XML 43 R18.htm IDEA: XBRL DOCUMENT v3.22.0.1
Pension Benefits
 12 Months Ended
Dec. 31, 2021
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
Pension Benefits
Note 11 – Pension Benefits
The Company has a non-contributory defined benefit pension plan covering employees who meet age and service requirements and who began employment with the Company prior to January 1, 2016 (“Qualified Pension Plan”). The Company also has a supplemental non-contributory pension plan covering certain management employees (“Nonqualified Pension Plan” and together with the Qualified Pension Plan, “Pension Plans”). The Company froze the Pension Plans to new participants, effective January 1, 2016. Employees participating in the Pension Plans prior to the plans being frozen will continue to earn benefits.
Obligations and Funded Status for the Pension Plans
The Company recognizes the funded status (i.e. the difference between the fair value of plan assets and the projected benefit obligation) of the Company’s Pension Plans in the accompanying balance sheets as either an asset or a liability and recognizes a corresponding adjustment within the other comprehensive income (loss), net of tax, line item in the accompanying statements of
comprehensive income (loss). The projected benefit obligation is the actuarial present value of the benefits earned to date by plan participants based on employee service and compensation including the effect of assumed future salary increases. The accumulated benefit obligation uses the same factors as the projected benefit obligation, but excludes the effects of assumed future salary increases. The Company’s measurement date for plan assets and obligations is December 31.
For the Years Ended December 31,
20212020
(in thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year$73,593 $70,843 
Service cost4,455 4,516 
Interest cost2,089 2,358 
Actuarial loss1,914 7,483 
Benefits paid(4,630)(905)
Settlements(1,661)(10,702)
Projected benefit obligation at end of year75,760 73,593 
Change in plan assets:
Fair value of plan assets at beginning of year32,894 35,634 
Actual return on plan assets2,777 2,837 
Employer contribution6,561 6,030 
Benefits paid(4,630)(905)
Settlements(1,661)(10,702)
Fair value of plan assets at end of year35,941 32,894 
Funded status at end of year$(39,819)$(40,699)
The Company’s underfunded status for the Pension Plans as of December 31, 2021, and 2020, was $39.8 million and $40.7 million, respectively, and is recognized in the accompanying balance sheets within the other noncurrent liabilities line item. There are no plan assets in the Nonqualified Pension Plan.
Accumulated Benefit Obligation in Excess of Plan Assets for the Pension Plans
As of December 31,
20212020
(in thousands)
Projected benefit obligation$75,760 $73,593 
Accumulated benefit obligation$64,325 $63,934 
Less: fair value of plan assets(35,941)(32,894)
Underfunded accumulated benefit obligation$28,384 $31,040 
Pension expense is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a five-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Amortization of the unrecognized net gain or loss resulting from actual experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet reflected in market-related value) is included as a component of net periodic benefit cost for the year. If, as of the beginning of the year, the unrecognized net gain or loss exceeds 10 percent of the greater of the projected benefit obligation and the market-related value of plan assets, then the amortization is the excess divided by the average remaining service period of participating employees expected to receive benefits under the plan.
