Employee Benefit Plans

The Company sponsors a cash balance defined benefit pension plan that covers substantially all of its salaried employees (the “Pension Plan”). Amounts credited to employee accounts in the Pension Plan are based on the employees’ years of service and compensation. The Company complies with the minimum funding requirements of ERISA.

In November 2012, the Board of Directors approved the termination of the Company’s Pension Plan. In March 2013, the Pension Plan was frozen until the final regulatory approvals are received and the Pension Plan’s assets will be distributed and used to pay excise taxes with any remaining assets to revert back to the Company. The Company recognized a curtailment change of $2.1 million in the Company’s Consolidated Statement of Operations in 2012 as a result of the termination. Upon settlement, the Company expects to recognize further estimated losses that will significantly affect the Company’s Consolidated Statement of Operations once the final regulatory approvals are received and the Pension Plan assets are distributed, which we expect to occur in 2014 or 2015. However, the Company cannot provide any assurance as to the timing of these matters.

The Company incurred settlement losses of $0.7 million and $1.2 million in 2013 and 2012, respectively, related to cash distributions made to certain participants. In 2011, $5.9 million of the settlement losses and curtailment charges recognized were for certain participants and related to the Company's reduced employment levels in connection with its restructurings.

Obligations and Funded Status

Change in projected benefit obligation and plan assets:



	2013			2012
Projected benefit obligation, beginning of year	$	26,741		$	25,828
Service cost	225			889
Interest cost	653			712
Actuarial (gain) loss	(888		)	3,059
Benefits paid	(101		)	(29		)
Settlement loss	(3,099		)	(3,718		)
Projected benefit obligation, end of year	$	23,531		$	26,741

Fair value of assets, beginning of year	$	60,097		$	60,953
Actual return on assets	2,378			3,543
Settlements	(3,099		)	(3,718		)
Benefits and expenses paid	(728		)	(681		)
Fair value of assets, end of year	$	58,648		$	60,097

Funded status at end of year	$	35,117		$	33,356

Ratio of plan assets to projected benefit obligation	249		%	225		%

The Company has recorded a prepaid pension asset of $35.1 million and $33.4 million at December 31, 2013 and 2012, respectively. The accumulated benefit obligation of the Pension Plan was $23.5 million and $26.7 million at December 31, 2013 and 2012 respectively.

A summary of the net periodic pension cost and other amounts recognized in other comprehensive income (loss) are as follows:



	2013			2012			2011
Service cost	$	225		$	889		$	3,059
Interest cost	653			712			1,225
Expected return on assets	(443		)	(2,315		)	(3,038		)
Amortization of prior service costs	—			440			649
Amortization of loss	326			48			—
Settlement charges	739			1,162			3,698
One-time charge in connection with an increase in benefits for certain participants	—			—			1,401
Curtailment charge	—			2,063			2,173
Net periodic pension cost	$	1,500		$	2,999		$	9,167
Other changes in plan assets and obligations recognized in Other comprehensive income:
Prior service cost	—			(2,503		)	(769		)
(Gain) loss	(3,260		)	1,275			(2,531		)
Total other comprehensive income	(3,260		)	(1,228		)	(3,300		)
Total net periodic pension cost and other comprehensive income (loss)	$	(1,760	)	$	1,771		$	5,867

Actuarial loss amounts not yet reflected in net periodic pension cost and included in accumulated other comprehensive loss are $5.4 million and $8.7 million at December 31, 2013 and 2012, respectively. The estimated amount of the actuarial loss that will be amortized from accumulated other comprehensive income into net periodic pension cost is $0.5 million in 2014.

Assumptions

Assumptions used to develop end of period benefit obligations:



	2013		2012
Discount rate	4.37	%	3.27	%
Rate of compensation increase	N/A		N/A

Assumptions used to develop net periodic pension cost:



	December 31, 2013	December 31, 2012	December 31, 2011
Discount rate	4.37%	3.50%	4.59%
Expected long term rate on plan assets	—%	4.75%	5.00%
Rate of compensation increase	N/A	N/A	3.75%

To develop the expected long-term rate of return on assets assumption, the Company considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio. This resulted in the selection of the 0.0%, 4.75% and 5.00% assumption in 2013, 2012 and 2011, respectively.

Plan Assets

During 2013, the Pension Plan transferred the majority of its investments held in plan assets to U.S treasury securities to maintain the Pension Plan asset balance. Prior to the termination of the Pension Plan, the Company’s investment policy was to maintain over the long-term life of the Pension Plan, an adequate pool of assets to support the benefit obligations to participants, retirees and beneficiaries. In meeting this objective, the Pension Plan sought the opportunity to achieve an adequate return to fund the obligations in a manner consistent with the fiduciary standards of ERISA and with a prudent level of diversification. Specifically, these objectives included the desire to:


•	invest assets in a manner such that contributions remain within a reasonable range and future assets are available to fund liabilities;


•	maintain liquidity sufficient to pay current benefits when due; and


•	diversify, over time, among asset classes so assets earn a reasonable return with acceptable risk of capital loss.

The Company’s overall investment strategy was to achieve a range of 65-95% fixed income investments and 5% -35% equity type investments.

Following is a description of the valuation methodologies used for assets measured at fair value at December 31, 2013 and 2012.

U.S. treasury securities: Valued based on quoted market prices in an active market.

Common/collective trusts: Valued based on information reported by the investment advisor using the financial statements of the collective trusts at year end.

Mutual funds and money market funds : Valued at the net asset value of shares held by the Pension Plan.

Other: The other investment consists of a royalty investment for which there is no quoted market price. The fair value of the royalty investment is estimated based on the present value of future cash flows, using management’s best estimate of key assumptions, including historical cash receipts and discount rates.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables sets forth by level within the fair value hierarchy:

Assets at Fair Value as of December 31, 2013



Asset Category:	Level 1		Level 2		Level 3		Total
Cash	$	115	$	—	$	—	$	115
Money market funds	697		—		—		697
U.S. treasury securities	57,836		—		—		57,836
Total	$	58,648	$	—	$	—	$	58,648

Assets at Fair Value as of December 31, 2012



Asset Category:	Level 1		Level 2		Level 3		Total
Common/collective trusts ^(a)	$	—	$	34,936	$	—	$	34,936
Mutual funds ^(b)	—		23,756		—		23,756
Money market funds	478		—		—		478
Other	—		—		927		927
Total	$	478	$	58,692	$	927	$	60,097



(a)	Common/collective trusts invest in 67% U.S. short maturity fixed income investments, 25% U. S. large cap equities and 8% international equities.
(b)	One hundred percent of mutual funds invest in a short term fixed income fund.

The following table sets forth a summary of changes in the fair value of the Plan’s level 3 assets for the year ended December 31, 2013 and 2012:



	2013			2012
Balance, beginning of year	$	927		$	810
Sales	(1,648		)	—
Realized gain on sale	721			—
Unrealized gains relating to instruments still held at the reporting date	—			117
Balance, end of year	$	—		$	927

The Company does not anticipate making any contributions to the plan during 2014. Expected benefit payments for the next ten years are as follows:



Year Ended	Expected Benefit Payments
2014	$	11,739
2015	616
2016	752
2017	757
2018	863
2019-2023	5,908

Deferred Compensation Plan

The Company maintains a 401(k) retirement plan covering substantially all officers and employees, which permits participants to defer up to the maximum allowable amount determined by the IRS of their eligible compensation. The Company contributions to the plan were approximately $0.2 million in 2011. The Company discontinued the matching contributions as of July 1, 2011.