Note 11 - Employee Benefit Plans | 12 Months Ended |
Sep. 27, 2014 |
Compensation and Retirement Disclosure [Abstract] | ' |
Pension and Other Postretirement Benefits Disclosure [Text Block] | ' |
(11) Employee Benefit Plans |
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Retirement plans. The Company has one defined benefit pension plan, the Insteel Wire Products Company Retirement Income Plan for Hourly Employees, Wilmington, Delaware (“the Delaware Plan”). The Delaware Plan provides benefits for eligible employees based primarily upon years of service and compensation levels. The Company’s funding policy is to contribute amounts at least equal to those required by law. The Delaware Plan was frozen effective September 30, 2008 whereby participants will no longer earn additional benefits. The Company made contributions totaling $240,000, $307,000 and $206,000 to the Delaware Plan during 2014, 2013 and 2012, respectively, and expects to make contributions of $261,000 during 2015. |
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The reconciliation of the projected benefit obligation, plan assets, funded status of the plan and amounts recognized in the Company’s consolidated balance sheets for the Delaware Plan is as follows: |
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| | Year Ended | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
(In thousands) | | 2014 | | | 2013 | | | 2012 | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | | |
Benefit obligation at beginning of year | | $ | 2,973 | | | $ | 3,181 | | | $ | 3,231 | | | | | |
Interest cost | | | 137 | | | | 128 | | | | 146 | | | | | |
Actuarial loss (gain) | | | 174 | | | | (134 | ) | | | 218 | | | | | |
Settlement | | | - | | | | - | | | | (218 | ) | | | | |
Distributions | | | (206 | ) | | | (202 | ) | | | (196 | ) | | | | |
Benefit obligation at end of year | | $ | 3,078 | | | $ | 2,973 | | | $ | 3,181 | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | | |
Fair value of plan assets at beginning of year | | $ | 2,045 | | | $ | 1,739 | | | $ | 1,660 | | | | | |
Actual return on plan assets | | | 178 | | | | 201 | | | | 287 | | | | | |
Employer contributions | | | 240 | | | | 307 | | | | 206 | | | | | |
Settlement | | | - | | | | - | | | | (218 | ) | | | | |
Distributions | | | (210 | ) | | | (202 | ) | | | (196 | ) | | | | |
Fair value of plan assets at end of year | | $ | 2,253 | | | $ | 2,045 | | | $ | 1,739 | | | | | |
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Reconciliation of funded status to net amount recognized: | | | | | | | | | | | | | | | | |
Funded status | | $ | (825 | ) | | $ | (928 | ) | | $ | (1,442 | ) | | | | |
Net amount recognized | | $ | (825 | ) | | $ | (928 | ) | | $ | (1,442 | ) | | | | |
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Amounts recognized on the consolidated balance sheet: | | | | | | | | | | | | | | | | |
Accrued benefit liability | | $ | (825 | ) | | $ | (928 | ) | | $ | (1,442 | ) | | | | |
Accumulated other comprehensive loss (net of tax) | | | 782 | | | | 706 | | | | 859 | | | | | |
Net amount recognized | | $ | (43 | ) | | $ | (222 | ) | | $ | (583 | ) | | | | |
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Amounts recognized in accumulated other comprehensive loss: | | | | | | | | | | | | | | | | |
Unrecognized net loss | | $ | 1,261 | | | $ | 1,138 | | | $ | 1,386 | | | | | |
Net amount recognized | | $ | 1,261 | | | $ | 1,138 | | | $ | 1,386 | | | | | |
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Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | | | | | | | | | | | | | | | | |
Net loss (gain) | | $ | 165 | | | $ | (192 | ) | | $ | (31 | ) | | | | |
Amortization of net loss | | | (43 | ) | | | (56 | ) | | | (49 | ) | | | | |
Total recognized in other comprehensive income (loss) | | $ | 122 | | | $ | (248 | ) | | $ | (80 | ) | | | | |
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Net periodic pension cost for the Delaware Plan includes the following components: |
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| | Year Ended | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
(In thousands) | | 2014 | | | 2013 | | | 2012 | | | | | |
Interest cost | | $ | 137 | | | $ | 128 | | | $ | 146 | | | | | |
Expected return on plan assets | | | (165 | ) | | | (142 | ) | | | (134 | ) | | | | |
Recognized net actuarial loss | | | 43 | | | | 56 | | | | 49 | | | | | |
Net periodic pension cost | | $ | 15 | | | $ | 42 | | | $ | 61 | | | | | |
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The Company incurred a settlement loss of $95,000 during 2012 for lump-sum distributions to plan participants. The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic pension cost during 2015 is $47,000. |
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The projected benefit payments under the Delaware Plan are as follows: |
