Pension and Profit Sharing

12 Months Ended

Dec. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Pension and Profit Sharing

6. Pension and Profit Sharing

United States employees, hired prior to July 1, 1993, are covered by a funded, defined benefit pension plan. The benefits of this pension plan are based on years of service and the average compensation of the highest three consecutive years during the last ten years of employment. In December 1995, the Company's Board of Directors approved an amendment to the United States pension plan that terminated all future benefit accruals as of February 1, 1996, without terminating the pension plan.

In 2020, the Company entered into agreements with an insurance company to transfer future benefit obligations and annuity administration for retirees (or their beneficiaries) in the Company’s defined benefit pension plan. As a result of this agreement, the Company recorded pension settlement charges of $793,524.

The Company’s funding policy with respect to its qualified plan was to contribute at least the minimum amount required by applicable laws and regulations. In 2020, the Company contributed $222,857 to the plan.

The plan asset weighted average allocation at December 31, 2019, by asset category, were as follows:

Asset Category:	2019
Equity Securities		66	%
Fixed Income Securities		32	%
Other Securities / Investments		2	%
Total:		100	%

The Company’s investment policy for the pension plan is to minimize risk by balancing investments between equity securities and fixed income securities. Plan funds are invested in long-term obligations with a history of moderate to low risk.

The pension plan asset information included below is presented at fair value. ASC 820 establishes a framework for measuring fair value and requires disclosures about assets and liabilities measured at fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

• Level 1 – Inputs to the valuation methodology based on unadjusted quoted market prices in active markets that are accessible at the measurement date.

• Level 2 – Inputs to the valuation methodology that include quoted market prices that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

• Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following tables present the pension plan assets by level within the fair value hierarchy as of December 31, 2019:

2019	Level 1		Level 2		Level 3		Total
Money Market Fund	$	31	$	16,763	$	—	$	16,794
Equity Common and Collected Funds		102,030		580,839		—		682,869
Fixed Income Common and Collected Funds		82,670		246,316		—		328,986
Total:	$	184,731	$	843,918	$	—	$	1,028,649

Other disclosures related to the pension plan follow:  

	2020			2019
Assumptions used to determine benefit obligation:
Discount rate		2.74	%		2.74	%
Changes in benefit obligation:
Benefit obligation at beginning of year	$	(1,073,316	)	$	(1,160,930	)
Interest cost		(27,671	)		(41,841	)
Service cost		(30,195	)		(25,000	)
Actuarial loss		(160,884	)		(46,288	)
Benefits and plan expenses paid		203,596			200,743
Curtailments, settlements and special termination benefits		1,088,470			—
Benefit obligation at end of year:	$	—		$	(1,073,316	)
Changes in plan assets:
Fair value of plan assets at beginning of year	$	1,028,649		$	1,013,831
Actual return on plan assets		40,560			201,148
Employer contribution		222,857			14,413
Benefits and plan expenses paid		(203,596	)		(200,743	)
Settlements		(1,088,470	)		—
Fair value of plan assets at end of year		—			1,028,649
Funded status:	$	—		$	(44,667	)
Amounts recognized in accumulated other comprehensive income:
Net actuarial loss	$	—		$	689,398
Prior service cost		—			538
Total:	$	—		$	689,936

Accrued benefits costs are included in other accrued liabilities (non-current).  

	2020			2019
Assumptions used to determine net periodic benefit cost:
Discount rate		2.74	%		3.87	%
Expected return on plan assets		6.00	%		6.00	%
Components of net benefit expense:
Service cost	$	30,195		$	25,000
Interest cost		27,671			41,841
Expected return on plan assets		(40,560	)		(54,330	)
Settlement cost		793,524			—
Amortization of prior service costs		538			544
Amortization of actuarial loss		56,739			90,442
		837,912			78,497
Net periodic benefit cost:	$	868,107		$	103,497

The Company employed a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved consistent with the widely-accepted capital market principle that assets with higher volatility generate higher returns over the long run.  Our expected 6% long-term rate of return on plan assets is determined based on long-term historical performance of plan assets, current asset allocation and projected long-term rates of return.

The following table discloses the change recorded in other comprehensive income related to benefit costs:

	2020			2019
Balance at beginning of the year	$	689,936		$	881,452
Change in net loss		(617,800	)		(100,530	)
Amortization of actuarial loss		(71,598	)		(90,442	)
Amortization of prior service cost		(538	)		(544	)
Change recognized in other comprehensive income		(689,936	)		(191,516	)
Total recognized in other comprehensive income	$	—		$	689,936

The Company also has a qualified, 401k plan covering substantially all of its United States employees. Annual Company contributions to this plan are determined by the Company’s Compensation Committee. For the years ended December 31, 2020 and 2019, the Company contributed 50% of employee’s contributions, up to the first 6% contributed by each employee. Total contribution expense under this 401k plan was $369,890 in 2020 and $309,922 in 2019.