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Note G - Pensions and Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Note G – Pensions and Other Postretirement Benefits The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective January 1, 2008. Employees hired after this date, in eligible locations, participate in an enhanced 401(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits. Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. Total contributions to the plans were $1.6 million in each of the years 2016, 2015 and 2014. The Company also sponsors a non-contributory defined benefit postretirement health care plan that provides health benefits to certain domestic and Canadian retirees and their spouses. The Company funds the cost of these benefits as incurred. For measurement purposes, and based on maximum benefits as defined by the plan, a zero percent annual rate of increase in the per capita cost of covered health care benefits for domestic retirees age 65 and over was assumed for 2016 and is expected to remain constant going forward. A 5% rate of increase for all employees under age 65 and Canadian retirees over age 65 was assumed. The Company recognizes the obligations associated with its defined benefit pension plan and defined benefit postretirement health care plan in its consolidated financial statements. The following table presents the plans’ funded status as of the measurement date reconciled with amounts recognized in the Company’s consolidated balance sheets:
|  | Pension Plan |  |  | Postretirement Plan |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Accumulated benefit obligation at end of year |  | $ | 64,033 |  |  | $ | 63,830 |  |  | $ | 22,340 |  |  | $ | 22,430 |
Change in projected benefit obligation: |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 77,600 |  |  | $ | 80,069 |  |  | $ | 22,430 |  |  | $ | 22,813 |
Service cost |  |  | 2,837 |  |  |  | 3,064 |  |  |  | 1,192 |  |  |  | 1,194 |
Interest cost |  |  | 2,643 |  |  |  | 2,640 |  |  |  | 842 |  |  |  | 790 |
Settlement |  |  | - |  |  |  | 1,431 |  |  |  | - |  |  |  | – |
Benefits paid |  |  | (5,510 | ) |  |  | (10,069 | ) |  |  | (1,637 | ) |  |  | (1,094 | )
Effect of foreign exchange |  |  | - |  |  |  | – |  |  |  | 7 |  |  |  | (94 | )
Actuarial (gain) loss |  |  | (463 | ) |  |  | 465 |  |  |  | (494 | ) |  |  | (1,179 | )
Benefit obligation at end of year |  | $ | 77,107 |  |  | $ | 77,600 |  |  | $ | 22,340 |  |  | $ | 22,430 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Plan assets at beginning of year |  | $ | 68,291 |  |  | $ | 75,573 |  |  | $ | - |  |  | $ | - |
Actual return on plan assets |  |  | 4,537 |  |  |  | (1,213 | ) |  |  | - |  |  |  | – |
Employer contributions |  |  | 16,000 |  |  |  | 4,000 |  |  |  | 1,637 |  |  |  | 1,094 |
Benefits paid |  |  | (5,510 | ) |  |  | (10,069 | ) |  |  | (1,637 | ) |  |  | (1,094 | )
Plan assets at end of year |  |  | 83,318 |  |  |  | 68,291 |  |  |  | - |  |  |  | – |
Funded status at end of year |  | $ | 6,211 |  |  | $ | (9,309 | ) |  | $ | (22,340 | ) |  | $ | (22,430 | )
Amounts recognized in the Consolidated Balance Sheets consist of: |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent assets |  | $ | 6,211 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Current liabilities |  |  | - |  |  |  | - |  |  |  | (1,631 | ) |  |  | (1,646 | )
Noncurrent liabilities |  |  | - |  |  |  | (9,309 | ) |  |  | (20,709 | ) |  |  | (20,784 | )
Total assets (liabilities) |  | $ | 6,211 |  |  | $ | (9,309 | ) |  | $ | (22,340 | ) |  | $ | (22,430 | )
Amounts recognized in accumulated other comprehensive loss consist of: |  |  |  |  |  |  |  |  |
Net actuarial loss (gain) |  | $ | 27,041 |  |  | $ | 29,992 |  |  | $ | (7,890 | ) |  | $ | (8,082 | )
Deferred tax (benefit) expense |  |  | (10,506 | ) |  |  | (11,590 | ) |  |  | 2,978 |  |  |  | 3,038 |
