Retirement Plans

12 Months Ended

Dec. 31, 2011

Retirement Plans [Abstract]

Retirement Plans

Note 17.

Retirement Plans

With the acquisition of Portec, the Company has six plans which cover its hourly and salaried employees in the United States; three defined benefit plans (one active / two frozen) and three defined contribution plans.  Employees are eligible to participate in the appropriate plan based on employment classification.  The Company's funding to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), applicable plan policy and investment guidelines.  The Company policy is to contribute at least the minimum funding standards of ERISA.

Portec maintains two defined contribution plans for its employees in Canada, as well as a post-retirement benefit plan.  In the United Kingdom, Portec maintains both a defined contribution plan and a defined benefit plan.  These plans are discussed in further detail below.

United States Defined Benefit Plans

The following tables present a reconciliation of the changes in the benefit obligation, the fair market value of the assets and the funded status of the plans:

	2011			2010
	In thousands
Changes in benefit obligation:
Benefit obligation at beginning of year	$	14,955		$	4,493
Service cost		30			31
Interest cost		799			264
Actuarial losses		1,896			268
Portec acquisition		-			10,051
Benefits paid		(694	)		(152	)
Benefit obligation at end of year		16,986			14,955
Change to plan assets:
Fair value of assets at beginning of year		11,433			3,634
Actual gain on plan assets		266			342
Employer contribution		1,083			333
Portec acquisition		0			7,276
Benefits paid		(694	)		(152	)
Fair value of assets at end of year		12,088			11,433
Funded status at end of year	$	(4,898	)	$	(3,522	)
Amounts recognized in the statement
of financial position consist of:
Other long-term liabilities	$	(4,898	)	$	(3,522	)
Amounts recognized in accumulated other
comprehensive income consist of:
Net loss	$	4,206		$	1,921
Prior service cost		5			6
	$	4,211		$	1,927

The actuarial loss included in accumulated other comprehensive loss that will be recognized in net periodic pension cost during 2012 is $195,000, before taxes.  The transition asset and prior service cost expected to be recognized in net periodic pension cost in 2012 is immaterial.

Net periodic pension costs for the three years ended December 31, 2011 are as follows:

	2011			2010			2009
	In thousands
Components of net periodic benefit cost:
Service cost	$	30		$	31		$	28
Interest cost		799			264			258
Expected return on plan assets		(764	)		(286	)		(225	)
Amortization of prior service cost		1			0			3
Recognized net actuarial gain		111			106			138
Net periodic
benefit cost	$	177		$	115		$	202

The weighted average assumptions used to measure the projected benefit obligation for the years ended December 31, 2011 and 2010 are as follows:

	2011	2010
Discount rate	4.50%	5.50%

The weighted average assumptions used to determine net periodic benefit costs for the three years ended December 31, 2011:

	2011	2010	2009
Discount rate	5.48%	6.00%	6.00%
Expected rate of return on plan assets	6.70%	7.75%	7.75%

The expected long-term rate of return is based on numerous factors including the target asset allocation for plan assets, historical rate of return, long-term inflation assumptions, and current and projected market conditions.  Different asset category compositions between the two defined benefit plans led to two different expected rates of return on plan assets in 2011.

Amounts applicable to the Company's pension plans with accumulated benefit obligations in excess of plan assets are as follows:

	2011		2010		2009
	In thousands
Projected benefit obligation	$	16,986	$	14,955	$	4,493
Accumulated benefit obligation		16,986		14,955		4,493
Fair value of plan assets		12,088		11,433		3,634

Plan assets consist primarily of various fixed income and equity investments. The Company's primary investment objective is to provide long-term growth of capital while accepting a moderate level of risk.  The investments are limited to cash and equivalents, bonds, preferred stocks and common stocks. The investment target ranges and actual allocation of pension plan assets by major category at December 31, 2011 and 2010 are as follows:

	Target	2011	2010
Asset Category
Cash and cash equivalents	0 – 10%	4%	6%
Total fixed income funds	30 – 50%	37	28
Total mutual funds / equities	50 – 70%	59	66
Total		100%	100%

In accordance with the fair value disclosure requirements with FASB ASC 820, "Fair Value Measurements and Disclosures," the following assets were measured at fair value on a recurring basis at December 31, 2011 and 2010.  Additional information regarding FASB ASC 820 and the fair value hierarchy can be found in Note 19, Fair Value Measurements.

		December 31,		December 31,
		2011		2010
		In thousands
Asset Category
Cash and cash equivalents		$	513	$	640
Fixed income funds:
	Government bonds		1,342		1,012
	Corporate bonds		3,146		2,254
Total fixed income funds			4,488		3,266
Equity funds and equities:
	Mutual funds		678		2,161
	Common stock		6,409		5,366
Total equity funds and equities			7,087		7,527
Total		$	12,088	$	11,433

Cash and cash equivalents.  The Company uses quoted market prices to determine the fair value of these investments in interest-bearing cash accounts and they are classified in Level 1 of the fair value hierarchy.  The carrying amounts approximate fair value because of the short maturity of the instruments.

Fixed income funds.  Investments within the fixed income funds category consist of fixed income corporate debt and US government and various state agency obligations.  The Company uses quoted market prices to determine the fair value of these fixed income funds.  These instruments consist of exchange-traded government and corporate bonds and are classified in Level 1 of the fair value hierarchy.

Equity funds and equities.  The valuation of investments in registered investment companies is based on the underlying investments in securities.  Securities traded on security exchanges are valued at the latest quoted sales price.  Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and ask quotations.  These investments are classified in Level 1 of the fair value hierarchy.

The Company expects to contribute $740,000 to its U.S. defined benefit plans in 2012.

