Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2013 |
Compensation and Retirement Disclosure [Abstract] | ' |
Employee Benefit Plans | ' |
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NOTE 8: | EMPLOYEE BENEFIT PLANS | | | | | | | | | | | | | | | | | |
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401(k) Plans. The Company has established 401(k) profit sharing plans covering all employees after certain eligibility requirements are met. Amounts charged to operations for employer contributions related to the plans totaled $1,004 and $773 for the years ended December 31, 2013 and 2012. |
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Defined Benefit Retirement Plans. The Company sponsors two partially funded, noncontributory qualified defined benefit pension plans, which cover substantially all union employees and certain former employees. The benefits under these pension plans are based upon years of qualified credited service; however benefit accruals under the plans were frozen. The Company’s funding policy is to contribute annually not less than the regulatory minimum and not more than the maximum amount deductible for income tax purposes. The measurement date is December 31. |
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During the year ended December 31, 2012 our two defined benefit retirement plans were merged together and the beneficiaries of one plan were provided the opportunity to withdraw their pension funds resulting in a lump sum benefit payment of $1,997. Acceleration of the actuarial net losses (i.e. settlement losses) from accumulated other comprehensive income of $228 was required due to the significance of the lump sum benefit payments during 2012. |
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Other Post-Retirement Benefit Plan. The Company sponsors an unfunded, contributory qualified plan that provides life insurance coverage as well as certain health care and medical benefits, including prescription drug coverage, to certain retired employees. At December 31, 2013 the plan covered 327 participants, both active and retired. This post-retirement benefit plan is contributory and provides benefits to retirees and their spouses. Contributions are adjusted annually. The plan contains fixed deductibles, coinsurance and out-of-pocket limitations. The life insurance segment of the plan is noncontributory and is available to retirees only. During the year ended December 31, 2012, the Company made a change to the plan to terminate these health care and life insurance benefits at retirement age for non-union employees who were not at least 60 years old on September 1, 2012. The effect of this plan change was a negative plan amendment benefit of $1,165 and $79 curtailment gain. The negative plan amendment includes $1,021 for health care benefits and $144 for life insurance benefits. These amounts will be recognized into income over the average remaining years of service to retirement and the average expected lifetime remaining for health care benefits and life insurance benefits, respectively. The accounting impact for the curtailment resulted in immediate recognition of a benefit related to unamortized prior service cost of $79. The liability for such benefits was unfunded as it is the Company’s policy to fund benefits payable as they come due. |
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The Company funds the post retirement benefit plans on a pay-as-you-go basis, and there are no assets that have been segregated and restricted to provide for post retirement benefits. The Company pays claims as they are submitted for the medical plan. The Company provides varied levels of benefits to participants depending upon the date of retirement and the location in which the employee worked. The retiree medical and life plans are available to union employees who have attained the age of 62 and rendered the required five years of service. All health benefit plans provide company-paid continuation of the active medical plan until the retiree reaches age 65. At age 65, the Company pays a lump sum advance premium on behalf of the retiree to the MediGap carrier of the retiree’s choice. The employee retirement date determines which level of benefits is provided. |
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The Company’s measurement date is December 31. The Company expects to contribute approximately $405, net of $29 of Medicare Part D subsidy receipts, to the plan in fiscal year 2014. |
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The status of the Company’s plans at December 31, 2013 and 2012, was as follows: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | |
| December 31, | | December 31, | |
| 2013 | | 2012 | | | 2013 | | 2012 | | |
Change in benefit obligation: | | | | | | | | | | |
Beginning of year | $ | 2,690 | | | $ | 4,884 | | | | $ | 5,700 | | | $ | 6,309 | | | |
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Service cost | — | | | — | | | | 127 | | | 192 | | | |
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Interest cost | 83 | | | 146 | | | | 165 | | | 209 | | | |
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Actuarial loss (gain) | (241 | ) | | (300 | ) | | | (558 | ) | | 768 | | | |