After tax actuarial loss (gain) |  | $ | 16,535 |  |  | $ | 18,402 |  |  | $ | (4,912 | ) |  | $ | (5,044 | )
Components of net periodic benefit cost : |  |  |  |  |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |  |  |  |
Pension Plan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 2,837 |  |  | $ | 3,064 |  |  | $ | 2,904 |  |  |  |  |
Interest cost |  |  | 2,643 |  |  |  | 2,640 |  |  |  | 2,895 |  |  |  |  |
Expected return on plan assets |  |  | (4,150 | ) |  |  | (4,060 | ) |  |  | (4,755 | ) |  |  |  |
Recognized actuarial loss |  |  | 2,101 |  |  |  | 2,230 |  |  |  | 1,664 |  |  |  |  |
Settlement loss |  |  | - |  |  |  | 3,783 |  |  |  | - |  |  |  |  |
Net periodic benefit cost |  | $ | 3,431 |  |  | $ | 7,657 |  |  | $ | 2,708 |  |  |  |  |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |  |  |  |
Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (gain) loss |  | $ | (2,952 | ) |  | $ | 1,156 |  |  | $ | 4,541 |  |  |  |  |
Total expense recognized in net periodic benefit cost and other comprehensive income |  | $ | 479 |  |  | $ | 8,813 |  |  | $ | 7,249 |  |  |  |  |
Postretirement Plan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 1,192 |  |  | $ | 1,194 |  |  | $ | 907 |  |  |  |  |
Interest cost |  |  | 842 |  |  |  | 790 |  |  |  | 845 |  |  |  |  |
Recognized actuarial gain |  |  | (699 | ) |  |  | (649 | ) |  |  | (1,181 | ) |  |  |  |
Net periodic benefit cost |  | $ | 1,335 |  |  | $ | 1,335 |  |  | $ | 571 |  |  |  |  |
Other changes in postretirement plan assets and benefit obligations recognized in other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net gain (loss) |  | $ | 205 |  |  | $ | (529 | ) |  | $ | 4,233 |  |  |  |  |
Total expense recognized in net periodic benefit cost and other comprehensive income |  |  | 1,540 |  |  | $ | 806 |  |  | $ | 4,804 |  |  |  |  |
During 2015, the Company recorded a settlement loss relating to retirees that received lump-sum distributions from the Company’s defined benefit pension plan totaling $3.8 million. This charge was the result of lump-sum payments to retirees which exceeded the Plan’s actuarial service and interest cost thresholds in 2015. No settlement loss was incurred in 2016 or 2014. The prior service cost is amortized on a straight-line basis over the average estimated remaining service period of active participants. The unrecognized actuarial gain or loss in excess of the greater of 10% of the benefit obligation or the market value of plan assets is also amortized on a straight-line basis over the average estimated remaining service period of active participants.
|  | Pension Plan |  |  | Postretirement Plan |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Weighted-average assumptions used to determine benefit obligations at December 31: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 3.60 | % |  |  | 3.70 | % |  |  | 3.77 | % |  |  | 3.90 | %
Rate of compensation increase |  |  | 3.50 | % |  |  | 3.50 | % |  |  | – |  |  |  | – |
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 3.70 | % |  |  | 3.67 | % |  |  | 3.90 | % |  |  | 3.60 | %
Expected long-term rate of return on plan assets |  |  | 6.00 | % |  |  | 6.00 | % |  |  | – |  |  |  | – |
Rate of compensation increase |  |  | 3.50 | % |  |  | 3.50 | % |  |  | – |  |  |  | – |
To enhance the Company’s efforts to mitigate the impact of the defined benefit pension plan on its financial statements, in 2014 the Company moved towards a liability driven investing model to more closely align assets with liabilities based on when the liabilities are expected to come due. Currently, based on 2016 funding levels, equities may comprise between 14% and 34% of the Plan’s market value. Fixed income investments may comprise between 60% and 80% of the Plan’s market value. Alternative investments may comprise between 0% and 12% of the Plan’s market value. Cash and cash equivalents (including all senior debt securities with less than one year to