Annual report pursuant to Section 13 and 15(d)

Postretirement Benefits (Tables)

v2.4.0.8
Postretirement Benefits (Tables)
12 Months Ended
Dec. 31, 2013
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 2013, 2012 and 2011:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost
$
0.1

 
$
0.2

 
$
1.1

 
$

 
$

 
$
0.2

Interest cost
54.0

 
57.7

 
62.4

 
1.9

 
2.4

 
3.2

Expected return on plan assets
(57.0
)
 
(55.2
)
 
(53.3
)
 

 

 

Amortization of prior service costs (credits)

 

 
0.4

 
(5.7
)
 
(6.3
)
 
(5.2
)
Amortization of net actuarial losses
21.4

 
21.9

 
21.3

 
1.3

 
0.7

 
1.0

Curtailment loss

 
0.1

 
0.3

 

 

 

Net pension and other benefit costs
$
18.5

 
$
24.7

 
$
32.2

 
$
(2.5
)
 
$
(3.2
)
 
$
(0.8
)

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, 2013, 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)
2013
 
2012
 
2013
 
2012
Reconciliation of benefit obligation:
 
 
 
 
 
 
 
Benefit obligation at previous December 31
$
1,388.0

 
$
1,319.3

 
$
58.0

 
$
69.9

Service cost
0.1

 
0.2

 

 

Interest cost
54.0

 
57.7

 
1.9

 
2.4

Participant contributions

 

 
1.1

 
1.3

Actuarial (gains) losses
(116.4
)
 
84.5

 
(5.2
)
 
(5.5
)
Benefit payments
(76.4
)
 
(73.7
)
 
(8.1
)
 
(9.9
)
Plan amendments

 

 

 
(0.2
)
Benefit obligation at December 31
1,249.3

 
1,388.0

 
47.7

 
58.0

 
 
 
 
 
 
 
 
Reconciliation of fair value of plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at previous December 31
898.6

 
795.7

 

 

Actual return on plan assets
80.0

 
107.6

 

 

Employer contributions
53.8

 
69.0

 
7.0

 
8.6

Participant contributions

 

 
1.1

 
1.3

Benefit payments
(76.4
)
 
(73.7
)
 
(8.1
)
 
(9.9
)
Fair value of plan assets at December 31
956.0

 
898.6

 

 

 
 
 
 
 
 
 
 
Funded status at December 31
$
(293.3
)
 
$
(489.4
)
 
$
(47.7
)
 
$
(58.0
)
Schedule of Amounts Recognized in Consolidated Balance Sheet
The amounts included in the Company's Consolidated Balance Sheets as of December 31, 2013 and 2012, were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2013
 
2012
 
2013
 
2012
Accrued expenses
$
3.8

 
$
4.0

 
$
5.8

 
$
7.1

Postretirement benefit liabilities
289.5

 
485.4

 
41.9

 
50.9

Net amount recognized
$
293.3

 
$
489.4

 
$
47.7

 
$
58.0

Schedule of Projected and Accumulated Benefit Obligation and Fair Value of Plan Assets
The projected and accumulated benefit obligations and fair value of plan assets for the Company's qualified and nonqualified pension plans at December 31 were as follows:
(in millions)
2013
 
2012
Projected benefit obligation
$
1,249.3

 
$
1,388.0

Accumulated benefit obligation
$
1,249.3

 
$
1,388.0

Fair value of plan assets
$
956.0

 
$
898.6

Funded status
77
%
 
65
%
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 income (loss) as of December 31:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2013
 
2012
 
2013
 
2012
Prior service costs (credits)
 
 
 
 
 
 
 
Beginning balance
$

 
$
0.1

 
$
(18.2
)
 
$
(24.3
)
Prior service credits arising during the period

 

 

 
(0.2
)
Amount recognized as component of net benefit costs

 
(0.1
)
 
5.7

 
6.3

Ending balance

 

 
(12.5
)
 
(18.2
)
 
 
 
 
 
 
 
 
Net actuarial losses
 
 
 
 
 
 
 
Beginning balance
602.1

 
591.9

 
8.8

 
15.0

Actuarial (gains) losses arising during the period
(139.4
)
 
32.1

 
(5.2
)
 
(5.5
)
Amount recognized as component of net benefit costs
(21.4
)
 
(21.9
)
 
(1.3
)
 
(0.7
)
Ending balance
441.3

 
602.1

 
2.3

 
8.8

 
 
 
 
 
 
