Annual report pursuant to Section 13 and 15(d)

Supplemental Retirement Plan and Related Post Retirement Benefits

v2.4.0.6
Supplemental Retirement Plan and Related Post Retirement Benefits
 12 Months Ended
Dec. 31, 2011
Profit Sharing/401(K) plan/Supplemental Retirement Plan and Related Post Retirement Benefits [Abstract]  
SUPPLEMENTAL RETIREMENT PLAN AND RELATED POST RETIREMENT BENEFITS

NOTE 13—SUPPLEMENTAL RETIREMENT PLAN AND RELATED POST RETIREMENT BENEFITS

The Company has a nonqualified supplemental retirement defined benefit plan (the “Plan”) for certain current and retired executives. The Plan provides for benefits based upon average annual compensation and years of service, less offsets for Social Security and Profit Sharing benefits. It is the Company’s intent to fund the benefits as they become payable, since no plan assets exist at December 31, 2011 or 2010.

The Company accounts for the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its pension plan in accordance with the recognition and disclosure provisions of ASC Topic 715 “Compensation, Retirement Benefits” (“ASC Topic 715”), which requires the Company to recognize the funded status in its balance sheet, with a corresponding adjustment to AOCI, net of tax. These amounts will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized as a component of AOCI. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in AOCI.

Unrecognized prior service costs of $0.5 million ($0.3 million net of tax) and unrecognized actuarial losses $2.2 million ($1.4 million net of tax) are included in AOCI at December 31, 2011 and have not yet been recognized in net periodic pension cost. The prior service cost included in AOCI and expected to be recognized in net periodic pension cost during the fiscal year-ended December 31, 2012 is $0.1 million ($0.1 million net of tax). The actuarial loss included in AOCI expected to be recognized in net periodic pension cost during the fiscal year-ended December 31, 2012 is $0.1 million ($0.1 million net of tax).

The reconciliation of the beginning and ending balances of the projected benefit obligation for the year ended December 31, 2011 and 2010 is as follows:

 

                 
(In thousands)   December 31,
2011 		    December 31,
2010 		 

Funded Status

                

Projected Benefit Obligation

                

Beginning of Year—January 1

   $ 6,141     $ 5,669  

Service Cost

     46       38  

Interest Cost

     328       330  

Actuarial Loss

     1,421       452  

Benefits Paid

     (348 )      (348 ) 
   

 

 

    

 

 

  

End of Year—December 31

   $ 7,588     $ 6,141  
   

 

 

    

 

 

  

The increase in the 2011 projected benefit obligation is due primarily to the decrease in the discount rate and differences between estimated and actual salaries. The increase in the 2010 projected benefit obligation is due primarily to the decrease in the discount rate, differences between estimated and actual salaries and changes in beneficiary status.

The assumptions used to calculate the benefit obligation as of December 31, 2011 and 2010 are as follows:

 

                 
    2011     2010  

Discount Rate

     4.50 %      5.50 % 

Future Average Compensation Increases

     5.00 %      5.00 % 

 

The unfunded status of the plan of $7.6 million at December 31, 2011 is recognized in the accompanying consolidated balance sheet as a current accrued pension liability of $0.4 million and a long-term accrued pension liability of $7.2 million. This also is the expected Company contribution to the plan, since the plan is unfunded.

The following table summarizes the components of the net periodic cost for the years ended December 31, 2011, 2010 and 2009:

 

                         
(In thousands)   2011     2010     2009  

Net Periodic Cost

                        

Service Cost—Benefits Earned During Period

   $ 46     $ 38     $ 51  

Interest Cost

     328       330       365  

Amortization of Prior Service Cost

     109       109       108  

Amortization of Losses

     11       —         33  
   

 

 

    

 

 

    

 

 

  

Net Periodic Cost

   $ 494     $ 477     $ 557  
   

 

 

    

 

 

    

 

 

  

The assumptions used to determine the net periodic cost are as follows:

 

                         
    2011     2010     2009  

Discount Rate

     5.50 %      6.00 %      5.75 % 

Future Average Compensation Increases

     5.00 %      5.00 %      5.00 % 

The Company expects the benefits to be paid in each of the next five years to be $0.3 million and $1.7 million in the aggregate for the next five years after that. This also is the expected Company contribution to the plan.

Participants in the nonqualified supplemental retirement plan are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the plan. The measurement date for determining the plan obligation and cost is December 31.

The reconciliation of the beginning and ending balances of the projected benefit obligation for the year ended December 31, 2011 and 2010 is as follows:

 

                 
(In thousands)   December 31,
2011 		    December 31,
2010 		 

Funded Status

                

Projected Benefit Obligation

                

Beginning of Year—January 1

   $ 511     $ 871  

Service Cost

     2       4  

Interest Cost

     27       50  

Actuarial Loss (Gain)

     68       (361 ) 

Benefits Paid

     (40 )      (53 ) 
   

 

 

    

 

 

  

End of Year—December 31

   $ 568     $ 511  
   

 

 

    

 

 

  

The decrease in the projected benefit obligation in 2011 was result of a change from a traditional medical insurance plan to a medical plan supplemented by Medicare.

The assumptions used to calculate the post retirement benefit obligation as of December 31, 2011 and 2010 are as follows:

 

                 
    2011     2010  

Discount Rate

     4.50 %      5.50 % 

 

The following table summarizes the components of the net periodic cost for the years ended December 31, 2011, 2010 and 2009:

 

                         
(In thousands)   2011     2010     2009  

Net Periodic Cost

                        

Service Cost—Benefits Earned During Period

   $ 2     $ 4     $ 7  

Interest Cost

     27       50       50  

Amortization of Prior Service Cost

     25       25       34  

Amortization of (Gains) Losses

     (4 )      11       11  
   

 

 

    

 

 

    

 

 

  

Net Periodic Cost

   $ 50     $ 90     $ 102  
   

 

 

    

 

 

    

 

 

  

The assumptions used to determine the net periodic cost are as follows:

 

                         
    2011     2010     2009  

Discount Rate

     5.50 %      6.00 %      5.75 % 

Future Average Healthcare Benefit Increases

     9.00 %      10.00 %      10.00 % 

The Company estimates that the prior service costs and net losses in AOCI for medical, dental and long-term care insurance benefits as of December 31, 2011, that will be recognized as components of net periodic benefit cost during the year ended December 31, 2011 for the Plan will be insignificant. For measurement purposes, an 8.0% annual increase in the cost of health care benefits was assumed for 2012 gradually decreasing to 5.0% in 2015 and years thereafter. A one percentage point increase or decrease in this rate would change the post retirement benefit obligation insignificantly. The Company expects the benefits to be paid in each of the next five years to be approximately forty-two thousand per year and $0.2 million in the aggregate for the next five years after that. This also is the expected Company contribution to the plan, as it is unfunded.