Annual report pursuant to Section 13 and 15(d)

Postretirement Benefits (Tables)

v3.3.1.900
Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2015
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Schedule of Net Pension and Other Benefit Costs
Costs. Pension and other postretirement benefit costs included the following components for 2015, 2014 and 2013:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Service cost
$
—

 
$
—

 
$
0.1

 
$
—

 
$
—

 
$
—

Interest cost
47.9

 
58.6

 
54.0

 
1.8

 
2.0

 
1.9

Expected return on plan assets
(55.7
)
 
(58.8
)
 
(57.0
)
 
—

 
—

 
—

Amortization of prior service credits
—

 
—

 
—

 
(0.7
)
 
(0.9
)
 
(5.7
)
Amortization of net actuarial losses
19.5

 
15.0

 
21.4

 
1.3

 
—

 
1.3

Settlement loss
82.3

 
27.9

 
—

 
—

 
—

 
—

Net pension and other benefit costs
$
94.0

 
$
42.7

 
$
18.5

 
$
2.4

 
$
1.1

 
$
(2.5
)

Reconciliation of the Changes in Plans Benefit Obligations, Fair Value of Plan Assets, and Statement of Funded Status
A reconciliation of the changes in the benefit obligations and fair value of assets over the two-year period ending December 31, 2015, and a statement of the funded status at December 31 for these years for the Company's pension and other postretirement benefit plans follow:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2015
 
2014
 
2015
 
2014
Reconciliation of benefit obligation:
 
 
 
 
 
 
 
Benefit obligation at previous December 31
$
1,315.4

 
$
1,249.3

 
$
49.5

 
$
47.7

Interest cost
47.9

 
58.6

 
1.8

 
2.0

Participant contributions
—

 
—

 
0.7

 
0.9

Actuarial (gains) losses
(56.8
)
 
165.9

 
(4.1
)
 
5.0

Benefit payments
(79.2
)
 
(86.5
)
 
(4.4
)
 
(6.1
)
Settlement payments
(191.8
)
 
(71.9
)
 
—

 
—

Benefit obligation at December 31
1,035.5

 
1,315.4

 
43.5

 
49.5

 
 
 
 
 
 
 
 
Reconciliation of fair value of plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at previous December 31
965.9

 
956.0

 
—

 
—

Actual return on plan assets
(32.1
)
 
94.5

 
—

 
—

Employer contributions
73.6

 
73.8

 
3.7

 
5.2

Participant contributions
—

 
—

 
0.7

 
0.9

Benefit payments
(79.2
)
 
(86.5
)
 
(4.4
)
 
(6.1
)
Settlement payments
(191.8
)
 
(71.9
)
 
—

 
—

Fair value of plan assets at December 31
736.4

 
965.9

 
—

 
—

 
 
 
 
 
 
 
 
Funded status at December 31
$
(299.1
)
 
$
(349.5
)
 
$
(43.5
)
 
$
(49.5
)
Funded percentage (A)
71
%
 
73
%
 
NA

 
NA

Schedule of Amounts Recognized in Consolidated Balance Sheet
The amounts included in the Company's Consolidated Balance Sheets as of December 31, 2015 and 2014, were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2015
 
2014
 
2015
 
2014
Accrued expenses
$
3.8

 
$
3.8

 
$
4.4

 
$
4.9

Postretirement benefit liabilities
295.3

 
345.7

 
39.1

 
44.6

Net amount recognized
$
299.1

 
$
349.5

 
$
43.5

 
$
49.5

Activity Recorded in Accumulated Other Comprehensive Income or Loss
The following pretax activity related to pensions and other postretirement benefits was recorded in Accumulated other comprehensive loss as of December 31:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2015
 
2014
 
2015
 
2014
Prior service credits
 
 
 
 
 
 
 
Beginning balance
$
—

 
$
—

 
$
(11.6
)
 
$
(12.5
)
Prior service credits arising during the period
—

 
—

 
—

 
—

Amount recognized as component of net benefit costs
—

 
—

 
0.7

 
0.9

Ending balance
—

 
—

 
(10.9
)
 
(11.6
)
 
 
 
 
 
 
 
 
Net actuarial losses
 
 
 
 
 
 
 
Beginning balance
528.6

 
441.3

 
7.3

 
2.3

Actuarial (gains) losses arising during the period
31.0

 
130.2

 
(4.1
)
 
5.0

Amount recognized as component of net benefit costs
(101.8
)
 
(42.9
)
 
(1.3
)
 
—

Ending balance
457.8

 
528.6

 
1.9

 
7.3

 
 
 
 
 
 
 
 
Total
$
457.8

 
$
528.6

 
$
(9.0
)
 
$
(4.3
)
Assumed Health Care Cost Trend Rates
The assumed health care cost trend rate for other postretirement benefits for pre-age 65 benefits as of December 31 was as follows:
 
