Savings and Retirement Plans

12 Months Ended

Mar. 31, 2013

Savings and Retirement Plans [Abstract]

Savings and Retirement Plans

5.   Savings and Retirement Plans

We sponsor various plans for eligible employees in the United States, the United Kingdom (UK), and The Netherlands. Our retirement savings plan in the United States conforms to Section 401(k) of the Internal Revenue Code and participation is available to substantially all employees.  We may also make discretionary contributions ratably to all eligible employees.  We made discretionary contributions to the U.S. plan of $228,000, $218,000 and $52,000 for fiscal 2013, 2012 and 2011, respectively.

Our international subsidiaries in the U.K. and The Netherlands have defined benefit retirement plans for eligible employees.  These plans provide benefits based on the employee's years of service and compensation during the years immediately preceding retirement, termination, disability, or death, as defined in the plans.  We froze the U.K. subsidiary's defined benefit plan on December 31, 2004.  On March 10, 2005, we established a defined contribution plan for the U.K. subsidiary.  As of April 1, 2005 we closed The Netherlands subsidiary's defined benefit retirement plan for new employees and established a defined contribution plan for them.  The total contribution expense associated with the defined contribution plans in The Netherlands and the U.K. was $16,000, $12,000 and $6,000 for fiscal 2013, 2012 and 2011, respectively.

The amortization of actuarial gains or losses is included as a component of the annual expense for a year if, as of the beginning of the year, the cumulative net gain or loss exceeds 10% of the greater of the projected benefit obligation or plan assets.  If amortization is required, the amortization is that excess divided by the expected average future service of the active employees participating in the plans or the average remaining life expectancies of inactive employees.

The Netherlands defined benefit plan

The Netherlands defined benefit pension plan is funded through a guaranteed insurance contract with Swiss Life, an insurance company.  Our contract with Swiss Life requires of us to make annual premium payments which are sufficient to satisfy the Vested Benefit Obligation (VBO).  Swiss Life does not hold separate investment assets for our contract, but rather is obligated to provide the stream of future benefits for the annual premium payments we make.  We calculate the market value of the pension plan assets, held in Swiss Life insured assets, as the stream, based on mortality, of the earned guaranteed benefit payments discounted at market interest rate.  The benefit obligation is calculated based on the same assumptions as well.  Accordingly, the impact on pension plan assets of a change in assumption for discount rate and mortality would equally offset the change in VBO.

At March 31, 2013, we project the following benefit payments in subsequent fiscal years:

2014	$	-
2015		4,000
2016		23,000
2017		23,000
2018		23,000
2019 to 2023		159,000
	$	232,000

We contributed $122,000 in fiscal 2013, $154,000 in fiscal 2012, $135,000 in fiscal 2011, and expect to contribute approximately $110,000 in fiscal 2014.

The following table summarizes the change in benefit obligations and the change in plan assets for the years ended March 31:

	2013			2012
Changes in benefit obligations:
Projected benefit obligation, beginning of year	$	1,572,000		$	1,427,000
Service cost		74,000			73,000
Interest cost		88,000			86,000
Actuarial result		956,000			70,000
Foreign currency translation		(66,000	)		(84,000	)
Projected benefit obligation, end of year	$	2,624,000		$	1,572,000
Changes in plan assets:
Plan assets, beginning of year	$	1,217,000		$	1,041,000
Contributions to plan		122,000			154,000
Management cost		(11,000	)		(14,000	)
Actual return on assets		716,000			100,000
Foreign currency translation		(51,000	)		(64,000	)
Plan assets, end of year	$	1,993,000		$	1,217,000

The amount recognized in other comprehensive loss at March 31 consists of:

	2013			2012
Unrecognized net prior service benefit	$	(313,000	)	$	(357,000	)
Unrecognized net losses		612,000			411,000
Additional other comprehensive loss (gross of deferred taxes)	$	299,000		$	54,000

The projected benefit obligation, accumulated benefit obligations and the fair value plan assets at March 31 were as follows:

	2013		2012
Projected benefit obligation	$	2,624,000	$	1,572,000
Accumulated benefit obligation		2,083,000		1,253,000
Fair value of plan assets		1,993,000		1,217,000

We have recorded the excess of the projected benefit obligation over the fair value of the plan assets on March 31, 2013 and 2012, of $631,000 and $355,000, respectively, as accrued pension liability.

The cost of our defined benefit retirement plan includes the following components for the years ended March 31:

	2013			2012			2011
Gross service cost, net of employee contribution	$	60,000		$	58,000		$	80,000
Interest cost		88,000			86,000			81,000
Management cost		11,000			14,000			12,000
Expected return on assets		2,000			9,000			(24,000	)
Amortization		(11,000	)		(6,000	)		5,000
Net periodic retirement cost	$	150,000		$	161,000		$	154,000

Major assumptions used in the above calculations include:

	2013			2012
Discount rate		3.90	%		5.80	%
Expected return on assets		3.90	%		5.80	%
Expected rate of increase in future compensation:
General		2.5	%		2.5	%
Individual		0-3	%		0-3	%

The discount rate used is based upon the yields available on high quality corporate bonds with a term that matches the liabilities.  The impact of the decrease in discount rate used for March 31, 2013 over 2012 was an increase in the projected benefit obligation and actual return on assets. The market value of the assets is determined as the discounted stream of guaranteed benefit payments. Given the valuation method of the assets, the expected long-term rate of return on assets equals the discount rate.

