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Retirement Plans | 12 Months Ended
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Dec. 31, 2013
Retirement Plans [Abstract] |
RETIREMENT PLANS | Note 17. Retirement Plans The Company has five retirement plans which cover its hourly and salaried employees in the United States: three defined benefit plans (one active / two frozen) and two defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company's funding to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), applicable plan policy and investment guidelines. The Company policy is to contribute at least the minimum in accordance with the funding standards of ERISA. The Company’s subsidiary, L.B. Foster Rail Technologies (Rail Technologies), maintains two defined contribution plans for its employees in Canada, as well as a post-retirement benefit plan. In the United Kingdom, Rail Technologies maintains both a defined contribution plan and a defined benefit plan. These plans are discussed in further detail below. United States Defined Benefit Plans The following tables present a reconciliation of the changes in the benefit obligation, the fair market value of the assets and the funded status of the plans:
|  | 2013 |  | 2012
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year | $ | 18,034 | $ | 16,986
Service cost |  | 33 |  | 31
Interest cost |  | 707 |  | 748
Actuarial (gain) loss |  | (1,924) |  | 980
Benefits paid |  | (738) |  | (711)
Benefit obligation at end of year | $ | 16,112 | $ | 18,034
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year | $ | 13,262 | $ | 12,088
Actual gain on plan assets |  | 2,019 |  | 1,127
Employer contribution |  | 496 |  | 758
Benefits paid |  | (738) |  | (711)
Fair value of assets at end of year |  | 15,039 |  | 13,262
Funded status at end of year | $ | (1,073) | $ | (4,772)
Amounts recognized in the consolidated |  |  |  |
balance sheet consist of: |  |  |  |
Other long-term liabilities | $ | (1,073) | $ | (4,772)
Amounts recognized in accumulated other |  |  |  |
comprehensive income consist of: |  |  |  |
Net loss | $ | 1,375 | $ | 4,675
Prior service cost |  | 4 |  | 4
| $ | 1,379 | $ | 4,679
The actuarial loss included in accumulated other comprehensive loss that will be recognized in net periodic pension cost during 2014 is $65, before taxes. Net periodic pension costs for the three years ended December 31, 2013 are as follows:
|  | 2013 |  | 2012 |  | 2011 |
Components of net periodic benefit cost: |  |  |
Service cost | $ | 33 | $ | 31 | $ | 30 |
Interest cost |  | 707 |  | 748 |  | 799 |
Expected return on plan assets |  | (856) |  | (810) |  | (764) |
Amortization of prior service cost |  | 1 |  | 1 |  | 1 |
Recognized net actuarial loss |  | 212 |  | 194 |  | 111 |
Net periodic benefit cost | $ | 97 | $ | 164 | $ | 177 |
The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.
|  | 2013 |  | 2012 |  | 2011 |
Discount rate |  | 4.90 | % | 4.00 | % | 5.48 | %
Expected rate of return on plan assets |  | 6.50 | % | 6.50 | % | 6.70 | %
The expected long-term rate of return is based on numerous factors including the target asset allocation for plan assets, historical rate of return, long-term inflation assumptions, and current and projected market conditions. Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets are as follows:
|  |  |  | 2013 |  | 2012 |
Projected benefit obligation |  |  | $ | 12,513 | $ | 18,034 |
Accumulated benefit obligation |  |  |  | 12,513 |  | 18,034 |
Fair value of plan assets |  |  |  | 11,321 |  | 13,262 |
Plan assets consist primarily of various fixed income and equity investments. The Company’s primary investment objective is to provide long-term growth of capital while accepting a moderate level of risk. The investments are limited to cash and equivalents, bonds, preferred stocks and common stocks. The investment target ranges and actual allocation of pension plan assets by major category at December 31, 2013 and 2012 are as follows:
|  | Target |  | 2013 |  | 2012 |
Asset Category |  |  |  |  |  |  |
Cash and cash equivalents |  | 0 - 10 | % | 4 | % | 7 | %
Total fixed income funds |  | 25 - 50 |  | 27 |  | 31 |
Total mutual funds / equities |  | 50 - 70 |  | 69 |  | 62 |
Total |  |  |  | 100 | % | 100 | %
In accordance with the fair value disclosure requirements with FASB ASC 820, “Fair Value Measurements and Disclosures,” the following assets were measured at fair value on a recurring basis at December 31, 2013 and 2012. Additional information regarding FASB ASC 820 and the fair value hierarchy can be found in Note 19, Fair Value Measurements.
