Note 10 - Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

10. Pension and Other Postretirement Benefits

U.S. Pension Plan

The Company maintains a defined benefit pension plan for its domestic employees (the “U.S. Plan”), which was frozen effective July 15, 2005. Accordingly, no new benefits are being accrued under the U.S. Plan. Participant accounts are credited with interest at the federally mandated rates. Company contributions are based on computations by independent actuaries.

The plan’s assets are invested in a balanced index fund (the “Fund”) where the assets were invested during 2011, 2012 and 2013. The principal investment objective of the Fund is to provide an incremental risk adjusted return compared to a portfolio invested 50% in stocks and 50% in bonds over a full market cycle. Under normal market conditions, the average asset allocation for the Fund is expected to be approximately 50% in stocks and 50% in bonds. This benchmark allocation may be adjusted by up to 20% based on economic or market conditions and liquidity needs. Therefore, the stock allocation may fluctuate from 30% to 70% of the total portfolio, with a corresponding bond allocation of from 70% to 30%. Fund reallocation may take place at any time.

Canadian Pension Plan

Effective January 1, 2009, the Company converted its pension plan for its Canadian employees (the “Canadian Plan”) from a noncontributory defined benefit plan to a defined contribution plan. Until the conversion, benefits for the salaried employees were based on specified percentages of the employees’ monthly compensation. The conversion of the Canadian Plan has the effect of freezing the accrual of future defined benefits under the plan. Under the defined contribution plan, the Company will contribute 3% of employee compensation plus 50% of employee elective contributions up to a maximum contribution of 5% of employee compensation.

The Canadian Plan’s assets are invested in various pooled funds (the “Canadian Funds”) managed by a third party fund manager. The principal investment objective of the Canadian Funds is to provide an incremental risk adjusted return compared to a portfolio invested 50% in stocks and 50% in bonds over a full market cycle. Under normal market conditions, the average asset allocation for the Canadian Funds is expected to be approximately 50% in stocks and 50% in bonds. This benchmark allocation may be adjusted based on economic or market conditions and liquidity needs.

On July 6, 2012, the U.S. Government enacted the “Moving Ahead for Progress in the 21^st Century Act”, which contained provisions that changed the interest rate methodology used to calculate Employee Retirement Income Security Act (“ERISA”) minimum pension funding requirements in the U.S. This change reduced the Company’s near-term annual cash funding requirements for the U.S. pension plan. Contributions to be made to the plan in 2014 are expected to approximate $200,000 for the U.S. Plan and $65,000 for the Canadian Plan. However, contributions for 2015 and beyond have not been quantified at this time.

The change in projected benefit obligation, change in plan assets and reconciliation of funded status for the plans were as follows:

	Pension Benefits
	U.S. Plan						Canadian Plan
	2013			2012			2013			2012
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	4,100,047		$	3,829,727		$	1,500,537		$	1,441,482
Service cost		—			—			—			—
Interest cost		155,248			166,534			50,692			58,812
Benefit payments		(570,719	)		(257,958	)		(91,381	)		(94,119	)
Administrative expenses		(28,267	)		(28,019	)		—			—
Actuarial (gain) loss		(394,013	)		389,763			6,992			60,912
Plan amendments		—			—			—			—
Currency translation adjustment		—			—			(100,764	)		33,450
Settlements		—			—			—			—
Projected benefit obligation at end of year		3,262,296			4,100,047			1,366,076			1,500,537
Change in plan assets
Fair value of plan assets at beginning of year		2,248,925			2,067,871			1,287,679			1,212,167
Actual return on plan assets		336,348			227,201			85,068			58,042
Benefit payments		(570,719	)		(257,958	)		(91,381	)		(94,119	)
Employer contribution		162,417			239,830			76,523			83,387
Administrative expenses		(28,267	)		(28,019	)		—			—
Currency translation adjustment		—			—			(90,165	)		28,202
Fair value of plan assets at end of year		2,148,704			2,248,925			1,267,724			1,287,679
Plan assets (less) greater than benefit obligation	$	(1,113,592	)	$	(1,851,122	)	$	(98,352	)	$	(212,858	)

The net amounts recognized on the consolidated balance sheets were as follows:

	U.S. Plan						Canadian Plan
	2013			2012			2013			2012
Non-current liabilities	$	(1,113,592	)	$	(1,851,122	)	$	(98,352	)	$	(212,858	)
Net amount recognized	$	(1,113,592	)	$	(1,851,122	)	$	(98,352	)	$	(212,858	)

Amounts in accumulated other comprehensive loss at year end, consist of:

	U.S. Plan				Canadian Plan
	2013		2012		2013		2012
Unrecognized net loss	$	818,366	$	1,636,551	$	514,541	$	599,824
	$	818,366	$	1,636,551	$	514,541	$	599,824

The estimated net gain (loss) that will be amortized from accumulated other comprehensive loss for net periodic pension cost over the next year is approximately $(46,000) and $33,000 for the U.S. Plan and Canadian Plan, respectively.

