Pension And Postretirement Obligations

12 Months Ended

Dec. 31, 2012

Pension And Postretirement Obligations [Abstract]

Pension And Postretirement Obligations

Note 15: PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company has two defined benefit pension plans covering certain management and non-management employees who reached at least 21 years of age and have completed one year of service before the plan was frozen with respect to benefit accruals and new eligibility. The non-management plan was frozen as of May 1, 2003 and the management plan was frozen as of March 1, 2005. For an eligible employee, benefits are based on years of service and the average of the employee's three highest consecutive years' of base compensation for years prior to the date on which the plan was frozen. The Company's policy is to fund the minimum required contribution disregarding any credit balance arising from excess amounts contributed in the past.

The Company sponsors a postretirement medical benefit plan that covers all employees that retire directly from active service on or after age 55 with at least 10 years of service. The projected unit credit actuarial method was used in determining the cost of future benefits. Assets of the plan are principally invested in fixed income securities and a money market fund. The Company uses an annual measurement date of December 31 for all of its benefit plans.

The components of the pension and postretirement expense (credit) for the years ended December 31 are as follows:

			Pension Benefits							Postretirement Benefits
($ in thousands)		2012		2011			2010			2012			2011			2010
Components of net periodic costs:
Service cost	$	-	$	-		$	-		$	14		$	14		$	11
Interest cost		759		860			869			226			238			246
Expected return on plan assets		(876	)	(913	)		(820	)		(173	)		(168	)		(161	)
Amortization of transition asset		-		-			-			28			28			28
Amortization of prior service cost		56		56			56			(330	)		(330	)		(330	)
Recognized actuarial (gain) loss		909		755			873			131			94			94
Net periodic loss (gain)	$	848	$	758		$	978		$	(104	)	$	(124	)	$	(112	)

Amounts recognized in other comprehensive loss (income) and net periodic cost (income) before tax for pension and other postretirement plan consisted of the following:

					Pension Benefits						Postretirement Benefits
($ in thousands)		2012			2011			2010			2012			2011			2010
Actuarial net (gain) loss	$	(163	)	$	2,787		$	(1,244	)	$	(1,609	)	$	432		$	130
Transition obligation (asset)		-			-			-			(28	)		(28	)		(28	)
Prior service (credit) cost		(56	)		(56	)		(56	)		330			330			330
Total recognized in other comprehensive
(income) loss	$	(219	)	$	2,731		$	(1,300	)	$	(1,307	)	$	734		$	432
Total recognized in net periodic benefit cost
(income) and other comprehensive
(income) loss	$	629		$	3,489		$	(322	)	$	(1,411	)	$	610		$	320

The estimated amounts for the defined benefit pension plans and the postretirement benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost (income) over the next fiscal year are as follows:

				Postretirement
($ in thousands)		Pension Plans		Benefits
Amortization of net actuarial loss	$	792	$	61
Amortization of prior service cost (credit)	$	56	$	(330	)

The following table presents a summary of the projected benefit obligation and plan assets of the plans at December 31:

								Postretirement
($ in thousands)		Pension Benefits						Benefits
		2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation, beginning of year	$	18,556		$	16,020		$	5,143		$	4,580
Service cost		-			-			14			14
Interest cost		759			860			226			238
Actuarial losses (income)		1,518			2,602			(1,595	)		431
Benefit payments		(925	)		(926	)		(133	)		(120	)
Benefit obligation, end of year		19,908			18,556			3,655			5,143
Changes in fair value of plan assets
Fair value of plan assets, beginning of year		11,265			11,690			2,167			2,096
Actual return on plan		1,648			(28	)		54			72
Employer contributions		455			529			133			120
Benefit payments		(925	)		(926	)		(133	)		(120	)
Fair value of plan assets, end of year		12,443			11,265			2,221			2,168
Unfunded status at end of year	$	(7,465	)	$	(7,291	)	$	(1,434	)	$	(2,975	)

