Note 11 - Employee Benefit Programs

12 Months Ended

Dec. 31, 2012

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE 11. EMPLOYEE BENEFIT PROGRAMS

Defined Benefit Pension Plan

The Company’s Defined Benefit Pension Plan (the “Pension Plan”) is non-contributory, covering substantially all employees of the Company who had completed a year of service prior to July 1, 2002.  Membership in the Pension Plan was frozen effective July 1, 2002 and participants’ calculated pension benefit was frozen effective December 31, 2006.

The Company’s funding policy is to contribute at least the minimum amount required by the Employee Retirement Income Security Act of 1974. Additional amounts are contributed to assure that plan assets will be adequate to provide retirement benefits. The Company expects to make contributions of $2.8 million in 2013 to fund the Pension Plan.

Net Periodic Pension Cost

	Year Ended December 31,
	2012			2011			2010
Interest cost	$	3,991		$	4,123		$	4,217
Expected return on plan assets		(4,788	)		(5,101	)		(4,516	)
Recognized actuarial loss		1,695			1,208			1,098
Net periodic pension cost	$	898		$	230		$	799

Obligations and Funded Status

	December 31,
	2012			2011
Change in benefit obligation:
Benefit obligation at beginning of year	$	85,681		$	80,422
Interest cost		3,991			4,123
Benefits paid		(4,160	)		(3,941	)
Actuarial loss		10,177			5,077
Benefit obligation at end of year		95,689			85,681
Change in plan assets:
Fair value of plan assets at beginning of year		58,625			59,728
Actual return on plan assets		6,835			(1,012	)
Employer contributions		5,532			3,850
Benefits paid		(4,160	)		(3,941	)
Fair value of plan assets at end of year		66,832			58,625
Funded status	$	(28,857	)	$	(27,056	)

Amounts recognized in the consolidated balance sheets consist of:

	December 31,
	2012		2011
Accrued compensation and employee benefits	$	2,800	$	5,480
Other long-term liabilities		26,057		21,576
Net amount recognized	$	28,857	$	27,056

The accumulated benefit obligation and the projected benefit obligation for the Pension Plan were $95.7 million and $85.7 million at December 31, 2012 and 2011, respectively.

The reconciliation of the other comprehensive income was as follows:

	Beginning Balance		Amortization			Experience Loss/(Gain)		Ending Balance
2012	$	45,360	$	(1,695	)	$	8,131	$	51,796
2011	$	35,379	$	(1,208	)	$	11,189	$	45,360
2010	$	33,312	$	(1,098	)	$	3,165	$	35,379

The amounts recognized in other comprehensive income are reflected, net of related tax effects, as a component of accumulated other comprehensive loss as part of stockholders’ equity in the accompanying balance sheets.  The Company expects to recognize amortization expense related to the net actuarial loss of approximately $1.9 million in 2013.

Assumptions

The discount rate represents the estimated rate at which we could effectively settle our pension benefit obligations. In order to estimate this rate for 2012 and 2011, future expected cash flows of the plan were matched against the Towers Watson RATE:Link yield curve to produce a single discount rate.  For 2010, the rate of discount was determined using the spot rate of matching duration from the Citigroup Pension Discount Curve.

The assumed long-term rate of return on plan assets, which is the average return expected on the funds invested or to be invested to provide future benefits to pension plan participants, is determined by an annual review of historical plan assets returns and consultation with outside investment advisors.  In selecting the expected long-term rate of return on assets, the Company considered its investment return goals stated in the Pension Plan’s investment policy. The Company, with input from the Pension Plan’s professional investment managers, also considered the average rate of earnings expected on the funds invested or to be invested to provide Pension Plan benefits. This process included determining expected returns for the various asset classes that comprise the Pension Plan’s target asset allocation.

The following assumptions were used to determine the benefit obligations and net periodic benefit costs:

	December 31,
	2012			2011
Used to determine benefit obligations:
Discount rate		3.86	%		4.75	%
Rate of compensation increase		N/A			N/A

	Year Ended December 31,
	2012			2011			2010
Used to determine net periodic benefit costs:
Discount rate		4.75	%		5.25	%		5.75	%
Expected rate of return on assets		8.15	%		8.30	%		8.50	%
Rate of compensation increase		N/A			N/A			N/A

Plan Assets

During 2012, the Company’s overall investment strategy for plan assets was to achieve a long-term rate of return of 8.15%, with a wide diversification of asset types, fund strategies and fund managers.  The target allocation for the plan assets are 55% in equity securities, 38% in fixed income securities, 5% in other types of investments and 2% in cash and cash equivalents.  The risk management practices include regular evaluations of fund managers to ensure the risk assumed is commensurate with the given investment style and objectives.  Prohibited investments include, but are not limited to margin transactions. The Pension Plan’s assets did not include any of the Company’s common stock at December 31, 2012 and 2011.

The Company’s investment policy includes a periodic review of the Pension Plan’s investment in the various asset classes. The fair value measurement of the Company’s plan assets by asset category are as follows:

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant  Unobservable Inputs
Asset Category	Total		(Level 1)		(Level 2)		(Level 3)
At December 31, 2012:
Cash	$	289	$	289	$	-	$	-
Money market funds		4,061		-		4,061		-
Equity securities:
Common equity securities		3,489		3,489		-		-
Preferred equity securities		159		159		-		-
Equity mutual funds		30,540		30,540		-		-
Real estate investment trusts		2,675		2,675		-		-
Corporate and foreign bonds		18,581		-		18,581		-
Other type of investments:
Managed futures		1,725		-		-		1,725
Hedge funds		5,313		-		-		5,313
Total	$	66,832	$	37,152	$	22,642	$	7,038
At December 31, 2011:
Cash	$	279	$	279	$	-	$	-
Money market funds		2,826		-		2,826		-
Equity securities:
Common equity securities		5,281		5,281		-		-
Preferred equity securities		226		226		-		-
Equity mutual funds		23,847		23,847		-		-
Real estate investment trusts		2,439		2,439		-		-
Fixed income securities:
U.S. Treasury obligations		3,539		-		3,539		-
U.S. Government agencies		1,251		-		1,251		-
Corporate and foreign bonds		13,444		-		13,444		-
Other type of investments:
Managed futures		1,906		-		-		1,906
Hedge fund		3,587		-		-		3,587
Total	$	58,625	$	32,072	$	21,060	$	5,493

