EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2012

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

NOTE 6 — EMPLOYEE BENEFIT PLANS

Pension Plan — In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit pension plan. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan.  During the year ended December 31, 2012, 2011 and 2010,, the pension expenses were $75,500, $42,000, and $31,000 respectively.

As of December 31, 2012, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA).

The Cooperative’s Compensation Committee has the responsibility of managing the operations and administration of the Cooperative’s retirement plans.  The Cooperative has an investment policy that establishes target asset allocations to reduce the risk of large losses.  Asset classes are diversified to reduce risk, and equity exposure is limited to 75% of the total portfolio value.  The stated goal is for each component of the plan to earn a rate of return greater than its corresponding benchmark.  The return objective of the plan is to achieve a minimum average total rate of return of four percentage points (4.0%) above the rate of inflation as measured by the Consumer Price Index.  The real rate of return goal assumes a real rate of return for equities of 10.0% and a real rate of return for fixed income of 4.0%.

The assumptions used in the measurement of the Cooperative’s benefit obligations are shown below:

	2012		2011
Discount Rate	6.00	%	7.00	%
Expected Return on Plan Assets	8.00	%	8.50	%
Rate of Compensation Increase	4.73	%	4.67	%

The following schedule reflects the expected pension benefit payments during each of the next five years and the aggregate for the following five years (in thousands):

	Expected Benefit  Payments
2013	$	4
2014	57
2015	57
2016	56
2017	56
2018-2022	267
Total	$	497

The Cooperative expects to make contributions of approximately $141,000 to the defined benefit pension plan during the next fiscal year.

The following schedules provide the components of the Net Periodic Pension Costs for the periods ended December 31, 2012, 2011 and 2010 (in thousands):

	December 31,			December 31,			December 31,
	2012			2011			2010
Service Cost	$	—		$	36		$	33
Interest Cost	42			36			29
Expected Return on Plan Assets	(47		)	(31		)	(25		)
Amortization of Net (Gain) Loss	76			10			9
Net Periodic Pension Cost	$	71		$	51		$	46

The following schedules set forth a reconciliation of the changes in the plan’s benefit obligation and fair value of assets for the periods ending December 31, 2012  and 2011 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of December 31, 2012 and 2011 and (in thousands):

	December 31, 2012			December 31, 2011
Change in Benefit Obligation
Obligation at the Beginning of the Period	$	515		$	475
Service Cost	36			36
Interest Cost	37			33
Actuarial (Gain) Loss	115			(29		)
Benefits Paid	—			—
Obligation at the End of the Period	$	703		$	515
Change in Plan Assets
Fair Value at the Beginning of the Period	$	367		$	331
Actual Returns on Plan Assets	81			(6		)
Employer Contributions	76			42
Benefits Paid	—			—
Fair Value at the End of the Period	$	524		$	367
Funded Status
Funded Status as of Period Ended	$	(179	)	$	(148	)
Net Amount Recognized	$	(179	)	$	(148	)

	December 31, 2012			December 31, 2011
Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—		$	—
Current Liabilities	—			—
Noncurrent Liabilities	(179		)	(148		)
Net Amount Recognized	$	(179	)	$	(148	)
Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income Accumulated Gain (Loss) Beginning of the Period	$	(148	)	$	(144	)
Recognized in Periodic Cost	51			2
Amount Arising During the Period	(82		)	(6		)
Accumulated Gain (Loss) End of the Period	$	(179	)	$	(148	)

The estimated amount that will be amortized from Accumulated Other Comprehensive Income at December 31, 2012 into net periodic benefit cost in fiscal 2013 is as follows (in thousands):

Prior Service (Cost)	$	—
Accumulated Gain (Loss)	76
Total	$	76

The accumulated pension benefit obligation was $179,000 and $148,000 as of December 31, 2012 and 2011, respectively.

401(k) Plan — The Cooperative has a 401(k) plan that covers employees that meet eligibility requirements. The Cooperative’s contributions to the plan totaled $8,000, $7,442 and $6,959 for the years ended December 31, 2012, 2011 and 2010, respectively.

Deferred Compensation Plan — Prior to 2010, the Cooperative had a non-qualified deferred compensation plan for a key employee.  Under the plan, benefits accrued to the employee based upon the performance of the Cooperative.  During 2010, the Cooperative terminated the plan and issued 31,493 membership units to the key employee. The Cooperative recognized expenses totaling $36,000 for the year ended December 31, 2010.