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Fiscal year(s) | | In thousands | | | | | | | | | | | | | |
2015 | | $ | 213 | | | | | | | | | | | | | |
2016 | | | 212 | | | | | | | | | | | | | |
2017 | | | 206 | | | | | | | | | | | | | |
2018 | | | 207 | | | | | | | | | | | | | |
2019 | | | 204 | | | | | | | | | | | | | |
2020 - 2024 | | | 971 | | | | | | | | | | | | | |
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The assumptions used in the valuation of the Delaware Plan are as follows: |
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| | Measurement Date | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
| | 2014 | | | 2013 | | | 2012 | | | | | |
Assumptions at year-end: | | | | | | | | | | | | | | | | |
Discount rate | | | 4.25 | % | | | 4.75 | % | | | 4 | % | | | | |
Rate of increase in compensation levels | | N/A | | | N/A | | | N/A | | | | | |
Expected long-term rate of return on assets | | | 8 | % | | | 8 | % | | | 8 | % | | | | |
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The assumed discount rate is established as of the Company’s fiscal year-end measurement date. In establishing the discount rate, the Company reviews published market indices of high-quality debt securities, adjusted as appropriate for duration, and high-quality bond yield curves applicable to the expected benefit payments of the plan. To develop the expected long-term rate of return on asset assumption, the Company considers the historical returns and the future expectations of returns for each asset class, as well as the target asset allocation of the Delaware Plan portfolio. |
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The fundamental goal underlying the investment policy for the Delaware Plan is to ensure that its assets are invested in a prudent manner to meet the obligations of the plan as such obligations come due. The primary investment objectives include providing a total return that will promote the goal of benefit security by attaining an appropriate ratio of plan assets to plan obligations, diversifying investments across and within asset classes, minimizing the impact of losses in single investments and adhering to investment practices that comply with applicable laws and regulations. The investment strategy for equities emphasizes U.S. large cap equities with the portfolio’s performance measured against the S&P 500 index or other applicable indices. The investment strategy for fixed income investments is focused on maintaining an overall portfolio with a minimum credit rating of A-1 as well as a minimum rating of any security at the time of purchase of Baa/BBB by Moody’s or Standard & Poor’s, if rated. |
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The Delaware Plan has a long-term target asset mix of 60% equities and 40% fixed income. The asset allocation for the Delaware Plan is as follows: |
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| | Target Allocation | | | Percentage of Plan Assets at Measurement Date | |
| | September 27, | | | September 27, | | | September 28, | | | September 29, | |
| | 2014 | | | 2014 | | | 2013 | | | 2012 | |
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Large-cap equities | | | 35 | % | | | 36.6 | % | | | 37.7 | % | | | 39.3 | % |
Mid-cap equities | | | 8 | % | | | 7.4 | % | | | 8.1 | % | | | 8.9 | % |
Small-cap equities | | | 9 | % | | | 8.3 | % | | | 8.5 | % | | | 5.6 | % |
International equities | | | 8 | % | | | 8.8 | % | | | 7.5 | % | | | 5.9 | % |
Fixed income securities | | | 40 | % | | | 38 | % | | | 36.1 | % | | | 37.2 | % |
Cash and cash equivalents | | | 0 | % | | | 0.9 | % | | | 2.1 | % | | | 3.1 | % |
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As of September 27, 2014, the Delaware Plan’s assets include equity securities, fixed income securities and cash and cash equivalents, and were required to be measured at fair value. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value, defined as follows: Level 1 - observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2 - inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 - unobservable inputs in which little or no market data exists, thereby requiring the development of valuation assumptions. The fair values of the Delaware Plan’s assets as of September 27, 2014 and September 28, 2013 are as follows: |
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(In thousands) | | Total at | | | Quoted Prices | | | Observable | | | Unobservable | |
September 27, | in Active | Inputs | Inputs |
2014 | Markets | (Level 2) | (Level 3) |
| (Level 1) | | |
Large-cap equities | | $ | 825 | | | $ | 825 | | | $ | - | | | $ | - | |
Mid-cap equities | | | 166 | | | | 166 | | | | - | | | | - | |
Small-cap equities | | | 187 | | | | 187 | | | | - | | | | - | |
International equities | | | 199 | | | | 199 | | | | - | | | | - | |
Fixed income securities | | | 855 | | | | 855 | | | | - | | | | - | |
