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Retirement Plans | 12 Months Ended
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Dec. 31, 2018
Retirement Benefits [Abstract] |
Retirement Plans | The Company has three retirement plans that cover its hourly and salaried employees in the United States: one defined benefit plan, which is frozen, and two defined contribution plans. On December 31, 2017, the Company consolidated its three United States defined benefit plans into one United States defined benefit plan and consolidated its prior four United States defined contribution plans into two United States defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Company’s policy and investment guidelines of the applicable plan. The Company’s policy is to contribute at least the required minimum in accordance with the funding standards of ERISA. The Company maintains two defined contribution plans for its employees in Canada, as well as a post-retirement benefit plan. In the United Kingdom, the Company maintains two defined contribution plans and a defined benefit plan, which is frozen. These plans are discussed in further detail below. United States Defined Benefit Plan 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 plan, as of December 31, 2018 and 2017:
|  | December 31, |  |
|  | 2018 |  | 2017
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year |  | $ | 18,783 |  | $ | 18,241
Interest cost |  | 622 |  | 684
Actuarial (gain) loss |  | (1,249) |  | 775
Benefits paid |  | (1,439) |  | (917)
Benefit obligation at end of year |  | $ | 16,717 |  | $ | 18,783
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year |  | $ | 14,892 |  | $ | 14,180
Actual (loss) gain on plan assets |  | (985) |  | 1,629
Benefits paid |  | (1,439) |  | (917)
Fair value of assets at end of year |  | 12,468 |  | 14,892
Funded status at end of year |  | $ | (4,249) |  | $ | (3,891)
Amounts recognized in the consolidated balance sheet consist of: |  |  |  |
Other long-term liabilities |  | $ | (4,249) |  | $ | (3,891)
Amounts recognized in accumulated other comprehensive loss consist of: |  |  |  |
Net loss |  | $ | 4,406 |  | $ | 3,913
The actuarial loss included in accumulated other comprehensive loss that will be recognized in net periodic pension cost during 2019 is $125, before taxes. Net periodic pension costs for the years ended December 31, 2018 and 2017 are as follows:
|  | Year Ended December 31, |  |  |  |
|  | 2018 |  | 2017 |  |
Components of net periodic benefit cost: |  |  |  |  |  |
Interest cost |  | 622 |  | 684 |  |
Expected return on plan assets |  | (853) |  | (710) |  |
Recognized net actuarial loss |  | 96 |  | 130 |  |
Net periodic pension (income) cost |  | $ | (135) |  | $ | 104 |  |
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.
|  | Year Ended December 31, |  |  |  |
|  | 2018 |  | 2017 |  |
Discount rate |  | 3.4 | % |  | 3.9 | % |  |
Expected rate of return on plan assets |  | 5.9 | % |  | 5.9 | % |  |
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 prior year increase in the expected rate of return on plan assets reflects the expected increased corporate shareholder returns resulting from the Tax Cuts and Jobs Act of 2017. Amounts applicable to the Company’s pension plan with accumulated benefit obligations in excess of plan assets were as follows as of December 31:
|  | December 31, |  |
|  | 2018 |  | 2017
Projected benefit obligation |  | $ | 16,717 |  | $ | 18,783
Accumulated benefit obligation |  | 16,717 |  | 18,783
Fair value of plan assets |  | 12,468 |  | 14,892
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 cash equivalents, bonds, preferred stocks, and common stocks. The investment target ranges and actual allocation of pension plan assets by major category as of December 31, 2018 and 2017 are as follows:
|  |  |  | December 31, |  |
|  | Target |  | 2018 |  | 2017
Asset Category |  |  |  |  |  |
Cash and cash equivalents |  | 0 - 10% |  |  | 3 | % |  | 2 | %
Total fixed income funds |  | 25 - 50% |  |  | 28 |  |  | 32 |
Total mutual funds and equities |  | 50 - 70% |  |  | 69 |  |  | 66 |
Total |  |  |  | 100 | % |  | 100 | %
In accordance with the fair value disclosure requirements of ASC 820, “Fair Value Measurements and Disclosures,” the following assets were measured at fair value on a recurring basis as of December 31, 2018 and 2017. Additional information regarding ASC 820 and the fair value hierarchy can be found in Note 18.
