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Pension And Employee Benefit Plans
 12 Months Ended
Dec. 31, 2011
Pension And Employee Benefit Plans [Abstract]  
Pension And Employee Benefit Plans
12. Pension and Employee Benefit Plans

We sponsor a non-contributory defined benefit pension plan for certain union employees. The plan is funded in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974.

We also sponsor a postretirement health care plan for office employees retired before January 1, 1990. The plan allows retirees who have attained the age of 65 to elect the type of coverage desired.

 

The following tables set forth the plans' changes in benefit obligations, plan assets and funded status on the measurement dates, December 31, 2011 and 2010, and amounts recognized in our consolidated balance sheets as of those dates.

 

     Pension Benefits     Other Benefits  
$ in thousands    2011     2010     2011     2010  

Change in projected benefit obligation:

         

Projected benefit obligation at beginning of year

    $ 7,157      $ 6,686        n/a        n/a   

Accumulated post retirement benefit obligation

      n/a        n/a      $ 156      $ 228   

Service cost

      41        214        —          —     

Interest cost

      367        375        7        11   

Actuarial (gain)/loss

      631        169        12        (52 ) 

Benefits paid

      (310 )      (287 )      (29 )      (31 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Projected benefit obligation at end of year

      7,886        7,157        146        156   
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in plan assets:

         

Fair value of plan assets at beginning of year

      5,144        4,739        —          —     

Actual (loss) return on plan assets

      (212 )      465        —          —     

Employer contribution

      397        227        29        31   

Benefits paid

      (309 )      (287 )      (29 )      (31 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Fair value of plan assets at end of year

      5,020        5,144        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Funded status

    $ (2,866 )    $ (2,013 )    $ (146 )    $ (156 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Defined benefit liabilities included in accounts payable and accrued expenses

    $ —        $ —        $ (25 )    $ (27 ) 

Defined benefit liabilities included in other liabilities

      (2,866 )      (2,013 )      (121 )      (129 ) 

Deferred tax benefit/ (expense) associated with AOCL

      1,476        1,086        (31 )      (39 ) 

AOCL, net of tax

      2,215        1,626        (46 )      (60 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net amount recognized

    $ 825      $ 699      $ (223 )    $ (255 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Other comprehensive income (loss):

         

Net loss (gain)

    $ 1,231      $ 81      $ 12      $ (52 ) 

Amortization of prior service cost

      (1 )      (22 )      —          —     

Amortization of net actuarial loss

      (251 )      (219 )      10        3   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total recognized in other comprehensive income (loss)

    $ 979      $ (160 )    $ 22      $ (49 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated other comprehensive income (loss):

         

Net loss (gain)

    $ 3,685      $ 2,705      $ (77 )    $ (99 ) 

Prior service cost

      6        7        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

  

Amount recognized in accumulated other comprehensive income (loss)

    $ 3,691      $ 2,712      $ (77 )    $ (99 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted-average assumptions used to determine benefit obligations for the year ended December 31:

         

Discount rate

      4.25 %      5.25 %      4.25 %      5.25 % 

Compensation increase rate

      N/A        N/A        N/A        N/A   

Benefits under the plans are not based on wages and, therefore, future wage adjustments have no effect on the projected benefit obligations.

 

Included in other comprehensive income for our defined benefit plans, net of related tax effect, were a increase in the minimum liability of $601,000 in 2011 and a decrease of $126,000 in 2010.

The details of net periodic benefit cost for pension benefits included in the accompanying consolidated statements of income for the years ended December 31, 2011 and 2010 are as follows:

 

$ in thousands    2011     2010  

Service cost

    $ 41      $ 214   

Interest cost

      367        375   

Expected return on plan assets

      (388 )      (377 ) 

Net amortization and deferral

      252        241   
  

 

 

    

 

 

  

Net periodic benefit cost

    $ 272      $ 453   
  

 

 

    

 

 

  

Weighted-average assumptions used to determine net periodic benefit costs for the years ended December 31:

     

Discount rate

      5.25 %      5.75 % 

Expected return on assets

      7.50 %      8.00 % 

Compensation increase rate

      N/A        N/A   

The basis of the long-term rate of return assumption reflects the current asset mix for the pension plan of approximately 40% debt securities and 60% equity securities with assumed average annual returns of approximately 4% to 6% for debt securities and 8% for equity securities. The investment portfolio for the pension plan will be adjusted periodically to maintain the current ratios of debt securities and equity securities. Additional consideration is given to the historical returns for the pension plan as well as future long range projections of investment returns for each asset category.

The net loss and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2012 are $332,000 and $1,000, respectively. The net gain for the healthcare plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2012 is $(8,000).

The net periodic benefit (benefit) cost (representing interest cost and amortization of net actuarial loss only) for the healthcare plan included in the accompanying consolidated statements of income was $(3,000) and $9,000 for the years ended December 31, 2011 and 2010, respectively. The weighted average discount rate to determine the net periodic benefit cost for 2011 and 2010 was 5.25% and 5.75%, respectively.