The U.K. defined benefit plan

As of March 31, 2013 and 2012, we held all the assets of the U.K. defined benefit pension plan in a Deposit Administration Contract with Phoenix Life Limited.

At March 31, 2013 we project the following benefit payments in subsequent fiscal years:

2014	$	-
2015		-
2016		-
2017		86,000
2018		-
2019 to 2023		136,000
	$	222,000

We contributed $34,000 in fiscal 2013, $35,000 in fiscal 2012, $36,000 in fiscal 2011, and expect to contribute approximately $41,000 in fiscal 2014.

The following table summarizes the change in benefit obligations and the change in plan assets for the years ended March 31:

	2013			2012
Changes in benefit obligations:
Projected benefit obligation, beginning of year	$	733,000		$	652,000
Service cost		5,000			5,000
Interest cost		35,000			36,000
Other		(5,000	)		(5,000	)
Actuarial result		(69,000	)		47,000
Foreign currency translation		(34,000	)		(2,000	)
Projected benefit obligation, end of year	$	665,000		$	733,000
Changes in plan assets:
Plan assets, beginning of year	$	614,000		$	562,000
Contributions to plan		34,000			35,000
Management cost		(5,000	)		(5,000	)
Actual return on assets		24,000			23,000
Foreign currency translation		(31,000	)		(1,000	)
Plan assets, end of year	$	636,000		$	614,000

The amount recognized in other comprehensive loss as of March 31 consists of:

	2013		2012
Unrecognized net losses (gross of deferred taxes)	$	130,000	$	225,000

The projected benefit obligation, accumulated benefit obligation and the fair value plan assets at March 31 were as follows:

	2013		2012
Projected benefit obligation	$	665,000	$	733,000
Accumulated benefit obligation		665,000		733,000
Fair value of plan assets		636,000		614,000

We have recorded the excess of the projected benefit obligation over the fair value of the plan assets of $29,000 and $119,000, as of March 31, 2013 and March 31, 2012, respectively, as accrued pension liability.

The cost of our defined benefit retirement plan includes the following components for the years ended March 31:

	2013			2012			2011
Gross service cost, net of employee contribution	$	5,000		$	5,000		$	3,000
Interest cost		35,000			36,000			33,000
Expected return on assets		(21,000	)		(29,000	)		(26,000	)
Amortization		15,000			12,000			12,000
Net periodic retirement cost	$	34,000		$	24,000		$	22,000

Major assumptions used in the above calculations include:

	2013			2012
Discount rate		4.80	%		4.90	%
Expected return on assets		3.10	%		3.40	%

The discount rate used is based upon the yields available on high quality corporate bonds with a term that matches the liabilities.  The expected return on assets assumption on the investment portfolio for the defined benefit plan is based on the long-term expected returns for the assets currently in the portfolio. Management uses historic return trends of the asset portfolio combined with recent market conditions to estimate the future rate of return.

Plan Assets

The primary objective of the Netherlands pension plan is to meet retirement income commitments to plan participants at a reasonable cost.  In The Netherlands, consistent with typical practice, the pension plan is funded through a guaranteed insurance contract with Swiss Life, an insurance company.  Swiss Life is responsible for the investment strategy of the insurance premiums we make.  We have characterized the assets of the pension plan as an "other contract."

The primary objective of the U.K. pension plan is to meet retirement income commitments to plan participants at a reasonable cost.  The objective is achieved through growth of capital and safety of funds invested.  The pension plan assets are invested in a Deposit Administration Contract with Phoenix Life Limited, an insurance company, with underlying investments primarily in fixed interest U.K. government bonds.

The allocation of pension plan assets as of March 31 was as follows:

	2013						2012
	Target Allocation			Actual Allocation			Target Allocation			Actual Allocation
Other Contract (Netherlands Plan)		100	%		100	%		100	%		100	%
Deposit Administration Contract (U.K. Plan)		100	%		100	%		100	%		100	%

We calculate the market value of the pension plan assets, held in Swiss Life insured assets, as the stream, based on mortality (an unobservable input), of the earned guaranteed benefit payments discounted at market interest rate.  Accordingly, we have classified the Netherlands pension plan assets as Level 3 assets.  The market value of the U.K. pension plan reflects the value of our contributions to the plan and the credited accrued interest at the rate specified in the Deposit Administration Contract.  Accordingly, we have classified the U.K. plan assets as Level 2 assets.

The fair value of the pension plan assets at March 31 by asset class is as follows:

Asset Class	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
2013
Other Contract (Netherlands Plan)	$	1,993,000	$	(3,000	)	$	-	$	1,996,000
Deposit Administration Contract (U.K. Plan)		636,000		-			636,000		-
2012
Other Contract (Netherlands Plan)	$	1,217,000	$	-		$	-	$	1,217,000
Deposit Administration Contract (U.K. Plan)		614,000		-			614,000		-

The reconciliation of beginning and ending balances for our Level 3 assets is as follows:

	Other Contract (Netherlands Pension Plan Assets)
Beginning balance as at April 1, 2012	$	1,217,000
Loss recognized in earnings		(13,000	)
Unrealized actuarial gain recognized in other comprehensive loss		721,000
Purchases		122,000
Unrealized foreign currency translation loss recognized in other comprehensive loss		(51,000	)
Ending balance as at March 31, 2013	$	1,996,000

The unrealized actuarial gain of $721,000, recognized in other comprehensive loss, is equally offset by an unrealized actuarial loss, recognized in other comprehensive income, in the Vested Benefit Obligation.