The following benefit payments are expected to be paid:

	Pension
	Benefits
	In thousands
2012	$	717
2013		735
2014		749
2015		761
2016		806
Years 2017-2021		4,992

Portec Rail Products (UK) Limited Pension Plan (Portec Rail Plan):

During 2010, the Conveyors International Limited Pension Plan (Conveyors plan) was merged with the Portec Rail Products (UK) Limited Pension Plan (Portec Rail Plan) a defined benefit pension plan in the United Kingdom.  The combined Portec Rail Plan covers some current employees, former employees and retirees of the original Portec Rail Plan along with former employees of the Conveyors plan. The Portec Rail Plan has been frozen to new entrants since April 1, 1997 and also covers the former employees of the Conveyors plan after January 2002.  Benefits under the Portec Rail Plan, including the former Conveyors plan, were based on years of service and eligible compensation during defined periods of service.  Our funding policy for the Portec Rail Plan is to make minimum annual contributions required by applicable regulations.  Contributions of $235,000 and $54,000 were made to the plan on December 31, 2011 and 2010, respectively.  We expect to contribute $229,000 to the Portec Rail plan during 2012.

The funded status of the United Kingdom defined benefit plan at year end is as follows:

	December 31,			December 31,
	2011			2010
	In thousands
Benefit obligation at end of year	$	6,964		$	6,227
Fair value of assets at end of year		5,160			5,293
Funded status at end of year		(1,804	)		(934	)

Amounts recognized in the statement of financial position consist of:

	2011			2010
Other long-term liabilities	$	(1,804	)	$	(934	)

The weighted average assumptions used to measure the benefit obligation for the years ended December 31 were as follows:

	2011	2010
Discount rate	4.7%	5.4%
Expected rate of return	5.7%	5.2%

The Company has estimated the long-term rate of return on plan assets based primarily on historical returns on plan assets, adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based on publicly available information.

Plan assets are invested by the trustees in accordance with a written statement of investment principles.  This statement permits investment in equities, corporate bonds, United Kingdom government securities, commercial property and cash, based on certain target allocation percentages.

Asset allocation is primarily based on a strategy to provide steady growth without undue fluctuations.  The target asset allocation percentages for 2011 are as follows:

	Portec Rail Plan
Equity securities	Up to 100%
Commercial property	Not to exceed 50%
U.K. Government securities	Not to exceed 50%
Cash	Up to 100%

Substantially all plan assets held within Portec's United Kingdom defined benefit pension plan consists of marketable securities and are classified in Level 1 of the fair value hierarchy.

The plan assets by category for the years ended December 31, are as follows:

		December 31,	December 31,
		2011	2010
Asset Category
	Cash and cash equivalents	5%	3%
	Equity securities	43	44
	Bonds	27	19
	Commercial property	25	25
	Other	0	9
	Total	100%	100%

The following estimated future benefits payments are expected to be paid under the Portec Rail Plan:

	Pension
	Benefits
	In thousands
2012	$	187
2013		191
2014		224
2015		247
2016		280
Years 2017 – 2020		1,764

Defined Contribution Plans

The Company maintains a defined contribution plan for its non-union hourly and salaried employees.  This defined contribution plan contains a matched savings provision that permits both pretax and after-tax employee contributions.  Participants can contribute, subject to statutory limitations, between 1% and 75% of eligible pre-tax pay and 1% and 100% of eligible after-tax pay.

The Company's employer match is 100% of the first 1% of deferred eligible compensation and up to 50% of the next 6%, based on years of service, of deferred eligible compensation, for a total maximum potential match of 4%.  The Company may also make discretionary contributions to the plan.  The expense associated with this plan was $1,929,000 in 2011, $1,700,000 in 2010 and $1,570,000 in 2009.

Portec maintains a defined contribution plan covering all non-union employees at its Montreal, Quebec, Canada location.  Under the terms of this plan, Portec may contribute 4% of each employee's compensation as a non-elective contribution and may also contribute 30% of the first 6% of each employee's compensation contributed to the plan.  Contributions to this plan were $100,000 in 2011.

Portec also maintains a defined contribution plan covering substantially all employees of Portec Rail Products (UK) Ltd.  Benefits under this plan are provided under no formal written agreement.  Under the terms of the defined contribution plan, Portec may make non-elective contributions of between 3% and 10% of each employee's compensation.  Contributions to this plan were $122,000 in 2011.

In July 2009, Portec created a new defined contribution plan covering substantially all the employees of Kelsan Technologies Corp.  Under the terms of this plan, Portec makes a non-elective contribution of 4% of each employee's compensation and may also contribute 30% of the first 6% of each employee's compensation contributed to the plan. Contributions to this plan were $106,000 in 2011.

Finally, the Company also has a defined contribution plan for union hourly employees with contributions made by both the participants and the Company based on various formulas.  The expense associated with this plan was $62,000 in 2011, $34,000 in 2010 and $33,000 in 2009.

Other Post-Retirement Benefit Plan

At Portec's operation near Montreal, Quebec, Canada, it maintains a post-retirement benefit plan, which provides retiree life insurance, health care benefits and, for a closed group of employees, dental care.  Retiring employees with a minimum of 10 years of service are eligible for the plan benefits.  The plan is not funded.  Cost of benefits earned by employees is charged to expense as services are rendered.  The expense related to this plan was not material for 2011.  Portec's accrued benefit obligation per the actuarial valuation was $879,000 and $759,000 as of December 31, 2011 and 2010, respectively.  This amount is recognized within other long-term liabilities.

The weighted average assumptions used to measure the benefit obligation for the years ended December 31 were as follows:

	2011	2010
Discount rate	5.3%	5.7%
Weighted average health care trend rate	7.0%	7.3%

The weighted average health care rate trends downward to an ultimate rate of 4.70% in 2024.