|  | 2013 |  | 2012
Asset Category |  |  |  |
Cash and cash equivalents | $ | 568 | $ | 984
Fixed income funds |  |  |  |
Corporate bonds |  | 4,005 |  | 4,168
Total fixed income funds |  | 4,005 |  | 4,168
Equity funds and equities |  |  |  |
Mutual funds |  | 9,142 |  | 7,163
Common stock |  | 1,324 |  | 947
Total equity funds and equities |  | 10,466 |  | 8,110
Total | $ | 15,039 | $ | 13,262
Cash equivalents. The Company uses quoted market prices to determine the fair value of these investments in interest-bearing cash accounts and they are classified in Level 1 of the fair value hierarchy. The carrying amounts approximate fair value because of the short maturity of the instruments. Fixed income funds. Investments within the fixed income funds category consist of fixed income corporate debt. The Company uses quoted market prices to determine the fair value of these fixed income funds. These instruments consist of exchange-traded government and corporate bonds and are classified in Level 1 of the fair value hierarchy. Equity funds and equities. The valuation of investments in registered investment companies is based on the underlying investments in securities. Securities traded on security exchanges are valued at the latest quoted sales price. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and ask quotations. These investments are classified in Level 1 of the fair value hierarchy. The Company expects to contribute approximately $448 to its United States defined benefit plans in 2014. The following benefit payments are expected to be paid:
|  | Pension
|  | Benefits
2014 | $ | 759
2015 |  | 773
2016 |  | 802
2017 |  | 878
2018 |  | 912
Years 2019-2023 |  | 5,394
United Kingdom Defined Benefit Plan During 2010, the Conveyors International Limited Pension Plan (Conveyors plan) was merged with the Portec Rail Products (UK) Limited Pension Plan (Portec Rail Plan) a defined benefit pension plan in the United Kingdom. The combined Portec Rail Plan covers some current employees, former employees and retirees of the original Portec Rail Plan along with former employees of the Conveyors plan. The Portec Rail Plan has been frozen to new entrants since April 1, 1997 and also covers the former employees of the Conveyors plan after January 2002. Benefits under the Portec Rail Plan, including the former Conveyors plan, were based on years of service and eligible compensation during defined periods of service. Our funding policy for the Portec Rail Plan is to make minimum annual contributions required by applicable regulations. Contributions of $303 and $297 were made to the plan on December 31, 2013 and 2012, respectively. The funded status of the United Kingdom defined benefit plan at year end is as follows:
|  | 2013 |  | 2012
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year | $ | 8,034 | $ | 6,964
Interest cost |  | 348 |  | 338
Actuarial loss |  | 162 |  | 652
Benefits paid |  | (247) |  | (236)
Foreign currency exchange rate changes |  | 153 |  | 316
Benefit obligation at end of year | $ | 8,450 | $ | 8,034
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year | $ | 6,051 | $ | 5,160
Actual gain on plan assets |  | 545 |  | 596
Employer contribution |  | 303 |  | 297
Benefits paid |  | (247) |  | (236)
Foreign currency exchange rate changes |  | 117 |  | 234
Fair value of assets at end of year |  | 6,769 |  | 6,051
Funded status at end of year | $ | (1,681) | $ | (1,983)
Amounts recognized in the consolidated |  |  |  |
balance sheet consist of: |  |  |  |
Other long-term liabilities | $ | (1,681) | $ | (1,983)
Amounts recognized in accumulated |  |  |  |
other comprehensive income consist of: |  |  |  |
Net loss | $ | 906 | $ | 1,176
Prior service cost |  | 142 |  | 164
Transition obligation |  | (50) |  | (96)
| $ | 998 | $ | 1,244
Net periodic pension costs for the three years ended December 31, 2013 are as follows:
|  | 2013 |  | 2012 |  | 2011
Components of net periodic benefit cost: |  |
Interest cost | $ | 348 | $ | 338 | $ | 331
Expected return on plan assets |  | (321) |  | (307) |  | (337)
Amortization of transition obligation |  | (46) |  | (49) |  | (47)
Amortization of prior service cost |  | 22 |  | 23 |  | 22
Recognized net actuarial loss |  | 229 |  | 221 |  | 107
Net periodic benefit cost | $ | 232 | $ | 226 | $ | 76
The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.
