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RETIREMENT PLANS | 12 Months Ended
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Mar. 31, 2013
RETIREMENT PLANS [Abstract] |
RETIREMENT PLANS |
8. | RETIREMENT PLANS
CSW sponsors a qualified defined benefit pension plan which covers its employees and employees of certain of its controlled affiliates. The following information about the plan represents amounts and information related to CSW's participation in the plan and is presented as though CSW sponsored a single-employer plan. Benefits are based on years of service and an average of the highest five consecutive years of compensation during the last 10 years of employment. The funding policy of the plan is to contribute annual amounts that are currently deductible for tax reporting purposes. No contribution was made to the plan during the three years ended March 31, 2013. Additionally, CSW sponsors an unfunded Retirement Restoration Plan, which is a nonqualified plan that provides for the payment, upon retirement, of the difference between the maximum annual payment permissible under the qualified retirement plan pursuant to Federal limitations and the amount which would otherwise have been payable under the qualified plan. The following tables set forth the qualified plan's net pension benefit, benefit obligation, fair value of plan assets, and amounts recognized in our consolidated statements of operations at March 31, 2013, 2012 and 2011, as well as amounts recognized in our consolidated statements of assets and liabilities at March 31, 2013 and 2012:
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Net pension benefit |  |  |  |  |  |  |  |  |
Service cost-benefits earned during the year |  | $ | 259,672 |  |  | $ | 133,729 |  |  | $ | 161,047 |
Interest cost on projected benefit obligation |  |  | 286,639 |  |  |  | 256,558 |  |  |  | 231,332 |
Expected return on assets |  |  | (784,194 | ) |  |  | (781,299 | ) |  |  | (771,025 | )
Net amortization |  |  | 49,803 |  |  |  | 9,377 |  |  |  | 9,377 |
Net pension benefit from qualified plan |  | $ | (188,080 | ) |  | $ | (381,635 | ) |  | $ | (369,269 | )
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Change in benefit obligation |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 5,136,555 |  |  | $ | 4,213,349 |  |  | $ | 3,450,443 |
Service cost |  |  | 259,672 |  |  |  | 133,729 |  |  |  | 161,047 |
Interest cost |  |  | 286,639 |  |  |  | 256,558 |  |  |  | 231,332 |
Actuarial gain (loss) |  |  | 818,784 |  |  |  | 601,402 |  |  |  | 437,959 |
Benefits paid |  |  | (80,039 | ) |  |  | (68,483 | ) |  |  | (67,432 | )
Benefit obligation at end of year |  | $ | 6,421,611 |  |  | $ | 5,136,555 |  |  | $ | 4,213,349 |
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Change in plan assets |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 12,485,876 |  |  | $ | 11,610,994 |  |  | $ | 10,519,400 |
Actual return on plan assets |  |  | 2,777,996 |  |  |  | 943,365 |  |  |  | 1,159,026 |
Benefits paid |  |  | (80,039 | ) |  |  | (68,483 | ) |  |  | (67,432 | )
Fair value of plan assets at end of year |  | $ | 15,183,833 |  |  | $ | 12,485,876 |  |  | $ | 11,610,994 |
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |
Funded status and amounts recognized in consolidated statements of assets and liabilities |  |  |  |  |  |
Actuarial present value of benefit obligations: Accumulated benefit obligation |  | $ | (5,636,366 | ) |  | $ | (4,755,675 | )
Projected benefit obligation for service rendered to date |  |  | (6,421,611 | ) |  |  | (5,136,555 | )
Plan assets at fair value* |  |  | 15,183,833 |  |  |  | 12,485,876 |
Funded status |  |  | 8,762,222 |  |  |  | 7,349,321 |
Unrecognized net loss from past experience different from that assumed and effects of changes in assumptions |  |  | 602,598 |  |  |  | 1,818,042 |
Unrecognized prior service costs |  |  | 122,579 |  |  |  | 131,956 |
ASC 715 adjustment |  |  | (725,177 | ) |  |  | (1,949,998 | )
Prepaid pension cost included in pension assets |  | $ | 8,762,222 |  |  | $ | 7,349,321 |