Cash and cash equivalents | | | 21 | | | | - | | | | 21 | | | | - | |
Total | | $ | 2,253 | | | $ | 2,232 | | | $ | 21 | | | $ | - | |
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(In thousands) | | Total at | | | Quoted Prices | | | Observable | | | Unobservable | |
September 28, | in Active | Inputs | Inputs |
2013 | Markets | (Level 2) | (Level 3) |
| (Level 1) | | |
Large-cap equities | | $ | 771 | | | $ | 771 | | | $ | - | | | $ | - | |
Mid-cap equities | | | 165 | | | | 165 | | | | - | | | | - | |
Small-cap equities | | | 174 | | | | 174 | | | | - | | | | - | |
International equities | | | 153 | | | | 153 | | | | - | | | | - | |
Fixed income securities | | | 739 | | | | 739 | | | | - | | | | - | |
Cash and cash equivalents | | | 43 | | | | - | | | | 43 | | | | - | |
Total | | $ | 2,045 | | | $ | 2,002 | | | $ | 43 | | | $ | - | |
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Equity securities are primarily direct investments in the stock of publicly-traded companies that are valued based on the closing price reported in an active market on which the individual securities are traded. Fixed income securities are government and corporate debt securities that are valued based on the closing price reported in an active market on which the individual securities are traded. Cash and cash equivalents are money market funds that are valued based on the net asset value as determined by the fund each business day. |
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Supplemental employee retirement plan. The Company has Retirement Security Agreements (each, a “SERP”) with certain of its employees (each, a “Participant”). Under the SERPs, if the Participant remains in continuous service with the Company for a period of at least 30 years, the Company will pay to the Participant a supplemental retirement benefit for the 15-year period following the Participant’s retirement equal to 50% of the Participant’s highest average annual base salary for five consecutive years in the 10-year period preceding the Participant’s retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with the Company, but has completed at least 10 years of continuous service with the Company, the amount of the supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that the Participant was employed by the Company. In 2005, the Company revised the SERPs to add Participants and increase benefits to existing Participants. |
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The reconciliation of the projected benefit obligation, plan assets, funded status of the plan and amounts recognized for the SERPs in the Company’s consolidated balance sheets is as follows: |
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| | Year Ended | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
(In thousands) | | 2014 | | | 2013 | | | 2012 | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | | |
Benefit obligation at beginning of year | | $ | 6,938 | | | $ | 7,461 | | | $ | 6,102 | | | | | |
Service cost | | | 219 | | | | 242 | | | | 217 | | | | | |
Interest cost | | | 315 | | | | 287 | | | | 301 | | | | | |
Actuarial loss (gain) | | | 298 | | | | (807 | ) | | | 1,085 | | | | | |
Distributions | | | (290 | ) | | | (245 | ) | | | (244 | ) | | | | |
Benefit obligation at end of year | | $ | 7,480 | | | $ | 6,938 | | | $ | 7,461 | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | | |
Actual employer contributions | | $ | 290 | | | $ | 245 | | | $ | 244 | | | | | |
Actual distributions | | | (290 | ) | | | (245 | ) | | | (244 | ) | | | | |
Plan assets at fair value at end of year | | $ | - | | | $ | - | | | $ | - | | | | | |
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Reconciliation of funded status to net amount recognized: | | | | | | | | | | | | | | | | |
Funded status | | $ | (7,480 | ) | | $ | (6,938 | ) | | $ | (7,461 | ) | | | | |
Net amount recognized | | $ | (7,480 | ) | | $ | (6,938 | ) | | $ | (7,461 | ) | | | | |
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Amounts recognized in accumulated other comprehensive loss: | | | | | | | | | | | | | | | | |
Unrecognized net loss | | $ | 1,627 | | | $ | 1,380 | | | $ | 2,324 | | | | | |
Unrecognized prior service cost | | | - | | | | - | | | | 227 | | | | | |
Net amount recognized | | $ | 1,627 | | | $ | 1,380 | | | $ | 2,551 | | | | | |
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Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | | | | | | | | | | | | | | | | |
Net loss (gain) | | $ | 298 | | | $ | (807 | ) | | $ | 1,085 | | | | | |
Prior service costs | | | - | | | | (227 | ) | | | (227 | ) | | | | |
Amortization of net loss | | | (52 | ) | | | (136 | ) | | | (91 | ) | | | | |
Total recognized in other comprehensive income (loss) | | $ | 246 | | | $ | (1,170 | ) | | $ | 767 | | | | | |
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Net periodic pension cost for the SERPs includes the following components: |
