Annual report pursuant to Section 13 and 15(d)

Note 5 - Employee Benefit Plans

v2.4.0.6
Note 5 - Employee Benefit Plans
 12 Months Ended
Dec. 31, 2011
Pension and Other Postretirement Benefits Disclosure [Text Block]
(5)       Employee Benefit Plans

The Trust has a defined contribution plan available to all regular employees having one or more years of continuous service.  Contributions are at the discretion of the Trustees of the Trust. The Trust contributed $38,918, $43,824, and $43,071, in 2011, 2010, and 2009, respectively.

The Trust has a noncontributory pension plan (Plan) available to all regular employees having one or more years of continuous service. The Plan provides for normal retirement at age 65. Contributions to the Plan reflect benefits attributed to employees’ services to date, as well as services expected in the future.

The following table sets forth the Plan’s changes in benefit obligation, changes in fair value of plan assets, and funded status as of December 31, 2011 and 2010 using a measurement date of December 31:

   
2011
   
2010
 
Change in projected benefits obligation:
           
Projected benefit obligation at beginning of year
  $ 3,073,740     $ 2,796,056  
Service cost
    96,083       96,251  
Interest cost
    171,493       169,460  
Actuarial (gain) loss
    424,503       99,013  
Benefits paid
    (125,354 )     (87,040 )
Projected benefit obligation at end of year
  $ 3,640,465     $ 3,073,740  
                 
Change in plan assets:
               
Fair value of plan assets at beginning of year
  $ 2,637,397     $ 2,224,361  
Actual return on plan assets
    45,312       150,076  
Contributions by employer
    543,139       350,000  
Benefits paid
    (125,354 )     (87,040 )
Fair value of plan assets at end of year
  $ 3,100,494     $ 2,637,397  
Unfunded status at end of year
  $ (539,971 )   $ (436,343 )

Amounts recognized in the balance sheets as of December 31 consist of:

   
2011
   
2010
 
             
Assets
  $ —     $ —  
Liabilities
    (539,971 )     (436,343 )
    $ (539,971 )   $ (436,343 )

Amounts recognized in accumulated other comprehensive income (loss) consist of the following at December 31:

   
2011
   
2010
 
             
Net actuarial loss
  $ (1,259,043 )   $ (760,309 )
Prior service cost
    (24,517 )     (33,113 )
                 
Amounts recognized in accumulated other comprehensive income (loss), before taxes     (1,283,560 )     (793,422 )
Income tax benefit
    449,246       277,698  
Amounts recognized in accumulated other comprehensive income (loss), after taxes   $ (834,314 )   $ (515,724 )

Net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 include the following components:

   
2011
   
2010
   
2009
 
Components of net periodic benefit cost:
                 
Service cost
  $ 96,083     $ 96,251     $ 93,366  
Interest cost
    171,493       169,460       161,591  
Expected return on plan assets
    (180,852 )     (153,147 )     (138,635 )
Amortization of unrecognized gains
    61,309       50,553       65,816  
Amortization of prior service cost
    8,596       9,416       14,057  
Net periodic benefit cost
  $ 156,629     $ 172,533     $ 196,195  

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

   
2011
   
2010
   
2009
 
Net actuarial (gain) loss
  $ 560,043     $ 102,084     $ (136,629 )
Recognized actuarial loss
    (61,309 )     (50,553 )     (65,816 )
Recognized prior service cost
    (8,596 )     (9,416 )     (14,057 )
Total recognized in other comprehensive income, before taxes
  $ 490,138     $ 42,115     $ (216,502 )
Total recognized in net benefit cost and other comprehensive income, before taxes
  $ 646,767     $ 214,648     $ (20,307 )

The estimated net actuarial loss and prior service cost for the Plan that will be amortized from accumulated other comprehensive income (loss)  into net periodic benefit cost over the next fiscal year are $113,723 and $8,596, respectively.

