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Pension And Postretirement Benefit Plans
9 Months Ended
Sep. 30, 2011
Pension And Postretirement Benefit Plans [Abstract] 
Pension And Postretirement Benefit Plans

NOTE 8. Pension and Postretirement Benefit Plans

 

The Company has a funded noncontributory defined benefit pension plan that covers substantially all of its employees. The plan provides defined benefits based on years of service and final average salary. Effective December 31, 2006, the pension plan was amended so that no further benefits will accrue under the plan and no additional employees may become participants. In September 2010, the board of directors voted to terminate the pension plan effective September 30, 2010. Pending regulatory, approval, a payout is expected to occur in the fourth quarter of 2011. Defined benefit pension plan expenses are projected to be approximately $581,000 in 2011 and nothing going forward.

 

The Company provides certain health care and life insurance benefits for nine retired employees who have met certain eligibility requirements. All other employees retiring after reaching age 65 and having at least 15 years of service with the Company will be allowed to stay on the Company's group life and health insurance policies, but will be required to pay premiums. The Company's share of the estimated costs that will be paid after retirement is generally being accrued by charges to expense over the employees' active service periods to the dates they are fully eligible for benefits, except that the Company's unfunded cost that existed at January 1, 1993 is being accrued primarily in a straight-line manner that will result in its full accrual by December 31, 2013.

 

Generally Accepted Accounting Principles ("GAAP") requires the Company to recognize the funded status (i.e. the difference between the fair value of plan assets and the projected benefit obligations) of its pension and postretirement benefit plans in the consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive income, net of taxes.

 

The following tables provide the components of net periodic benefit cost of the pension plan and postretirement benefit plan for the three and nine months ended September 30, 2011 and 2010:

 

 

Pension Benefits

  

Postretirement Benefits

 

Three Months Ended September 30,

  

Three Months Ended September 30,

 

2011

  

2010

  

2011

  

2010

 

(in thousands)

Components of Net Periodic Benefit Cost:

              

     Service cost

 $                         -

 

 $                         -

 

 $                         -

 

 $                         -

     Interest cost

                         49

 

                         47

 

                           1

 

                           2

     Expected return on plan assets 

                        (40)

  

                        (37)

  

                            -

 

                            -

     Amortization of prior service costs

                            -

 

                            -

 

                            -

 

                            -

     Amortization of transition obligation

                            -

 

                            -

 

                            -

 

                            -

     Recognized net actuarial loss (gain)

                         16

 

                         59

 

                          (2)

  

                          (2)

     Net periodic benefit cost

 $                      25

 

 $                      69

 

 $                       (1)

  

 $                         -

   

 

 

        
               
               
 

Pension Benefits

  

Postretirement Benefits

 

Nine Months Ended September 30,

  

Nine Months Ended September 30,

 

2011

  

2010

  

2011

  

2010

 

(in thousands)

Components of Net Periodic Benefit Cost:

              

     Service cost

 $                         -

 

 $                         -

 

 $                         -

 

 $                         -

     Interest cost

                       147

 

                       141

 

                           3

 

                           6

     Expected return on plan assets 

                      (120)

  

                      (111)

  

                            -

 

                            -

     Amortization of prior service costs

                            -

 

                            -

 

                            -

 

                            -

     Amortization of transition obligation

                            -

 

                            -

 

                            -

 

                            -

     Recognized net actuarial loss (gain)

                         48

 

                       177

 

                          (6)

  

                          (6)

     Net periodic benefit cost

 $                      75

 

 $                    207

 

 $                       (3)

  

 $                         -

 

  

The pension financial instruments measured and reported at fair value are classified and disclosed in one of the following categories:

 

 

 

 

 

 

•

 

Level 1

 

Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

 

 

•

 

Level 2

 

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 

 

 

•

 

Level 3

 

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

 

 

The following table presents balances of pension assets measured at fair value on September 30, 2011 and December 31, 2010:

 

     

Fair Value Measurements at September 30, 2011 Using

     

Quoted Prices

        
     

in Active

  

Significant

    
     

Markets for

 

Other

  

Significant

 

Balance as of

 

Identical

  

Observable

  

Unobservable

 

September 30,

  

Assets

  

Inputs

 

Inputs

 

2011

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

(in thousands)

               

Cash Equivalents

 $              3,278

 

 $              3,278

 

 $                      -

 

 $                      -

               

Total assets at fair value

 $              3,278

 

 $              3,278

 

 $                      -

 

 $                      -

               
     

Fair Value Measurements at December 31, 2010 Using

     

Quoted Prices

        
     

in Active

  

Significant

    
     

Markets for

 

Other

  

Significant

 

Balance as of

 

Identical

  

Observable

  

Unobservable

 

December 30,

  

Assets

  

Inputs

 

Inputs

 

2010

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

(in thousands)

               

Cash

 $                     1

 

 $                     1

 

 $                      -

 

 $                      -

Cash Equivalents

                 1,406

 

                 1,406

       

AA corporate bonds

                    131

 

                         -

 

                    131

 

                         -

Mutual funds (a)

                 1,714

 

                 1,714

 

                         -

 

                         -

               

Total assets at fair value

 $              3,252

 

 $              3,121

 

 $                 131

 

 $                      -

               

(a) 100% of mutual funds are invested in fixed income corporate bond securities.