Quarterly report pursuant to Section 13 or 15(d)

PENSION AND RETIREMENT BENEFIT PLANS

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PENSION AND RETIREMENT BENEFIT PLANS
9 Months Ended
Sep. 30, 2018
Retirement Benefits [Abstract]  
PENSION AND RETIREMENT BENEFIT PLANS
7. PENSION AND RETIREMENT BENEFIT PLANS.

  

The Company sponsors a defined benefit pension plan (the “Retirement Plan”) and a health care and life insurance plan (the “Postretirement Plan”). The Company assumed the Retirement Plan and the Postretirement Plan as part of its acquisition of PE Central on July 1, 2015.

  

The Retirement Plan is noncontributory, and covers only “grandfathered” unionized employees at the Company’s Pekin, Illinois facility who fulfill minimum age and service requirements. Benefits are based on a prescribed formula based upon the employee’s years of service. The Retirement Plan, which is part of a collective bargaining agreement, covers only union employees hired prior to November 1, 2010.

 

The Company uses a December 31 measurement date for its Retirement Plan. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations. As of December 31, 2017, the Retirement Plan’s accumulated projected benefit obligation was $19.7 million, with a fair value of plan assets of $14.0 million. The underfunded amount of $5.7 million is recorded on the Company’s consolidated balance sheet in other liabilities.

 

Of the net periodic expense for the Retirement Plan and Postretirement Plan, the Company recognizes the service cost component in cost of goods sold and the interest cost, expected return on plan assets and amortization of gain (loss) in other income (expense), net.

 

The Company’s net periodic Retirement Plan costs are as follows (in thousands):

  

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2018     2017     2018     2017  
                         
Interest cost   $ 174     $ 98     $ 522     $ 293  
Service cost     106       188       318       563  
Expected return on plan assets     (204 )     (169 )     (612 )     (506 )
Net periodic expense   $ 76     $ 117     $ 228     $ 350  

 

The Postretirement Plan provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees. Employees hired after December 31, 2000 are not eligible to participate in the Postretirement Plan. The Postretirement Plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service. As of December 31, 2017, the Postretirement Plan’s accumulated projected benefit obligation was $5.6 million and is recorded on the Company’s consolidated balance sheet in other liabilities. The Company’s funding policy is to make the minimum annual contribution required by applicable regulations.

 

The Company’s net periodic Postretirement Plan costs are as follows (in thousands):

  

    Three Months Ended
September 30,
    Nine Months Ended  
September 30,
 
    2018     2017     2018     2017  
                         
Interest cost   $ 46     $ 21     $ 138     $ 63  
Service cost     2       50       6       150  
Amortization of (gain) loss     33       33       99       99  
Net periodic expense   $ 81     $ 104     $ 243     $ 312