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Negative plan amendment benefit | — | | | — | | | | — | | | (1,165 | ) | | |
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Benefits paid | (342 | ) | | (2,040 | ) | | | (607 | ) | | (613 | ) | | |
Benefit obligation at end of year | $ | 2,190 | | | $ | 2,690 | | | | $ | 4,827 | | | $ | 5,700 | | | |
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The following table shows the change in plan assets: |
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| Defined Benefit Retirement Plans | | | | | | | | | | | |
| December 31, | | | | | | | | | | | |
| 2013 | | 2012 | | | | | | | | | | | |
Fair value of plan assets at beginning of year | $ | 1,720 | | | $ | 3,278 | | | | | | | | | | | | |
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Actual return on plan assets | 172 | | | 129 | | | | | | | | | | | | |
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Employer contributions | — | | | 353 | | | | | | | | | | | | |
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Benefits paid | (342 | ) | | (2,040 | ) | | | | | | | | | | | |
Fair value of plan assets at end of year | $ | 1,550 | | | $ | 1,720 | | | | | | | | | | | | |
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Assumptions used to determine accumulated benefit obligations as of the year-end were: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | | | | | |
| Year Ended December 31, | | | Year Ended December 31, | | | | | | |
| 2013 | | 2012 | | | 2013 | | 2012 | | | | | | |
Discount rate | 4.11 | % | | 3.19 | % | | | 3.95 | % | | 2.98 | % | | | | | | |
Measurement date | December 31, | | December 31, | | | December 31, | | December 31, | | | | | | |
2013 | 2012 | 2013 | 2012 | | | | | |
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Assumptions used to determine net benefit cost for the years ended December 31, 2013 and 2012 were: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | | | | | | |
| Year Ended December 31, | | Year Ended December 31, | | | | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | | | | |
Expected return on Assets | 7 | % | | 7 | % | | — | | | — | | | | | | | | |
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Discount rate | 3.19 | % | | 4.21 | % | | 2.98 | % | | 3.26 | % | | | | | | | |
Average compensation increase | n/a | | | n/a | | | n/a | | | n/a | | | | | | | | |
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The discount rate refers to the interest rate used to discount the estimated future benefit payments to their present value, referred to as the benefit obligation. The discount rate allows the Company to estimate what it would cost to settle the pension obligations as of the measurement date. The Company determines the discount rate using a yield curve of high-quality fixed-income investments whose cash flows match the timing and amount of the Company’s expected benefit payments. |
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In determining the expected rate of return on assets, the Company considers its historical experience in the plans’ investment portfolio, historical market data and long-term historical relationships, as well as a review of other objective indices including current market factors such as inflation and interest rates. |
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Components of net benefit cost are as follows: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan |
| Year Ended December 31, | | | Year Ended December 31, | | |
| 2013 | | 2012 | | | 2013 | | 2012 | | |
Service cost | $ | — | | | $ | — | | | | 127 | | | $ | 192 | | | |
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Interest cost | 83 | | | 146 | | | | 165 | | | 209 | | | |
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Expected return on assets | (114 | ) | | (166 | ) | | | — | | | — | | | |
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Amortization of prior service cost | — | | | — | | | | (647 | ) | | (227 | ) | | |
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Prior service cost recognized due to curtailment | — | | | — | | | | — | | | (79 | ) | | |
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Recognized net actuarial loss | 66 | | | 90 | | | | 28 | | | — | | | |
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Settlement losses | 52 | | | 228 | | | | — | | | — | | | |
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Total | $ | 87 | | | $ | 298 | | | | $ | (327 | ) | | $ | 95 | | | |
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Changes in plan assets and benefit obligations recognized in other comprehensive income (loss) are as follows: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | |
| Year Ended December 31, | | | Year Ended December 31, | | |
| 2013 | | 2012 | | | 2013 | | 2012 | | |
Net actuarial (loss) gain | $ | 298 | | | $ | 265 | | | | $ | 558 | | | $ | (768 | ) | | |
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Settlement losses | 52 | | | 228 | | | | — | | | — | | | |
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Recognized net actuarial loss | 66 | | | 90 | | | | 28 | | | — | | | |
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Prior service cost recognized due to negative plan adjustment | — | | | — | | | | — | | | 1,165 | | | |