Pre-age 65 Benefits
 
2015
 
2014
Health care cost trend rate for next year
5.8
%
 
7.1
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5
%
 
4.5
%
Year rate reaches the ultimate trend rate
2037

 
2028

Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates
A one percent change in the assumed health care trend rate at December 31, 2015, would have the following effects:
(in millions)
One Percent Increase
 
One Percent Decrease
Effect on total service and interest cost
$
—

 
$
—

Effect on accumulated postretirement benefit obligation
$
0.1

 
$
(0.1
)
Weighted-average assumptions used to determine benefit obligations and net pension and other postretirement benefit costs
Weighted average assumptions used to determine pension and other postretirement benefit obligations at December 31 were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
 
2015
 
2014
 
2015
 
2014
Discount rate
4.40
%
 
3.95
%
 
4.23
%
 
3.75
%


Weighted average assumptions used to determine net pension and other postretirement benefit costs for the years ended December 31 were as follows:
 
2015
 
2014
 
2013
Discount rate for pension benefits
3.95%
 
4.85%
 
4.00%
Discount rate for other postretirement benefits
3.75%
 
4.40%
 
3.60%
Long-term rate of return on plan assets
6.00%
 
6.25%
 
6.50%

                
Schedule of Allocation of Plan Assets
The Trust asset allocation at December 31, 2015 and 2014, and target allocation for 2016 are as follows:
 
2015
 
2014
 
Target
Allocation for 2016
Equity securities:
 
 
 
 
 
United States
17%
 
17%
 
17%
International
3%
 
3%
 
3%
Fixed-income securities
77%
 
66%
 
80%
Short-term investments
3%
 
14%
 
—
Total
100%
 
100%
 
100%


The fair values of the Trust's pension assets at December 31, 2015, by asset class were as follows:
 
Fair Value Measurements at December 31, 2015 (A)
(in millions)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Asset Class
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Short-term investments
$
26.7

 
$
0.5

 
$
26.2

 
$
—

Equity securities: (B) 
 
 
 
 
 
 
 
United States
129.1

 
—

 
129.1

 
—

International
21.0

 
—

 
21.0

 
—

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
124.8

 
—

 
124.8

 
—

Corporate securities (D)
415.8

 
—

 
415.8

 
—

Commingled funds (E)
37.3

 
—

 
37.3

 
—

Other investments (F) 
(1.0
)
 
—

 
(1.0
)
 
—

Total pension assets at fair value
753.7

 
$
0.5

 
$
753.2

 
$
—

Other liabilities (G)
(17.3
)
 
 
 
 
 
 
Total pension plan net assets
$
736.4

 
 
 
 
 
 

(A) See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2015.
(B) The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2015.
(C) Government securities are comprised of U.S. Treasury bonds and other government securities.
(D) Corporate securities consist primarily of a diversified portfolio of investment grade bonds issued by companies.
(E) This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligation and mortgage-backed securities, futures and options.
(F) Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio and credit default swaps to manage credit risk exposure.
(G) This class includes interest receivable and receivables/payables for securities sold/purchased.


The fair values of the Trust's pension assets at December 31, 2014, by asset class were as follows:
 
Fair Value Measurements at December 31, 2014 (A)
(in millions)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Asset Class
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Short-term investments
$
151.3

 
$
6.3

 
$
145.0

 
$
—

Equity securities: (B) 
 
 
 
 
 
 
 
United States
164.4

 
—

 
164.4

 
—

International
28.1

 
—

 
28.1

 
—

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
119.7

 
—

 
119.7

 
—

Corporate securities (D)
372.3

 
—

 
372.3

 
—

Commingled funds (E)
141.3

 
—

 
141.3

 
—

Other investments (F)
(6.2
)
 
—

 
(6.2
)
 
—

Total pension assets at fair value
970.9

 
$
6.3

 
$
964.6

 
$
—

Other liabilities (G)
(5.0
)
 
 
 
 
 
 
Total pension plan net assets
$
965.9

 
 
 
 
 
 

(A) See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2014.
(B) The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2014.
(C) Government securities are comprised of U.S. Treasury bonds and other government securities.
(D) Corporate securities consist primarily of a diversified portfolio of investment grade bonds issued by companies.
(E) This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligation and mortgage-backed securities, futures and options.
(F) Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio.
(G) This class includes interest receivable and receivables/payables for securities sold/purchased.
Schedule of Expected Cash Flows
The expected cash flows for the Company's pension and other postretirement benefit plans follow:
(in millions)
Pension Benefits
 
Other Postretirement Benefits
Company contributions expected to be made in 2016 (A)
$
38.8

 
$
4.4

Expected benefit payments (which reflect future service):
 
 
 
2016
$
73.0

 
$
4.4

2017
$
73.5

 
$
4.2

2018
$
73.4

 
$
4.0

2019
$
73.0

 
$
3.8

2020
$
72.2

 
$
3.5

2020-2024
$
345.8

 
$
13.3


(A) The Company currently anticipates contributing approximately $35.0 million to fund the qualified pension plans and approximately $3.8 million to cover benefit payments in the unfunded, nonqualified pension plan in 2016. Company contributions are subject to change based on market conditions or Company discretion.