maturity) may comprise between 0% and 10% of the Plan’s market value. Financial instruments included in pension plan assets are categorized into a fair value hierarchy of three levels, based on the degree of subjectivity inherent in the valuation methodology. Level 1 assets are based on unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets. Level 2 assets are valued at inputs other than quoted prices in active markets for identical assets that are observable either directly or indirectly for substantially the full term of the assets. Level 3 assets are valued based on unobservable inputs for the asset (i.e., supported by little or no market activity). These inputs include management’s own assessments about the assumptions that market participants would use in pricing assets (including assumptions about risk). The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety. All of the Plan’s assets in the following table sets forth by asset class the Plan’s fair value of assets. Plan fair value asset allocation by category:
2016 |  |  | $ |  |  | % |
Level 1: |  |  |  |  |  |  |  |
Equity |  | $ | 19,752 |  |  |  | 24 | %
Fixed income |  |  | 11,805 |  |  |  | 14 | %
Mutual funds |  |  | - |  |  |  | - |
Money funds and cash |  |  | 11,134 |  |  |  | 13 | %
Total Level 1 |  |  | 42,691 |  |  |  | 51 | %
Level 2: |  |  |  |  |  |  |  |
Fixed income |  |  | 40,597 |  |  |  | 49 | %
Money fund |  |  | - |  |  |  | - |
Total Level 2 |  |  | 40,597 |  |  |  | 49 | %
Level 3: |  |  |  |  |  |  |  |
Equity |  |  | 30 |  |  |  | - |
Total Level 3 |  |  | 30 |  |  |  | - |
Total fair value of Plan assets |  | $ | 83,318 |  |  |  | 100 | %
2015 |  |  | $ |  |  | % |
Level 1: |  |  |  |  |  |  |  |
Equity |  | $ | 16,908 |  |  |  | 25 | %
Fixed income |  |  | 1,468 |  |  |  | 2 | %
Mutual funds |  |  | 3,476 |  |  |  | 5 | %
Money funds and cash |  |  | 1,011 |  |  |  | 1 | %
Total Level 1 |  |  | 22,863 |  |  |  | 33 | %
Level 2: |  |  |  |  |  |  |  |
Fixed income |  |  | 41,984 |  |  |  | 62 | %
Money fund |  |  | 3,428 |  |  |  | 5 | %
Total Level 2 |  |  | 45,412 |  |  |  | 67 | %
Level 3: |  |  |  |  |  |  |  |
Total Level 3 |  |  | - |  |  |  | - |
Total fair value of Plan assets |  | $ | 68,275 |  |  |  | 100 | %
Contributions The Company may contribute $2 million to $6 million to its defined benefit pension plan in 2017. Expected future benefit payments The following benefit payments are expected to be paid as follows based on actuarial calculations:
|  | 2017 |  |  | 2018 |  |  | 2019 |  |  | 2020 |  |  | 2021 |  |  | Thereafter |
Pension |  | $ | 6,611 |  |  | $ | 5,420 |  |  | $ | 6,029 |  |  | $ | 6,617 |  |  | $ | 6,345 |  |  | $ | 29,054 |
Postretirement |  |  | 1,660 |  |  |  | 1,678 |  |  |  | 1,662 |  |  |  | 1,690 |  |  |  | 1,694 |  |  |  | 8,878 |
A one percentage point increase in the assumed health care trend rate would increase postretirement expense by approximately $270,000, changing the benefit obligation by approximately $2.0 million; while a one percentage point decrease in the assumed health care trend rate would decrease postretirement health care expense by approximately $231,000, changing the benefit obligation by approximately $1.7 million. The assumed trend rates for healthcare costs are a 5% increase per year for retirees prior to the age 65 and 0% for retirees post age 65. A 5% rate of increase for all employees under age 65 and Canadian retirees over age 65 was assumed. A one percentage point change in the assumed rate of return on the defined benefit pension plan assets is estimated to have an approximate $692,000 effect on pension expense. Additionally, a one percentage point increase in the discount rate is estimated to have a $1.4 million decrease in pension expense, while a one percentage point decrease in the discount rate is estimated to have a $1.7 million increase in pension expense.

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