Notes to Financial Statements
December 31, 2014 and 2013
(1)
|
Description of the Plan
|
The following description of the Huttig Building Products, Inc. Savings and Profit Sharing Plan (the Plan) is provided
for financial statement purposes only. Participants should refer to the Plan document for more complete information.
The Plan
is a defined contribution plan established by Huttig Building Products, Inc. (Huttig or the Company) under the provisions of Section 401(a) of the Internal Revenue Code (IRC), which includes a qualified cash or
deferred salary arrangement as described in Section 401(k) of the IRC, for the benefit of eligible employees of the Company. The Plan was established December 16, 1999 to offer the employees of the Company a means of saving funds, on a
pre-tax basis or
after-tax
basis, for retirement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. Participation is voluntary.
Full-time
employees are eligible to participate in the Plan upon completing 30 days of
regular service. The Plan covers all employees of the Company or any other corporation affiliated with the Company, which has adopted the Plan, who have completed 30 days of service, as defined by the Plan, and are not leased employees. Each
employee may become a participant of the Plan on the first day of any calendar month coinciding with, or following, the fulfillment of the eligibility requirements.
The Plan is administered by executives of the Company. Prudential Trust Company serves as the Plan Trustee (the Trustee) and The Prudential Investment Company of America serves as Plan
Recordkeeper and Custodian.
Plan participants may contribute a percentage of their annual compensation, up to the maximum allowable under Section 402(g) of the IRC. Contributions may be made prior to Federal and certain other
income taxes pursuant to Section 401(k) of the IRC or on an
after-tax
basis. Plan participants must elect out of the minimum annual contribution. The minimum annual contribution changed from 3% to 4%
effective May 1, 2015. Participants attaining the age of 50 before the end of year are eligible to make catch-up contributions of an extra $6,000. The Plan allows participants to make Roth contributions to the Plan.
Company matching contributions are discretionary as determined by the Board of Directors. The Company did not make any matching
contributions in 2015 or 2014.
The Company may also make a
profit-sharing
contribution
on a discretionary basis on behalf of all eligible participants employed on the last day of the Plan year, as defined by the Plan, whether or not they make an elective matching contribution for the Plan year.
Profit-sharing
contributions are based on the Companys profitability and are allocated based on a participants yearly eligible compensation as a percentage of total eligible compensation for that
particular year. These contributions are also subject to certain limitations. There were no discretionary profit sharing contributions remitted to the Plan in 2015 or 2014.
4
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
Participants may elect to place
their deferred or
non-deferred
contributions into the following investments: Huttig Common Stock, Prudential Jennison Growth Fund Z, Prudential QMA Stock Index Fund, Prudential Guaranteed Income Fund, American
Funds EuroPacific Growth Fund A, T Rowe Price Mid Cap Growth R, Federated Clover Small Value A, Metropolitan West Total Return Bond M, Lord Abbett Developing Growth A, Virtus Emerging Market Opportunities A, JPMorgan Diversified Sel, JPMorgan Mid
Cap Value Inst, American Balanced Fund, BlackRock Equity Dividend Inst and Templeton Global Bond Fund. As a result of the
spin-off
of the Company by Crane Co. in 1999, all assets resulting from such transfer
held within the Crane Common Stock are held as a separate investment fund; however, participants are not permitted to direct any contributions to the Crane Common Stock after the effective date of the Plan.
(d) Vesting and Forfeitures
Participants are always 100% vested in the value of their contributions and the earnings thereon. Vesting of Company contributions and the earnings thereon is determined based on participants years
of vesting service. A participant is vested 20% after each year of service and becomes fully vested after five years of service or if employment terminates by reason of death, permanent disability, or retirement at age 65. A terminated
participant forfeits non-vested Company contributions on the one year anniversary of the participants termination.
Any
amounts forfeited are first used for payment of employer matching contributions and then to pay Plan expenses. The amounts forfeited were $3,831 and $2,994 in 2015 and 2014, respectively.
