Pension Liabilities

12 Months Ended

Dec. 31, 2011

Pension Liabilities [Abstract]

Pension Liabilities

NOTE 11:- PENSION LIABILITIES

The Norwegian subsidiary ("Nera AS") Nera has both defined benefit scheme (overfunded and underfunded) and defined contribution schemes.

Defined contribution - overfunded - Under the defined contributions scheme Nera AS makes a payment to the insurance company who administer the fund on behalf of the employee. Nera AS has no liabilities relating to such schemes after the payment to the insurance company. As of December 31, 2011 almost all active employees are in this scheme. The contribution and the corresponding social security taxes are recognized as payroll expenses in the period to which the employee's services are rendered. The defined pension contribution schemes meet the requirements of the law on compulsory occupational pension.

Defined benefit scheme - overfunded - Defined benefit scheme was stopped for admission from December 1, 2007, and persons that were employed after that date were automatically entered into the defined contribution scheme. The schemes give right to defined future benefits. These are mainly dependent on the number of qualifying employment years, salary level at pension age, and the amount of benefits from the national insurance scheme. The commitment related to the pension scheme is covered through an insurance company. As of December 31, 2011 the pension scheme has 102 members out of which 92 are retired. The fair value of plan assets exceeds the defined benefit obligation.

Defined benefit scheme - underfunded - The underfunded defined benefit scheme mainly consists of a pension agreement for former executives and of early retirement pensions (the "AFP"). The Pension scheme for former executives is stopped for admission. The scheme gives right to defined future benefits. These are mainly dependent on the number of qualifying employment years, salary level at pension age, and the amount of benefits from the national insurance scheme.

The AFP arrangement has been terminated in 2010. The AFP-liability following the old scheme was recognized in the balance sheet as debt and was recognized as income in 2010, with the exception of the liability relating to previous employees who are now retirees in this scheme.

With the termination of the old AFP (early retirement) scheme there was a deficit. The liability is set to best estimates, the present value of estimated future premium payments in the period 2011-2015.

Additionally, Nera has an agreed early retirement scheme (AFP). The new AFP-scheme, in force from 1 January 2011, is a defined benefit multi-enterprise scheme, but is recognized in the accounts as a defined contribution scheme until reliable and sufficient information is available for the group to recognize its proportional share of pension cost, pension liability and pension funds in the scheme. Nera's liabilities are therefore not recognized as liability in the balance sheet.

The difference between the liability (the Projected Benefit Obligation or PBO as defined in

ASC No. 715 "Compensation - Retirement Benefits" ("ASC 715") and the market value of the plan assets is accounted for on the financial statements of the Company.

The liabilities in respect of Nera AS's pension plans have been recalculated based on updated employee numbers and asset values at December 31, 2011. These plans together represent 100% of the PBO of the entire group. The value for the other liabilities has been projected from the results of the valuation on the date of Acquisition and updated for changes in discount rate.

The following tables provide a reconciliation of the changes in the plans' benefits obligation and fair value of assets for the year ended December 31, 2011, and the statement of funded status as of December 31, 2011:

	December 31, 2011
Accumulated benefit obligation	$	9,860
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	-
Liability assumed at the acquisition date of Nera		11,532
Service cost		59
Interest cost		323
Expenses paid		(1,296	)
Actuarial gain		(626	)
Projected benefit obligation at end of year	$	9,992
	December 31, 2011
Change in plan assets
Fair value of plan assets at beginning of year	$	-
Acquisition of Nera		7,500
Actual return on plan assets		272
Employer contributions to plan		52
Expenses paid		(702	)
Fair value of plan assets at end of year	$	7,122

The assumptions used in the measurement of the Company' benefits obligations as of December 31, 2011 is as follows:

	December 31, 2011
Weighted-average assumptions
Discount rate		3.8	%
Expected return on plan assets		4.1	%
Rate of compensation increase		3.5	%

The amounts reported for net periodic pension costs and the respective benefit obligation amounts are dependent upon the actuarial assumptions used.  The Company reviews historical trends, future expectations, current market conditions and external data to determine the assumptions. The discount rate is determined considering the yield of government bonds.  For purposes of calculating the 2011 net periodic benefit cost and the benefit obligation, the Company used a discount rate of 3.8%.  The rate of compensation increase is determined by the Company, based upon its long-term plans for such increases.

The following table provides the components of net periodic benefits cost for the year ended December 31, 2011:

	December 31, 2011
Components of net periodic benefit cost
Service cost	$	59
Interest cost		323
Expected return on plan assets		(272	)
Amortization of net loss		-
Settlement gain recognized		-
Net periodic benefit cost	$	110

Benefit payments are expected to be paid as follows:

	December 31, 2011
2012	$	817
2013		561
2014		361
2015		223
2016 and thereafter		908
	$	2,870

The plan asset allocations at December 31, 2011is as follows:

	December 31, 2011
Bonds		49.0	%
Real estate		16.0	%
Cash		17.0	%
Shares		18.0	%
		100	%

Regarding the policy for amortizing actuarial gains or losses for pension and post-employment plans, the Company has chosen to charge the actuarial gains or losses to statement of operations as net periodic pension cost as incurred.

 For the year ended December 31, 2011, an actuarial gain of $325 was recognized in income statements.