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Prior service cost recognized due to curtailments | — | | | — | | | | — | | | (79 | ) | | |
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Amortization of prior service cost | — | | | — | | | | (647 | ) | | (227 | ) | | |
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Total other comprehensive income (loss), pre-tax | 416 | | | 583 | | | | (61 | ) | | 91 | | | |
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Income tax provision (benefit) | 166 | | | — | | | | (22 | ) | | — | | | |
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Total other comprehensive income (loss), net of tax | $ | 250 | | | $ | 583 | | | | $ | (39 | ) | | $ | 91 | | | |
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Amounts recognized in the Consolidated Balance Sheets are as follows: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | | | |
| As of December 31, | | As of December 31, | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | |
Accrued expenses | $ | — | | | $ | — | | | $ | (405 | ) | | $ | (604 | ) | | | |
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Other non-current liabilities | (640 | ) | | (970 | ) | | — | | | — | | | | |
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Accrued retirement benefits | — | | | — | | | (4,422 | ) | | (5,096 | ) | | | |
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Net amount recognized | $ | (640 | ) | | $ | (970 | ) | | $ | (4,827 | ) | | $ | (5,700 | ) | | | |
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The estimated amount that will be recognized from accumulated other comprehensive income (loss) into net periodic benefit cost during the year ended December 31, 2014 is as follows: |
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| Defined Benefit Retirement Plans | | Post-Retirement Benefit Plan | | | | | | | | | | | |
Actuarial net loss | $ | (20 | ) | | $ | — | | | | | | | | | | | | |
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Net prior service credits | — | | | 196 | | | | | | | | | | | | |
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Net amount recognized | $ | (20 | ) | | $ | 196 | | | | | | | | | | | | |
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The assumed average annual rate of increase in the per capita cost of covered benefits (health care cost trend rate) is as follows: |
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| Post-Retirement Benefit Plan | | | | | | |
| Year Ended December 31, | | | | | | | |
| 2013 | | 2012 | | | | | | | |
| Pre-Age 65 | | Age 65 and older | | Pre-Age 65 | | Age 65 and older | | | | | | | |
Health care cost trend rate | 8 | % | | 6.5 | % | | 8 | % | | 8 | % | | | | | | | |
Ultimate trend rate | 5 | % | | 5 | % | | 5 | % | | 5 | % | | | | | | | |
Year rate reaches ultimate trend rate | 2027 | | | 2021 | | | 2024 | | | 2024 | | | | | | | | |
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A one percentage point increase (decrease) in the assumed health care cost trend rate would have increased (decreased) the accumulated benefit obligation by $263 ($238) at December 31, 2013, and the service and interest cost would have increased (decreased) by $24 ($21) for the year ended December 31, 2013. |
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As of December 31, 2013, the following expected benefit payments (net of Medicare Part D subsidiary for Post-Retirement Benefit Plan Payments), and the related expected subsidy receipts which reflect expected future service, as appropriate, are expected to be paid to plan participants: |
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| Defined Benefit | | Post-Retirement Benefit Plan | | | | | | | |
Retirement Plan | | | | | | | |
| Expected Benefit | | Expected Benefit | | Expected Subsidy | | | | | | | |
Payments | Payments | Receipts | | | | | | | |
2014 | $ | 124 | | | $ | 405 | | | $ | 29 | | | | | | | | |
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2015 | 91 | | | 398 | | | 26 | | | | | | | | |
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2016 | 222 | | | 375 | | | 25 | | | | | | | | |
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2017 | 161 | | | 375 | | | 23 | | | | | | | | |
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2018 | 180 | | | 416 | | | 22 | | | | | | | | |
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2019-2023 | 939 | | | 2,292 | | | 84 | | | | | | | | |
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Total | $ | 1,717 | | | $ | 4,261 | | | $ | 209 | | | | | | | | |
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The weighted average asset allocation by asset category is as follows: |
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| Defined Benefit Retirement Plan | | | | | | | | | | | |
| As of December 31, | | | | | | | | | | | | |
| | 2013 | | 2012 | | | | | | | | | | | | |
Asset Category | | | | | | | | | | | |
Cash and cash equivalents | | 36 | % | | 42 | % | | | | | | | | | | | | |
Equity Securities | | 47 | % | | 36 | % | | | | | | | | | | | | |
Debt Securities | | 11 | % | | 13 | % | | | | | | | | | | | | |
Other | | 6 | % | | 9 | % | | | | | | | | | | | | |
Total | | 100 | % | | 100 | % | | | | | | | | | | | | |
