Memorex 2011 Annual Report Download - page 73

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
$10 million to our pension plans in 2012. 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.
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 2011 exceeded our 2010 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, $2.5 million and $7.1 million in 2011, 2010 and 2009, 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 January 1, 2011,
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.
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 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 4.19 percent for 2011. In
accordance with the annual update process, the interest credit rate will be 3.02 percent for 2012.
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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