(e) Payments of Benefits
Amounts in a participants account and the vested portion of a participants employer contributions are distributed upon retirement, death, disability, or other termination of employment.
Distributions from the Huttig Common Stock are made in cash.
(f) Notes
Receivable Participants
Participants may borrow funds from their accounts up to 50% of
the total vested balance but not more than $50,000, less the participants highest outstanding loan balance for the previous
12-month
period. The minimum loan amount is $1,000. Loans are repayable through
payroll deductions over
1-10 years.
At December 31, 2015, the interest rates on participants loans ranged from 4.25% 9.25%. The loans are secured by the balance in the participants
account and bear interest at the initial lending rate for the life of the loan. Loans taken out in 2015 had an initial lending rate of prime of 3.25% plus 1%, or 4.25%. Effective December 17, 2015, prime rate was increased to 3.50%. Participant
loans are measured at the unpaid principal balance plus any accrued unpaid interest. The outstanding balance of loans to participants was $701,128 and $754,983 as of December 31, 2015 and 2014, respectively. Interest income on the loan fund is
included as interest income in the participants fund accounts based on their elected loan allocation.
5
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
(g) Plan Participant Accounts
Individual accounts are maintained for each Plan participant to reflect the Plan participants share of the Plans income, the
Companys contribution, and the Plan participants contribution.
(2)
|
Summary of Significant Accounting Policies
|
(a) Basis of Presentation
The accompanying
financial statements of the Plan have been prepared on the accrual basis of accounting. As described in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 962,
Plan Accounting
Defined Contribution Plans
, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for
benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As
required, the Statements of Net Assets Available for Benefits presents the fair value of the investment contracts. The contract is an insurance company issued general account backed group annuity contract. There are no specific securities in the
general account that back the investments in this account. All transactions are at contract value, including discontinuance of the contract. Therefore, fair value is equal to contract value for this investment and no adjustment to fair value is
required.
(b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and
deductions during the reporting period. Actual results could differ from those estimates.
(c) Administrative Expenses
The assets of the Plan shall be used to pay benefits as provided in the Plan and, to the extent not paid directly by the Company, to pay the reasonable expenses of administering the Plan. Administrative
expenses were $111,602 and $86,281 for the years ended December 31, 2015 and 2014, respectively, recorded in net depreciation in fair value of investments of changes in net assets available for benefits.
6
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
(d) Valuation of Investments and Income Recognition
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. See note 3 for discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net depreciation includes the
Plans gains and losses on investments bought and sold as well as held during the year.
(e) Payment of Benefits
Benefit payments to participants are recorded upon distribution.
(f) Transfers Between Fair Value Hierarchy Levels
Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant
unobservable inputs) are recognized on the period beginning date
(g) New Accounting
Pronouncements
In May 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
2015-07,
Disclosures for Investments in Certain Entities That Calculate Net Asset Value Per Share (or its Equivalent),
(ASU 2015-07). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy investments for which fair
values are estimated using the net asset value practical expedient provided by Accounting Standards Codification Topic 820,
Fair Value Measurement
. Disclosures about investments in certain entities that calculate net asset value per share are
limited under ASU 2015-07 to those investments for which the entity has elected to estimate the fair value using the net asset value practical expedient. ASU 2015-07 is effective for entities (other than public business entities) for fiscal years
beginning after December 15, 2016, with retrospective application to all periods presented. Early application is permitted. Management has elected to not adopt ASU 2015-07 early.
In July 2015, the FASB issued ASU 2015-12,
Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension
Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient
. Part I of the ASU eliminates the
requirements to measure the fair value of fully benefit-responsive investment contracts and provide certain disclosures. Contract value is the only required measure for fully benefit-responsive investment contracts. Part II of the ASU eliminates the
requirements to disclose individual investments that represent 5% or more of net assets available for benefits and the net appreciation or depreciation in fair value of investments by general type. It also simplifies the level of disaggregation of
investments that are measured using fair value. Plans will continue to disaggregate investments that are measured using fair value by general type; however, plans are no longer required to also disaggregate investments by nature, characteristics and
risks. Further, the disclosure of information about fair value measurements shall be provided by general type of plan asset. The ASU is effective for fiscal years beginning
7
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
after December 15, 2015. Parts I and II are to be applied retrospectively. Plans can early adopt any of the ASUs three parts without early adopting the other parts. Management has
elected to not adopt Parts I and II of the ASU early. Part III is not applicable to the Plan.
