14. Retirement Plans

Defined Benefit Plans

The Company provides retirement benefits to substantially all eligible salaried and hourly employees.

Net periodic pension cost for fiscal 2011, 2010, and 2009, includes the following components:


	United States Plans									International Plans
	Fiscal Year Ended March 31,									Fiscal Year Ended March 31,
	2011			2010			2009			2011			2010			2009
Service cost	$	250		$	224		$	300		$	603		$	621		$	2,897
Interest cost		646			635			608			2,503			2,520			2,529
Expected return on plan assets		(624	)		(491	)		(639	)		(1,615	)		(1,256	)		(1,568	)
Amortization and deferral		248			458			208			53			(43	)		—

Net periodic benefit cost	$	520		$	826		$	477		$	1,544		$	1,842		$	3,858

The following table sets forth a reconciliation of the related benefit obligation, plan assets, and accrued benefit costs related to the pension benefits provided by the Company for those employees covered by defined benefit plans:


	United States Plans						International Plans
	March 31,						March 31,
	2011			2010			2011			2010
Change in projected benefit obligation
Benefit obligation at the beginning of the period	$	10,992		$	9,969		$	46,851		$	38,080
Service cost		250			224			603			621
Interest cost		646			635			2,503			2,520
Benefits paid, inclusive of plan expenses		(581	)		(588	)		(1,481	)		(2,299	)
Plan curtailments		—			—			—			(60	)
Plan amendments		108			—			817			—
Plan combinations (including newly material plans)		—			—			337			—
Experience (gain) loss		488			752			(3,366	)		6,575
Foreign currency translation adjustment		—			—			2,617			1,414

Benefit obligation at the end of the period	$	11,903		$	10,992		$	48,881		$	46,851


	United States Plans						International Plans
	March 31,						March 31,
	2011			2010			2011			2010
Change in plan assets
Fair value of plan assets at the beginning of the period	$	7,859		$	6,279		$	22,712		$	16,285
Actual return on plan assets		1,102			1,994			1,751			6,326
Employer contributions		366			174			1,424			1,659
Benefits paid, inclusive of plan expenses		(581	)		(588	)		(1,481	)		(2,299	)
Foreign currency translation adjustments		—			—			1,373			741

Fair value of plan assets at the end of the period	$	8,746		$	7,859		$	25,779		$	22,712

Funded status deficit	$	(3,157	)	$	(3,133	)	$	(23,102	)	$	(24,139	)

The Company uses a measurement date of March 31 for its pension plans. Accrued pension benefit liability is included in accrued expenses and other liabilities.

As required by FASB guidance, for pension plans for which the projected benefit obligation exceeds the fair value of plan assets, the Company has recognized in the Consolidated Balance Sheets at March 31, 2011 and 2010, the additional liability of the unfunded projected benefit obligation of $4,766 and $7,476, respectively, as current and long-term liabilities, with offsetting equity adjustments. The accumulated benefit obligation for all defined benefit pension plans was $58,128 and $55,282 at March 31, 2011 and 2010, respectively.

The accumulated benefit obligation related to all defined benefit pension plans and information related to unfunded and underfunded defined benefit pension plans at the end of each year follows:


	United States Plans				International Plans
	March 31,				March 31,
	2011		2010		2011		2010
All defined benefit plans:
Accumulated benefit obligation	$	11,903	$	10,992	$	46,225	$	44,290
Unfunded defined benefit plans:
Projected benefit obligation		—		—		25,533		23,367
Accumulated benefit obligation		—		—		24,413		22,557
Defined benefit plans with an accumulated benefit obligation in excess of the fair value of plan assets:
Projected benefit obligation		11,903		10,992		25,560		23,367
Accumulated benefit obligation		11,903		10,992		24,440		22,557
Fair value of plan assets		8,746		7,859		—		—

Assumptions

Significant assumptions used to determine the net periodic benefit cost for the US and International plans were as follows:


	United States Plans									International Plans
	March 31,									March 31,
	2011			2010			2009			2011			2010			2009
Discount rate		6.0	%		6.5	%		6.0	%		4.3-6.0	%		3.8-6.0	%		4.3-6.0	%
Expected return on plan assets		8.0			8.0			8.0			5.5-7.0			5.5-7.0			5.5-7.5
Rate of compensation increase		N/A			N/A			N/A			2.0-3.5			2.0-3.5			2.0-3.5

Significant assumptions used to determine the projected benefit obligations for the US and International plans were as follows:


	United States Plans						International Plans
	March 31,						March 31,
	2011			2010			2011			2010
Discount rate		5.7	%		6.0	%		4.0-5.5	%		4.3-6.0	%
Rate of compensation increase		N/A			N/A			2.0-4.0			2.0-3.5

NA = not applicable

The United States plans do not include compensation in the formula for determining the pension benefit as it is based solely on years of service.

The expected long-term rate of return for the Company's pension plan assets is based upon the target asset allocation and is determined using forward looking assumptions in the context of historical returns and volatilities for each asset class, as well as correlations among asset classes. The Company evaluates the rate of return assumptions for each of its plans on an annual basis.

Pension Plan Investment Strategy

The Company's investment policy emphasizes a balanced approach to investing in securities of high quality and ready marketability. Investment flexibility is encouraged so as not to exclude opportunities available through a diversified investment strategy.

