Pension And Postretirement Obligations

12 Months Ended

Dec. 31, 2013

Pension And Postretirement Obligations [Abstract]

Pension And Postretirement Obligations

NOTE 13: 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
		For the Years Ended December 31,
($ in thousands)		2013			2012			2011			2013			2012			2011
Components of net periodic costs:
Service cost	$	-		$	-		$	-		$	13		$	14		$	14
Interest cost		756			759			860			112			226			238
Expected return on plan assets		(975	)		(876	)		(913	)		(178	)		(173	)		(168	)
Amortization of transition asset		-			-			-			-			28			28
Amortization of prior service cost		56			56			56			(330	)		(330	)		(330	)
Recognized actuarial (gain) loss		840			909			755			37			131			94
Net periodic loss (gain)	$	677		$	848		$	758		$	(346	)	$	(104	)	$	(124	)

The amortization of prior service cost and recognized actuarial (gain) loss included in pension and postretirement expense represent relassifications out of other comprehensive income (loss).

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	$	710	$	24
Amortization of prior service cost (credit)	$	56	$	(330	)

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

								Postretirement
($ in thousands)		Pension Benefits						Benefits
		For the Years Ended December 31,
		2013			2012			2013			2012
Change in Benefit Obligation
Benefit obligation, beginning of year	$	19,908		$	18,556		$	3,655		$	5,143
Service cost		-			-			13			14
Interest cost		756			759			112			226
Actuarial losses (income)		(1,240	)		1,518			(805	)		(1,595	)
Benefit payments		(931	)		(925	)		(133	)		(133	)
Benefit obligation, end of year		18,493			19,908			2,842			3,655
Changes in fair value of plan assets
Fair value of plan assets, beginning of year		12,443			11,265			2,221			2,167
Actual return on plan		1,084			1,648			(16	)		54
Employer contributions		520			455			134			133
Benefit payments		(931	)		(925	)		(133	)		(133	)
Fair value of plan assets, end of year		13,116			12,443			2,206			2,221
Unfunded status, end of year	$	(5,377	)	$	(7,465	)	$	(636	)	$	(1,434	)

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

								Postretirement
		Pension Benefits						Benefits
					As of December 31,
($ in thousands)		2013			2012			2013			2012
Pension and postretirement benefit obligations-current	$	(267	)	$	(954	)	$	-		$	(135	)
Pension and postretirement benefit obligations-long term		(5,110	)		(6,511	)		(636	)		(1,299	)
Total	$	(5,377	)	$	(7,465	)	$	(636	)	$	(1,434	)

The Company also 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, 2013 and 2012.

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

								Postretirement
		Pension Benefits						Benefits
		For the Years Ended December 31,
($ in thousands)		2013			2012			2013			2012
Actuarial net (loss) gain	$	(3,824	)	$	(6,013	)	$	(168	)	$	(815	)
Net prior service credit		(178	)		(234	)		507			837
Income tax expense (benefit)		(2,433	)		(2,234	)		206			8
Total	$	(1,569	)	$	(4,013	)	$	133		$	14

Actuarial assumptions used to calculate the projected benefit obligation were as follows for the years ended December 31, 2013 and 2012:

	Pension Benefits				Postretirement Benefits
	For the Years Ended December 31,
	2013		2012		2013		2012
Discount rate	4.50- 4.70%		3.70- 3.90%		4.50	%	3.60	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%	8.00	%
Healthcare cost trend	-		-		8.50	%	9.00	%

Actuarial assumptions used to calculate net periodic benefit cost were as follows for the years ended December 31, 2013 and 2012:

					Postretirement
	Pension Benefits				Benefits
	For the Years Ended December 31,
	2013		2012		2013		2012
Discount rate	3.7- 3.9	%	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 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 projected pension benefit obligation of $18.5 million at December 31, 2013 was in excess of plan assets of $13.1 million, leading to an unfunded projected benefit obligation of $5.4 million as of December 31, 2013. 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 pension benefit obligation exceeded the fair value of plan assets at December 31, 2013, however the projected benefit obligation declined from the same period December 31, 2012. The Company was required to record a reduction to its pension liability on its Consolidated Balance Sheet as of December 31, 2013 and the effect of this adjustment was a decrease in the pension liability of $2.1 million and a decrease in accumulated other comprehensive loss of $2.3 million.