The
following presents investments that represent 5% or more of the Plans net assets available for benefits:
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
Prudential Guaranteed Income Fund
|
|
$
|
9,903,562
|
|
|
$
|
10,342,415
|
|
Prudential Jennison Growth Fund Z
|
|
|
7,289,209
|
|
|
|
7,103,393
|
|
Huttig Company Stock
|
|
|
6,442,638
|
|
|
|
5,789,135
|
|
BlackRock Equity Dividend Inst
|
|
|
6,196,912
|
|
|
|
6,461,964
|
|
American Funds EuroPacific Growth Fund A
|
|
|
4,726,980
|
|
|
|
5,214,363
|
|
Prudential QMA Stock Index Fund
|
|
|
3,115,130
|
|
|
|
|
*
|
JPMorgan Mid Cap Value Inst
|
|
|
|
*
|
|
|
2,969,664
|
|
American Balanced Fund
|
|
|
|
*
|
|
|
2,956,485
|
|
* Investment is less than 5% of net assets available for benefits
8
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
The Plans investments (including realized and unrealized gains and losses on investments bought
and sold, as well as held during the year) appreciated (depreciated) in value as follows:
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
Appreciation/(depreciation) in fair value:
|
|
|
|
|
|
|
|
|
JPMorgan Diversified Sel
|
|
$
|
(86,587
|
)
|
|
$
|
(7,978
|
)
|
JPMorgan Mid Cap Value Inst
|
|
|
(240,186
|
)
|
|
|
167,073
|
|
Prudential Jennison Growth Fund Z
|
|
|
317,740
|
|
|
|
310,771
|
|
Crane Common Stock
|
|
|
(302,879
|
)
|
|
|
(271,710
|
)
|
Huttig Common Stock
|
|
|
764,735
|
|
|
|
(864,399
|
)
|
Prudential QMA Stock Index Fund
|
|
|
(61,005
|
)
|
|
|
130,579
|
|
American Funds EuroPacific Growth Fund A
|
|
|
(159,412
|
)
|
|
|
(212,379
|
)
|
BlackRock Equity Dividend Inst
|
|
|
(993,392
|
)
|
|
|
167,550
|
|
Federated Clover Small Value A
|
|
|
(121,632
|
)
|
|
|
(57,655
|
)
|
T Rowe Price Mid Cap Growth R
|
|
|
(73,527
|
)
|
|
|
94,868
|
|
Lord Abbett Developing Growth A
|
|
|
(281,267
|
)
|
|
|
(257,982
|
)
|
Metropolitan West Total Return Bond M
|
|
|
(57,815
|
)
|
|
|
16,222
|
|
Templeton Global Bond Fund
|
|
|
(66,278
|
)
|
|
|
(47,426
|
)
|
American Balanced Fund
|
|
|
(103,921
|
)
|
|
|
32,135
|
|
Virtus Emerging Market Opportunities A
|
|
|
(110,739
|
)
|
|
|
32,868
|
|
PIMCO Total Return A
|
|
|
|
|
|
|
41,373
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,576,165
|
)
|
|
$
|
(726,090
|
)
|
|
|
|
|
|
|
|
|
|
9
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
Fair Value Measurements
FASB ASC 820,
Fair Value Measurements and Disclosures
, establishes a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. This hierarchy consists of
three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority; Level 2 inputs consist of quoted market prices in active markets for similar type assets; and Level 3
consist of unobservable inputs that have the lowest priority. The Plan uses appropriate techniques based on the available inputs to measure the fair value of its investments. When available, the Plan measures fair value using Level 1 inputs because
they generally provide the most reliable evidence of fair value. There have been no changes in methodologies used in December 31, 2015 or 2014. The Plan had no assets measured at fair value on a nonrecurring basis.