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The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, the composition of the Company’s plan assets is broadly characterized as a 62%/26%/12% allocation between equity, debt, and other securities. The strategy utilizes a diversified equity approach using multiple asset classes. The fixed income portion is actively managed investment grade debt securities (which constitute 80% or more of debt securities) with a lesser allocation to high-yield, international, inflation-protected, and rising rate debt securities. Of the lesser allocation, any one debt category will be no greater than 10% of the total debt portfolio. The portfolio may also utilize alternative assets to mitigate risk in the portfolio. |
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The Company further mitigates investment risk by rebalancing between equity and debt classes to maintain allocation parameters to be within approximately +/-10% of established targets. This is done to handle changes in asset allocation caused by Company contributions, monthly benefit payments, and general market volatility. At December 31, 2013, the Company held 36% of its investments in cash due to anticipated benefit payments to be made during 2014. The following table sets forth the Company’s defined benefit retirement plan assets as of December 31, 2013, by level within the fair value hierarchy. |
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| | Fair Value Measurements at December 31, 2013 | | |
| | Level 1 | | Level 2 | | Level 3 | | Total | | |
Cash and cash equivalents | | $ | 556 | | | $ | — | | | $ | — | | | $ | 556 | | | |
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Equity Securities: | | | | | | | | | | | | | |
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Domestic equity securities | | 566 | | | — | | | — | | | 566 | | | |
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International equity securities | | 156 | | | — | | | — | | | 156 | | | |
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Fixed income securities: | | | | | | | | | | | | | |
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Investment grade domestic bonds | | 167 | | | — | | | — | | | 167 | | | |
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Other | | 105 | | | — | | | — | | | 105 | | | |
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Total | | $ | 1,550 | | | $ | — | | | $ | — | | | $ | 1,550 | | | |
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The following table sets forth the Company’s defined benefit retirement plan assets as of December 31, 2012, by level within the fair value hierarchy. |
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| | Fair Value Measurements at December 31, 2012 | | |
| | Level 1 | | Level 2 | | Level 3 | | Total | | |
Cash and cash equivalents | | $ | 724 | | | $ | — | | | $ | — | | | $ | 724 | | | |
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Equity Securities: | | | | | | | | | | | | | | |
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Domestic equity securities | | 487 | | | — | | | — | | | 487 | | | |
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International equity securities | | 135 | | | — | | | — | | | 135 | | | |
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Fixed income securities: | | | | | | | | | | | | | | |
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Investment grade domestic bonds | | 207 | | | — | | | — | | | 207 | | | |
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Other | | 167 | | | — | | | — | | | 167 | | | |
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Total | | $ | 1,720 | | | $ | — | | | $ | — | | | $ | 1,720 | | | |
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Level 1 assets are valued based on quoted prices in active markets for identical securities. The majority of Level 1 assets listed above include exchange traded index funds, bond funds and mutual funds. |
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Equity-Based Compensation Plans. The Company has four equity-based compensation plans: the Stock Incentive Plan of 2004 (the “2004 Plan”), the Stock Option Plan for Outside Directors (the “Directors’ Option Plan”), the 1998 Stock Incentive Plan for Salaried Employees (the “Salaried Plan”) and the Non-Employee Directors' Restricted Stock Plan (the "Directors' Stock Plan"). The Company’s equity based compensation plans provide for the awarding of stock options, stock appreciation rights and shares of restricted common stock (“restricted stock”) for senior executives and salaried employees as well as outside directors. Compensation expense related to restricted stock awards is based on the market price of the stock on the date the Board of Directors communicates the approved award and is amortized over the vesting period of the restricted stock award. |
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The Consolidated Statement of Operations for the years ended December 31, 2013 and 2012, reflects share-based compensation cost of $932 and $969, respectively related to these plans. |
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In conjunction with reorganization of the Company into a holding company structure on January 3, 2012, the new holding company adopted all of the active shareholder-approved stock plans, which are described as follows: |
