	2011			2010			2009			2011			2010			2009

Service cost	$	—		$	1,614		$	2,861		$	555		$	465		$	412
Interest cost		4,578			4,339			4,001			1,285			1,213			1,155
Expected return on plan assets		(6,236	)		(5,451	)		(4,356	)		—			—			—
Amortization of prior service cost		—			—			(392	)		(543	)		(511	)		(511	)
Recognized net actuarial loss		940			1,817			3,503			901			691			624
Curtailment gain		—			—			(4,132	)		—			—			—

Net periodic benefit cost	$	(718	)	$	2,319		$	1,485		$	2,198		$	1,858		$	1,680

Following are weighted average assumptions of pension and postretirement benefits for each year:


	Pension Benefits									Postretirement Benefits
	2011			2010			2009			2011			2010			2009
Used to Determine Benefit Obligations at Measurement Date
Discount rate (a)		4.30	%		5.20	%		5.70	%		4.30	%		5.30	%		5.80	%
Rate of compensation increases		N/A			3.50	%		3.50	%		—			—			—
Used to Determine Net Periodic Benefit Cost for Years ended December 31
Discount rate (b)		5.20	%		5.70	%		6.10	%		5.30	%		5.80	%		6.10	%
Expected long-term return on plan assets		7.75	%		8.00	%		8.25	%		—			—			—
Rate of compensation increases		3.50	%		3.50	%		4.50	%		—			—			—

(a)	In 2011, 2010 and 2009, the calculated discount rate for the unfunded pension plan was different than the defined benefit pension plan. The calculated rate for the supplemental employee retirement plan was 3.20%, 4.20% and 6.00% in 2011, 2010 and 2009, respectively.

(b)	In 2011 and 2010, the calculated discount rate for the unfunded pension plan was different than the defined benefit pension plan. The calculated rate for the supplemental employee retirement plan was 4.20% and 6.00% in 2011 and 2010, respectively.

The discount rate is calculated based on projecting future cash flows and aligning each year's cash flows to the Citigroup Pension Discount Curve and then calculating a weighted average discount rate for each plan. The Company has elected to use the nearest tenth of a percent from this calculated rate.

The expected long-term return on plan assets was determined based on the current asset allocation and historical results from plan inception. The expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on a goal of earning the highest rate of return while maintaining risk at acceptable levels and is disclosed in the Plan Assets section of this Note. The plan strives to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio.

Assumed Health Care Cost Trend Rates at Beginning of Year


	2011			2010
Health care cost trend rate assumed for next year		7.5	%		8.0	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.0	%		5.0	%
Year that the rate reaches the ultimate trend rate		2017			2017

The assumed health care cost trend rate has an effect on the amounts reported for postretirement benefits. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:


	One-Percentage-Point
(in thousands)	Increase			Decrease
Effect on total service and interest cost components in 2011	$	(18	)	$	16
Effect on postretirement benefit obligation as of December 31, 2011		(164	)		140

Plan Assets

The Company's pension plan weighted average asset allocations at December 31 by asset category, are as follows:


Asset Category	2011			2010

Equity securities		57	%		68	%
Fixed income securities		41	%		31	%
Cash and equivalents		2	%		1	%

		100	%		100	%

The plan assets are allocated within the broader asset categories in investments that focus on more specific sectors. Within equity securities, subcategories include large cap growth, large cap value, small cap growth, small cap value, and internationally focused investment funds. These funds are judged in comparison to benchmark indexes that best match their specific category. Within fixed income securities, the funds are invested in a broad cross section of securities to ensure diversification. These include treasury, government agency, corporate, securitization, high yield, global, emerging market and other debt securities.

The investment policy and strategy for the assets of the Company's funded defined benefit plan includes the following objectives:

•

ensure superior long-term capital growth and capital preservation;

•

reduce the level of the unfunded accrued liability in the plan; and

•

offset the impact of inflation.

Risks of investing are managed through asset allocation and diversification. Investments are given extensive due diligence by an impartial third party investment firm. All investments are monitored and re-assessed by the Company's pension committee on a semi-annual basis. Available investment options include U.S. Government and agency bonds and instruments, equity and debt securities of public corporations listed on U.S. stock exchanges, exchange listed U.S. mutual funds and institutional portfolios investing in equity and debt securities of publicly traded domestic or international companies and cash or money market securities. In order to reduce risk and volatility, the Company has placed the following portfolio market value limits on its investments, to which the investments must be rebalanced after each quarterly cash contribution. Note that the single security restriction does not apply to mutual funds or institutional investment portfolios. No securities are purchased on margin, nor are any derivatives used to create leverage. The overall expected long-term rate of return is determined by using long-term historical returns for equity and fixed income securities in proportion to their weight in the investment portfolio.


	Percentage of Total Portfolio Market Value
	Minimum			Maximum			Single Security
Equity based		30	%		70	%		<5	%
Fixed income based		20	%		70	%		<5	%
Cash and equivalents		1	%		5	%		<5	%
Alternative investments		0	%		20	%		<5	%

The following table presents the fair value of the assets (by asset category) in the Company's defined benefit pension plan at December 31, 2011 and 2010:

December 31, 2011

		$00,000		$00,000		$00,000		$00,000
(in thousands) Assets	Level 1		Level 2		Level 3		Total
Mutual funds	$	10,773	$	—	$	—	$	10,773
Money market fund		—		1,659		—		1,659
Equity funds		—		39,573		—		39,573
Fixed income funds		—		35,600		—		35,600

Total	$	10,773	$	76,832	$	—	$	87,605

December 31, 2010

		$00,000		$00,000		$00,000		$00,000
(in thousands) Assets	Level 1		Level 2		Level 3		Total
Mutual funds	$	12,119	$	—	$	—	$	12,119
Money market fund		—		793		—		793
Equity funds		—		45,502		—		45,502
Fixed income funds		—		25,683		—		25,683

Total	$	12,119	$	71,978	$	—	$	84,097

There is no equity or debt of the Company included in the assets of the defined benefit plan.

Cash Flows

The Company expects to make contributions to the defined benefit pension plan of up to $3.0 million in 2012. The Company reserves the right to contribute more or less than this amount. For the year ended December 31, 2011, the Company contributed $5.0 million to the defined benefit pension plan.