Memorex 2010 Annual Report Download - page 66

In connection with actions taken under our previously announced restructuring programs, the number of employees
accumulating benefits under our pension plan in the United States has declined significantly. Participants in our U.S. pension
plan have the option of receiving cash lump sum payments when exiting the plan, which a number of participants exiting
the pension plan have elected to receive. Lump sum payments in 2010 exceeded our 2009 service and interest costs; as
a result a partial settlement event occurred and we recognized a pro-rata portion of the previously unrecognized net
actuarial loss. We incurred partial settlement losses of $2.5 million, $7.1 million and $4.5 million in 2010, 2009 and 2008,
respectively, which are included in restructuring and other expense on our Consolidated Statements of Operations. Further,
as required by GAAP, we remeasured the funded status of our United States plan as of the date of the settlements.
Effective January 1, 2010, the U.S. pension plan was amended to exclude new hires and rehires from participating in
the plan. Furthermore, we eliminated benefit accruals under the United States defined benefit pension plan as of
December 31, 2010, thus “freezing” the defined benefit pension plan. Under the plan freeze, no pay credits will be made
to a participant’s account balance after December 31, 2010. However, interest credits will continue in accordance with the
annual update process. These actions resulted in the recognition of all prior service cost as a curtailment loss of
$0.3 million in 2010, included as a component of restructuring and other in the Consolidated Statements of Operations.
Due to the timing of this plan amendment we remeasured the funded status of our U.S. pension plan in conjunction with
the annual remeasurement as of December 31, 2010.
In connection with actions taken under our previously announced restructuring programs, we fully terminated a
defined benefit pension plan in Canada during the year ended December 31, 2009. We purchased annuities to fully fund
our obligation and removed the Company from future liability. A full settlement event occurred and we recognized the
previously unrecognized net actuarial position and incurred a settlement loss of $4.6 million, which is included in
restructuring and other expense on our Consolidated Statements of Operations.
In connection with actions taken under our 2008 cost reduction restructuring program, the number of employees
accumulating benefits under our pension plan in the United States was reduced significantly, which resulted in the
recognition of a curtailment loss of $1.2 million in 2008, included as a component of restructuring and other in the
Consolidated Statements of Operations. Further, as required by GAAP, we remeasured the funded status of our
United States plan as of the date of the curtailment.
For the U.S. pension plan, employees who have completed three years or more of service, including service with
3M Company before July 1, 1996, or who have reached age 65, are entitled to pension benefits beginning at normal
retirement age (65) based primarily on employees’ pay credits and interest credits. Through December 31, 2009, pay
credits were made to each eligible participant’s account equal to six percent of that participant’s eligible earnings for the
year. Beginning on January 1, 2010 and through December 31, 2010, pay credits were reduced to three percent of each
participant’s eligible earnings. In conjunction with the plan freeze, no additional pay credits will be made to a participant’s
account balance after December 31, 2010. A monthly interest credit was made to each eligible participant’s account based
on the participant’s account balance as of the last day of the preceding year. The interest credit rate is established
annually and is based on the interest rate of certain low-risk debt instruments. The interest credit rate was 4.31 percent for
2010. In accordance with the annual update process, the interest credit rate will be 4.19 percent for 2011.
The U.S. pension plan permits four payment options: a lump-sum option, a life income option, a survivor option or a
period certain option. If a participant terminates prior to completing three years of service, the participant forfeits the right
to receive benefits under the pension plan unless the participant has reached the age of 65 at the time of termination.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)