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2004 Plan |
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Under the 2004 Plan, as amended, the Company may grant incentives (including stock options and restricted stock awards) for up to 2,680,000 shares of the Company’s common stock to salaried, full time employees, including executive officers. The term of each award generally is determined by the committee of the Board of Directors charged with administering the 2004 Plan. Under the terms of the 2004 Plan, any options granted will be nonqualified stock options, must be exercisable within ten years and must have an exercise price which is not less than the fair value of the Company’s common stock on the date of the grant. As of December 31, 2013, no stock options and 556,900 restricted stock awards (net of forfeitures) remained outstanding under the 2004 Plan. |
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Under programs approved by the Company’s Board of Directors annually in fiscal years 2004 through 2007, shares of restricted stock were awarded to senior executives and other employees under plans in which they were eligible. These annual programs provided for the accelerated vesting of restricted stock after three fiscal years if the Company achieved certain specific operating and financial objectives over such period. If the objectives were not met, the program provided for the vesting of the restricted stock at the end of the seventh fiscal year of the restricted stock award. Except in the case of awards granted in fiscal 2004, the Company did not achieve the specific operating and financial objectives and accordingly, the awards vest at the end of the seventh year. Accelerated full or pro rata vesting may occur upon a change of control or if employment is terminated as a result of death, disability, retirement or termination without cause. |
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In connection with the Reorganization, the 2004 Plan was amended to provide for grants in the form of restricted stock units. The awards entitled participants to receive shares of stock following the end of a 5 year vesting period. Full or pro rata accelerated vesting generally may occur upon a “change in the ownership” of the Company or the subsidiary for which a participant performs services, a “change in effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company (in each case, generally as defined in the Treasury regulations under Section 409A of the Internal Revenue Code), or if employment of a participant is terminated as a result of death, disability, retirement or termination without cause. Participants have no voting of dividend rights under the awards; however, the awards provide for payment of cash dividend equivalents when dividends are paid to stockholders. As of December 31, 2013, 328,750 restricted stock unit awards remained outstanding under the 2004 Plan. As of December 31, 2013, an aggregate of 1,292,958 restricted stock and restricted stock unit awards remain available for future awards under the 2004 Plan. |
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Under the annual restricted stock program which has been administered under the Company’s 2004 Stock Incentive Plan since fiscal 2008, amounts awarded are conditioned in part on improvements to MEP (as defined below under Annual Cash Incentive Plan). Under the program, subject to the availability of shares under the 2004 Stock Incentive Plan, restricted stock awards are made each year and generally are based on a percentage (approximately 85.7 percent) of the increase in MEP over the prior year. However, subject to the discretion of the Human Resources and Compensation Committee, the maximum grant date market value of the awards made for any year to all participants is $4,500 and the minimum grant date market value made in any year to all participants, including years in which the change in MEP is negative, is $1,500. Shares awarded vest in 5 years and are eligible for dividends during the vesting period. Provisions for forfeiture and accelerated full and pro rata vesting generally are similar to those under the guidelines for the Company’s outstanding performance accelerated restricted stock awards. |
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On August 8, 2013, the Board of Directors approved modification of certain provisions related to vesting for all restricted stock and restricted unit awards, awarded under the 2004 Plan. The modifications provided that a pro-rata portion of each restricted stock and restricted unit awards granted under the 2004 Plan shall, in addition to vesting in accordance with the terms previously provided therein, vest with respect to a pro-rata portion of such grant, upon the occurrence of the Employment Agreement Change in Control. The modification applies to all employee restricted stock awards and restricted stock unit holders, not just executive officers. The modification also provided that all restricted stock awards and restricted stock units previously awarded to employees shall vest, to the maximum extent provided under the terms of the prior restricted stock award and restricted stock unit award guidelines, upon the termination of employment by the Company without Cause. |
