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Retirement Plans | 12 Months Ended
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Dec. 31, 2014
Retirement Plans [Abstract] |
RETIREMENT PLANS | Note 17. Retirement Plans The Company has six retirement plans which cover its hourly and salaried employees in the United States: three defined benefit plans (one active / two frozen) and th ree 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:
|  | 2014 |  | 2013
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year | $ | 16,112 | $ | 18,034
Service cost |  | 23 |  | 33
Interest cost |  | 771 |  | 707
Actuarial loss (gain) |  | 2,753 |  | (1,924)
Benefits paid |  | (734) |  | (738)
Benefit obligation at end of year | $ | 18,925 | $ | 16,112
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year | $ | 15,039 | $ | 13,262
Actual gain on plan assets |  | 601 |  | 2,019
Employer contribution |  | 299 |  | 496
Benefits paid |  | (734) |  | (738)
Fair value of assets at end of year |  | 15,205 |  | 15,039
Funded status at end of year | $ | (3,720) | $ | (1,073)
Amounts recognized in the consolidated balance sheet consist of: |  |  |  |
Other long-term liabilities | $ | (3,720) | $ | (1,073)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |
Net loss | $ | 4,429 | $ | 1,375
Prior service cost |  | 3 |  | 4
| $ | 4,432 | $ | 1,379
The actuarial loss included in accumulated other comprehensive loss that will be recognized in net periodic pension cost during 2015 is $278, before taxes. Net periodic pension costs for the three years ended December 31, 2014 are as follows:
|  | 2014 |  | 2013 |  | 2012 |
Components of net periodic benefit cost: |  |  |
Service cost | $ | 23 | $ | 33 | $ | 31 |
Interest cost |  | 771 |  | 707 |  | 748 |
Expected return on plan assets |  | (968) |  | (856) |  | (810) |
Amortization of prior service cost |  | 1 |  | 1 |  | 1 |
Recognized net actuarial loss |  | 65 |  | 212 |  | 194 |
Net periodic pension (income) cost | $ | (108) | $ | 97 | $ | 164 |
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.
|  | 2014 |  | 2013 |  | 2012 |
Discount rate |  | 4.0 | % | 4.9 | % | 4.0 | %
Expected rate of return on plan assets |  | 5.5 | % | 6.5 | % | 6.5 | %
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. The decline in the expected rate of return on plan assets reflects a shift in the Plans’ investment strategy toward a higher focus on fixed income investments. Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets are as follows:
|  |  |  | 2014 |  | 2013 |
Projected benefit obligation |  |  | $ | 18,925 | $ | 12,513 |
Accumulated benefit obligation |  |  |  | 18,925 |  | 12,513 |
Fair value of plan assets |  |  | $ | 15,205 | $ | 11,321 |
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, 2014 and 2013 are as follows:
|  | Target |  | 2014 |  | 2013 |
Asset Category |  |  |  |  |  |  |
Cash and cash equivalents |  | 0 - 10 | % | 2 | % | 4 | %
Total fixed income funds |  | 25 - 50 |  | 34 |  | 27 |
Total mutual funds and equities |  | 50 - 70 |  | 64 |  | 69 |
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, 2014 and 2013. Additional information regarding FASB ASC 820 and the fair value hierarchy can be found in Note 19, Fair Value Measurements.
