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Note 8 - Benefit Plans | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Retirement Benefits [Text Block] | NOTE 8 – Benefit Plans: Defined Benefit Plans The Company is the sponsor of two noncontributory qualified defined benefit pension plans, providing for normal retirement at age 65, covering all eligible employees (as defined). Periodic benefit payments on retirement are determined based on a fixed amount applied to service or determined as a percentage of earnings prior to retirement. The Company is also the sponsor of an unfunded supplemental executive retirement plan (“SERP”) in which several employees participate. Pension plan assets for retirement benefits consist primarily of fixed income securities, money market securities and common stock equities. Effective June 30, 2013, the Company no longer accrues additional benefits for future service or for future increases in compensation levels for the Company’s primary defined benefit pension plan. Effective December 31, 2014, the Company no longer accrues additional benefits for future service for the Company’s hourly defined benefit pension plan. The Company recognizes the funded status of its defined benefit post retirement plans in the Company’s balance sheets. At December 31, 2020, the Company's projected benefit obligations for the noncontributory qualified defined benefit pension plans approximated the fair value of the plans’ assets. The Company’s projected benefit obligation under the SERP exceeded the fair value of the plans’ assets by $14.3 million and thus the plan is underfunded. It is our policy to make contributions to the various plans in accordance with statutory funding requirements and any additional funding that may be deemed appropriate. The following tables present the changes in the benefit obligations and the various plan assets, the funded status of the plans, and the amounts recognized in the Company’s balance sheets at December 31, 2020 and 2019 (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | Pension Plans |  |  | SERP |  |  | Total |  |  | Pension Plans |  |  | SERP |  |  | Total |
Changes in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 18,114 |  |  | $ | 10,356 |  |  | $ | 28,470 |  |  | $ | 18,317 |  |  | $ | 8,808 |  |  | $ | 27,125 |
Service cost |  |  | - |  |  |  | 152 |  |  |  | 152 |  |  |  | - |  |  |  | 117 |  |  |  | 117 |
Interest cost |  |  | 541 |  |  |  | 322 |  |  |  | 863 |  |  |  | 721 |  |  |  | 363 |  |  |  | 1,084 |
Actuarial loss |  |  | 1,773 |  |  |  | 3,610 |  |  |  | 5,383 |  |  |  | 2,664 |  |  |  | 1,171 |  |  |  | 3,835 |
Benefits paid |  |  | (1,650 | ) |  |  | (103 | ) |  |  | (1,753 | ) |  |  | (3,588 | ) |  |  | (103 | ) |  |  | (3,691 | )
Benefit obligation at end of year |  |  | 18,778 |  |  |  | 14,337 |  |  |  | 33,115 |  |  |  | 18,114 |  |  |  | 10,356 |  |  |  | 28,470 |
Changes in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  |  | 19,939 |  |  |  | - |  |  |  | 19,939 |  |  |  | 19,980 |  |  |  | - |  |  |  | 19,980 |
Actual return on assets |  |  | 462 |  |  |  | - |  |  |  | 462 |  |  |  | 3,547 |  |  |  | - |  |  |  | 3,547 |
Employer contributions |  |  | - |  |  |  | 103 |  |  |  | 103 |  |  |  | - |  |  |  | 103 |  |  |  | 103 |
Benefits paid |  |  | (1,647 | ) |  |  | (103 | ) |  |  | (1,750 | ) |  |  | (3,588 | ) |  |  | (103 | ) |  |  | (3,691 | )
Fair value of plan assets at end of year |  |  | 18,754 |  |  |  | - |  |  |  | 18,754 |  |  |  | 19,939 |  |  |  | - |  |  |  | 19,939 |
Funded status at end of year |  | $ | (24 | ) |  | $ | (14,337 | ) |  | $ | (14,361 | ) |  | $ | 1,825 |  |  | $ | (10,356 | ) |  | $ | (8,531 | )
Amounts recognized in balance sheets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other assets |  | $ | 314 |  |  | $ | - |  |  | $ | 314 |  |  | $ | 1,825 |  |  | $ | - |  |  | $ | 1,825 |
Other current liabilities |  |  | - |  |  |  | (101 | ) |  |  | (101 | ) |  |  | - |  |  |  | (103 | ) |  |  | (103 | )
Long-term pension liability |  |  | (338 | ) |  |  | (14,236 | ) |  |  | (14,574 | ) |  |  | - |  |  |  | (10,253 | ) |  |  | (10,253 | )
Net amount recognized |  | $ | (24 | ) |  | $ | (14,337 | ) |  | $ | (14,361 | ) |  | $ | 1,825 |  |  | $ | (10,356 | ) |  | $ | (8,531 | )