 
 
Total
$
441.3

 
$
602.1

 
$
(10.2
)
 
$
(9.4
)
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
 
2013
 
2012
Health care cost trend rate for next year
7.3
%
 
7.5
%
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
2028

 
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, 2013, 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
$
0.3

 
$
(0.3
)
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
 
2013
 
2012
 
2013
 
2012
Discount rate
4.85
%
 
4.00
%
 
4.40
%
 
3.60
%
Rate of compensation increase(A)

 

 

 


(A) Assumption used in determining pension benefit obligation only. The rate of compensation increase was reduced to 0.00% at December 31, 2008, as a result of the decision to freeze future benefit accruals for those plans where benefits are based on average compensation.

Weighted average assumptions used to determine net pension and other postretirement benefit costs for the years ended December 31 were as follows:
 
2013
 
2012
 
2011
Discount rate for pension benefits(A)
4.00%
 
4.50%
 
5.20%-5.30%
Discount rate for other postretirement benefits(A)
3.60%
 
4.20%
 
4.65%-4.80%
Long-term rate of return on plan assets(B)
6.50%
 
7.00%
 
7.25%
Rate of compensation increase(B)
 
 

(A) Range of discount rates in 2011 reflects the remeasurements of pension and postretirement benefit costs during the year due to negative plan amendments and curtailments recognized.    

(B) Assumption used in determining pension benefit cost only.

Schedule of Allocation of Plan Assets
The Trust asset allocation at December 31, 2013 and 2012, and target allocations for 2014 are as follows:
 
2013
 
2012
 
Target
Allocations for 2014
Equity securities:
 
 
 
 
 
United States
25%
 
37%
 
15%
International
5%
 
7%
 
5%
Fixed-income securities
46%
 
49%
 
80%
Short-term investments
24%
 
7%
 
Total
100%
 
100%
 
100%


The fair values of the Trust's pension assets at December 31, 2013, by asset class were as follows:
 
Fair Value Measurements at December 31, 2013 (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
$
237.0

 
$

 
$
237.0

 
$

Equity securities: (B) 
 
 
 
 
 
 
 
United States
243.8

 

 
243.8

 

International
46.8

 

 
46.8

 

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
70.2

 
27.8

 
42.4

 

Corporate securities (D)
157.0

 

 
157.0

 

Commingled funds (E)
208.0

 

 
208.0

 

Other investments (F) 
9.0

 

 
9.0

 

Total pension assets at fair value
971.8

 
$
27.8

 
$
944.0

 
$

Other liabilities (G)
(15.8
)
 
 
 
 
 
 
Total pension plan net assets
$
956.0

 
 
 
 
 
 

(A) See Note 6 – 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 2013.

(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, 2013.

(C) Government securities are comprised of U.S. Treasury bonds and other government securities.

(D) Corporate securities consist primarily of investment grade bonds issued by companies in diversified industries.

(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.

(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, 2012, by asset class were as follows:
 
Fair Value Measurements at December 31, 2012 (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
$
62.0

 
$
0.1

 
$
61.9

 
$

Equity securities: (B) 
 
 
 
 
 
 
 
United States
336.7

 

 
336.7

 

International
60.6

 

 
60.6

 

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
146.5

 
102.7

 
43.8

 

Corporate securities (D)
117.5

 

 
117.5

 

Commingled funds (E)
174.2

 

 
174.2

 

Total pension assets at fair value
897.5

 
$
102.8

 
$
794.7

 
$

Other assets (F)
1.1

 
 
 
 
 
 
Total pension plan net assets
$
898.6

 
 
 
 
 
 

(A) See Note 6 – 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 2012.

(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, 2012.

(C) Government securities are comprised primarily of U.S. Treasury bonds and other government securities.

(D) Corporate securities consist primarily of investment grade bonds issued by companies in diversified industries.

(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) 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 2014 (A)
$
55.8

 
$
5.8

Expected benefit payments (which reflect future service):
 
 
 
2014
$
80.6

 
$
5.8

2015
$
82.1

 
$
5.3

2016
$
83.1

 
$
4.8

2017
$
83.8

 
$
4.4

2018
$
84.1

 
$
4.1

2019-2023
$
419.1

 
$
15.4


(A) The Company currently anticipates contributing approximately $52.0 million to fund the qualified pension plans and approximately $3.8 million to cover benefit payments in the unfunded, nonqualified pension plan in 2014. Company contributions are subject to change based on market conditions or Company discretion.