Equity investments are maintained within a target range of 50%-70% of the total portfolio market value. Investments in debt securities include issues of various maturities, and the average quality rating of bonds should be investment grade with a minimum quality rating of "B" at the time of purchase.

The Company periodically reviews the asset allocation of its portfolio. The proportion committed to equities, debt securities and cash and cash equivalents is a function of the values available in each category and risk considerations. The plan's overall return will be compared to and expected to meet or exceed established benchmark funds and returns over a three to five year period.

The objectives of the Company's investment strategies are: (a) the achievement of a reasonable long-term rate of total return consistent with an emphasis on preservation of capital and purchasing power, (b) stability of annual returns through a portfolio risk level, which is appropriate to conservative accounts, and (c) reflective of the Company's willingness to forgo significantly above-average rewards in order to minimize above-average risks. These objectives may not be met each year but should be attained over a reasonable period of time.

In connection with a past acquisition, the Company had assumed defined benefit plans in Germany and France. These plans have no assets, while their benefit obligations were $21,706 and $20,266 as of March 31, 2011 and 2010, respectively. Other salary and hourly employees are provided benefits in accordance with governmental regulatory requirements.

The following table represents our pension plan investments measured at fair value as of March 31, 2011 and 2010 and the basis for that measurement:


	March 31, 2011
	United States Plans								International Plans
	Total Fair Value Measurement		Quoted Price In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurement		Quoted Price In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category:
Cash and Cash Equivalents	$	528	$	528	$	—	$	—	$	—	$	—	$	—	$	—
Equity Securities
US^(a)		4,839		4,839		—		—		2,521		2,521		—		—
International^(b)		840		840		—		—		13,600		13,600		—		—
Fixed Income^(c)		2,539		2,539		—		—		9,658		9,658		—		—

Total	$	8,746	$	8,746	$	—	$	—	$	25,779	$	25,779	$	—	$	—


	March 31, 2010
	United States Plans								International Plans
	Total Fair Value Measurement		Quoted Price In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurement		Quoted Price In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category:
Cash and Cash Equivalents	$	450	$	450	$	—	$	—	$	—	$	—	$	—	$	—
Equity Securities
US^(a)		4,058		4,058		—		—		2,196		2,196		—		—
International^(b)		819		819		—		—		13,053		13,053		—		—
Fixed Income^(c)		2,532		2,532		—		—		7,463		7,463		—		—

Total	$	7,859	$	7,859	$	—	$	—	$	22,712	$	22,712	$	—	$	—

The fair values presented above were determined based on valuation techniques categorized as follows:

•

Level one: The use of quoted prices in active markets for identical instruments.

•

Level two: The use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or other inputs that are observable in the market or can be corroborated by observable market data.

•

Level three: The use of significantly unobservable inputs and that typically require the use of management's estimates of assumptions that market participants would use in pricing.

(a)

US equities include companies that are well diversified by industry sector and equity style (i.e., growth and value strategies). Active and passive management strategies are employed. Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks.

(b)

International equities are invested in companies that are traded on exchanges outside the U.S. and are well diversified by industry sector, country and equity style. Active and passive strategies are employed. The vast majority of the investments are made in companies in developed markets with a small percentage in emerging markets.

(c)

Fixed income consists primarily of investment grade bonds from diversified industries.

The Company expects to make cash contributions of approximately $2,336 to its pension plans in fiscal year 2012.

Estimated future benefit payments under the Company's pension plans are as follows:


	Pension Benefits
2012	$	2,113
2013		2,130
2014		2,548
2015		2,588
2016		2,849
Years 2017-2021		17,408

In accordance with FASB guidance, the Company recognizes the funded status of its retirement plans in its Consolidated Balance Sheet. The underfunded status of the retirement plans recorded as a liability on the Company's Consolidated Balance Sheets at March 31, 2011 and 2010 was approximately $26,259 and $27,272, respectively.

The amounts included in AOCI as of March 31, 2011 that are expected to be recognized as components of net periodic pension cost during the fiscal year ended March 31, 2012 are as follows:


Net loss	$	(173	)
Net prior service cost		(85	)

Net amount expected to be recognized	$	(258	)

Defined Contribution Plan

Effective January 1, 2004, the Company amended its Defined Contribution Plan (the "401(k) Plan"). The amended 401(k) Plan covers substantially all U.S. salaried and hourly employees except those covered by a union plan. All eligible employees of the amended 401(k) Plan receive a matching contribution of 100% of the first 4% of wages contributed and 50% of the next 2% of wages contributed for a total match of up to 5% by the Company.

Effective February 1, 2009, the Company amended the EnerSys United Kingdom Pension Scheme ("Amended U.K. Plan") that covers substantially all United Kingdom employees, both direct and salaried so that all members with defined benefit plan benefits at that date would be provided with defined contribution plan benefits for future service. The Company pays contributions to fund any accrued liabilities in excess of the assets in the defined benefit section of the Amended U.K. Plan as necessary. Active members of the Amended U.K. Plan as of February 1, 2009 receive a matching contribution from the Company up to 4% of Pensionable Salary and an enhanced Company contribution in excess of this in line with the rules of the plan. New eligible employees of the Amended U.K. Plan receive a matching contribution from the Company up to 5% of pensionable salary, at various rates as provided by the Plan.

Employer expenses for the 401(k) plan and the Amended U.K. Plan for the fiscal years ended March 31, 2011, 2010 and 2009 were $5,025, $3,909 and $2,394, respectively.