(10) Retirement Plans

The Company sponsors a defined benefit plan for its inland vessel personnel and shore based tankermen. The plan benefits are based on an employee's years of service and compensation. The plan assets consist primarily of equity and fixed income securities.

The fair value of plan assets was $217,811,000 and $174,223,000 at December 31, 2012 and 2011 respectively. As of December 31, 2012 and 2011, these assets were allocated among asset categories as follows:

Asset Category	2012			2011			Current Minimum, Target and Maximum Allocation Policy
U.S. equity securities		44	%		43	%		30% — 50% — 70	%
International equity securities		18	%		16	%		0% — 20% — 30	%
Debt securities		26	%		25	%		15% — 30% — 55	%
Cash and cash equivalents		12	%		16	%		0% — 0% — 5	%
		100	%		100	%

The cash and cash equivalents asset category exceeded the maximum percentage allocation in 2012 and 2011 due to the 2012 and 2011 pension plan contributions of $25,000,000 and $27,500,000, respectively, being funded on the last day of the year which resulted in insufficient time to properly allocate the contribution among the asset categories. The Company allocated the contribution among the appropriate asset categories in January of the following year.

The plan assets are invested entirely in common collective trusts. These instruments are public investment vehicles valued using the net asset value provided by the administrator of the fund. The net asset value is classified within Level 2 of the valuation hierarchy as set forth in the accounting guidance for fair value measurements because the net asset value price is quoted on an inactive private market although the underlying investments are traded on an active market.

The Company's investment strategy focuses on total return on invested assets (capital appreciation plus dividend and interest income). The primary objective in the investment management of assets is to achieve long-term growth of principal while avoiding excessive risk. Risk is managed through diversification of investments within and among asset classes, as well as by choosing securities that have an established trading and underlying operating history.

The Company makes various assumptions when determining defined benefit plan costs including, but not limited to, the current discount rate and the expected long-term return on plan assets. Discount rates are determined annually and are based on a yield curve that consists of a hypothetical portfolio of high quality corporate bonds with maturities matching the projected benefit cash flows. The Company assumed that plan assets would generate a long-term rate of return of 7.5% in 2012 and 2011. The Company developed its expected long-term rate of return assumption by evaluating input from investment consultants comparing historical returns for various asset classes with its actual and targeted plan investments. The Company believes that its long-term asset allocation, on average, will approximate the targeted allocation.

The Company's pension plan funding strategy has historically been to contribute an amount equal to the greater of the minimum required contribution under ERISA or the amount necessary to fully fund the plan on an accumulated benefit obligation ("ABO") basis at the end of the fiscal year. The ABO is based on a variety of demographic and economic assumptions, and the pension plan assets' returns are subject to various risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult. The Company's contribution of $25,000,000 in December 2012 resulted in funding 101% of the pension plan's ABO at December 31. 2012.

The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to employees who met minimum age and service requirements, and to eligible dependents. The plan limits cost increases in the Company's contribution to 4% per year. The plan is contributory, with retiree contributions adjusted annually. The plan eliminated coverage for future retirees as of December 31, 2011. The Company also has an unfunded defined benefit supplemental executive retirement plan ("SERP") that was assumed in an acquisition in 1999. That plan ceased to accrue additional benefits effective January 1, 2000.

The following table presents the change in benefit obligation and plan assets for the Company's defined benefit plans and postretirement benefit plan (in thousands):

													Other Postretirement Benefits
	Pension Benefits												Postretirement
	Pension Plan						SERP						Welfare Plan
	2012			2011			2012			2011			2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	216,926		$	170,742		$	1,645		$	1,511		$	3,014		$	2,790
Service cost		10,206			7,303			—			—			—			—
Interest cost		10,506			9,693			73			80			133			164
Actuarial loss (gain)		34,084			33,662			131			157			(235	)		182
Gross benefits paid		(4,811	)		(4,474	)		(103	)		(103	)		(58	)		(122	)
Benefit obligation at end of year	$	266,911		$	216,926		$	1,746		$	1,645		$	2,854		$	3,014

Accumulated benefit obligation at end of year	$	214,951		$	179,190		$	1,746		$	1,645		$	—		$	—


Weighted-average assumption used to determine benefit obligation at end of year
Discount rate	4.1	%	4.6	%	4.1	%	4.6	%	4.1	%	4.6	%
Rate of compensation increase	4.25	%	4.25	%	—		—		—		—
Health care cost trend rate
Initial rate	—		—		—		—		7.5	%	7.5	%
Ultimate rate	—		—		—		—		5.0	%	5.0	%
Years to ultimate	—		—		—		—		2017		2017