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | 8,227 |  |  | $ | 7,429 |  |  | $ | 15,656 |  |  | $ | 6,312 |  |  | $ | 4,516 |  |  | $ | 10,828 |
Information for benefit plans with projected benefit obligation in excess of plan assets depicted as follows (in thousands):
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | Pension Plans |  |  | SERP |  |  | Total |  |  | Pension Plans |  |  | SERP |  |  | Total |
Projected benefit obligation |  | $ | 18,778 |  |  | $ | 14,337 |  |  | $ | 33,115 |  |  | $ | 18,114 |  |  | $ | 10,356 |  |  | $ | 28,470 |
Fair value of plan assets |  |  | (18,754 | ) |  |  | - |  |  |  | (18,754 | ) |  |  | (19,939 | ) |  |  | - |  |  |  | (19,939 | )
|  | $ | 24 |  |  | $ | 14,337 |  |  | $ | 14,361 |  |  | $ | (1,825 | ) |  | $ | 10,356 |  |  | $ | 8,531 |
Components of net periodic benefit cost related to pension plans were as follows (in thousands):
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Interest cost on projected benefit obligation |  | $ | 541 |  |  | $ | 721 |  |  | $ | 675 |
Expected return on plan assets |  |  | (1,555 | ) |  |  | (1,491 | ) |  |  | (1,717 | )
Recognized actuarial loss |  |  | 539 |  |  |  | 643 |  |  |  | 526 |
Settlement loss |  |  | 413 |  |  |  | 1,110 |  |  |  | - |
Net periodic pension cost after settlements |  | $ | (62 | ) |  | $ | 983 |  |  | $ | (516 | )
The pension settlement losses included in the table above resulted from lump sum pension payments made to various employees upon their retirement or termination during the periods specified. The pension settlement losses did not require a cash outlay by the Company and did not increase the Company’s total pension expense over time, as the charge was an acceleration of costs that otherwise would be recognized as pension expense in future periods. The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income. The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.5 million. Components of net periodic benefit cost related to the SERP were as follows (in thousands):
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Service cost - benefits earned during the period |  | $ | 152 |  |  | $ | 117 |  |  | $ | 108 |
Interest cost on projected benefit obligation |  |  | 322 |  |  |  | 363 |  |  |  | 295 |
Recognized actuarial loss |  |  | 695 |  |  |  | 616 |  |  |  | 606 |
Net periodic pension cost after settlements |  | $ | 1,169 |  |  | $ | 1,096 |  |  | $ | 1,009 |
The service cost component is included in selling and administrative expenses in our statements of comprehensive income and the other components of net periodic pension cost are included in other periodic pension costs in our statements of comprehensive income. The estimated net actuarial loss for the SERP that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.7 million. The tables below presents various assumptions used in determining the benefit obligation for each year and reflects the percentages for the various plans. The following table presents the weighted-average assumptions used to determine benefit obligations as of December 31, 2019 and 2020:
|  | Discount Rate |  |  | Long Term Rate of Return |  |  | Salary Scale |
|  | Pension Plans |  |  |  |  |  |  | Pension Plans |  |  |  |  |  |  | Pension Plans |  |  |  |  |
|  |  | Corporate |  |  |  | Plants |  |  |  | SERP |  |  |  | Corporate |  |  |  | Plants |  |  |  | SERP |  |  |  | Corporate |  |  |  | Plants |  |  |  | SERP |
2019 |  |  | 3.12 | % |  |  | 3.02 | % |  |  | 3.12 | % |  |  | 8.00 | % |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | 3.00 | %
2020 |  |  | 2.36 | % |  |  | 2.21 | % |  |  | 2.36 | % |  |  | 8.00 | % |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | 3.00 | %
The following table presents the weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2018, 2019 and 2020:
|  | Discount Rate |  |  | Long Term Rate of Return |  |  | Salary Scale |
|  | Pension Plans |  |  |  |  |  |  | Pension Plans |  |  |  |  |  |  | Pension Plans |  |  |  |
|  |  | Corporate |  |  |  | Plants |  |  |  | SERP |  |  |  | Corporate |  |  |  | Plants |  |  |  | SERP |  |  |  | Corporate |  |  |  | Plants |  |  |  | SERP |
2018 |  |  | 3.53 | % |  |  | 3.45 | % |  |  | 3.53 | % |  |  | 8.00 | % |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | 3.00 | %
2019 |  |  | 4.14 | % |  |  | 4.06 | % |  |  | 4.14 | % |  |  | 8.00 | % |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | 3.00 | %