Amounts recognized in the consolidated balance sheets consisted of the following:

								Postretirement
		Pension Benefits						Benefits
($ in thousands)		2012			2011			2012			2011
Pension and postretirement benefit obligations-current	$	(954	)	$	(502	)	$	(135	)	$	(120	)
Pension and postretirement benefit obligations-long term		(6,511	)		(6,789	)		(1,299	)		(2,855	)
Total	$	(7,465	)	$	(7,291	)	$	(1,434	)	$	(2,975	)

Amounts recognized in the accumulated other comprehensive loss, net of tax, consisted of the following:

								Postretirement
		Pension Benefits						Benefits
($ in thousands)		2012			2011			2012			2011
Actuarial net (loss) gain	$	(3,863	)	$	(3,967	)	$	(524	)	$	(1,557	)
Transition obligation / (asset)					-			-			(18	)
Net prior service credit		(150	)		(187	)		538			750
Total	$	(4,013	)	$	(4,154	)	$	14		$	(825	)

Actuarial assumptions used to calculate the projected benefit obligation were as follows for the years ended December 31:

	Pension Benefits				Postretirement Benefits
	2012		2011		2012		2011
Discount rate	3.70- 3.90%		4.25	%	3.60	%	4.25	%
Expected return on plans	8.00	%	8.00	%	8.00	%	8.00	%
Healthcare cost trend	-		-		5.00- 9.00%		6.50- 8.50%

Actuarial assumptions used to calculate net periodic benefit cost were as follows for the years ended December 31:

	Pension				Postretirement
	Benefits				Benefits
	2012		2011		2012		2011
Discount rate	3.70 - 3.90%		4.25	%	3.60	%	4.25	%
Expected return on assets	8.00	%	8.00	%	8.00	%	8.00	%

The rate of return assumption, currently 8%, estimates the portion of plan benefits that will be derived from investment return and the portion that will come directly from Company contributions. Accordingly, the Company, utilizing the investment policy described below, strives to maintain an investment portfolio that generates annual returns from funds invested consistent with achieving the projected long-term rate of return required for plan assets. The investment policy followed by the Pension Plan Manager can be described as an "adaptive" approach that is essentially structured towards achieving a compromise between the static long-term approach and the short-term opportunism of the dynamic or tactical approaches. The objective is to modify asset allocations based on changing economic and financial market conditions so as to capture the major position of excess returns and then shift the priority to risk containment after valuations become stretched.

The projected benefit obligation of $19.9 million at December 31, 2012 was in excess of plan assets of $12.4 million, leading to an unfunded projected benefit obligation of $7.5 million as of December 31, 2012. The projected benefit obligation of $18.6 million at December 31, 2011 was in excess of plan assets of $11.3 million, leading to an unfunded projected benefit obligation of $7.3 million as of December 31, 2011. The Company's postretirement plans had an unfunded projected benefit obligation of $3.0 million as of December 31, 2011. The projected benefit obligation of $5.2 million at December 31, 2011 was in excess of plan assets of $2.2 million.

The Company's postretirement plans had an unfunded projected benefit obligation of $1.4 million as of December 31, 2012. The $1.6 million improvement compared to December 31, 2011 was due to changes in the model based on actual experience of the plan. Primarily, the gain resulted from the change in how post-65 benefits are valued. The Medicare supplement plan currently provided through AARP has been running at a cost much lower than was anticipated. The projected benefit obligation of $3.7 million at December 31, 2012 was in excess of plan assets of $2.3 million.

The projected benefit obligations exceeded the fair value of plan assets at December 31, 2012, however the projected benefit obligation declined from the same period December 31, 2011. The Company was required to record a reduction to its pension liability in the Consolidated Balance Sheet as of December 31, 2012 and the effect of this adjustment was a decrease in the pension liability of $1.4 million and an decrease in accumulated other comprehensive loss of $1.0 million, net of tax. The health care cost trend rates (representing the assumed annual percentage increase in claim costs by year) was 9% for the year 2013 grading down to 5% in 2021 and later by 0.5% per year. The Company's most recent actuarial calculation anticipates that this trend will continue into 2013. An increase in the assumed health care cost trend rate by 1.0% would increase the accumulated postretirement benefit obligation as of December 31, 2012 by approximately $0.4 million. A 1.0% decrease in the health care cost trend rate would decrease these components by $0.3 million

Plan Assets

The Company diversifies its pension and postretirement plan assets across domestic and international common stock and fixed income asset classes.