A reconciliation of the beginning and ending balances of Level 3 assets is as follows:

	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
	Managed Futures			Hedge Fund(s)			Total
Ending balance at December 31, 2010	$	2,024		$	2,195		$	4,219
Actual returns on plan assets related to assets still held at the reporting date		(118	)		(108	)		(226	)
Purchases		-			1,500			1,500
Ending balance at December 31, 2011		1,906			3,587			5,493
Actual returns on plan assets related to assets still held at the reporting date		(181	)		664			483
Purchases		2,000			1,062			3,062
Sales		(2,000	)		-			(2,000	)
Ending balance at December 31, 2012	$	1,725		$	5,313		$	7,038

The managed futures consist of units of limited partnership interests through the allocation of assets of multiple commodity trading advisors.  These commodity trading advisors engage in speculative trading in U.S. and international markets for currencies, interest rates, stock indices, agricultural and energy products, and precious base metals.  The fair value of managed futures is estimated based on the investments net asset value at the reporting period as the fair value is not readily determinable and the investment fund meets the criteria of an investment company.  Redemptions can only be made monthly and require ten days prior notice to the general partner of the fund.

The Company’s plan assets consist of interest’s in two hedge funds.  One of the hedge funds is a fund of funds that combines diversified multi-strategy methods to achieve investment objectives during a three to five year investment cycle.  Strategy methods may consist of conventional long-term equity and fixed income investments or derivative investments, including, total return swaps, options and forwards.  The second hedge fund is a multi-strategy equity hedge fund with a focus on investment strategies that exploit market inefficiencies to produce absolute returns with low correlation to global capital markets.  For both, the fair value of the hedge funds are estimated based on the investments net asset value at the reporting period as the fair value is not readily determinable and the investment fund meets the criteria of an investment company. Redemptions of the interests in both funds can be made quarterly based on the discretion of the investment company’s board of directors.

Estimated Future Benefit Payments

The following table sets forth the expected timing of benefit payments:

Year ending December 31:
2013	$	4,498
2014	$	4,657
2015	$	4,844
2016	$	4,940
2017	$	5,104
Five subsequent fiscal years	$	27,865

401(k) Plan

The Company maintains a cash or deferred savings plan, the 401(k) Plan. All employees are eligible to elect to defer a portion of their salary and contribute the deferred portion to the 401(k) Plan.

The 401(k) Plan is structured with two components: (i) a Company matching contribution for 100% of the first 2% of the employee contribution and an additional 50% of the next 4% of the employee contribution; and (ii) a discretionary profit sharing contribution by the Company for all eligible employees.

Employee contributions and the Company’s contributions are invested in one or more collective investment funds at the participant’s direction. The Company’s contributions are subject to forfeitures of any non-vested portion if termination occurs.  The vesting of the Company’s matching contribution is 25% after one year and 100% after the second year.  The vesting of profit sharing contributions is 100% cliff vesting after three years.

With the merger of HPTi, the Company also maintains a defined contribution 401(k) profit sharing plan for all HPTi employees who are over the age of 21. Participants may make voluntary contributions up to the maximum amount allowable by law. Company contributions to the 401(k) profit sharing plan are at the discretion of management and vest to the participants ratably over a five-year period, beginning with the second year of participation.

The Company’s total 401(k) contributions, net of forfeitures, charged to expense aggregated $3.9 million, $3.0 million and $3.3 million in 2012, 2011 and 2010, respectively.

Supplemental Executive Retirement Plan

The Company has a Supplemental Executive Retirement Plan (“SERP”) for certain former key employees providing for annual benefits commencing on the sixth anniversary of the executive’s retirement. The cost of these benefits is being charged to expense and accrued using a projected unit credit method. Expenses related to this plan were approximately $0.1 million in each of the three years ended December 31, 2012. The liability related to the SERP, which is unfunded, was $0.3 million and $0.4 million at December 31, 2012 and 2011, respectively. These amounts represent the amounts the Company estimates to be the present value of the obligation at each respective date.

Deferred Compensation Plans

The Company has a deferred compensation plan approved by the Board of Directors that allows certain employees to defer up to 100% of cash incentive payments and salary in excess of the Federal Insurance Contributions Act earnings ceiling. Employee contributions are invested in selected mutual funds held within a Rabbi Trust. These investments, which the Company has classified as trading securities, are recorded at fair value and reported as a component of other noncurrent assets in the accompanying balance sheets. Amounts recorded as deferred compensation liabilities are adjusted to reflect the fair value of investments held by the Rabbi Trust. Changes in obligations to participants as a result of gains or losses on the fair value of the investments are reflected as a component of compensation expense. At December 31, 2012 and 2011, $1.5 million and $1.4 million, respectively, had been deferred under the plan.

The Company also has a deferred compensation plan under which non-employee directors may elect to defer their directors’ fees. Amounts deferred for each participant are credited to a separate account, and interest at the lowest rate at which the Company borrowed money during each quarter is credited quarterly. The balance in a participant’s account is payable in a lump sum or in installments when the participant ceases to be a director.