The following table summarizes the projected benefit obligation in excess of Plan assets and the Plan assets in excess of accumulated benefit obligation at December 31, 2011 and 2010:

   
2011
   
2010
 
Projected benefit obligation in excess of plan assets:
           
Projected benefit obligation
  $ 3,640,465     $ 3,073,740  
Fair value of plan assets
  $ 3,100,494     $ 2,637,397  
Plan assets in excess of accumulated benefit obligation:
               
Accumulated benefit obligation
  $ 3,076,051     $ 2,559,433  
Fair value of plan assets
  $ 3,100,494     $ 2,637,397  

The following are weighted-average assumptions used to determine benefit obligations and costs at December 31, 2011, 2010, and 2009

     
2011
   
2010
   
2009
 
Weighted average assumptions used to determine benefit obligations as of December 31:
                         
Discount rate
      4.75 %        5.75 %        6.25 %   
Rate of compensation increase
      7.29         7.29         7.29    
                                 
Weighted average assumptions used to determine benefit costs for the years ended December 31:                                
Discount rate
      5.75 %        6.25 %        6.25 %   
Expected return on plan assets
      7.00         7.00         7.00    
Rate of compensation increase
      7.29         7.29         7.29    

The expected return on Plan assets assumption of 7.0% was selected by the Trust based on historical real rates of return for the current asset mix and an assumption with respect to future inflation. The rate was determined based on a long-term allocation of about two-thirds fixed income and one-third equity securities; historical real rates of return of about 2.5% and 8.5% for fixed income and equity securities, respectively; and assuming a long-term inflation rate of 2.5%.

The Plan has a formal investment policy statement. The Plan’s investment objective is balanced income, with a moderate risk tolerance.  This objective emphasizes current income through a 60% to 80% allocation to fixed income securities, complemented by a secondary consideration for capital appreciation through an equity allocation in the range of 20% to 40%.  Diversification is achieved through investment in mutual funds and bonds. The asset allocation is reviewed annually with respect to the target allocations and rebalancing adjustments and/or target allocation changes are made as appropriate. The Trust’s current funding policy is to maintain the Plan’s fully funded status on an ERISA minimum funding basis.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.

The fair value accounting standards establish a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from independent sources.  Unobservable inputs reflect our assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  The fair value hierarchy is categorized into three levels based on the inputs used in measuring fair value, as follows:

Level 1 – Inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access.  Since inputs are based on quoted prices that are readily and regularly available in an active market, Level 1 inputs require the least judgment.

Level 2 – Inputs are based on quoted prices for similar instruments in active markets, or are observable either directly or indirectly.  Inputs are obtained from various sources including financial institutions and brokers.

Level 3 – Inputs that are unobservable and significant to the overall fair value measurement.  The degree of judgment exercised by us in determining fair value is greatest for fair value measurements categorized in Level 3.

The fair values of plan assets by major asset category at December 31, 2011 and 2010, respectively, are as follows:

   
Total
   
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
   
Significant Other
Observable
Inputs (Level 2)
   
Significant
Unobservable
Inputs (Level 3)
 
                         
Cash and Cash Equivalents
                       
Money Markets
  $ 801,651     $ 801,651     $ —     $ —  
Equities
                               
Unit Investment Trusts
    —       —       —       —  
Mutual Funds
                               
Equity Funds
    1,026,046       1,026,046       —       —  
Fixed Income Funds
    1,272,797       1,272,797       —       —  
Total
  $ 3,100,494     $ 3,100,494     $ —     $ —  

   
Total
   
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
   
Significant Other
Observable
Inputs (Level 2)
   
Significant
Unobservable
Inputs (Level 3)
 
                         
Cash and Cash Equivalents
                       
Money Markets
  $ 117,480     $ 117,480     $ —     $ —  
Equities
                               
Unit Investment Trusts
    —       —       —       —  
Mutual Funds
                               
Income Growth Funds
    514,254       514,254       —       —  
Corporate Bond Funds
    —       —       —       —  
Fixed Income Funds
    2,005,663       2,005,663       —       —  
Total
  $ 2,637,397     $ 2,637,397     $ —     $ —  

Management intends to fund the minimum ERISA amount for 2012. The Trust may make some discretionary contributions to the Plan, the amounts of which have not yet been determined.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following ten year period:

Year ending December 31,
 
Amount
 
2012
  $ 204,481  
2013
    201,116  
2014
    197,676  
2015
    194,167  
2016
    194,541  
2017 to 2021
    1,175,926