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| | Year Ended | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
(In thousands) | | 2014 | | | 2013 | | | 2012 | | | | | |
Service cost | | $ | 219 | | | $ | 242 | | | $ | 217 | | | | | |
Interest cost | | | 315 | | | | 287 | | | | 301 | | | | | |
Prior service cost | | | - | | | | 227 | | | | 227 | | | | | |
Amortization of net loss | | | 52 | | | | 136 | | | | 91 | | | | | |
Net periodic pension cost | | $ | 586 | | | $ | 892 | | | $ | 836 | | | | | |
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The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic pension cost during 2015 is $83,000. |
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The assumptions used in the valuation of the SERPs are as follows: |
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| | Measurement Date | | | | | |
| | September 27, | | | September 28, | | | September 29, | | | | | |
| | 2014 | | | 2013 | | | 2012 | | | | | |
Assumptions at year-end: | | | | | | | | | | | | | | | | |
Discount rate | | | 4.25 | % | | | 4.75 | % | | | 4 | % | | | | |
Rate of increase in compensation levels | | | 3 | % | | | 3 | % | | | 3 | % | | | | |
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The assumed discount rate is established as of the Company’s fiscal year-end measurement date. In establishing the discount rate, the Company reviews published market indices of high-quality debt securities, adjusted as appropriate for duration, and high-quality bond yield curves applicable to the expected benefit payments of the plan. The SERPs expected rate of increase in compensation levels is based on the anticipated increases in annual compensation. |
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The projected benefit payments under the SERPs are as follows: |
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Fiscal year(s) | | In thousands | | | | | | | | | | | | | |
2015 | | $ | 290 | | | | | | | | | | | | | |
2016 | | | 290 | | | | | | | | | | | | | |
2017 | | | 290 | | | | | | | | | | | | | |
2018 | | | 356 | | | | | | | | | | | | | |
2019 | | | 319 | | | | | | | | | | | | | |
2020-2024 | | | 1,961 | | | | | | | | | | | | | |
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As noted above, the SERPs were revised in 2005 to add Participants and increase benefits to certain existing Participants. However, for certain Participants the Company still maintains the benefits of the respective SERPs that were in effect prior to the 2005 changes, which entitles them to fixed cash benefits upon retirement at age 65, payable annually for 15 years. These SERPs are supported by life insurance policies on the Participants purchased and owned by the Company. The cash benefits paid under these SERPs were $25,000 in 2014, $28,000 in 2013 and $62,000 in 2012. The expense attributable to these SERPs was $16,000 in 2014, $15,000 in 2013 and $15,000 in 2012. |
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Retirement savings plan. In 1996, the Company adopted the Retirement Savings Plan of Insteel Industries, Inc. (“the Plan”) to provide retirement benefits and stock ownership for its employees. The Plan is an amendment and restatement of the Company’s Employee Stock Ownership Plan. As allowed under Sections 401(a) and 401(k) of the Internal Revenue Code, the Plan provides for tax-deferred salary deductions for eligible employees. |
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During 2012 to 2014, employees were permitted to contribute up to 75% of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Code. The Plan allows for discretionary contributions to be made by the Company as determined by the Board of Directors. Such contributions to the Plan are allocated among eligible participants based on their compensation relative to the total compensation of all participants. During 2012 - 2014, the Company matched employee contributions up to 100% of the first 1% and 50% of the next 5% of eligible compensation that was contributed by employees. Company contributions to the Plan were $862,000 in 2014, $758,000 in 2013 and $734,000 in 2012. |
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Voluntary Employee Beneficiary Associations (“VEBA”). The Company has a VEBA under which both employees and the Company may make contributions to pay for medical costs. Company contributions to the VEBA were $4.6 million in 2014, $3.6 million in 2013 and $3.4 million in 2012. The Company is primarily self-insured for each employee’s healthcare costs, carrying stop-loss insurance coverage for individual claims in excess of $175,000 per benefit plan year. The Company’s self-insurance liabilities are based on the total estimated costs of claims filed and claims incurred but not reported, less amounts paid against such claims. Management reviews current and historical claims data in developing its estimates. |