XML 152 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
Employee Benefit Plans:

Over the past several years, we have frozen many of our defined benefit pension and profit sharing plans and replaced them with defined contribution plans. We have a liability for the benefits earned under these inactive plans prior to the date the benefits were frozen. Our defined contribution plans generally include both company and employee contributions which are based on predetermined percentages of compensation earned by the employee. We also have several active defined benefit plans that provide benefits based on years of service.

In addition to freezing the benefits of our defined benefit pension plans, we have also eliminated nearly all of our post-retirement medical benefits. In 2012, we amended the post-retirement benefit plan to shift pre-65 medical coverage for the employees of our largest manufacturing plant so that by 2015, retirees would pay 100% of the cost of post-retirement medical coverage. This change resulted in a significant reduction in the projected benefit obligation for post-retirement medical benefits in 2012.

Defined Contribution Plans

As noted above, we sponsor several defined contribution plans, and we recorded the following expenses related to our contributions to these plans (in millions):
 
For the Years Ended December 31,
 
2012
 
2011
 
2010
Contributions to defined contribution plans(1)
$
13.2

 
$
14.3

 
$
13.6


(1) Contributions of $2.0 million, $2.7 million and $3.3 million are included in Loss for discontinued operations for the years ended December 31, 2012, 2011 and 2010 respectively.

Pension and Post-retirement Benefit Plans

As noted above, we have recorded a liability and expenses for our pension and post-retirement plans. The following tables set forth amounts recognized in our financial statements and the plans' funded status (dollars in millions):
 
Pension Benefits
 
Other Benefits
 
2012
 
2011
 
2012
 
2011
Accumulated benefit obligation
$
406.3

 
$
363.6

 
N/A

 
N/A

Changes in projected benefit obligation:

 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
368.8

 
$
336.3

 
$
19.9

 
$
17.0

Service cost
5.8

 
5.4

 
0.2

 
0.8

Interest cost
17.5

 
17.8

 
0.4

 
0.9

Plan participants' contributions
—

 
—

 
0.8

 
0.8

Amendments
—

 
—

 
(14.2
)
 
—

Other
4.5

 
—

 
—

 
—

Actuarial loss
47.0

 
28.9

 
2.8

 
2.3

Effect of exchange rates
1.6

 
(0.7
)
 
—

 
—

Divestiture
(10.4
)
 
—

 
—

 
—

Settlements and curtailments
(1.7
)
 
(2.1
)
 
—

 
—

Benefits paid
(19.2
)
 
(16.8
)
 
(2.3
)
 
(1.9
)
Benefit obligation at end of year
$
413.9

 
$
368.8

 
$
7.6

 
$
19.9

 
 
 
 
 
 
 
 
Changes in plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
242.5

 
$
244.6

 
$
—

 
$
—

Actual gain return on plan assets
32.1

 
3.8

 
—

 
—

Employer contribution
29.4

 
13.4

 
1.5

 
1.1

Plan participants' contributions
—

 
—

 
0.8

 
0.8

Effect of exchange rates
1.0

 
(0.4
)
 
—

 
—

Divestiture
(7.3
)
 
—

 
—

 
—

Plan settlements
(1.7
)
 
(2.1
)
 
—

 
—

Benefits paid
(19.2
)
 
(16.8
)
 
(2.3
)
 
(1.9
)
Fair value of plan assets at end of year
276.8

 
242.5

 
—

 
—

Funded status / net amount recognized
$
(137.1
)
 
$
(126.3
)
 
$
(7.6
)
 
$
(19.9
)
 
 
 
 
 
 
 
 
Net amount recognized consists of:
 
 
 
 
 
 
 
Current liability
$
(2.7
)
 
$
(1.6
)
 
$
(1.5
)
 
$
(1.3
)
Non-current liability
(134.4
)
 
(124.7
)
 
(6.1
)
 
(18.6
)
Net amount recognized
$
(137.1
)
 
$
(126.3
)
 
$
(7.6
)
 
$
(19.9
)


No pension plans were over-funded as of December 31, 2012 or 2011.
 
For the Years Ended December 31,
 
2012
 
2011
Pension plans with a benefit obligation in excess of plan assets:
 
 
 
Projected benefit obligation
$
413.2

 
$
368.1

Accumulated benefit obligation
405.5

 
362.9

Fair value of plan assets
276.1

 
241.8



Our U.S.-based pension plans comprised approximately 88% of the projected benefit obligation and 89% of plan assets as of December 31, 2012.