Level 1 Fair Value Measurements
The fair value of mutual funds is based on quoted net asset values of the shares held by the Plan at year-end. The fair value of common stock is based on quoted market prices.
Level 2 Fair Value Measurements
Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted market prices in active markets for similar assets or liabilities, quoted prices for identical or similar
assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Plan has no Level 2 investments.
Level 3 Fair Value Measurements
The fair value is based upon significant unobservable inputs, including the reporting entitys own assumptions in determining the fair value of investments. The Plans investment in the
Guaranteed Income Fund (the GIF) is a fully benefit-responsive investment fund. The GIF is valued based on the participant contributions made in the fund, plus earnings at guaranteed crediting rates, less withdrawals and fees.
10
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
Recurring Measurements
The following table presents the fair value measurements of assets and liabilities recognized in the accompanying statements of net assets available for benefits measured at fair value on a recurring
basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using:
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
December 31, 2015
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Mutual funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balanced
|
|
$
|
4,438,861
|
|
|
$
|
4,438,861
|
|
|
$
|
|
|
|
$
|
|
|
Bond
|
|
|
3,147,641
|
|
|
|
3,147,641
|
|
|
|
|
|
|
|
|
|
International
|
|
|
5,875,477
|
|
|
|
5,875,477
|
|
|
|
|
|
|
|
|
|
Large Cap Growth
|
|
|
7,289,209
|
|
|
|
7,289,209
|
|
|
|
|
|
|
|
|
|
Large Cap Balanced
|
|
|
3,115,130
|
|
|
|
3,115,130
|
|
|
|
|
|
|
|
|
|
Large Cap Value
|
|
|
6,196,912
|
|
|
|
6,196,912
|
|
|
|
|
|
|
|
|
|
Mid Cap Growth
|
|
|
2,566,194
|
|
|
|
2,566,194
|
|
|
|
|
|
|
|
|
|
Mid Cap Value
|
|
|
2,744,788
|
|
|
|
2,744,788
|
|
|
|
|
|
|
|
|
|
Small Cap Value
|
|
|
1,377,211
|
|
|
|
1,377,211
|
|
|
|
|
|
|
|
|
|
Small Cap Growth
|
|
|
1,585,549
|
|
|
|
1,585,549
|
|
|
|
|
|
|
|
|
|
Huttig Common Stock
|
|
|
6,442,638
|
|
|
|
6,442,638
|
|
|
|
|
|
|
|
|
|
Crane Common Stock
|
|
|
1,269,076
|
|
|
|
1,269,076
|
|
|
|
|
|
|
|
|
|
Guaranteed Income Fund
|
|
|
9,903,562
|
|
|
|
|
|
|
|
|
|
|
|
9,903,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,952,248
|
|
|
$
|
46,048,686
|
|
|
$
|
|
|
|
$
|
9,903,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using:
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
December 31, 2014
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Mutual funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balanced
|
|
$
|
4,567,002
|
|
|
$
|
4,567,002
|
|
|
$
|
|
|
|
$
|
|
|
Bond
|
|
|
3,002,755
|
|
|
|
3,002,755
|
|
|
|
|
|
|
|
|
|
International
|
|
|
6,384,801
|
|
|
|
6,384,801
|
|
|
|
|
|
|
|
|
|
Large Cap Growth
|
|
|
7,103,393
|
|
|
|
7,103,393
|
|
|
|
|
|
|
|
|
|
Large Cap Balanced
|
|
|
2,699,761
|
|
|
|
2,699,761
|
|
|
|
|
|
|
|
|
|
Large Cap Value
|
|
|
6,461,964
|
|
|
|
6,461,964
|
|
|
|
|
|
|
|
|
|
Mid Cap Growth
|
|
|
2,522,353
|
|
|
|
2,522,353
|
|
|
|
|
|
|
|
|
|
Mid Cap Value
|
|
|
2,969,664
|
|
|
|
2,969,664
|
|
|
|
|
|
|
|
|
|
Small Cap Value
|
|
|
1,497,332
|
|
|
|
1,497,332
|
|
|
|
|
|
|
|
|
|
Small Cap Growth
|
|
|
1,693,114
|
|
|
|
1,693,114
|
|
|
|
|
|
|
|
|
|
Huttig Common Stock
|
|
|
5,789,135
|
|
|
|
5,789,135
|
|
|
|
|
|
|
|
|
|
Crane Common Stock
|
|
|
1,903,378
|
|
|
|
1,903,378
|
|
|
|
|
|
|
|
|
|
Guaranteed Income Fund
|
|
|
10,342,415
|
|
|
|
|
|
|
|
|
|
|
|
10,342,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
56,937,067
|
|
|
$
|
46,594,652
|
|
|
$
|
|
|
|
$
|
10,342,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value determinations for Level 3 measurements of securities are the responsibility of the Plan
Administrator. The Plan Administrator contracts with the trustee to generate fair value estimates on a monthly or quarterly basis. The Plan Administrator challenges the reasonableness of the assumptions used and reviews the methodology to
ensure the estimated fair value complies with accounting standards generally accepted in the United States.
12
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in recurring Level 3 fair value measurements.
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Fair Value
12/31/2015
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Valuation
Technique
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Unobservable
Inputs
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Range
(Weighted
Average)
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Prudential Guaranteed Income Fund
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$
