Note 13 - Pensions

12 Months Ended

Dec. 29, 2012

Pension and Other Postretirement Benefits Disclosure [Text Block]

13. Benefit Plans

The company has a company-sponsored defined benefit pension plan covering certain of its North American employees. The amount of the retirement benefit is based on years of service and final average pay. The plan also provides post-retirement medical benefits to retirees and their spouses if the retiree has reached age 62 and has provided at least ten years of service prior to retirement. Such benefits generally cease once the retiree attains age 65. The U.S Pension plan was frozen in 2009. The company also has company-sponsored defined benefit pension plans covering employees in the U.K., Germany, Japan, Taiwan and the Philippines. The amount of the retirement benefits provided under the plans is based on years of service and final average pay.

During the fourth quarter of 2012, the company recorded $5.3 million in pension settlement and valuation charges. Approximately $5.1 million of these charges were classified in selling, general and administrative expenses and approximately $0.2 million were classified in cost of sales. During the fourth quarter of 2012, the company amended the Littelfuse Inc. Retirement Plan to allow participants who meet certain requirements to elect, during a limited window period, to receive their vested retirement benefits in a lump sum (or for certain participants annuity payments, on and after) December 1, 2012. The $5.1 million settlement charge recorded in selling, general and administrative expenses related to the amended Littelfuse, Inc. Retirement Plan represents the total amount for eligible participants who elected to receive their benefits under the amendment.  The $0.2 million charge recorded in cost of sales related to the company's Taiwan manufacturing facility that was closed in 2012.

Effective December 31, 2011, the Cole Hersee pension plans were merged with the Littelfuse Inc. Retirement Plan.

During the fourth quarter of 2010, the company elected to fully fund its German pension liability for approximately $10.2 million in cash. The German pension plan was frozen in 2009.

The company’s contributions are made in amounts sufficient to satisfy legal requirements. The company is not expected to be required to make a minimum funding contribution in accordance with the Employee Retirement Income Securities Act of 1974 (“ERISA”) for fiscal year 2013 but made a $5.0 million voluntary contribution to its U.S. pension plan in February 2013.

Total pension expense (income) was $5.4 million, $0.5 million and ($0.3) million in 2012, 2011 and 2010, respectively. The increase in pension expense in 2012 was the result of a pension settlement charge as described above. The increase in pension expense in 2011 resulted from required service and interest costs exceeding net earnings from plan assets for the year. The pension income in 2010 resulted from net earnings from plan assets that exceeded the required service and interest cost for the year.

Benefit plan related information is as follows:

	2012									2011
(In thousands)	U.S.			Foreign			Total			U.S.			Foreign			Total
Change in benefit obligation:
Benefit obligation at beginning of year	$	94,383		$	13,193		$	107,576		$	91,264		$	12,627		$	103,891
Service cost		600			601			1,201			560			429			989
Interest cost		4,962			644			5,606			5,110			632			5,742
Curtailment (gain)		—			(87	)		(87	)		—			(19	)		(19	)
Net actuarial loss		20,333			2,562			22,895			2,723			614			3,337
Benefits paid from the trust		(21,566	)		(1,201	)		(22,767	)		(5,274	)		(37	)		(5,311	)
Benefits paid directly by company		—			(725	)		(725	)		—			(874	)		(874	)
Settlement (gain)		(3,525	)		—			(3,525	)		—			—			—
Effect of exchange rate movements		—			419			419			—			(179	)		(179	)
Benefit obligation at end of year	$	95,187		$	15,406		$	110,593		$	94,383		$	13,193		$	107,576
Change in plan assets at fair value:
Fair value of plan assets at beginning of year	$	81,201		$	11,278		$	92,479		$	87,522		$	11,158		$	98,680
Actual return on plan assets		8,314			604			8,918			(1,047	)		431			(616	)
Employer contributions		10,000			—			10,000			—			—			—
Benefits paid		(21,566	)		(1,201	)		(22,767	)		(5,274	)		(37	)		(5,311	)
Effect of exchange rate movements		—			271			271			—			(274	)		(274	)
Fair value of plan assets at end of year		77,949			10,952			88,901			81,201			11,278			92,479
Net amount recognized/unfunded status	$	(17,238	)	$	(4,454	)	$	(21,692	)	$	(13,182	)	$	(1,915	)	$	(15,097	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Prepaid benefit cost	$	—		$	646		$	646		$	—		$	195		$	195
Accrued benefit liability		(17,238	)		(5,100	)		(22,338	)		(13,182	)		(2,110	)		(15,292	)
Net liability recognized	$	(17,238	)	$	(4,454	)	$	(21,692	)	$	(13,182	)	$	(1,915	)	$	(15,097	)
Accumulated other comprehensive loss	$	29,406		$	3,292		$	32,698		$	19,728		$	1,036		$	20,764

Amounts recognized in accumulated other comprehensive income (loss), pre-tax consist of:

	2012						2011
(In thousands)	U.S.		Foreign		Total		U.S.		Foreign			Total
Net actuarial loss	$	29,406	$	3,292	$	32,698	$	19,728	$	1,051		$	20,779
Prior service (cost)		—		—		—		—		(15	)		(15	)
Net amount recognized / occurring, pre-tax	$	29,406	$	3,292	$	32,698	$	19,728	$	1,036		$	20,764

The estimated net actuarial loss (gain) which will be amortized from accumulated other comprehensive income (loss) into benefit cost in 2013 is less than $0.9 million.

