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RETIREMENT FUND AND PROFIT SHARING PLAN | 12 Months Ended
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Dec. 31, 2011
RETIREMENT FUND AND PROFIT SHARING PLAN [Abstract] |
RETIREMENT FUND AND PROFIT SHARING PLAN |
12. | RETIREMENT FUND AND PROFIT SHARING PLAN
The Company maintains a domestic profit sharing plan and a contributory stock ownership and savings 401(k) plan, which combines stock ownership and individual voluntary savings provisions to provide retirement benefits for plan participants. The plan provides for participants to voluntarily contribute a portion of their compensation, subject to certain legal maximums. The Company will match, based on a sliding scale, up to $350 for the first $600 contributed by each participant. Matching contributions plus additional discretionary contributions are made with Company stock purchased in the open market. The expense for the years ended December 31, 2011, 2010 and 2009 amounted to approximately $0.9 million, $0.7 million and $0.4 million, respectively. As of December 31, 2011, the plans owned 15,920 and 243,547 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The Company amended its 401(k) plan effective January 1, 2012. Under the new plan design, the Company will match 100% of the first 1% of employee deferrals and 50% of the next 5% of employee deferrals. Matching contributions will be made in cash beginning in 2012. The Company's subsidiaries in Asia have a retirement fund covering substantially all of their Hong Kong based full-time employees. Eligible employees contribute up to 5% of salary to the fund. In addition, the Company must contribute a minimum of 5% of eligible salary, as determined by Hong Kong government regulations. The Company currently contributes 7% of eligible salary in cash or Company stock. The expense for the years ended December 31, 2011, 2010 and 2009 amounted to approximately $0.3 million in each year. As of December 31, 2011, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The Supplemental Executive Retirement Plan (the "SERP" or the “Plan”) is designed to provide a limited group of key management and highly compensated employees of the Company with supplemental retirement and death benefits. Participants in the SERP are selected by the Compensation Committee of the Board of Directors. The SERP initially became effective in 2002 and was amended and restated in April 2007 to conform with applicable requirements of Section 409A of the Internal Revenue Code and to modify the provisions regarding benefits payable in connection with a change in control of the Company. The Plan is unfunded. Benefits under the SERP are payable from the general assets of the Company, but the Company has established a rabbi trust which includes certain life insurance policies in effect on participants as well as other investments to partially cover the Company's obligations under the Plan. The benefits available under the Plan vary according to when and how the participant terminates employment with the Company. If a participant retires (with the prior written consent of the Company) on his normal retirement date (65 years old, 20 years of service, and 5 years of Plan participation), his normal retirement benefit under the Plan would be annual payments equal to 40% of his average base compensation (calculated using compensation from the highest 5 consecutive calendar years of Plan participation), payable in monthly installments for the remainder of his life. If a participant retires early from the Company (55 years old, 20 years of service, and 5 years of Plan participation), his early retirement benefit under the Plan would be an amount (i) calculated as if his early retirement date were in fact his normal retirement date, (ii) multiplied by a fraction, with the numerator being the actual years of service the participant has with the Company and the denominator being the years of service the participant would have had if he had retired at age 65, and (iii) actuarially reduced to reflect the early retirement date. If a participant dies prior to receiving 120 monthly payments under the Plan, his beneficiary would be entitled to continue receiving benefits for the shorter of (i) the time necessary to complete 120 monthly payments or (ii) 60 months. If a participant dies while employed by the Company, his beneficiary would receive, as a survivor benefit, an annual amount equal to (i) 100% of the participant's annual base salary at date of death for one year, and (ii) 50% of the participant's annual base salary at date of death for each of the following 4 years, each payable in monthly installments. The Plan also provides for disability benefits, and a forfeiture of benefits if a participant terminates employment for reasons other than those contemplated under the Plan. The expense related to the Plan for the years ended December 31, 2011, 2010 and 2009 amounted to approximately $0.9 million, $0.8 million and $0.9 million, respectively. Net Periodic Benefit Cost The net periodic benefit cost related to the SERP consisted of the following components during the years ended December 31, 2011, 2010 and 2009 (dollars in thousands):
|  | 2011 |  |  | 2010 |  |  | 2009 |
Service Cost |  | $ | 371 |  |  | $ | 340 |  |  | $ | 383 |
Interest Cost |  |  | 404 |  |  |  | 336 |  |  |  | 352 |
Net amortization |  |  | 149 |  |  |  | 133 |  |  |  | 147 |
Net periodic benefit cost |  | $ | 924 |  |  | $ | 809 |  |  | $ | 882 |
Obligations and Funded Status Summarized information about the changes in plan assets and benefit obligation, the funded status and the amounts recorded at December 31, 2011 and 2010 are as follows (dollars in thousands):
|  | 2011 |  |  | 2010 |
Fair value of plan assets, January 1 |  | $ | - |  |  | $ | - |
Company contributions |  |  | - |  |  |  | 56 |
Benefits paid |  |  | - |  |  |  | (56 | )
Fair value of plan assets, December 31 |  | $ | - |  |  | $ | - |
Benefit obligation, January 1 |  |  | 7,350 |  |  |  | 5,622 |
Service cost |  |  | 371 |  |  |  | 340 |
Interest cost |  |  | 404 |  |  |  | 336 |
Benefits paid |  |  | - |  |  |  | (56 | )
Actuarial losses |  |  | 1,149 |  |  |  | 1,108 |
Benefit obligation, December 31 |  | $ | 9,274 |  |  | $ | 7,350 |
Funded status, December 31 |  | $ | (9,274 | ) |  | $ | (7,350 | )
The Company has recorded the related liability of $9.3 million and $7.4 million as a long-term liability in its consolidated balance sheets at December 31, 2011 and 2010, respectively. The accumulated benefit obligation for the SERP was $7.5 million and $5.8 million as of December 31, 2011 and 2010, respectively. The aforementioned company-owned life insurance policies and marketable securities held in a rabbi trust had a combined fair value of $10.5 million and $8.4 million at December 31, 2011 and 2010, respectively. See Note 5 for additional information on these investments. The estimated net loss and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.1 million and $0.1 million, respectively. The Company does not expect to make any contributions to the SERP in 2012. The Company had no net transition assets or obligations recognized as an adjustment to other comprehensive income and does not anticipate any plan assets being returned to the Company during 2012, as the plan has no assets. The following benefit payments, which reflect expected future service, are expected to be paid (dollars in thousands):
Years Ending |  |  |
December 31, |  |  |
2012 |  | $ | - |
2013 |  |  | 136 |
2014 |  |  | 179 |
2015 |  |  | 234 |
2016 |  |  | 234 |
2017 - 2021 |  |  | 2,157 |
The following gross amounts are recognized in accumulated other comprehensive loss, net of tax (dollars in thousands):
|  | 2011 |  |  | 2010 |
Prior service cost |  | $ | 1,010 |  |  | $ | 1,143 |
Net loss |  |  | 2,065 |  |  |  | 932 |
|  | $ | 3,075 |  |  | $ | 2,075 |
Actuarial Assumptions The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the SERP are as follows:
| 2011 |  | 2010 |  | 2009
Net periodic benefit cost |  |  |  |  |
Discount rate | 5.50% |  | 6.00% |  | 6.00%
Rate of compensation increase | 3.00% |  | 3.00% |  | 3.00%
Benefit obligation |  |  |  |  |
Discount rate | 4.50% |  | 5.50% |  | 6.00%
Rate of compensation increase | 3.00% |  | 3.00% |  | 3.00%

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