The pre-tax amounts not yet recognized in net periodic pension costs, but rather recognized in the accumulated other comprehensive loss line item within the accompanying balance sheets as of December 31, 2021, and 2020, were as follows:
As of December 31,
20212020
(in thousands)
Unrecognized actuarial losses$16,388 $17,328 
Unrecognized prior service costs— 14 
Accumulated other comprehensive loss (pre-tax)$16,388 $17,342 
The pension liability adjustments recognized in other comprehensive income (loss) during 2021, 2020, and 2019, were as follows:
For the Years Ended December 31,
202120202019
(in thousands)
Net actuarial gain (loss)$(612)$(6,381)$377 
Amortization of prior service cost13 17 17 
Amortization of net actuarial loss1,240 950 958 
Settlements312 2,509 — 
Total pension liability adjustment, pre-tax953 (2,905)1,352 
Tax (expense) benefit(204)626 (291)
Total pension liability adjustment, net$749 $(2,279)$1,061 
Components of Net Periodic Benefit Cost for the Pension Plans
For the Years Ended December 31,
202120202019
(in thousands)
Components of net periodic benefit cost:
Service cost$4,455 $4,516 $5,582 
Interest cost2,089 2,3582,791 
Expected return on plan assets that reduces periodic pension benefit cost(1,474)(1,735)(1,574)
Amortization of prior service cost13 17 17 
Amortization of net actuarial loss1,240 950 958 
Net periodic benefit cost6,323 6,106 7,774 
Settlements312 2,509 — 
Total net benefit cost$6,635 $8,615 $7,774 
Pension Plan Assumptions
The weighted-average assumptions used to measure the Company’s projected benefit obligation are as follows:
As of December 31,
20212020
Projected benefit obligation:
Discount rate3.1%2.9%
Rate of compensation increase3.6%4.4%
The weighted-average assumptions used to measure the Company’s net periodic benefit cost are as follows:
For the Years Ended December 31,
202120202019
Net periodic benefit cost:
Discount rate2.9%3.6%4.4%
Expected return on plan assets (1)
4.4%5.3%5.0%
Rate of compensation increase4.4%4.5%6.2%
____________________________________________
(1)There is no assumed expected return on plan assets for the Nonqualified Pension Plan because there are no plan assets in the Nonqualified Pension Plan.
The Company’s pension investment policy includes various guidelines and procedures designed to ensure that assets are prudently invested in a manner necessary to meet the future benefit obligation of the Pension Plans. The policy prohibits the direct investment of plan assets in the Company’s securities. The Qualified Pension Plan’s investment horizon is long-term and accordingly the target asset allocations encompass a strategic, long-term perspective of capital markets, expected risk and return behavior and perceived future economic conditions. The key investment principles of diversification, assessment of risk, and targeting the optimal expected returns for given levels of risk are applied.
The Qualified Pension Plan’s investment portfolio contains a diversified blend of investments, which may reflect varying rates of return. The investments are further diversified within each asset classification. This portfolio diversification provides protection against a single security or class of securities having a disproportionate impact on aggregate investment performance. The actual asset allocations are reviewed and rebalanced on a periodic basis to maintain the target allocations.
The weighted-average asset allocation of the Qualified Pension Plan is as follows:
TargetAs of December 31,
Asset Category202220212020
Equity securities37.0 %39.0 %37.0 %
Fixed income securities38.0 %27.9 %24.9 %
Other securities25.0 %33.1 %38.1 %
Total100.0 %100.0 %100.0 %
There is no asset allocation of the Nonqualified Pension Plan since there are no plan assets in the plan. The assumption of the expected long-term rate of return on plan assets of the Qualified Pension Plan is based upon the target asset allocation and is determined using forward-looking assumptions in the context of historical returns and volatilities for each asset class, as well as correlations among asset classes. The Company evaluates the expected rate of return on plan assets assumption on an annual basis.