*Primarily equities and bonds including approximately 25,000 shares of CSW Common Stock. The following tables set forth the retirement restoration plan's net pension benefit and benefit obligation amounts at March 31, 2013, 2012 and 2011, as well as amounts recognized in our consolidated statements of assets and liabilities at March 31, 2013, 2012:
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Net pension cost |  |  |  |  |  |  |  |  |
Service cost-benefits earned during the year |  | $ | 37,052 |  |  | $ | 18,163 |  |  | $ | 33,216 |
Interest cost on projected benefit obligation |  |  | 106,939 |  |  |  | 79,056 |  |  |  | 69,248 |
Net amortization |  |  | 9,731 |  |  |  | (15,428 | ) |  |  | (24,507 | )
Net pension cost from qualified plan |  | $ | 153,722 |  |  | $ | 81,791 |  |  | $ | 77,957 |
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Change in benefit obligation |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 1,568,392 |  |  | $ | 1,256,895 |  |  | $ | 1,082,941 |
Service cost |  |  | 37,052 |  |  |  | 18,163 |  |  |  | 33,216 |
Interest cost |  |  | 106,939 |  |  |  | 79,056 |  |  |  | 69,248 |
Actuarial gain (loss) |  |  | 810,303 |  |  |  | 214,278 |  |  |  | 132,940 |
Other adjustments |  |  | 127,280 |  |  |  | – |  |  |  | (61,450 | )
Benefit obligation at end of year |  | $ | 2,649,966 |  |  | $ | 1,568,392 |  |  | $ | 1,256,895 |
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |
Amounts recognized in our consolidated statements of assets and liabilities |  |  |  |  |  |
Projected benefit obligation |  | $ | (2,649,966 | ) |  | $ | (1,568,392 | )
Unrecognized net (gain) loss from past experience different from that assumed and effects of changes in assumptions |  |  | 836,122 |  |  |  | 8,556 |
Unrecognized prior service costs |  |  | (122,296 | ) |  |  | (130,798 | )
ASC 715 adjustment |  |  | (713,826 | ) |  |  | 122,242 |
Accrued pension cost included in pension liabilities |  | $ | (2,649,966 | ) |  | $ | (1,568,392 | )
The following assumptions were used in estimating the actuarial present value of the projected benefit obligations:
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Discount rate |  |  | 4.50 | % |  |  | 5.25 | % |  |  | 6.00 | %
Rate of compensation increases |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
The following assumptions were used in estimating the net periodic (income)/expense:
|  | Years Ended March 31 |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Discount rate |  |  | 4.50 | % |  |  | 5.25 | % |  |  | 6.00 | %
Expected return on plan assets |  |  | 6.50 | % |  |  | 6.50 | % |  |  | 6.50 | %
Rate of compensation increases |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
Following are the expected benefit payments for the next five years and in the aggregate for the years 2019-2023:
(In thousands) |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | 2017 |  |  | 2018 |  |  |  | 2019-2023 |
Qualified Plan |  | $ | 222 |  |  | $ | 238 |  |  | $ | 250 |  |  | $ | 334 |  |  | $ | 338 |  |  | $ | 1,921 |
Restoration Plan |  | $ | 100 |  |  | $ | 119 |  |  | $ | 134 |  |  | $ | 181 |  |  | $ | 183 |  |  | $ | 965 |
During the plan year ended March 31, 2013, the discount rate was changed from 5.25% to 4.50%. The retirement assumption was changed from the prior assumption that all participants retire at age 65 with an assumption that reflects rates of retirement at each age between ages 55 and 70 for those participants who are retirement eligible to better reflect the anticipated experience of the plan. The expected rate of return on assets assumption was determined based on the anticipated performance of the various asset classes in the plan's portfolio and the allocation of assets to each class. The anticipated asset class return is developed using historical and predicted asset return performance, considering the investments underlying each asset class and expected investment performance based on forecasts of inflation, interest rates and market indices for fixed income and equity securities. Plan Assets Our pension plan is administered by a board-appointed committee that has fiduciary responsibility for the plan's