As of December 31, 2012, the current target allocations for pension and postretirement plan assets are 50-60% for equity securities, 40-50% for fixed income securities and 0-10% for cash and certain other investments.

The fair values of the Company's pension plan assets at December 31, 2012 by asset category are as follows:

		Total
($ in thousands)		Market
		Value		Level 1		Level 2		Level 3
Asset Category
Equity securities (a)	$	6,239	$	6,239	$	-	$	-
Fixed income securities (b)		5,390		5,390		-		-
Cash and cash equivalents (c)		814		814		-		-
Total pension assets	$	12,443	$	12,443	$	-	$	-

The fair values of the Company's postretirement plan assets at December 31, 2012 by asset category are as follows:

	Total
($ in thousands)	Market
	Value			Level 1		Level 2		Level 3
Asset Category
Fixed income securities (b)	$	1,760	$	1,760	$	-	$	-
Cash and cash equivalents (c)		461		461		-		-
Total pension assets	$	2,221	$	2,221	$	-	$	-

(a) This category includes funds invested in equity securities of large, medium and small-sized companies and equity securities of international markets. The funds are valued using the market value for the underlying investments.

(b) This category includes funds invested in fixed income instruments. The funds are valued using the market value for the underlying investments.

(c) This category comprises cash held to pay beneficiaries. The fair value equals its book value.

The fair values of the Company's pension plan assets at December 31, 2011 by asset category are as follows:

		Total
($ in thousands)		Market
		Value		Level 1		Level 2		Level 3
Asset Category
Equity securities (a)	$	5,826	$	5,826	$	-	$	-
Fixed income securities (b)		4,605		4,605		-		-
Cash and cash equivalents (c)		834		834		-		-
Total pension assets	$	11,265	$	11,265	$	-	$	-

The fair values of the Company's postretirement plan assets at December 31, 2011 by asset category are as follows:

	Total
($ in thousands)	Market
	Value			Level 1		Level 2		Level 3
Asset Category
Fixed income securities (b)	$	1,706	$	1,706	$	-	$	-
Cash and cash equivalents (c)		461		461		-		-
Total pension assets	$	2,167	$	2,167	$	-	$	-

(a) This category includes funds invested in equity securities of large, medium and small-sized companies and equity securities of international markets. The funds are valued using the market value for the underlying investments.

(b) This category includes funds invested in fixed income instruments. The funds are valued using the market value for the underlying investments.

(c) This category comprises cash held to pay beneficiaries. The fair value equals its book value.

In accordance with its contribution policy, in 2013 the Company expects to contribute $1.0 million to its pension plan.

Benefit payments, under the provisions of the plans, are expected to be paid as follows:

		Pension		Postretirement
($ in thousands)		Benefits		Benefits
2013	$	991	$	214
2014		1,007		232
2015		1,028		220
2016		1,068		195
2017		1,131		206
2018-2021		6,091		1,062

The Company also has a defined contribution 401(k) Profit Sharing Plan covering certain eligible employees. Under the plan, employees may contribute up to 100% of compensation not to exceed certain legal limitations. The Company matches 100% of the participant's contributions, up to either 4.0% or 4.5% of compensation, as set forth in the plan. The Company contributed and expensed $0.4 million, $0.3 million and $0.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

The Company has deferred compensation agreements in place with certain former officers that became effective upon retirement. These non-qualified plans are not currently funded and a liability representing the present value of future payments has been established, with balances of $0.3 million as of December 31, 2012 and 2011.