Changes in health care costs have no effect on the plan as future increases are assumed by the retirees.

 

Pension plan assets are invested in trusts comprised primarily of investments in various debt and equity funds. A fiduciary committee establishes the target asset mix and monitors asset performance. The expected rate of return on assets includes the determination of a real rate of return for equity and fixed income investment applied to the portfolio based on their relative weighting, increased by an underlying inflation rate. Our defined benefit pension plan asset allocation by asset category is as follows:

 

     Target
Allocation
2012		     Percentage of
Plan Assets		  
       2011     2010  

Asset Category:

       

Equity securities

      60 %      61 %      63 % 

Debt securities

      40 %      39 %      37 % 
  

 

 

    

 

 

    

 

 

  

Total

      100 %      100 %      100 % 
  

 

 

    

 

 

    

 

 

  

Estimated pension plan cash obligations are $355,000, $385,000, $413,000, $415,000, and $423,000 for 2012 – 2016, respectively, and a total of $2,407,000 for the years 2017 through 2021. Estimated healthcare plan cash obligations are $26,000, $23,000, $21,000, $18,000, and $16,000 for 2012–2016, respectively, and a total of $51,000 for the years 2017 through 2021.

Fair Value Measurements of Pension Plan Assets

Following is a description of the valuation methodologies used for pension assets measured at fair value:

 

  •  

Cash and cash equivalents: Cash and cash equivalents consist of cash on deposit in a money market fund. Cash and cash equivalents are stated at cost, which approximates fair value.

 

  •  

U.S. government and agency securities: Valued at closing price reported in the active market in which the individual security is traded.

 

  •  

Corporate bonds and notes: Valued using market inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Inputs may be prioritized differently at certain times based on market conditions.

 

  •  

Mutual funds: Valued at closing price reported in the active market in which the individual security is traded.

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 Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

 

The levels assigned to the defined benefit plan assets as of December 31, 2011, are summarized in the tables below:

 

$ in thousands    Level 1      Level 2      Level 3      Total  

Pension assets, at fair value:

            

Cash in money market fund

    $ 323       $ —         $ —         $ 323   

U.S. government and agency securities

      172         —           —           172   

Corporate bonds and notes

      —           348         —           348   

Mutual funds

      4,177         —           —           4,177   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 4,672       $ 348       $ —         $ 5,020   
  

 

 

     

 

 

     

 

 

     

 

 

  

The levels assigned to the defined benefit plan assets as of December 31, 2010, are summarized in the tables below:

 

$ in thousands    Level 1      Level 2      Level 3      Total  

Pension assets, at fair value:

            

Cash in money market fund

    $ 675       $ —         $ —         $ 675   

U.S. government and agency securities

      498         —           —           498   

Corporate bonds and notes

      —           571         —           571   

Mutual funds

      3,400         —           —           3,400   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets

    $ 4,573       $ 571       $ —         $ 5,144   
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

 

  •  

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 the Company chooses to stop participating in some of its multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

 

The Company participation in these plans for the year ended December 31, 2011, is outlined in the table below. The "EIN/Pension Plan Number" column provides the Employee Identification Number and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2011 is for the plan's year-end at December 31, 2010. The zone status is based on information that the Company 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 last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject.

 

Pension Fund

    EIN/Pension
Plan Number		    

Pension
Protection
Act Zone
Status

2010

   

FIP/RP Status Pending/
Implemented

   Company
Contributions
(in thousands)		     Surcharge
Imposed		     Expiration
of Collective
Bargaining
Agreement
                    2011      2010            

Sheet Metal Workers' National Pension Fund

      52-6112463/001      Red    (did not disclose)   $ 1,100       $ 1,300        No      various

Sheet Metal Workers Local 224 Pension Plan

      31-6171353/001      Yellow   

FIP: Yes - Implemented

RP: No

   $ 100       $ 300        No      May 31, 2013

The Company was not listed in any of the plans' Forms 5500 as providing more than 5 percent of the total contributions for the above plans and plan years. At the date the financial statements were issued, Forms 5500 were not available for the plan years ended December 31, 2011.

We have no current intention of withdrawing from any plan and, therefore, no liability has been provided in the accompanying consolidated financial statements.

Amounts charged to pension expense under the above plans including the multi-employer plans totaled $1.3 million and $2.1 million for 2011 and 2010, respectively.

We have a profit sharing and 401(k) savings retirement plan for non-union employees of certain of our subsidiaries. The plan covers substantially all employees who have 6 months of service, completed 1,000 hours of service and who have attained 18 years of age. The plan allows us to make discretionary contributions and provides for employee salary deferrals of up to 22%. We increased, effective January 1, 2008, the matching contributions to 100% of the first 1% and 50% of the next 5% of the employee deferral for a maximum match of 3.5%. We made aggregate matching contributions and discretionary contributions of $381,000 and $509,000 during 2011 and 2010, respectively.