Memorex 2012 Annual Report Download - page 75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2012, 2011
or 2010.
Note 9 — Retirement Plans
Pension Plans
We have various non-contributory defined benefit pension plans covering United States employees employed prior to
January 1, 2010 and certain employees outside the United States, primarily in Germany, the United Kingdom and Japan.
Total pension expense was $2.0 million, $2.4 million and $4.5 million in 2012, 2011 and 2010, respectively. Total pension
expense decreased year over year due primarily to lower service and interest costs. The measurement date of our pension
plans is December 31. During the twelve months ended December 31, 2012 we contributed $5.1 million to our worldwide
pension plans. We presently anticipate contributing between $2 million and $4 million to fund our worldwide pension plans in
2013. It is our general practice, at a minimum, to fund amounts sufficient to meet the requirements set forth in applicable
benefits laws and local tax laws. From time to time, we contribute additional amounts, as we deem appropriate.
Effective January 1, 2010, the U.S. plan was amended to exclude new hires and rehires from participating in the plan. In
addition, we eliminated benefit accruals under the U.S. plan as of January 1, 2011, thus “freezing” the defined benefit pension
plan. Under the plan freeze, no pay credits were 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 costs as a curtailment loss of $0.3 million in 2010, included as a component of restructuring and other in the
Consolidated Statements of Operations.
For the U.S. 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 is 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 3.02 percent for 2012. In accordance with the annual
update process, the interest credit rate will be 2.80 percent for 2013.
In connection with actions taken under our announced restructuring programs, the number of employees accumulating
benefits under our pension plan in the United States continues to decline. Participants in our U.S. plan have the option of
receiving cash lump sum payments when exiting the plan, which a number of participants exiting the plan have elected to
receive. Lump sum payments in 2012, 2011 and 2010 exceeded the service and interest costs associated with those years.
As a result, a partial settlement event occurred in those years and, accordingly, we recognized a settlement loss of $2.4
million, $2.5 million and $2.5 million during 2012, 2011 and 2010, respectively. These settlement losses are included in
restructuring and other in our Consolidated Statements of Operations.
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.
72