|  | December 31, |  |
|  | 2018 |  | 2017
Asset Category |  |  |  |
Cash and cash equivalents |  | $ | 355 |  | $ | 284
Fixed income funds |  |  |  |
Corporate bonds |  | 3,521 |  | 4,755
Total fixed income funds |  | 3,521 |  | 4,755
Equity funds and equities |  |  |  |
Mutual funds |  | 1,881 |  | 712
Exchange-traded funds |  | 6,711 |  | 9,141
Total mutual funds and equities |  | 8,592 |  | 9,853
Total |  | $ | 12,468 |  | $ | 14,892
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 values 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 plan in 2019. The following benefit payments are expected to be paid:
|  | Pension
Year Ending December 31, |  | Benefits
2019 |  | $ | 940
2020 |  | 946
2021 |  | 1,004
2022 |  | 1,021
2023 |  | 1,080
Years 2024-2028 |  | 5,396
United Kingdom Defined Benefit Plan The Company's U.K. defined benefit 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 as of December 31, 2018 and 2017 was as follows:
|  | December 31, |  |
|  | 2018 |  | 2017
Changes in benefit obligation: |  |  |  |
Benefit obligation at beginning of year |  | $ | 8,335 |  | $ | 8,104
Interest cost |  | 194 |  | 236
Actuarial gain |  | (201) |  | (451)
Benefits paid |  | (292) |  | (322)
Foreign currency exchange rate changes |  | (475) |  | 768
Benefit obligation at end of year |  | $ | 7,750 |  | $ | 8,335
Change to plan assets: |  |  |  |
Fair value of assets at beginning of year |  | $ | 6,904 |  | $ | 5,826
Actual (loss) gain on plan assets |  | (144) |  | 573
Employer contribution |  | 271 |  | 276
Benefits paid |  | (292) |  | (322)
Foreign currency exchange rate changes |  | (392) |  | 551
Fair value of assets at end of year |  | 6,347 |  | 6,904
Funded status at end of year |  | $ | (1,403) |  | $ | (1,431)
Amounts recognized in the consolidated balance sheet consist of: |  |  |  |
Other long-term liabilities |  | $ | (1,403) |  | $ | (1,431)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |
Net loss |  | $ | 1,116 |  | $ | 1,161
Prior service cost |  | 208 |  | 39
|  | $ | 1,324 |  | $ | 1,200
Net periodic pension costs for the years ended December 31 were as follows:
|  | Year Ended December 31, |  |  |  |
|  | 2018 |  | 2017 |  |
Components of net periodic benefit cost: |  |  |  |  |  |
Interest cost |  | $ | 194 |  | $ | 236 |  |
Expected return on plan assets |  | (260) |  | (280) |  |
Amortization of prior service cost |  | 42 |  | 19 |  |
Recognized net actuarial loss |  | 208 |  | 192 |  |
Net periodic pension cost |  | $ | 184 |  | $ | 167 |  |
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.
|  | Year Ended December 31, |  |  |  |
|  | 2018 |  | 2017 |  |
Discount rate |  | 2.8 | % |  | 2.5 | % |  |
Expected rate of return on plan assets |  | 3.8 | % |  | 4.1 | % |  |
Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets were as follows as of December 31:
|  | December 31, |  |
|  | 2018 |  | 2017
Projected benefit obligation |  | $ | 7,750 |  | $ | 8,335
Accumulated benefit obligation |  | 7,750 |  | 8,335
Fair value of plan assets |  | 6,347 |  | 6,904
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 2018 were 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 United Kingdom defined benefit plan consist of cash and equity securities that 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, 2018 and 2017 are as follows:
|  | December 31, |  |
|  | 2018 |  | 2017
Asset Category |  |  |  |
Cash and cash equivalents |  | $ | 685 |  | $ | 695
Equity securities |  | 2,001 |  | 2,707
Bonds |  | 2,866 |  | 2,276
Other |  | 795 |  | 1,226
Total |  | $ | 6,347 |  | $ | 6,904
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 $250 to the United Kingdom defined benefit plan during 2019. The following estimated future benefits payments are expected to be paid under the United Kingdom defined benefit plan:
|  | Pension
Year Ending December 31, |  | Benefits
2019 |  | $ | 261
2020 |  | 276
2021 |  | 283
2022 |  | 301
2023 |  | 325
Years 2024-2028 |  | 2,044
Other Post-Retirement Benefit Plan The Company's 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 2018 or 2017. Rail Technologies’ accrued benefit obligation was $724 and $1,104 as of December 31, 2018 and 2017, respectively. This obligation is recognized within “Other long-term liabilities.” During 2018, the plan recognized a curtailment gain of $113. Benefit payments anticipated for 2019 are not material. 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.
|  | Year Ended December 31, |  |
|  | 2018 |  | 2017
Discount rate |  | 3.8 | % |  | 3.6 | %
Weighted average health care trend rate |  | 4.9 | % |  | 5.1 | %
The weighted average health care rate is assumed to trend downward to an ultimate rate of 4.0% in 2040. 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.

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