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9,903,562
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Contract Value
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Contractual interest rate
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1.7%
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Fair Value
12/31/2014
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Valuation
Technique
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Unobservable
Inputs
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Range
(Weighted
Average)
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Prudential Guaranteed Income Fund
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$
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10,342,415
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Contract Value
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Contractual interest rate
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1.8%
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Sensitivity of Significant Unobservable Inputs
The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other
unobservable inputs used in recurring fair value measurement and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.
Investment Contract with Insurance Company
The significant unobservable input used in the fair value measurement of the Plans investment contract with an insurance company is the interest rate of the investment contract. Changes in the
contractual interest rate would result in a significant change in fair value to the extent the change deviates from changes in market interest rates. Generally, an increase (decrease) in the difference between the contractual interest rate and the
market interest rate is accompanied by a directionally opposed change in the fair value.
13
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
The table below sets forth a summary of changes in the fair value of the Plans Level 3 investment
assets for the years ended 2015 and 2014.
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2015
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2014
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Guaranteed
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Guaranteed
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Income Fund
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Income Fund
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Balance at January 1
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$
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10,342,415
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$
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11,442,144
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Interest Income
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214,554
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239,855
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Purchases
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1,793,965
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1,577,297
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Sales
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(2,447,372
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)
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(2,916,881
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)
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Balance at December 31
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$
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9,903,562
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$
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10,342,415
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14
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
(4)
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Contract with Insurance Company
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In 2015 and 2014, the Plan invested in the Prudential Guaranteed Income Fund (GIF) offered by the Prudential Retirement Insurance and Annuity Company (PRIAC), an affiliate of the Trustee.
Guarantees are based on the claims paying ability of PRIAC and not the value of the securities within the insurers general account. The credit rating of the issuer at December 31, 2015 was A1 as reported by Moodys Investors Service.
Deposits made to the GIF are deposited in PRIACs general account. Payment obligations under the GIF represent an insurance claim supported by all the general assets. The GIF does not operate like a mutual fund, variable annuity product, or
conventional fixed rate individual annuity product. Expenses related to the GIF are calculated by PRIAC and incorporated in the GIF crediting rate. Past interest rates are not indicative of future interest rates.