	U.S.									Foreign
(In thousands)	2012			2011			2010			2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	600		$	560		$	500		$	601		$	429		$	266
Interest cost		4,962			5,110			3,927			644			632			591
Expected return on plan assets		(6,620	)		(6,518	)		(5,018	)		(480	)		(507	)		(15	)
Amortization of prior service (credit)		—			—			—			(1	)		(1	)		(1	)
Amortization of losses (gains)		338			748			—			63			25			(3	)
Total cost of the plan for the year		(720	)		(100	)		(591	)		827			578			838
Expected plan participants’ contributions		—			—			—			—			—			—
Net periodic benefit (credit) cost		(720	)		(100	)		(591	)		827			578			838
Settlement loss		5,098			—			—			188			11			27
Total (income) expense for the year	$	4,378		$	(100	)	$	(591	)	$	1,015		$	589		$	865

Weighted average assumptions used to determine net periodic benefit cost for the years 2012, 2011 and 2010 are as follows:

	U.S.									Foreign
	2012			2011			2010			2012			2011			2010
Discount rate		5.4	%		5.9%/5.4	% (1)		7.0	%		5.5	%		5.3	%		5.6	%
Expected return on plan assets		7.8	%		8.5%/7.5	% (2)		8.5	%		4.5	%		4.5	%		1.5	%
Compensation increase rate		—			—			—			5.6	%		5.3	%		4.8	%
Measurement dates	12/31/12			12/31/11			12/31/10			12/31/12			12/31/11			12/31/10

(1) 5.9% used for the Littelfuse, Inc. Plan, and 5.4% used for the Cole Hersee plan.

(2) 8.5% used for the Littelfuse, Inc. Plan, and 7.5% used for the Cole Hersee plan.

The accumulated benefit obligation for the U.S. defined benefit plan was $95.2 million and $94.4 million at December 29, 2012 and December 31, 2011, respectively. The accumulated benefit obligation for the foreign plans was $12.5 million and $1.2 million at December 29, 2012 and December 31, 2011, respectively.

Weighted average assumptions used to determine benefit obligations at year-end 2012, 2011 and 2010 are as follows:

	U.S.									Foreign
	2012			2011			2010			2012			2011			2010
Discount rate		3.9	%		5.4	%		5.9/5.4	% (1)		4.2	%		5.5	%		5.3	%
Compensation increase rate		—			—			—			6.3	%		5.6	%		5.3	%
Measurement dates	12/31/12			12/31/11			12/31/10			12/31/12			12/31/11			12/31/10

(1) 5.9% used for the Littelfuse, Inc. plan and 5.4% used for the Cole Hersee plan.

Expected benefit payments to be paid to participants for the fiscal year ending are as follows (in thousands):

Year	U.S.		Foreign
2013	$	5,167	$	1,079
2014		5,186		858
2015		5,232		860
2016		5,284		894
2017		5,338		925

Defined Benefit Plan Assets

Based upon analysis of the target asset allocation and historical returns by type of investment, the company has assumed that the expected long-term rate of return will be 7.8% on the Littelfuse, Inc. domestic plan assets and 4.5% on foreign plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation:

	U.S. Asset Allocation						Foreign Asset Allocation
	2012			2011			2012			2011
Equity securities		53	%		71	%		3	%		3	%
Debt securities		46	%		28	%		95	%		95	%
Cash		1	%		1	%		2	%		2	%
		100	%		100	%		100	%		100	%

The following table presents the company’s  U.S and German pension plan assets measured at fair value by classification within the fair value hierarchy as of  December 29, 2012 (in thousands):

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equities:
MSCI Emg Mkts Index Fund	$	—	$	6,243	$	—	$	6,243
MSCI World Index Fund		—		34,666		—		34,666
Fixed income:
Long U.S. Credit Corp Index Fund		—		22,889		—		22,889
Long U.S. Govt Bond Index Fund		—		7,630		—		7,630
High yield corporate bond funds		—		5,378		—		5,378
Investment grade corporate bond funds		—		10,297		—		10,297
Other		—		655		—		655
Cash and equivalents		1,143		—		—		1,143
Total pension plan assets	$	1,143	$	87,758	$	—	$	88,901

The following table presents the company’s  U.S and German pension plan assets measured at fair value by classification within the fair value hierarchy as of  January 1, 2011 (in thousands):

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equities:
U.S. large-cap core funds	$	—	$	32,555	$	—	$	32,555
U.S. mid-cap core funds		—		11,347		—		11,347
U.S. small-cap core funds		—		4,077		—		4,077
International funds		—		9,719		—		9,719
Fixed income:
Investment grade corporate bond funds		—		24,834		—		24,834
High yield corporate bond funds		—		8,401		—		8,401
Other		—		871		—		871
Cash and equivalents		675		—		—		675
Total pension plan assets	$	675	$	91,804	$	—	$	92,479

Defined Contribution Plans

The company also maintains a 401(k) savings plan covering substantially all U.S. employees. The company matches 100% of the employee’s annual contributions for the first 4% of the employee’s gross wages. Employees are immediately vested in their contributions plus actual earnings thereon, as well as the company contributions. Company matching contributions amounted to $1.5 million, $1.3 million and $1.1 million in each of the years 2012, 2011 and 2010, respectively.

On January 1, 2010, the company adopted a non-qualified Supplemental Retirement and Savings Plan. The company will provide additional retirement benefits for certain management employees and named executive officers by allowing participants to contribute up to 90% of their annual compensation with matching contributions of 4% and 5% of the participant’s annual compensation in excess of the IRS compensation limits.

The company previously provided additional retirement benefits for certain key executives through its unfunded defined contribution Supplemental Executive Retirement Plan (“SERP”). The company amended the SERP during 2009 to freeze contributions and set the annual interest rate credited to the accounts until distributed at the five-year Treasury constant maturity rate. The charge to expense for the SERP plan amounted to $0.1 million, $0.1 million and $0.1 million in each of the years 2012, 2011 and 2010, respectively.