Retirement Benefits

12 Months Ended

Dec. 31, 2012

Retirement Benefits [Abstract]

Retirement Benefits

NOTE 13

Retirement Benefits

The Company maintains a noncontributory supplemental retirement program that was established for key management. No new participants have been admitted to this program since 2001 and the benefits of active participants were frozen in 2005. The program participants do not include any of the Company’s current executive officers. The supplemental retirement program requires continued employment or disability through the date of expected retirement. The cost of the program is accrued over the average expected future lifetime of the participants. The program provides for vesting of benefits under certain circumstances. Funding is not required, but the Company has made investments in annuity contracts and maintains life insurance policies on the lives of the individual participants to assist in payment of retirement benefits. The Company is the owner and beneficiary of the annuity contracts and life insurance policies; accordingly, the cash value of the annuity contracts and the cash surrender value of the life insurance policies are reported on the consolidated balance sheets and the appreciation is included in the consolidated statement of operations. The Company accounts for the cash surrender value of the approximately 70 annuity contracts and life insurance policies using the fair value method. The fair value method requires the Company to remeasure the policies at fair value at each reporting period and the changes are recorded in earnings. Any cash receipts and payments related to the policies are included in the consolidated statement of cash flows within the operating activities section. The carrying value of the annuity contracts and life insurance policies was $18.1 million and $17.3 million as of December 31, 2012 and 2011, respectively. The face value of the annuity contracts and life insurance policies was $25.5 million and $25.1 million as of December 31, 2012 and 2011, respectively.

In June 2005, the program was amended to freeze accrual of all benefits to active participants provided under the program. The Company continues to recognize periodic pension cost related to the program, but the amount is lower as a result of the curtailment.

The following provides a reconciliation of benefit obligation and funded status of the Company’s supplemental retirement program (in thousands):

	December 31,
	2012			2011
Projected benefit obligation, beginning of year	$	21,488		$	19,703
Interest cost		935			1,001
Assumption changes		2,263			1,617
Actuarial (gain) loss		145			253
Benefit payments		(1,157	)		(1,086	)
Projected benefit obligation, end of year	$	23,674		$	21,488
Unfunded status	$	23,674		$	21,488
Accumulated loss		(7,523	)		(5,298	)
Net amount recognized	$	16,151		$	16,190

Amounts recognized in consolidated balance sheets consist of (in thousands):

	December 31,
	2012			2011
Accrued pension liability	$	23,674		$	21,488
Accumulated other comprehensive loss		(7,523	)		(5,298	)
Net amount recognized	$	16,151		$	16,190
Assumptions used to determine pension obligations are as follows:
Discount rate		3.55	%		4.48	%
Rate of compensation increase		N/A			N/A

At December 31, 2012 and 2011, the Company estimated its discount rate based on the Citigroup Pension Discount Curve, which is a well-established and credible source based upon a similar duration to the Company’s pension obligations. At December 31, 2010, the Company estimated its discount rate based on the Moody’s AA long-term corporate bond yield, which is a well-established and credible source based upon bonds of appropriate credit quality and a similar duration to the Company’s pension obligations.

The net periodic pension cost for the Company’s supplemental retirement program is as follows (in thousands):

	Year Ended December 31,
	2012		2011		2010
Interest cost	$	935	$	1,001	$	1,017
Amortization of loss		182		86		39
Net periodic pension cost	$	1,117	$	1,087	$	1,056

The discount rate used to determine net periodic pension cost at December 31, 2012, 2011 and 2010 was 4.48%, 5.22% and 5.57%, respectively.

The accumulated benefit obligation of the Company’s supplemental retirement program was $23.7 million and $21.5 million as of December 31, 2012 and 2011, respectively. At December 31, 2012 and 2011, the accumulated benefit obligation of the Company’s supplemental retirement program exceeded plan assets.

Health insurance benefits are provided to certain employees who retire before age 65 and, in certain cases, spouses of retired employees. The Company has not accepted new participants into this benefit program since 2001and the program is set to expire in 2017. The accrued postretirement benefit cost was approximately $277,000 and $336,000 as of December 31, 2012 and 2011, respectively.

The Company estimates that benefits expected to be paid to participants under the supplemental retirement program and postretirement health insurance program are as follows (in thousands):

	Supplemental Retirement Program		Postretirement Health Insurance Program
2013	$	1,308	$	60
2014		1,319		64
2015		1,455		69
2016		1,564		52
2017		1,524		56
Next 5 years		7,229		—
	$	14,399	$	301

The Company has a defined contribution retirement plan which is qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees are eligible to participate. The Company may make discretionary matching contributions. Employer contributions to the plan were $899,000, $788,000 and $0 for the years ended December 31, 2012, 2011 and 2010, respectively.