Directors’ Option Plan |
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Under the Directors Option Plan, each non-employee or “outside” director of the Company received on the day after each annual meeting of stockholders an option to purchase 2,000 shares of the Company’s common stock at a price equal to the fair market value of the Company’s common stock on such date. Options became exercisable on the 184th day following the date of grant and expired no later than ten years after the date of grant. Subject to certain adjustments, a total of 180,000 shares were reserved for annual grants under the Plan. The Plan expired in 2006 and no further options may be granted under it. At December 31, 2013, the directors had 10,000 outstanding options to purchase shares under the Directors’ Option Plan. |
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Directors’ Stock Plan |
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In addition to annual awards, under the Directors’ Stock Plan, which was approved by stockholders at the 2006 annual meeting, as amended, the Company may grant incentives for up to 175,000 shares of the Company’s common stock to outside directors. The plan allows for grants to be made on the first business day following the date of each annual meeting of stockholders, whereby each non-employee director is awarded restricted stock with a fair market value as determined on such first business day following the annual meeting. The shares awarded become fully vested upon the occurrence of one of the following events (1) the third anniversary of the award date, (2) the death of the director, or (3) a change in control, as defined in the Plan. The Human Resources and Compensation Committee may allow accelerated vesting in the event of specified terminations. |
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In connection with the Reorganization, the Directors’ Stock Plan was amended to provide for grants in the form of restricted stock units instead of restricted shares. As of December 31, 2013, 106,923 restricted stock awards (vested and non-vested, net of forfeitures) had been granted under the Directors’ Stock Plan. In contrast to restricted stock awards, shares will not be issued (and participants will not have voting or dividend rights) before awards vest and are issued. However, the Directors’ Stock Plan provides for the payment of “dividend equivalents” in the terms of such awards. As of December 31, 2013, 54,694 restricted stock units had been granted under the Directors’ Stock Plan. As of December 31, 2013, 13,383 restricted stock units remain available for future awards under the Directors’ Stock Plan. |
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Salaried Plan |
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Under the Salaried Plan, the Company was authorized to grant stock incentives for up to 600,000 shares of the Company’s common stock to full-time salaried employees. The Salaried Plan provides that the amount, recipients, timing and terms of each award be determined by the Committee of the Board of Directors charged with administering the Salaried Plan. Under the terms of the Salaried Plan, options granted could be either nonqualified or incentive stock options and the exercise price could not be less than the fair value of the Company’s common stock on the date of the grant. At December 31, 2013, the Company had no remaining outstanding incentive stock options under the Salaried Plan. These options originally had ten-year terms and have exercise prices equal to fair market value of the Company’s common stock as of the date of grant. On March 5, 2008 the period in which the Company could make awards under the Plan expired and no further awards may be made under the Plan. |
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Stock Options. The fair value of each option is estimated on the date of the grant using the Black-Scholes option-pricing model. For the years ended December 31, 2013 and 2012, no options have been granted. |
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A summary of the status of stock options awarded under the Company’s stock option plans as of December 31, 2013 and 2012 is presented below: |
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| Year Ended December 31, | | | | | |
| 2013 | | 2012 | | | | | |
| | | Weighted | | | | Weighted | | | | | |
Shares | Average | Shares | Average | | | | |
| Exercise | | Exercise | | | | |
| Price | | Price | | | | |
Outstanding at beginning of year | 20,000 | | | $ | 9.3 | | | 42,000 | | | $ | 6.98 | | | | | | |
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Granted | — | | | — | | | — | | | — | | | | | | |
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Canceled/Forfeited | (10,000 | ) | | 8.69 | | | (22,000 | ) | | 4.88 | | | | | | |
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Exercised | | | | | — | | | — | | | | | | |
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Outstanding at end of year | 10,000 | | | $ | 9.91 | | | 20,000 | | | $ | 9.3 | | | | | | |
