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Pension benefits
 12 Months Ended
Dec. 31, 2011
Pension benefits
6. Pension benefits

 

U.S. Defined Contribution Pension Plan-The Company has a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code, pursuant to which substantially all of its U.S. employees are eligible to participate after completing six months of service. Participants may elect to contribute a portion of their compensation to the plan. Under the plan, the Company has the discretion to match a portion of participants’ contributions. The Company intends to match approximately $0.1 million to the plan for the year ended December 31, 2011.  For the years ended December 31, 2010 and 2009, the Company’s matching contributions were approximately $0.1 million.

 

 

Non-U.S. Pension benefits-The accounting standard for pensions requires an employer to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and other post-retirement benefit plans.

 

Most of the non-U.S. subsidiaries provide for government mandated defined pension benefits. For certain of these subsidiaries, vested eligible employees are provided a lump sum payment upon retiring from the Company at a defined age. The lump sum amount is based on the salary and tenure as of retirement date. Other non-U.S subsidiaries provide for a lump sum payment to vested employees on retirement, death, incapacitation or termination of employment, based upon the salary and tenure as of the date employment ceases. The liability for such defined benefit obligations is determined and provided on the basis of actuarial valuations. As of December 31, 2011, these plans are unfunded. Pension expense for foreign subsidiaries totaled approximately $0.5 million, $0.4 million and $0.2 million for each of the three years in the period ended December 31, 2011.

 

The following table summarizes the amounts recognized in accumulated other comprehensive income, net of taxes (in thousands):

 

    Years Ended December 31,  
    2011     2010     2009  
                   
Amortization of transition obligation   $ 89     $ 91     $ 99  
Actuarial gain     (373 )     (379 )     (174 )
Total   $ (284 )   $ (288 )   $ (75 )
                         
Amounts in accumulated other comprehensive income not yet                        
reflected in net periodic pension cost, net of taxes:                        
                         
Actuarial gain   $ 401     $ 774          
Transition obligation     (306 )     (395 )        
Total   $ 95     $ 379          
                         
Amounts in accumulated other comprehensive income expected to                        
be amortized in 2012 net periodic pension cost:                        
                         
Actuarial loss   $ 32                  
Transition obligation     83                  
Total   $ 115                  

 

The following table sets out the status of the non-U.S pension benefits and the amounts (in thousands) recognized in the Company’s consolidated financial statements for each of the three years ended December 31:

 

Benefit Obligations:

 

Change in the Benefit Obligation:   2011     2010     2009  
                   
Projected benefit obligation at beginning of the year   $ 2,074     $ 1,392     $ 1,072  
Service cost     332       244       210  
Interest cost     186       142       105  
Actuarial loss     299       271       24  
Foreign currency exchange rate changes     (100 )     86       23  
Benefits paid     (96 )     (61 )     (42 )
Projected benefit obligation at end of year   $ 2,695     $ 2,074     $ 1,392  

 

 

 

Components of Net Periodic Pension Cost:

    2011     2010     2009  
                   
Service cost   $ 332     $ 244     $ 210  
Interest cost     186       142       105  
Actuarial (gain) loss recognized     (17 )     (4 )     (92 )
Net periodic pension cost   $ 501     $ 382     $ 223  

 

The accumulated benefit obligation, which represents benefits earned to date, was approximately $1.1 million and $0.9 million at December 31, 2011 and 2010, respectively.

 

Actuarial assumptions for all non-U.S. plans are described below. The discount rates are used to measure the year end benefit obligations and the earnings effects for the subsequent year. The assumptions for each of the three years ended December 31, 2011 are as follows:

 

      2011       2010     2009
Discount rate     7.2%-9.5%       8.5%-9.9%     7.2%-12%
Rate of increase in compensation levels     7%-9%       7%-9%     7%-10%

 

Estimated Future Benefit Payments:

 

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

 

Years Ending December 31,      
       
2012   $ 152  
2013     95  
2014     66  
2015     164  
2016     292  
2017 to 2021     802  
    $ 1,571