GIF Operation
Under the group annuity contract that supports this product, participants may ordinarily direct permitted withdrawals or transfers of all or a portion of their account balance at Contract Value within
reasonable time frames. Contract Value represents deposits made to the contract, plus earnings at guaranteed crediting rates, less withdrawals and fees. The contract is effected directly between the Plan and the issuer. The repayment of principal
and interest credited to participants is a financial obligation of the issuer. There are no reserves against Contract Value for credit risk of the contract issuer or otherwise. Given these provisions, the Plan considers this contact to be benefit
responsive.
Contract/Fair Value
The concept of a value other than Contract Value does not apply to this insurance company issued account backed evergreen (no maturity date) group annuity spread product even upon discontinuance of the
contract in which case Contract Value would be paid no later than 90 days from the date the sponsor provides notice to discontinue. The contracts operation is different than many other evergreen group annuity products in the market by virtue
of the fact that a market value (fair value) adjustment does not apply upon a discontinuance. This annuity contract, and therefore the liability of the insurer, is not backed by specific securities of its general account, and therefore the market
value of the securities in the insurers general account does not represent the fair value. The Plan owns a promise to receive interest at crediting rates which are announced in advance and guaranteed for a specific period of time as outlined
in the group annuity contract. This product is not a traditional Guaranteed Investment Contract (the GIC), and therefore there are no known cash flows that could be discounted. As a result, the value amount shown materially approximates
the Contract Value. As of December 31, 2015 and 2014, the Plan held $9,903,562 and $10,342,415, respectively.
15
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
Interest Crediting Rates
Interest is credited on contract balances using a single portfolio rate approach. Under this methodology, a single interest crediting rate
is applied to all contributions made to the product regardless of the timing of those contributions. The average interest earned by the Plan was 1.7% and 1.8% for the years ended December 31, 2015 and December 31, 2014, respectively. No
adjustment is required to mediate between the average earnings credited to the Plan and the average earnings credited to the participants. The same crediting interest rate is applied to the entire contract value and is reviewed on a semi-annual
basis for resetting. The factors considered in establishing the crediting interest rate include current economic and market conditions, the general interest rate environment and both actual and expected experience of a reference portfolio within the
general account. The guaranteed minimum interest rate is 1.50%.
Events
Only an event causing liquidity constraints at PRIAC could limit the ability of the Plan to transact at Contract Value paid within 90 days
or in rare circumstances, Contract Value over time. There are not any events that allow the issuer to terminate the contract and which require the Plan sponsor to settle at an amount different than Contact Value paid either within 90 days or over
time.
The Plan
Administrator has concluded that as of December 31, 2015 and 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to
routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
The Plan
operates under a non-standardized adoption agreement in connection with a prototype retirement plan and trust/custodial document sponsored by The Prudential Investment Company of America. This prototype plan document has been filed with the
appropriate agency. The Plan has not obtained or requested a determination letter. However, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC and that the
Plan was qualified and the related trust was tax exempt as of the financial statement date.
(6)
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Distribution of Assets Upon Termination of the Plan
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Huttig reserves the right to terminate the Plan, in whole or in part, at any time. In the event of termination, all amounts credited to the participant accounts will become 100% vested. If the Plan is
terminated at any time or contributions are completely discontinued and Huttig determines that the trust shall be terminated, all accounts shall be revalued as if the termination date were a valuation date and such accounts shall be distributed to
participants. If
16
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2015 and 2014
the Plan is terminated or contributions completely discontinued, but Huttig determines that the trust shall be continued pursuant to the terms of the trust agreement, participants or the Company
shall make no further contributions, but the trust shall be administered as though the Plan were otherwise in effect. There are no intentions to terminate the Plan at this time.
(7)
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Related Party Transactions
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Certain Plan investments are shares of mutual funds and the guaranteed income fund that are managed by Prudential Trust Company.
Prudential Trust Company is the Trustee, as defined by the Plan, and therefore, these transactions qualify as
party-in-interest
transactions.