management. The trustee of the plan is JPMorgan Asset Management. Currently, approximately 15% of the assets are selected and managed by the trustee and the remainder of the assets are managed by the committee, invested mostly in equity securities, including our stock. The plan assets are invested using a total return approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and achieve our targeted investment return benchmark. Investment performance and asset allocation are measured and monitored on an ongoing basis. Plan assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of plan equity investments is to maximize the long-term real growth of the plan's assets, while the role of fixed income investments is to generate current income, provide for more stable periodic returns and provide some protection against prolonged decline in the market value of the plan's equity investments. The current target allocations for plan assets are 60-80% equity, 15-40% for fixed income, and 0-15% for cash and cash equivalents. Equity investments include U.S. and foreign equities, as well as publicly traded and non-publicly traded mutual funds. Fixed income securities include long-duration government obligations, government agency obligations and corporate obligations. CSW's pension plan asset allocations are as follows:
|  | Percentage of Plan Assets at March 31 |
Asset Category |  | 2013 |  |  | 2012 |
Equity securities |  |  | 78.8 | % |  |  | 77.7 | %
Fixed income securities |  |  | 14.5 | % |  |  | 16.6 | %
Cash and cash equivalents |  |  | 6.7 | % |  |  | 5.7 | %
|  |  | 100.0 | % |  |  | 100.0 | %
Below is the pension plan asset for Capital Southwest Corporation and its affiliates, of which Capital Southwest assets were $15,183,833 and $12,485,876 as of March 31, 2013 and 2012 respectively. The following fair value hierarchy table sets forth our pension plan investment portfolio by level as of March 31, 2013 (in millions):
|  |  |  |  | Fair Value Measurements at Reporting Date Using |
Asset Category |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets Level I |  |  | Significant Other Observable Inputs Level 2 |  |  | Significant Observable Inputs Level 3 |
Equity securities (a) |  | $ | 40.1 |  |  | $ | 26.7 |  |  | $ | 13.4 |  |  | $ | – |
Fixed income securities (b) |  |  | 7.4 |  |  |  | – |  |  |  | 7.4 |  |  |  | – |
Cash and cash equivalents |  |  | 3.4 |  |  |  | 3.4 |  |  |  | – |  |  |  | – |
Total |  | $ | 50.9 |  |  | $ | 30.1 |  |  | $ | 20.8 |  |  | $ | – |
The following fair value hierarchy table sets forth our pension plan investment portfolio by level as of March 31, 2012 (in millions):
|  |  |  |  | Fair Value Measurements at Reporting Date Using |
Asset Category |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets Level I |  |  | Significant Other Observable Inputs Level 2 |  |  | Significant Observable Inputs Level 3 |
Equity securities (a) |  | $ | 32.9 |  |  | $ | 21.4 |  |  | $ | 11.5 |  |  | $ | – |
Fixed income securities (b) |  |  | 7.0 |  |  |  | – |  |  |  | 7.0 |  |  |  | – |
Cash and cash equivalents |  |  | 2.4 |  |  |  | 2.4 |  |  |  | – |  |  |  | – |
Total |  | $ | 42.3 |  |  | $ | 23.8 |  |  | $ | 18.5 |  |  | $ | – |
There were no plan assets valued using significant unobservable inputs (level 3) as of March 31, 2013 or 2012.
| (a) | This category includes investment in equity securities of large, medium and small companies and equity investments in foreign companies. Mutual funds included in this category are valued using the net asset value per unit as of the valuation date. These investments include shares of our common stock. At March 31, 2013 and 2012, our common stock represented 19.9% and 19.7% respectively, of the plan assets.
| (b) | This category includes investments in investment grade fixed income instruments, primarily U.S. government obligations.

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This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Implementation Guide (Q and A) -Number FAS88 -Paragraph 63 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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