Net pension expense is included in selling, administrative and general expenses on the consolidated statements of operations. The components of net pension expense for the plans were as follows:

	U.S. Plan									Canadian Plan
	2013			2012			2011			2013			2012			2011
Components of net periodic benefit cost:
Service cost	$	—		$	—		$	21,100		$	—		$	—		$	—
Interest cost		155,248			166,534			172,221			55,158			58,812			76,866
Expected return on plan assets		(167,347	)		(154,411	)		(142,104	)		(68,171	)		(73,715	)		(84,452	)
Net actuarial loss		116,814			93,661			51,287			—			—			—
Settlement costs		138,357			—			—			—			—			—
Amortization of prior service cost		—			—			—			36,319			34,007			15,070
Net periodic benefit cost	$	243,072		$	105,784		$	102,504		$	23,306		$	19,104		$	7,484

The Fair Value Measurements and Disclosure Topic require the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The fair value hierarchy is described as follows:

Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

Level 2 – Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 – Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The fair value hierarchy of the plan assets are as follows:

		December 31, 2013
		US Plan		Canadian Plan
Cash and cash equivalents	Level 1	$	169,927	$	13,788
Mutual funds	Level 1		220,841		1,253,936
Corporate/Government Bonds	Level 1		657,373		-
Equities	Level 1		1,100,563		-
Total		$	2,148,704	$	1,267,724

The plans’ weighted-average allocations by asset category are as follows:

	December 31, 2013
	US Plan			Canadian Plan
Equities		51	%		41	%
Fixed income		49	%		59	%
Total		100	%		100	%

Expected benefits to be paid by the plans during the next five years and in the aggregate for the five fiscal years thereafter, are as follows:

	U.S. Plan		Canadian Plan
2014	$	145,378	$	87,974
2015		153,410		74,138
2016		162,891		69,650
2017		173,625		64,882
2018		186,231		60,021
2019 through 2023		952,384		189,317

Benefit obligations are determined using assumptions at the end of each fiscal year and are not impacted by expected rate of return on plan assets. The weighted average assumptions used in computing the benefit obligations for the plans were as follows:

	U.S. Plan						Canadian Plan
	2013			2012			2013			2012
Weighted average assumptions as of December 31:
Discount rate		4.78	%		3.85	%		4.39	%		3.60	%
Rate of compensation increase		—			—			2.00	%		2.00	%

The weighted average assumptions used in computing net pension expense for the plans were as follows:

	U.S. Plan						Canadian Plan
	2013			2012			2013			2012
Weighted average assumptions as of December 31:
Discount rate		3.85	%		4.50	%		3.60	%		4.13	%
Expected return on plan assets		7.50	%		7.50	%		5.50	%		6.00	%
Rate of compensation increase		—			—			2.00	%		2.00	%

The expected return on plan assets is based upon anticipated returns generated by the investment vehicle. Any shortfall in the actual return has the effect of increasing the benefit obligation. The benefit obligation represents the actuarial present value of benefits attributed to employee service rendered; assuming future compensation levels are used to measure the obligation. The accumulated benefit obligation for the U.S. Plan was $3,262,296 and $4,100,047 at December 31, 2013 and 2012, respectively. The accumulated benefit obligation for the Canadian Plan was $1,366,076 and $1,500,537 at December 31, 2013 and 2012, respectively.

Death Benefit Plan

The Company also provides a death benefit for retired former employees of the Company. Effective in 2000, the Company discontinued this benefit for active employees. The death benefit is not a funded plan. The Company pays the benefit upon the death of the retiree. The Company has fully recorded its liability in connection with this plan. The liability was approximately $62,000 at December 31, 2013 and 2012, respectively, and is recorded as long-term pension and other benefits in the accompanying consolidated balance sheets. No expense was recorded in 2013, 2012 or 2011 related to the death benefit, as the plan is closed to new participants.

Defined Contribution Plan

During 1999, the Company established a 401(k) plan for the benefit of its U.S. full-time employees. Under the Company’s 401(k) plan, the Company makes an employer matching contribution equal to $0.10 for each $1.00 of an employee’s salary contributions up to a total of 10% of that employee’s compensation. The Company’s contributions vest over a period of five years. The Company recorded expense of approximately $12,000, $12,000, and $4,000 in connection with its contribution to the plan during 2013, 2012 and 2011, respectively.

Effective January 1, 2009, the Company converted the Canadian Plan from a defined benefit plan to a defined contribution plan. Under the defined contribution plan, the Company will contribute 3% of employee compensation plus 50% of employee elective contributions up to a maximum contribution of 5% of employee compensation. The Company recorded expense of approximately $4,600, $4,600, and $4,000 in connection with its contribution to the plan during 2013, 2012 and 2011, respectively.