Effect of one-percentage-point change in assumed health care cost trend rate on postretirement obligation
Increase	$	—	$	—	$	—	$	—	$	267		$	285
Decrease		—		—		—		—		(234	)		(250	)

Change in plan assets
Fair value of plan assets at beginning of year	$	174,223		$	152,696		$	—		$	—		$	—		$	—
Actual return on plan assets		23,399			(1,499	)		—			—			—			—
Employer contribution		25,000			27,500			103			103			58			122
Gross benefits paid		(4,811	)		(4,474	)		(103	)		(103	)		(58	)		(122	)
Fair value of plan assets at end of year	$	217,811		$	174,223		$	—		$	—		$	—		$	—

The following table presents the funded status and amounts recognized in the Company's consolidated balance sheet for the Company's defined benefit plans and postretirement benefit plan at December 31, 2012 and 2011 (in thousands):

										Other Postretirement Benefits
	Pension Benefits												Postretirement
	Pension Plan						SERP						Welfare Plan
	2012			2011			2012			2011			2012			2011
Funded status at end of year
Fair value of plan assets	$	217,811		$	174,223		$	—		$	—		$	—		$	—
Benefit obligations		266,911			216,926			1,746			1,645			2,854			3,014
Funded status and amount recognized at end of year	$	(49,100	)	$	(42,703	)	$	(1,746	)	$	(1,645	)	$	(2,854	)	$	(3,014	)

Amounts recognized in the consolidated balance sheets
Current liability	$	—		$	—		$	(101	)	$	(102	)	$	(223	)	$	(256	)
Long-term liability		(49,100	)		(42,703	)		(1,645	)		(1,543	)		(2,631	)		(2,758	)

Amounts recognized in accumulated other comprehensive income
Net actuarial loss (gain)	$	102,795	$	86,633	$	559	$	442	$	(6,378	)	$	(6,751	)
Prior service cost (credit)		—		—		—		—		—			—
Accumulated other compensation income	$	102,795	$	86,633	$	559	$	442	$	(6,378	)	$	(6,751	)

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets at December 31, 2012 and 2011 were as follows (in thousands):

	Pension Benefits
	Pension Plan				SERP
	2012		2011		2012		2011
Projected benefit obligation in excess of plan assets
Projected benefit obligation at end of year	$	266,911	$	216,926	$	1,746	$	1,645
Fair value of plan assets at end of year		217,811		174,223		—		—

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2012 and 2011 were as follows (in thousands):

	Pension Benefits
	Pension Plan				SERP
	2012		2011		2012		2011
Accumulated benefit obligation in excess of plan assets
Projected benefit obligation at end of year	$	—	$	216,926	$	1,746	$	1,645
Accumulated benefit obligation at end of year		—		179,190		1,746		1,645
Fair value of plan assets at end of year		—		174,223		—		—

The following tables presents the expected cash flows for the Company's defined benefit plans and postretirement benefit plan at December 31, 2012 and 2011 (in thousands):

							Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
	2012		2011		2012		2011		2012		2011
Expected employer contributions
First year	$	3,400	$	11,800	$	101	$	102	$	223	$	256

							Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
		2012		2011		2012		2011		2012		2011
Expected benefit payments (gross)
Year one	$	6,213	$	5,142	$	101	$	102	$	237	$	271
Year two		6,545		5,590		100		100		242		264
Year three		6,992		6,113		98		98		245		268
Year four		7,579		6,649		105		97		245		271
Year five		8,265		7,252		109		105		255		271
Next five years		53,734		47,701		616		597		1,154		1,343

							Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
		2012		2011		2012		2011		2012			2011
Expected federal subsidy
Year one	$	—	$	—	$	—	$	—	$	(14	)	$	(15	)
Year two		—		—		—		—		(14	)		(15	)
Year three		—		—		—		—		(14	)		(15	)
Year four		—		—		—		—		(14	)		(15	)
Year five		—		—		—		—		(14	)		(15	)
Next five years		—		—		—		—		(62	)		(67	)

The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company's defined benefit plans for the years ended December 31, 2012, 2011 and 2010 were as follows (in thousands):

	Pension Benefits
	Pension Plan									SERP
	2012			2011			2010			2012			2011			2010
Components of net periodic benefit cost
Service cost	$	10,206		$	7,303		$	6,883		$	—		$	—		$	—
Interest cost		10,506			9,693			9,399			73			80			84
Expected return on plan assets		(12,872	)		(11,283	)		(9,329	)		—			—			—
Amortization:
Actuarial loss		7,395			2,859			3,162			14			7			2
Prior service credit		—			(38	)		(89	)		—			—			—