|  | 2013 |  | 2012 |  | 2011 |
Discount rate |  | 4.6 | % | 4.3 | % | 4.7 | %
Expected rate of return on plan assets |  | 5.8 | % | 5.2 | % | 5.7 | %
Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets are as follows:
|  | 2013 |  | 2012 |
Projected benefit obligation | $ | 8,450 | $ | 8,034 |
Accumulated benefit obligation |  | 8,450 |  | 8,034 |
Fair value of plan assets |  | 6,769 |  | 6,051 |
The Company has estimated the long-term rate of return on plan assets based primarily on historical returns on plan assets, adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based on publicly available information. Plan assets are invested by the trustees in accordance with a written statement of investment principles. This statement permits investment in equities, corporate bonds, United Kingdom government securities, commercial property and cash, based on certain target allocation percentages. Asset allocation is primarily based on a strategy to provide steady growth without undue fluctuations. The target asset allocation percentages for 2013 are as follows:
| Portec Rail
| Plan
Equity securities | Up to 100%
Commercial property | Not to exceed 50%
U.K. Government securities | Not to exceed 50%
Cash | Up to 100%
Plan assets held within the Portec Rail Plan consist of cash and marketable securities which have been classified as Level 1 of the fair value hierarchy. All other plan assets have been classified as Level 2 of the fair value hierarchy. The plan assets by category for the years ended December 31, are as follows:
|  | 2013 |  | 2012 |
Asset Category |  |  |
Cash and cash equivalents | $ | 369 | $ | 520 |
Equity securities |  | 2,803 |  | 2,250 |
Bonds |  | 1,468 |  | 1,529 |
Commercial property |  | 2,129 |  | 1,636 |
Alternatives |  | - |  | 116 |
Total | $ | 6,769 | $ | 6,051 |
United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans. The Company anticipates making contributions of $298 to the Portec Rail Plan during 2014. The following estimated future benefits payments are expected to be paid under the Portec Rail Plan:
|  | Pension
|  | Benefits
2014 | $ | 231
2015 |  | 256
2016 |  | 290
2017 |  | 313
2018 |  | 333
Years 2019-2023 |  | 2,103
Other Post-Retirement Benefit Plan Rail Technologies' operation near Montreal, Quebec, Canada, maintains a post-retirement benefit plan, which provides retiree life insurance, health care benefits and, for a closed group of employees, dental care. Retiring employees with a minimum of 10 years of service are eligible for the plan benefits. The plan is not funded. Cost of benefits earned by employees is charged to expense as services are rendered. The expense related to this plan was not material for 2013 and 2012. Rail Technologies' accrued benefit obligation was $1,080 and $1,130 as of December 31, 2013 and 2012, respectively. Benefit payments anticipated for 2013 are not material. This obligation is recognized within other long-term liabilities. The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.
|  | 2013 |  | 2012 |
Discount rate |  | 5.0 | % | 4.4 | %
Weighted average health care trend rate |  | 6.4 | % | 6.6 | %
The weighted average health care rate trends downward to an ultimate rate of 4.40% in 2032. A 1% increase in the assumed health care cost trend rate will increase the service and interest cost components of the expense by $6 and increase the accumulated post-retirement benefit obligation by approximately $63 for 2013. A 1% decrease in the assumed health care cost trend rate will decrease the service and interest cost components of the expense by $7 and decrease the accumulated post-retirement benefit obligation by $76 for 2013. Defined Contribution Plans The Company has a domestic defined contribution plan that covers all non-union hourly and all salaried employees (Salaried Plan). The Salaried Plan permits both pre-tax and after-tax employee contributions. Participants can contribute, subject to statutory limitations, between 1% and 75% of eligible pre-tax pay and between 1% and 100% of eligible after-tax pay. The Company's employer match is 100% of the first 1% of deferred eligible compensation and up to 50% of the next 6%, based on years of service, of deferred eligible compensation, for a total maximum potential match of 4%. The Company may also make discretionary contributions to the Salaried Plan. The Company also has a domestic defined contribution plan for union hourly employees with contributions made by both the participants and the Company based on various formulas (Union Plan). The Company’s Rail Technologies subsidiary maintains a defined contribution plan covering all non-union employees at its Montreal, Quebec, Canada location (Montreal Plan). Under the terms of the Montreal Plan, Rail Technologies may contribute 4% of each employee’s compensation as a non-elective contribution and may also contribute 30% of the first 6% of each employee’s compensation contributed to the Montreal Plan. The subsidiary also maintains a defined contribution plan covering substantially all employees at its United Kingdom locations (U.K. Plan). Benefits under the U.K. Plan are provided under no formal written agreement. Under the terms of the defined contribution U.K. Plan, Rail Technologies may make non-elective contributions of between 3% and 10% of each employee’s compensation. Finally, Rail Technologies maintains a defined contribution plan covering substantially all of the employees of at its Burnaby, British Columbia, Canada location (Burnaby Plan). Under the terms of the Burnaby Plan, Rail Technologies makes a non-elective contribution of 4% of each employee’s compensation and may also contribute 30% of the first 6% of each employee’s compensation contributed to the Burnaby Plan.
|  | 2013 |  | 2012 |  | 2011
Salaried Plan | $ | 2,077 | $ | 2,028 | $ | 1,846
Union Plan |  | 74 |  | 79 |  | 62
Montreal Plan |  | 123 |  | 126 |  | 101
U.K. Plan |  | 136 |  | 116 |  | 122
Burnaby Plan |  | 143 |  | 143 |  | 106
| $ | 2,553 | $ | 2,492 | $ | 2,237

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- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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