Employee Benefit Plans

12 Months Ended

Dec. 25, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

Note 13. EMPLOYEE BENEFIT PLANS

Under our defined contribution savings plans, eligible employees may make basic (up to 6% of an employee's earnings) and supplemental contributions. We match in cash 50% of the participant's basic contributions. Company contributions vest to participants in increasing percentages over one to five years of service. Our contributions under the plans approximated $1.5 million, $1.3 million, and $1.1 million, in 2011, 2010, and 2009, respectively.

Generally, all employees in the U.S. may participate in our U.S. Savings Plan. All full-time employees of the Puerto Rico subsidiary who have completed three months of service may participate in our Puerto Rico Savings Plan.

During fiscal 2005, we initiated a 423(b) Employee Stock Purchase Plan (ESPP), which was adopted by the shareholders at the Annual Shareholder Meeting on April 29, 2004. This plan replaces the non-qualified Employee Stock Purchase Plan. Under the provisions of the 423(b) plan, eligible employees may contribute from 1% to 25% of their base compensation to purchase shares of our common stock at 85 percent of the fair market value on the offering date or the exercise date of the offering period, whichever is lower.

On June 3, 2009, at the 2009 Annual Meeting of Shareholders of Checkpoint, our shareholders amended the ESPP in order to increase the number of shares of the Company's common stock reserved for issuance under the ESPP by 400,000 shares to an aggregate of 650,000 shares. Our expense for this plan in fiscal 2011, 2010 and 2009 was $0.6 million, $0.6 million, and $0.6 million, respectively. As of December 25, 2011, there were 139,475 shares authorized and available to be issued. During fiscal year 2011, 100,475 shares were issued under this plan as compared to 102,769 shares in 2010 and 132,165 shares in 2009.

We maintain deferred compensation plans for executives and non-employee directors. The executive deferred compensation plan allows certain executives to defer portions of their salary and bonus (up to 50% and 100%, respectively) into a deferred stock account. All deferrals in this plan are matched 25% by the Company. The match vests in thirds at each calendar year end for three years following the match. For executives over the age of 55 years old, the matching contribution vests immediately. The settlement of this deferred stock account is required by the plan to be made only in Company common stock. The deferral shares held in the deferred compensation plan are considered outstanding for purposes of calculating basic and diluted earnings per share. The unvested match is considered in the calculation of diluted earnings per share. Our match into the deferred stock account under the executive plan for fiscal years 2011, 2010, and 2009 were approximately $0.2 million, $0.4 million, and $0.3 million, respectively. The match will be expensed ratably over a three year vesting period for executives under 55 years old and immediate for those older than 55 years.

The director deferred compensation plan allows non-employee directors to defer their compensation into a deferred stock account. All deferrals in this plan are matched 25% by the Company. The match vests immediately. The settlement of this deferred stock account is required by the plan to be made only in Company common stock. The deferral shares held in the deferred compensation plan are considered outstanding for purposes of calculating basic and diluted earnings per share. Our match into the deferred stock account under the director's plan approximated $40 thousand, $46 thousand, and $0.1 million for fiscal years 2011, 2010, and 2009, respectively.

Pension Plans

We maintain several defined benefit pension plans, principally in Europe. The plans covered approximately 5% of the total workforce at December 25, 2011. The benefits accrue according to the length of service, age, and remuneration of the employee. We recognize the funded status of our defined benefit postretirement plans in the Company's statement of financial position.

The amounts recognized in accumulated other comprehensive income at December 25, 2011, and December 26, 2010, consist of:

(amounts in thousands)	December 25, 2011	December 26, 2010
Transition obligation	$      58	$      198
Prior service costs	12	16
Actuarial losses	10,638	7,358
Total	10,708	7,572
Deferred tax	(4,311)	(3,426)
Net	$    6,397	$    4,146

The amounts included in accumulated other comprehensive income at December 25, 2011 and expected to be recognized in net periodic pension cost during the year ended December 30, 2012 is as follows:

(amounts in thousands)	December 30, 2012
Transition obligation	$   57
Prior service costs	2
Actuarial loss	228
Total	$ 287

The Company expects to make contributions of $4.7 million during the year ended December 30, 2012.

The pension plans included the following net cost components:

(amounts in thousands)	December 25, 2011	December 26, 2010	December 27, 2009
Service cost	$    972	$    855	$ 1,020
Interest cost	4,418	4,331	4,643
Expected return on plan assets	155	(60)	(67)
Amortization of actuarial loss (gain)	50	(24)	(10)
Amortization of transition obligation	129	124	130
Amortization of prior service costs	2	2	3
Net periodic pension cost	5,726	5,228	5,719
Settlement loss	46	—	—
Curtailment gain	(104)	—	—
Total pension expense	$ 5,668	$ 5,228	$ 5,719

The table below sets forth the funded status of our plans and amounts recognized in the accompanying Consolidated Balance Sheets.