|  | 2014 |  | 2013
Asset Category |  |  |  |
Cash and cash equivalents | $ | 347 | $ | 568
Fixed income funds |  |  |  |
Corporate bonds |  | 5,194 |  | 4,005
Total fixed income funds |  | 5,194 |  | 4,005
Equity funds and equities |  |  |  |
Mutual funds |  | 3,566 |  | 9,142
Common stock |  | 6,098 |  | 1,324
Total mutual funds and equities |  | 9,664 |  | 10,466
Total | $ | 15,205 | $ | 15,039
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 currently does not anticipate contributions to its United States defined benefit plans in 2015. The following benefit payments are expected to be paid:
|  | Pension
|  | Benefits
2015 | $ | 793
2016 |  | 822
2017 |  | 882
2018 |  | 915
2019 |  | 993
Years 2020-2024 |  | 5,606
United Kingdom Defined Benefit Plan The Portec Rail Products (UK) Limited Pension Plan covers certain current employees, former employees, and retirees. The plan has been frozen to new entrants since April 1, 1997 and also covers the former employees of a merged plan after January 2002. Benefits under the plan were based on years of service and eligible compensation during defined periods of service. Our funding policy for the plan is to make minimum annual contributions required by applicable regulations. The funded status of the United Kingdom defined benefit plan at year end is as follows:
|  | 2014 |  | 2013
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year | $ | 8,450 | $ | 8,034
Interest cost |  | 360 |  | 348
Actuarial loss |  | 883 |  | 162
Benefits paid |  | (397) |  | (247)
Foreign currency exchange rate changes |  | (499) |  | 153
Benefit obligation at end of year | $ | 8,797 | $ | 8,450
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year | $ | 6,769 | $ | 6,051
Actual gain on plan assets |  | 502 |  | 545
Employer contribution |  | 284 |  | 303
Benefits paid |  | (397) |  | (247)
Foreign currency exchange rate changes |  | (401) |  | 117
Fair value of assets at end of year |  | 6,757 |  | 6,769
Funded status at end of year | $ | (2,040) | $ | (1,681)
Amounts recognized in the consolidated balance sheet consist of: |  |  |  |
Other long-term liabilities | $ | (2,040) | $ | (1,681)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |
Net loss | $ | 1,413 | $ | 906
Prior service cost |  | 112 |  | 142
Transition obligation |  | - |  | (50)
| $ | 1,525 | $ | 998
Net periodic pension costs for the three years ended December 31, 2014 are as follows:
|  | 2014 |  | 2013 |  | 2012
Components of net periodic benefit cost: |  |
Interest cost | $ | 360 | $ | 348 | $ | 338
Expected return on plan assets |  | (370) |  | (321) |  | (307)
Amortization of transition obligation |  | (50) |  | (46) |  | (49)
Amortization of prior service cost |  | 30 |  | 22 |  | 23
Recognized net actuarial loss |  | 185 |  | 229 |  | 221
Net periodic pension cost | $ | 155 | $ | 232 | $ | 226
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.
|  | 2014 |  | 2013 |  | 2012 |
Discount rate |  | 3.6 | % | 4.6 | % | 4.3 | %
Expected rate of return on plan assets |  | 5.0 | % | 5.8 | % | 5.2 | %
Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets are as follows:
|  | 2014 |  | 2013 |
Projected benefit obligation | $ | 8,797 | $ | 8,450 |
Accumulated benefit obligation |  | 8,797 |  | 8,450 |
Fair value of plan assets |  | 6,757 |  | 6,769 |
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 2014 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:
|  | 2014 |  | 2013 |
Asset Category |  |  |
Cash and cash equivalents | $ | 218 | $ | 369 |
Equity securities |  | 2,156 |  | 2,803 |
Bonds |  | 1,899 |  | 1,468 |
Commercial property |  | 2,484 |  | 2,129 |
Total | $ | 6,757 | $ | 6,769 |
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 $280 to the Portec Rail Plan during 2015. The following estimated future benefits payments are expected to be paid under the Portec Rail Plan:
|  | Pension
|  | Benefits
2015 | $ | 246
2016 |  | 270
2017 |  | 288
2018 |  | 307
2019 |  | 334
Years 2020-2024 |  | 1,965
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 2014 and 2013. Rail Technologies' accrued benefit obligation was $1,172 and $1,080 as of December 31, 2014 and 2013, respectively. Benefit payments anticipated for 2015 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.
|  | 2014 |  | 2013 |
Discount rate |  | 4.0 | % | 5.0 | %
Weighted average health care trend rate |  | 6.2 | % | 6.4 | %
The weighted average health care rate trends downward to an ultimate rate of 4.4% 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 $5 and increase the accumulated post-retirement benefit obligation by approximately $66 for 2014. 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 $77 for 2014. Defined Contribution Plans The Company sponsors six defined contribution plans for hourly and salaried employees across our domestic and international facilities. The following table summarizes the expense associated with the contributions made to these plans.
|  | 2014 |  | 2013 |  | 2012
United States | $ | 2,425 | $ | 2,151 | $ | 2,107
Canada |  | 227 |  | 266 |  | 269
United Kingdom |  | 158 |  | 136 |  | 116
| $ | 2,810 | $ | 2,553 | $ | 2,492

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