Pension Plan Assets
The fair values of the Company’s Qualified Pension Plan assets as of December 31, 2021, and 2020, utilizing the fair value hierarchy discussed in Note 8 – Fair Value Measurements are as follows:
Fair Value Measurements Using:
Actual Asset Allocation (1)
TotalLevel 1 InputsLevel 2 InputsLevel 3 Inputs
(in thousands)
As of December 31, 2021
Equity securities:
Domestic (2)
19.1 %$6,860 $4,909 $1,951 $— 
International (3)
19.9 %7,138 7,138 — — 
Total equity securities39.0 %13,998 12,047 1,951 — 
Fixed income securities:
Core fixed income (4)
18.8 %6,770 6,770 — — 
Floating rate corporate loans (5)
9.1 %3,272 3,272 — — 
Total fixed income securities27.9 %10,042 10,042 — — 
Other securities:
Real estate (6)
5.1 %1,833 — — 1,833 
Collective investment trusts (7)
1.4 %499 — 499 — 
Hedge fund (8)
26.6 %9,569 5,207 — 4,362 
Total other securities33.1 %11,901 5,207 499 6,195 
Total investments100.0 %$35,941 $27,296 $2,450 $6,195 
As of December 31, 2020
Equity securities:
Domestic (2)
18.7 %$6,149 $4,165 $1,984 $— 
International (3)
18.3 %6,010 6,010 — — 
Total equity securities37.0 %12,159 10,175 1,984 — 
Fixed income securities:
Core fixed income (4)
16.6 %5,447 5,447 — — 
Floating rate corporate loans (5)
8.3 %2,755 2,755 — — 
Total fixed income securities24.9 %8,202 8,202 — — 
Other securities:
Real estate (6)
5.7 %1,870 — — 1,870 
Collective investment trusts (7)
4.6 %1,498 — 1,498 — 
Hedge fund (8)
27.8 %9,165 5,299 — 3,866 
Total other securities38.1 %12,533 5,299 1,498 5,736 
Total investments100.0 %$32,894 $23,676 $3,482 $5,736 
____________________________________________
(1)Percentages may not calculate due to rounding.
(2)Level 1 equity securities consist of United States large and small capitalization companies, which are actively traded securities that can be sold on demand. Level 2 equity securities are investments in a collective investment fund that is valued at net asset value based on the value of the underlying investments and total units outstanding on a daily basis. The objective of these funds is to approximate the S&P 500 by investing in one or more collective investment funds.
(3)International equity securities consist of a well-diversified portfolio of holdings of mostly large issuers organized in developed countries with liquid markets, commingled with investments in equity securities of issuers located in emerging markets that are believed to have strong sustainable financial productivity at attractive valuations.
(4)The objective of core fixed income funds is to achieve value added from sector or issue selection by constructing a portfolio to approximate the investment results of the Barclay’s Capital Aggregate Bond Index with a modest amount of variability in duration around the index.
(5)Investments consist of floating rate bank loans. The interest rates on these loans are typically reset on a periodic basis to account for changes in the level of interest rates.
(6)The investment objective of direct real estate is to provide current income with the potential for long-term capital appreciation. Ownership in real estate entails a long-term time horizon, periodic valuations, and potentially low liquidity.
(7)Collective investment trusts invest in short-term investments and are valued at the net asset value of the collective investment trust. The net asset value, as provided by the trustee, is used as a practical expedient to estimate fair value. The net asset value is based on the fair value of the underlying investments held by the fund less its liabilities.
(8)The hedge fund portfolio includes investments in actively traded global mutual funds that focus on alternative investments and a hedge fund of funds that invests both long and short using a variety of investment strategies.
Included below is a summary of the changes in Level 3 plan assets (in thousands):
Balance at January 1, 2020$5,748 
Purchases— 
Realized gain on assets526 
Unrealized gain on assets41 
Disposition(579)
Balance at December 31, 2020$5,736 
Purchases250 
Realized gain on assets132 
Unrealized gain on assets298 
Disposition(221)
Balance at December 31, 2021$6,195 
Contributions
The Company contributed $6.6 million, $6.0 million, and $7.2 million to the Pension Plans for the years ended December 31, 2021, 2020, and 2019, respectively. The Company expects to make a $6.0 million contribution to the Pension Plans in 2022.
Benefit Payments
The Pension Plans made actual benefit payments of $6.3 million, $11.6 million, and $5.7 million for the years ended December 31, 2021, 2020, and 2019, respectively. Expected benefit payments over the next 10 years are as follows:
For the Years Ending December 31,Amount
(in thousands)
2022$4,200 
2023$5,066 
2024$4,404 
2025$4,879 
2026$6,834 
2027 through 2031$27,197