(amounts in thousands)	December 25, 2011	December 26, 2010
Change in benefit obligation
Net benefit obligation at beginning of year	$   81,226	$   83,634
Service cost	972	855
Interest cost	4,418	4,331
Actuarial loss	4,439	4,344
Gross benefits paid	(4,537)	(4,487)
Plan curtailments	(618)	—
Plan settlements	(470)	—
Foreign currency exchange rate changes	(756)	(7,451)
Net benefit obligation at end of year	$   84,674	$   81,226
Change in plan assets
Fair value of plan assets at beginning of year	$     1,472	$     1,400
Actual return on assets	145	(432)
Employer contributions	4,801	5,117
Gross benefits paid	(4,537)	(4,487)
Plan settlements	(470)	—
Foreign currency exchange rate changes	(5)	(126)
Fair value of plan assets at end of year	$     1,406	$     1,472
Reconciliation of funded status
Funded status at end of year	$ (83,268)	$ (79,754)

(amounts in thousands)	December 25, 2011	December 26, 2010
Amounts recognized in accrued benefit consist of:
Accrued pensions — current	$   4,453	$   4,358
Accrued pensions	78,815	75,396
Net amount recognized at end of year	$ 83,268	$ 79,754
Other comprehensive income attributable to change in additional minimum liability recognition	$        —	$        —
Accumulated benefit obligation at end of year	$ 80,744	$ 77,361

The following table sets forth additional fiscal year-ended information for pension plans for which the accumulated benefit is in excess of plan assets:

(amounts in thousands)	December 25, 2011	December 26, 2010
Projected benefit obligation	$ 84,674	$ 81,226
Accumulated benefit obligation	$ 80,744	$ 77,361
Fair value of plan assets	$   1,406	$   1,472

The weighted average rate assumptions used in determining pension costs and the projected benefit obligation are as follows:

	December 25, 2011		December 26, 2010
Weighted average assumptions for year-end benefit obligations:
Discount rate (1)	4.77	%	5.27	%
Expected rate of increase in future compensation levels	2.52	%	2.52	%
Weighted average assumptions for net periodic benefit cost development:
Discount rate (1)	5.27	%	5.77	%
Expected rate of return on plan assets	5.75	%	4.00	%
Expected rate of increase in future compensation levels	2.52	%	2.52	%
Measurement Date:	December 31, 2011		December 31, 2010

(1)   Represents the weighted average rate for all pension plans.

In developing the discount rate assumption for each country, we use a yield curve approach. The yield curve is based on the AA rated bonds underlying the Barclays Capital corporate bond index. The weighted average discount rate was 4.77% in 2011 and 5.27% in 2010. We calculate the weighted average duration of the plans in each country, then select the discount rate from the appropriate yield curve which best corresponds to the plans' liability profile.

The majority of our pension plans are unfunded plans. The expected rate of the return was developed using the historical rate of returns of the foreign government bonds currently held. This resulted in the selection of the 5.75% long-term rate of return on asset assumption. For funded plans, all assets are held in foreign government bonds.

The benefits expected to be paid over the next five years and the five aggregated years after:

(amounts in thousands)

2012	$   4,453
2013	$   4,563
2014	$   4,653
2015	$   4,825
2016	$   4,777
2017 through 2021	$ 25,341

The following table provides a summary of the fair value of the Company's pension plan assets at December 25, 2011 utilizing the fair value hierarchy discussed in Note 14:

(amounts in thousands)	Total Fair Value Measurement December 25, 2011	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Global insurance assets	$ 1,406	$ —	$ —	$ 1,406

All investments consist of fixed-income global insurance. The investment objective of fixed-income funds is to maximize investment return while preserving investment principal.

Additional information pertaining to the changes in the fair value of the pension plan assets classified as Level 3 for the year ended December 25, 2011 is presented below:

(amounts in thousands)	Balance as of December 26, 2010	Actual Return on Plan Assets, Relating to Assets Still Held at the Reporting Date	Actual Return on Plan Assets, Relating to Assets Sold During the Period	Purchases, Sales and Settlements	Transfer into / (out of) Level 3	Change due to Exchange Rate Changes	Balance as of December 25, 2011
Asset Category
Global insurance assets	$ 1,472	$ 627	$ (153)	$ (381)	$ (154)	$ (5)	$ 1,406
Total Level 3 Assets	$ 1,472	$ 627	$ (153)	$ (381)	$(154)	$ (5)	$ 1,406