Additionally, Plan investments include shares of Huttig Building Products, Inc. common stock. Huttig Building Products, Inc. is the Plan
Sponsor, as defined by the Plan and, therefore, these transactions qualify as
party-in-interest
transactions. These
party-in-interest
transactions are allowable under ERISA regulations. The Plan has investments in Huttig Common Stock as of December 31, 2015 and 2014 of $6,442,638 and $5,789,135, respectively. In 2015
and 2014, the Company did not make matching contributions for the purchase of Huttig Common Stock. The participant can reallocate the vested portions of the Huttig Common Stock at any time. In addition, after three years of service, a participant
can reallocate matching contributions invested in Huttig Common Stock regardless of whether the participant is vested in such matching contributions.
As of December 31, 2015 and 2014, the Plan held approximately 1,695,431 and 1,728,100 shares, respectively, of Company Common Stock. Total outstanding Huttig Company Stock as of
December 31, 2015, was approximately 25 million shares.
During the years ended December 31, 2015 and 2014, the
Plan had the following transactions involving Huttig Common Stock:
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2015
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2014
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Shares purchased
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62,634
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58,364
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Shares sold
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95,303
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128,861
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Cost of shares purchased
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$
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197,795
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$
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231,441
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Cost of shares sold
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$
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265,325
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$
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395,500
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Net proceeds from shares sold
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$
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308,998
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$
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520,494
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(8)
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Risks and Uncertainties
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The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and
credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect
participants account balances and the amounts reported in the statement of net assets available for benefits.
17
Schedule 1
HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
Schedule H, Line
4i Schedule of Assets Held (at end of year)
EIN #43-0334550 Plan No. 006
December 31, 2015
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(a) (b) Identity of Issuer
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(c) Description
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(d) Cost
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(e) Current
Value
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Prudential Guaranteed Income Fund*
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Unallocated Investment Contract
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**
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$
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9,903,562
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Prudential Jennison Growth Fund Z*
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Mutual Fund
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**
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7,289,209
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Huttig Common Stock*
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Company Stock
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**
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6,442,638
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BlackRock Equity Dividend Inst
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Mutual Fund
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**
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6,196,912
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American Funds EuroPacific Growth Fund A
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Mutual Fund
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**
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4,726,980
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Prudential QMA Stock Index Fund
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Mutual Fund
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**
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3,115,130
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American Balanced Fund
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Mutual Fund
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**
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2,774,148
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JPMorgan Mid Cap Value Inst
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Mutual Fund
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**
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2,744,788
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T Rowe Price Mid Cap Growth R
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Mutual Fund
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**
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2,566,194
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Metropolitan West Total Return Bond M
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Mutual Fund
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**
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2,214,024
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JPMorgan Diversified Sel
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Mutual Fund
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**
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1,664,713
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Lord Abbett Developing Growth A
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Mutual Fund
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**
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1,585,549
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Federated Clover Small Value A
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Mutual Fund
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**
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1,377,211
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Crane Common Stock
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Company Stock
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**
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1,269,076
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Virtus Emerging Market Opportunities A
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Mutual Fund
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**
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1,148,497
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Templeton Global Bond Fund
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Mutual Fund
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**
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933,617
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Notes receivableparticipants*
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Interest rates 4.25% to 9.25%;
maturing dates vary through 2024
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**
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701,128
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$
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56,653,376
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*Represents a party-in-interest investment allowable under ERISA regulations.
**Cost omitted for participant-directed investments
See accompanying report of independent registered public accounting firm
18
SIGNATURES
The Plan.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Trustees (or other persons who administer the
employee benefit plan) have duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.
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HUTTIG BUILDING PRODUCTS, INC.
SAVINGS AND PROFIT SHARING PLAN
|
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HUTTIG BUILDING PRODUCTS, INC.
(Plan Administrator)
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Date: June 13, 2016
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By:
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/s/ Oscar A.
Martinez
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Name:
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Oscar A. Martinez
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Title:
|
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Vice President and Chief Financial Officer
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EXHIBIT INDEX
|
|
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Exhibit No.
|
|
Description
|
|
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23.1
|
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Consent of BKD, LLP, independent registered public accounting firm.
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