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At December 31, 2013, the aggregate intrinsic value of stock options outstanding and exercisable was $0. The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s average closing stock price on the last ten trading days of the related fiscal period and the exercise price, multiplied by the number of related in-the-money options) that would have been received by the option holders had they exercised their options at the end of the period. This amount changes based on the market value of the Company’s common stock. |
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Restricted Stock. A summary of the status of restricted stock awarded under the Company’s restricted stock plans at December 31, 2013 and 2012 and changes during the periods then ended is presented below: |
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| Year Ended December 31, | | | | | |
| 2013 | | 2012 | | | | | |
| | | Weighted | | | | Weighted | | | | | |
| Average | | Average | | | | |
| Grant-Date | | Grant-Date | | | | |
Shares | Fair Value | Shares | Fair Value | | | | |
Non vested balance at beginning of year | 933,887 | | | $ | 6.22 | | | 1,199,661 | | | $ | 6.26 | | | | | | |
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Granted | 60,805 | | | 4.88 | | | — | | | — | | | | | | |
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Forfeited | (181,687 | ) | | 5.11 | | | (181,696 | ) | | 5.97 | | | | | | |
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Vested | (243,709 | ) | | 8.95 | | | (84,078 | ) | | 7.33 | | | | | | |
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Non vested balance at end of year | 569,296 | | | $ | 5.26 | | | 933,887 | | | $ | 6.22 | | | | | | |
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During the years ended December 31, 2013 and 2012, the total fair value of restricted stock awards vested was $2,182 and $616, respectively. As of December 31, 2013 there was $922 of total unrecognized compensation costs related to stock awards. These costs are expected to be recognized over a weighted average period of approximately 1.7 years. |
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Restricted Stock Units. A summary of the status of restricted stock units awarded under the Company’s restricted stock plans at December 31, 2013 and 2012 is presented below. |
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| Year Ended December 31, | | | | | |
| 2013 | | 2012 | | | | | |
| | | Weighted Average | | | | Weighted Average | | | | | |
| Grant-Date Fair | | Grant-Date Fair | | | | | |
Units | Value | Units | Value | | | | | |
Non vested balance at beginning of year | 423,264 | | | $ | 4.29 | | | — | | | $ | — | | | | | | |
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Granted | 33,822 | | | 5.13 | | | 432,264 | | | 4.33 | | | | | | |
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Forfeited | (71,223 | ) | | 4.31 | | | (9,000 | ) | | 5.92 | | | | | | |
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Vested | (14,361 | ) | | 5.07 | | | — | | | — | | | | | | |
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Non vested balance at end of year | 371,502 | | | $ | 4.34 | | | 423,264 | | | $ | 4.29 | | | | | | |
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During the years ended December 31, 2013 and 2012, the total fair value of restricted stock unit awards vested was $72 and $0, respectively. As of December 31, 2013 there was $1,011 of total unrecognized compensation costs related to restricted stock unit awards. These costs are expected to be recognized over a weighted average period of approximately 2.9 years. |
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Annual Cash Incentive Plan. In December 2011, the Human Resources and Compensation Committee (“HRCC”) recommended and the Board of Directors approved the adoption of a new annual cash incentive plan. This plan was amended and restated in December 2012 and applies to fiscal 2012 and subsequent years (“New Cash Incentive Program”). For certain senior executives of the Company, the New Cash Incentive Program will function similarly to the prior modified economic profit (“MEP”) program. For other eligible participants, 50 percent of the target award is based on improvement in MEP and the remaining 50 percent is based on attainment of individual performance goals. No incentive compensation is payable if growth is less than 50% of target. If growth in MEP ranges between 50% and 100% of target, an equivalent percentage of targeted bonus that is based on MEP will be paid. If growth in MEP is over 100% of target, then an equivalent percentage of targeted MEP bonus will be paid, provided that no bonus in excess of 125% will be paid and the HRCC has discretion to limit the payout to 100% where growth in MEP over target ranges from 100% to 125%. Any MEP improvement in excess of 100% that is not paid will be carried over to the next plan year and be added to the growth in MEP for the following year to determine the amount of incentive compensation payable with respect to that year, unless the HRCC decides to carry over a lesser, or no, amount. |
