13. OTHER LONG-TERM LIABILITIES

Other long-term liabilities consisted of the following at December 31:

	2011		2010
	(In thousands)
Unfavorable lease adjustment as lessee	$	929	$	1,393
Future lease commitments		3,755		4,246
Deferred compensation		4,132		4,109
Asset retirement obligation		291		276
	$	9,107	$	10,024

Unfavorable Lease Adjustment as Lessee

ALC evaluated the leases in existence at the date of the ALC Purchase and determined, based upon future discounted lease payments over the remaining terms of the leases, an excess was to be paid, as compared to the market, based upon the operating cash flows of the leased facilities. The unfavorable lease liability upon acquisition was $4.0 million. The unfavorable lease liability is amortized on a straight-line basis, as an offset to lease expense, over the term of the lease agreements. In 2010, in conjunction with the acquisition of nine residences which were formerly leased by ALC, the related $0.3 million purchase accounting reserve was reversed. The unfavorable lease amortization, including the $0.3 million reversal in 2010, was $0.5 million, $0.7 million and $0.4 million for 2011, 2010 and 2009, respectively.

Future Lease Commitments

Future lease commitments represent the cumulative excess of lease expense computed on a straight-line basis for the lease term over actual lease payments. The effects of scheduled rent increases, which are included in minimum lease payments, are recognized on a straight-line basis over the lease term.

Deferred Compensation

ALC implemented an unfunded deferred compensation plan in 2005 which is offered to all company employees defined as highly compensated by the Internal Revenue Code in which participants may defer up to 10% of their base salary. ALC matches

50% of the amount deferred. Expenses incurred by ALC under the deferred compensation plan were $199,000, $170,000 and $163,000 in 2011, 2010 and 2009, respectively.

ALC implemented the ERP, a non-qualified deferred compensation plan in 2005, covering certain executive employees. Expenses incurred from ALC contributions under the plan were $193,000, $280,000 and $290,000 in 2011, 2010 and 2009, respectively. The plan does not require ALC to fund the liability currently but ALC has funded it since the plan's inception. Assets related to the plan are recorded as investments and classified as available for sale and were $1.1 million and $1.0 million as of December 31, 2011 and 2010, respectively.

Other Employee Pension Arrangements

ALC maintains a defined contribution retirement 401(k) savings plan, which is made available to substantially all employees. ALC pays a matching contribution of 25% of every qualifying dollar contributed by plan participants, net of any forfeiture. Expenses incurred by ALC related to the 401(k) savings plans were $160,000, $200,000 and $157,000 in 2011, 2010 and 2009, respectively.

Fair Value of Derivatives

ALC entered into derivative financial instruments in November 2008 and March 2009, specifically interest rate swaps, for non-trading purposes. ALC uses interest rate swaps to manage interest rate risk associated with floating rate debt. The agreements expired on November 14, 2011, the same time as our original expiration date of our $120 million revolving credit facility. As of December 31, 2010, ALC was party to interest rate swaps with a total notional amount of $50.0 million. Until, February 18, 2011, when the $120 million revolving credit facility was repaid, ALC elected to apply hedge accounting for the interest rate swaps because they were an economic hedge of the ALC's floating rate debt. The derivative contracts had a negative fair value of $0.9 million as of December 31, 2010, based on current market conditions affecting interest rates. The negative fair value was reported in accrued liabilities in 2010. No derivative financial instruments were outstanding at December 31, 2011. (See footnote 11. DEBT).

Asset retirement obligation

ALC determined that a conditional asset retirement obligation exists for asbestos remediation in one of its residences. Although not a current health hazard, if ALC were to renovate the residence, ALC would be required to follow the appropriate remediation procedures in compliance with state law. The removal of asbestos-containing materials includes primarily floor and ceiling tiles. The fair value of the conditional asset retirement obligation was determined as the present value of the estimated future cost of remediation based on an estimated expected date of remediation. This computation is based on a number of assumptions which may change in the future based on the availability of new information, technology changes, changes in costs of remediation, and other factors.