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Multiemployer Plans

12 Months Ended

Dec. 31, 2011

Note 17 — Multiemployer Plans

Union Plans—The Company contributes to multiemployer benefit plans for its union employees at rates determined by the various collective bargaining agreements. Each plan’s trustees determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits, and administer the plan.

The Company contributed $24,182, $12,590 and $9,924, to multiemployer pension plans for the years ended December 31, 2011, 2010 and 2009, respectively. These costs are charged directly to the related construction contracts in process. As a result of the November 2010 acquisition of Rockford, contributions during 2011 increased substantially, especially from the large workload associated with the Ruby contract.

For the Company, the financial risks of participating in multiemployer plans are different from single-employer plans in the following respects:

· Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

· If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

· If a participating employer chooses to stop participating in the plan, a withdrawal liability may be created based on the unfunded vested benefits for all employees in the plan.

Under U.S. legislation regarding multiemployer pension plans, a company is required to pay an amount that representing its proportionate share of a plan’s unfunded vested benefits in the event of withdrawal (as defined by the legislation) from a plan or upon plan termination.

The Company participates in a number of multiemployer pension plans, and the potential withdrawal obligation may be significant. Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Other than as discussed in the following paragraph, the Company has no plans to withdraw from any of these agreements.

In November 2011, Rockford, along with other members of the Pipe Line Contractors Association (“PLCA”), withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan (the “Plan”). In connection with the withdrawal, the Company recorded an estimated net liability and one-time expense of $5.0 million in 2011 based on information provided by the Plan. The Company withdrew from the Plan in order to mitigate its liability in connection with the Plan, which is significantly underfunded. The Plan has asserted that the PLCA members did not affect a withdrawal in 2011, although the Company believes that a legally effective withdrawal occurred in November 2011 and has recorded the withdrawal liability on that basis. If the Plan were to prevail in its assertion and the withdrawal of the Company were deemed to occur after 2011, the amount of any withdrawal liability would be expected to increase.

In September 2011, the FASB issued ASU 2011-09, requiring employers to provide additional quantitative and qualitative disclosures for multiemployer plans. During the last three years, the Company made annual contributions to 38 pension plans. The Company was not listed in any of its plans’ Form 5500s as providing more than 5% of the plan’s total contributions. Our participation in significant plans for the year ended December 31, 2011 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three digit plan number. The zone status is based on the latest information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The “Surcharge Imposed” column includes plans in a red zone status that require a payment of a surcharge in excess or regular contributions. The last column lists the expiration date of the collective bargaining agreement to which the plan is subject. The table follows:

EIN/Pension Plan

Pension Protection Act Zone
Status

FIP/RP Status

Surcharge

Collective
Bargaining
Agreement

Contributions of the Company

Pension Fund Name

Number

2011

2010

Pending/Impemented

Imposed

Expiration Date

2011

2010

2009

Laborers Pension Trust Fund for Northern California

94-6277608/001

Yellow as of June 1, 2011

Yellow as of June 1, 2010

Yes

No

6/30/2012

$

3,501

$

1,237

$

1,203

Construction Laborers Pension Trust for Southern California

43-6159056/001

Green as of January 1, 2010

Green as of January 1, 2009

No

6/30/2012

2,373

1,683

1,467

Central Pension Fund of the International Union of Operating Engineers and Participating Employers

36-6052390/001

Green as of February 1, 2010

Yellow as of February 1, 2009

No

1/31/2014

1,797

946

11

Pipeline Industry Benefit Fund

73-6146433/001

Green as of January 1, 2010

Green as of January 1, 2009

No

5/31/2014

1,793

1,110

61

Laborers International Union of North America National (Industrial) Pension Fund

52-6074345/001

Red as of March 31, 2011

Red as of March 31, 2010

Yes

Yes (1)

1/31/2014

1,658

754

126

So Cal Pipetrades Trust Funds

51-6108443/001

Green as of January 1, 2010

Yellow as of January 1, 2009

Yes

No

6/30/2014

1,506

1,066

1,230

Pipe Trades District Council No. 36 Trust Funds

94-6082956/001

Yellow as of January 1, 2010

Yellow as of January 1, 2009

Yes

No

9/30/2012

1,506

199

22

Northern California Pipe Trades Pension Plan

94-3190386/002

Green as of January 1, 2010

Green as of January 1, 2009

No

6/30/2012

1,475

283

646

Pension Trust Fund for Operating Engineers

94-6090764/001

Yellow as of January 1, 2011

Yellow as of January 1, 2010

Yes

No

6/15/2013

1,288

508

608

Operating Engineers Trust Funds

95-6032478/001

Red as of July 1, 2011

Red as of July 1, 2010

Yes

Yes (2)

6/30/2013

771

531

547

Central States, Southeast, and Southwest Areas Pension Plan

36-6044243/001

Red as of January 1, 2011

Red as of January 1, 2010

Yes

No

4/13/2012 (3)

694

463

—

Contributions for significant plans

$

18,362

$

8,780

$

5,921

Contributions to other multiemployer plans

5,820

3,810

4,003

Total contributions made

$

24,182

$

12,590

$

9,924

(1) Temporary surcharge of 5% of total contributions imposed during the period June 1, 2010 through December 31, 2010. Effective January 1, 2011, the surcharge was increased to 10% of total contributions. Under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, the plan adopted to amortize the fund’s 2008 investment losses over a 29 year period (rather than 15 years) and the 2008 investment losses will be recognized for funding purposes over a 10 year smoothing period (rather than 5 years). During this period, benefits cannot be increased.

(2) Temporary surcharge of 5% of total contributions imposed during the period July 1, 2010 through June 30, 2011. Effective July 1, 2011 through June 30, 2012, the surcharge was increased to 10% of total contributions.

(3) The collective bargaining agreement expired December 31, 2011, but was extended to April 13, 2012. On November 2, 2011, the Company notified the Central States, Southeast and Southwest Areas Pension Plan that the Company withdrew from the plan. The Company recognized a withdrawal liability of $5.0 million in 2011.

- Definition

The entire disclosure for postemployment benefits, which may include supplemental unemployment benefits, obligations recognized for all types of benefits provided to former or inactive employees, their beneficiaries, and covered dependents after employment but before retirement. Disclosure may also include discussion that an obligation for postemployment benefits is not accrued in accordance with regulation only because the amount cannot be reasonably estimated.

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