2020 |  |  | 3.12 | % |  |  | 3.02 | % |  |  | 3.12 | % |  |  | 8.00 | % |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | 3.00 | %
The methodology used to determine the expected rate of return on the pension plan assets was based on a review of actual returns in the past and consideration of projected returns based upon our projected asset allocation. Our strategy with respect to our investments in pension plan assets is to be invested with a long-term outlook. Therefore, the risk and return balance of our asset portfolio should reflect a long-term horizon. Our pension plan asset allocation at December 31, 2020, 2019 and target allocation for 2021 are as follows:
|  | Percentage of Plan Assets |  |  | Target |
|  | December 31, |  |  | Allocation |
Investment description |  | 2020 |  |  | 2019 |  |  | 2021 |
Equity securities |  |  | - | % |  |  | 68 | % |  |  | 60 | %
Fixed income |  |  | 40 | % |  |  | 31 | % |  |  | 40 | %
Money market |  |  | 60 | % |  |  | - | % |  |  | - | %
Other |  |  | - | % |  |  | 1 | % |  |  | - | %
Total |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
The Company does not plan to contribute any significant amounts to our defined benefit pension plans in 2021. The following table includes projected benefit payments for the years indicated (in thousands):
|  |  | Projected Benefit Payments |
Year |  |  | Pension Plans |  |  | SERP |  |  | Total |
2021 |  |  | $ | 1,686 |  |  | $ | 102 |  |  | $ | 1,788 |
2022 |  |  |  | 1,028 |  |  |  | 1,175 |  |  |  | 2,203 |
2023 |  |  |  | 1,351 |  |  |  | 588 |  |  |  | 1,939 |
2024 |  |  |  | 1,317 |  |  |  | 581 |  |  |  | 1,898 |
2025 |  |  |  | 1,297 |  |  |  | 572 |  |  |  | 1,869 |
2026-2030 |  |  |  | 4,651 |  |  |  | 3,776 |  |  |  | 8,427 |
Rabbi Trust In connection with the Company’s unfunded SERP, we have life insurance contracts on the lives of designated individuals. The insurance contracts associated with the SERP are held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the SERP. The cash surrender value of the life insurance contracts was $4.0 million and $3.6 million at December 31, 2020 and 2019, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. During the years ended December 31, 2020, 2019 and 2018, we recognized an investment gain of $0.5 million, investment gain of $0.7 million and investment loss of $0.3 million, respectively, on the cash surrender value of these life insurance contracts. In 2013, we initiated a Non-Qualified Deferred Compensation Plan, and we have purchased life insurance contracts on the lives of designated individuals. The insurance contracts associated with the Non-Qualified Deferred Compensation Plan are also held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the Non-Qualified Deferred Compensation Plan. The cash surrender value of the life insurance contracts was $5.0 million and $4.3 million at December 31, 2020 and 2019, respectively. The cash surrender value of these policies is included in other assets in the balance sheets. The liability for participant deferrals was $4.8 million and $4.1 million as of December 31, 2020 and 2019, respectively, and is included in other long-term liabilities in the balance sheets. Defined Contribution Plan The Company provides a defined contribution plan covering qualified employees. The plan includes a provision that allows employees to make pre-tax contributions under Section 401(k) of the Internal Revenue Code. The plan provides for the Company to make a guaranteed match equal to 25% of each employee’s eligible contributions. The plan also provides the Company with the option of making an additional discretionary contribution to the plan each year. The Company expensed employer matching contributions of $1.6 million and $1.0 million during years ended December 31, 2019 and 2018, respectively. As a response to the COVID-19 pandemic, the Company elected not to make any discretionary contributions for the fiscal year 2019, and as a result, $1.2 million of accrued discretionary contributions as of December 31, 2019 were reversed during 2020. As a result, the Company recorded a net reversal in expense of $0.3 million relating to employer matching contributions during year ended December 31, 2020.

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