Net periodic benefit cost		15,235			8,534			10,026			87			87			86

Other changes in plan assets and benefit obligations recognized in other comprehensive income
Current year actuarial loss		23,557			46,444			8,145			131			156			102
Recognition of actuarial loss		(7,395	)		(2,859	)		(3,162	)		(14	)		(7	)		(2	)
Recognition of prior service credit		—			38			89			—			—			—

Total recognized in other comprehensive income		16,162			43,623			5,072			117			149			100

Total recognized in net periodic benefit cost and other comprehensive income	$	31,397		$	52,157		$	15,098		$	204		$	236		$	186


Weighted average assumptions used to determine net periodic benefit cost
Discount rate	4.6	%	5.5	%	6.1	%	4.6	%	5.5	%	6.1	%
Expected long-term rate of return on plan assets	7.5	%	7.5	%	7.5	%	—		—		—
Rate of compensation increase	4.25	%	4.25	%	4.0	%	—		—		—

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2013 are as follows (in thousands):

	Pension Benefits
	Pension Plan		SERP
Actuarial loss	$	8,224	$	19
Prior service credit		—		—
	$	8,224	$	19

The components of net periodic benefit cost and other changes in benefit obligations recognized in other comprehensive income for the Company's postretirement benefit plan for the years ended December 31, 2012, 2011 and 2010 were as follows (in thousands):

	Other Postretirement Benefits
	Postretirement Welfare Plan
	2012			2011			2010
Components of net periodic benefit cost
Service cost	$	—		$	—		$	—
Interest cost		133			164			154
Curtailment loss		—			119			—
Amortization:
Actuarial gain		(618	)		(593	)		(660	)
Prior service cost		—			40			560

Net periodic benefit cost		(485	)		(270	)		54

Other changes in benefit obligations recognized in other comprehensive income
Current year actuarial gain		(235	)		182			(3,109	)
Recognition of actuarial gain		618			593			660
Recognition of prior service cost		—			(158	)		(40	)
Adjustment for actual Medicare Part D reimbursement		(10	)		(3	)		(10	)

Total recognized in other comprehensive income		373			614			(2,499	)

Total recognized in net periodic benefit cost and other comprehensive income	$	(112	)	$	344		$	(2,445	)


Weighted average assumptions used to determine net periodic benefit cost
Discount rate	4.6	%	5.5	%	6.1	%
Health care cost trend rate:
Initial rate	7.5	%	8.0	%	7.5	%
Ultimate rate	5.0	%	5.0	%	5.0	%
Years to ultimate	2017		2017		2015

Effect of one-percentage-point change in assumed health care cost trend rate on aggregate service and interest cost
Increase	$	13		$	16		$	14
Decrease		(11	)		(14	)		(12	)

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2013 are as follows (in thousands):

	Other Postretirement Benefits
	Postretirement Welfare Plan
Actuarial gain	$	(620	)
Prior service cost		—
	$	(620	)

The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement which covers certain vessel crew members of its coastal operations and expires on April 30, 2015. The Company began participation in the Seafarers Pension Trust ("SPT") with the Penn acquisition on December 14, 2012.

Contributions to the SPT are made currently based on a per day worked basis and charged to expense as incurred and included in costs of sales and operating expenses in the consolidated statement of earnings. During 2012, the Company made contributions of $107,000 to the SPT and none of the Company's contributions to the SPT exceeded 5% of total contributions to the SPT nor did the Company pay any material surcharges.

The federal identification number of the SPT is 13-6100329 and the Certified Zone Status is Green at December 31, 2012. The Company's future minimum contribution requirements under the SPT are unavailable because actuarial reports for the 2012 plan year are not yet complete and such contributions are subject to negotiations between the employers and the unions. The SPT was neither in endangered or critical status for the 2011 plan year, the latest period for which a report is available, as the funded status was in excess of 100%. Based on an actuarial valuation performed as of December 31, 2011, there would be no withdrawal liability if the Company chose to withdraw from the SPT although the Company has no intention of terminating its participation in the SPT.

In addition to the defined benefit plans, the Company sponsors various defined contribution plans for substantially all employees. The aggregate contributions to the plans were $22,427,000, $13,793,000 and $11,614,000 in 2012, 2011 and 2010, respectively.