Memorex 2013 Annual Report Download - page 78

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Of the restricted stock granted during the year ended December 31, 2013, 529,141 were performance-based restricted
stock that vest based on the Company’s cost reduction efforts and performance against EBITDA targets for 2013, 2014, and
2015. Our 2013 performance was partially met and, accordingly, some of the restricted stock for 2013 vested and will be
issued subsequent to December 31, 2013. No performance-based restricted shares were granted during the years ended
December 31, 2012 or 2011.
The total fair value of shares that vested during the years 2013, 2012 and 2011 was $3.9 million, $3.3 million and
$3.3 million, respectively.
Total stock-based compensation expense associated with restricted stock relating to continuing operations recognized in
our Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011 was $3.6 million,
$3.3 million and $3.1 million, respectively. This expense would result in related tax benefits of $1.5 million, $1.4 million and
$1.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. However, these tax benefits are included
in the U.S. deferred tax assets which are subject to a full valuation allowance and due to the valuation allowance, we did not
recognize the related tax benefit in 2013, 2012 and 2011. As of December 31, 2013 there was $3.1 million of total
unrecognized compensation expense related to outstanding restricted stock. That expense is expected to be recognized over
a weighted average period of 1.4 years.
No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2013, 2012
or 2011.
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 and Japan. Total pension expense
was $2.6 million, $2.0 million and $2.4 million in 2013, 2012 and 2011, respectively. The measurement date of our pension
plans is December 31. During the twelve months ended December 31, 2013 we contributed $1.5 million to our worldwide
pension plans. We presently anticipate contributing between $2 million and $4 million to fund our worldwide pension plans in
2014. 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.
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 credit contributions 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 2.80 percent for 2013. In accordance with the
annual update process, the interest credit rate will be 3.80 percent for 2014.
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
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