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In the final month of each plan year, the HRCC may use projections of MEP and MEP growth performance to determine estimated annual incentive compensation payments to participants where the HRCC wishes to make a 90% payment in such final month (a “December Payment”). After the financial results for the plan year are available, the annual incentive compensation payment of those participants who received a December Payment will be calculated and a true-up payment for any remainder will be paid. In the event that a December Payment is in excess of the finally determined amount of actual incentive compensation, the participant is required to pay to the Company the amount of such excess payment within 15 days of the Company’s demand and the Company may elect to set-off any amount it otherwise owes to the participant by the amount of such excess. For the year ended December 31, 2013 there have been no payments related to the 2013 Annual Cash Incentive Plan and as of December 31, 2013, $3,111 was recorded in accrued expense on the consolidated balance sheet. |
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For 2012, growth in MEP was measured from calendar year 2011. For 2012, the HRCC estimated that the MEP improvement was substantially more than 100% of target. A December Payment equal to 90% of the incentive compensation payable of the MEP improvement at 100% was paid under the plan and the remaining 10% was paid in March 2013. For the six month transition period ended December 31, 2011, the target for growth in MEP was 50% of the increase amount that was targeted for fiscal 2011. The Company did not exceed its targeted growth in MEP of $1,500 for the six month transition period ended December 31, 2011, and no incentive was paid for the six month transition period ended December 31, 2011. For the year ended June 30, 2011, the growth in MEP was measured against fiscal 2010. The Company did not exceed its targeted growth in MEP of $3,000 in fiscal 2011, and no annual incentive was paid for fiscal 2011. |
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Amounts expensed under the annual cash incentive plan totaled $3,111 and $2,911, for the years ended December 31, 2013 and 2012, respectively. |
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New Employment Agreements. On August 8, 2013, the Company entered into new employment agreements (the “Employment Agreements”) with its then President and Chief Executive Officer, Timothy W. Newkirk; Vice President of Finance and Chief Financial Officer, Donald P. Tracy; and certain other executives (each, an “Executive” and collectively, the “Executives”). The new Employment Agreements do not affect the compensation paid to the Executives in fiscal 2012 or prior fiscal years. |
The Employment Agreements provide that in the event the Executive is terminated by the Company without Cause or the Executive terminates his employment with the Company or its successor for Good Reason, the Executive shall be entitled to: (1) all previously earned and accrued but unpaid Base Salary up to the date of such termination; (2) severance pay in the amount equal to 12 months of Base Salary paid in equal installments over a 12 month period; (3) a lump sum payment equal to the mean of payments under any short-term incentive or annual bonus plan maintained by the Company during each of the three calendar years prior to the year in which such termination occurs (or fewer calendar years if the Executive has not been a participant in the Company’s annual or short-term incentive bonus plan for the entirety of each such three prior calendar years); (4) for the 12 month period following the Executive’s termination of employment or such shorter period of time that the Executive or any of his dependents is eligible for and elects COBRA continuation coverage, the Executive’s cost of coverage shall be the employee contribution rate, with employer portions of premiums paid on an after-tax basis. |
If prior to but in connection with an Employment Agreement Change in Control (as defined in the Employment Agreements) or during the 18 month period following an Employment Agreement Change in Control (i) the Executive’s employment with the Company or its successor is terminated by the Company or its successor without Cause or (ii) the Executive terminates his employment with the Company or its successor for Good Reason, the Executive shall be entitled to: (1) all previously earned and accrued but unpaid Base Salary up to the date of such termination; (2) severance pay in an amount equal to 18 months of Base Salary paid in equal installments over an 18 month period; (3) a lump sum payment equal to one and one-half times the mean of payments under any short-term incentive or annual bonus plan maintained by the Company during each of the three calendar years prior to the year in which such termination occurs (or fewer calendar years if the Executive has not been a participant in the Company’s annual or short-term incentive bonus plan for the entirety of each such three prior calendar years); and (4) for such period of time that the Executive or any of the Executive’s dependents is eligible for and elects COBRA continuation coverage, the Executive’s cost of coverage shall be the employee contribution rate, with employer portions of premiums paid on an after-tax basis. |
See Note 9: Restructuring and Severance Costs for additional information. |