The Company's postretirement plans had an unfunded projected benefit obligation of $0.6 million as of December 31, 2013. The projected benefit obligation of $2.8 million at December 31, 2013 was in excess of plan assets of $2.2 million. The Company's postretirement plans had a benefit obligation of $3.7 million as of December 31, 2012. The $0.8 million improvement compared to December 31, 2012 was due to the Medicare supplement plan currently provided through AARP running at a cost much lower than was anticipated. The health care cost trend rates (representing the assumed annual percentage increase in claim costs by year) was 8.5% for the year 2014 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 2014. An increase in the assumed health care cost trend rate by 1.0% would increase the accumulated postretirement benefit obligation as of December 31, 2013 by approximately $0.3 million. A 1.0% decrease in the health care cost trend rate would decrease these components by $0.2 million. The projected postretirement benefit obligation exceeded the fair value of plan assets at December 31, 2013, however the projected benefit obligation declined from the same period December 31, 2012. The Company was required to record a reduction to its postretirement liability on its Consolidated Balance Sheet as of December 31, 2013 and the effect of this adjustment was a decrease in the postretirement liability of $0.8 million and a decrease in accumulated other comprehensive loss of $0.3million.

On December 8, 2003, the Medicare Prescription Drug Improvement Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare Part D, as well as a federal subsidy to sponsors of retiree health care benefit plans that provide benefits at least actuarially equivalent to Medicare Part D. The Company has not applied for a subsidy as it has not done an assessment to determine if it is actuarially equivalent to Medicare Part D under the Act. Therefore, a subsidy is not included in the actuarial assumptions for its postretirement benefits plan.

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, 2013, 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, 2013 by asset category are as follows:

($ in thousands)
		Total		Level 1		Level 2		Level 3
Asset Category
Equity securities	$	6,777	$	1,361	$	5,416	$	-
Fixed income securities		5,528		4,605		923		-
Cash and cash equivalents		811		811		-		-
Total pension assets	$	13,116	$	6,777	$	6,339	$	-

The fair values of the Company's postretirement plan assets at December 31, 2013 by asset category are as follows:

($ in thousands)
		Total		Level 1		Level 2		Level 3
Asset Category
Fixed income securities	$	1,744	$	1,744	$	-	$	-
Cash and cash equivalents		462		462		-		-
Total pension assets	$	2,206	$	2,206	$	-	$	-

The fair value of certain equity and fixed income investment vehicles of $4.9 million and $0.9 million, respectively were incorrectly disclosed as Level 1 fiar value measurements in the Company's 2012 consolidated financial statements. The 2012 disclosure has been corrected to classify these investments as Level 2 fair value measurements as fair value is based on observable inputs other than quoted prices in active markets. The Company does not believe that these disclosure errors were material to the previously issued 2012 consolidated financial statements.

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

($ in thousands)
		Total		Level 1		Level 2		Level 3
Asset Category
Equity securities	$	6,239	$	1,293	$	4,946	$	-
Fixed income securities		5,390		4,502		888		-
Cash and cash equivalents		814		814		-		-
Total pension assets	$	12,443	$	6,609	$	5,834	$	-

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

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

Equity securities and fixed income securities categorized as Level 1 represent mutual funds that are traded on national and international exchanges and are valued at their closing prices on the last trading day of the year. Additionally, some equity securities and fixed income securities are public investment vehicles valued using the Net Asset Value ("NAV") provided by the fund manager. The NAV is the total value of the fund divided by the number of shares outstanding. As the underlying securities to these funds are nationally traded and these funds do not have redemption restrictions, they are categorized as Level 2.

In accordance with its contribution policy, in 2014 the Company expects to make the required contribution of $0.3 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
2014	$	1,041	$	203
2015		1,065		190
2016		1,095		167
2017		1,160		177
2018		1,216		178
2019-2023		6,330		941

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, $0.4 million, and $0.3 million for the years ended December 31, 2013, 2012 and 2011, respectively.