 
Pension Benefits
 
Other Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Components of net periodic benefit cost as of December 31:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
5.8

 
$
5.4

 
$
5.0

 
$
0.2

 
$
0.8

 
$
0.6

Interest cost
17.5

 
17.8

 
17.6

 
0.4

 
0.9

 
0.8

Expected return on plan assets
(19.0
)
 
(19.0
)
 
(19.5
)
 
—

 
—

 
—

Amortization of prior service cost
0.4

 
0.4

 
0.5

 
(2.7
)
 
(1.9
)
 
(1.9
)
Recognized actuarial loss
8.7

 
7.0

 
5.1

 
1.4

 
1.2

 
1.2

Settlements and curtailments
7.1

 
1.7

 
1.4

 
—

 
—

 
—

Net periodic benefit cost(1)
$
20.5

 
$
13.3

 
$
10.1

 
$
(0.7
)
 
$
1.0

 
$
0.7



(1) Pension expense of $6.9 million, $0.8 million and $0.8 million is included in Loss for discontinued operations for the years ended December 31, 2012, 2011 and 2010 respectively.

The following table sets forth amounts recognized in AOCI in our financial statements for 2012 and 2011 (in millions):
 
Pension Benefits
 
Other Benefits
 
2012
 
2011
 
2012
 
2011
Amounts recognized in other comprehensive income (loss):
 
 
 
 
 
 
 
Prior service costs
$
(2.8
)
 
$
(2.6
)
 
$
24.2

 
$
12.7

Actuarial loss
(231.2
)
 
(212.0
)
 
(22.2
)
 
(20.8
)
Subtotal
(234.0
)
 
(214.6
)
 
2.0

 
(8.1
)
Deferred taxes
85.2

 
78.6

 
(0.8
)
 
3.1

Net amount recognized
$
(148.8
)
 
$
(136.0
)
 
$
1.2

 
$
(5.0
)
Changes recognized in other comprehensive income (loss):
 
 
 
 
 
 
 
Adjustment to OCI due to reclassification
$
0.8

 
$
—

 
$
—

 
$
—

Current year prior service costs
—

 
—

 
(14.2
)
 
—

Current year actuarial loss
34.0

 
44.4

 
2.8

 
2.3

Effect of exchange rates
0.7

 
(0.4
)
 
—

 
—

Amortization of prior service (costs) credits
(0.4
)
 
(0.9
)
 
2.7

 
1.9

Amortization of actuarial loss
(15.8
)
 
(8.2
)
 
(1.4
)
 
(1.2
)
Total recognized in other comprehensive income
$
19.3

 
$
34.9

 
$
(10.1
)
 
$
3.0

Total recognized in net periodic benefit cost and other comprehensive income (loss)
$
39.8

 
$
48.2

 
$
(10.8
)
 
$
4.0



The estimated prior service (costs) credits and actuarial gains (losses) that will be amortized from AOCI in 2013 are $(0.5) million and $(10.5) million, respectively, for pension benefits and $3.1 million and $(1.5) million, respectively, for other benefits.

The following tables set forth the weighted-average assumptions used to determine Benefit Obligations and Net Periodic Benefit Cost for the U.S.-based plans in 2012 and 2011:

 
Pension Benefits
 
Other Benefits
 
2012
 
2011
 
2012
 
2011
Weighted-average assumptions used to determine benefit obligations as of December 31:
 
 
 
 
 
 
 
Discount rate
3.97
%
 
4.83
%
 
2.72
%
 
4.64
%
Rate of compensation increase
4.23
%
 
4.23
%
 
—

 
—


 
Pension Benefits
 
Other Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.83
%
 
5.45
%
 
6.07
%
 
4.64
%
 
5.30
%
 
5.95
%
Expected long-term return on plan assets
8.00
%
 
8.00
%
 
8.00
%
 
—

 
—

 
—

Rate of compensation increase
4.23
%
 
4.23
%
 
4.23
%
 
—

 
—

 
—



The following tables set forth the weighted-average assumptions used to determine Benefit Obligations and Net Periodic Benefit Cost for the non-U.S.-based plans in 2012 and 2011:
 
Pension Benefits
 
2012
 
2011
Weighted-average assumptions used to determine benefit obligations as of December 31:
 
 
 
Discount rate
4.12
%
 
4.93
%
Rate of compensation increase
3.48
%
 
3.68
%

 
Pension Benefits
 
2012
 
2011
 
2010
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
 
 
 
 
 
Discount rate
4.93
%
 
5.43
%
 
5.98
%
Expected long-term return on plan assets
6.26
%
 
5.56
%
 
5.59
%
Rate of compensation increase
3.68
%
 
3.98
%
 
3.98
%


To develop the expected long-term rate of return on assets assumption for the U.S. plans, we considered the historical returns and the future expectations for returns for each asset category, as well as the target asset allocation of the pension portfolio and the effect of periodic balancing. These results were adjusted for the payment of reasonable expenses of the plan from plan assets. This resulted in the selection of the 8.0% long-term rate of return on assets assumption. A similar process was followed for the non-U.S.-based plans.

To select a discount rate for the purpose of valuing the plan obligations for the U.S. plans, we performed an analysis in which the duration of projected cash flows from defined benefit and retiree healthcare plans was matched with a yield curve based on the appropriate universe of high-quality corporate bonds that were available. We used the results of the yield curve analysis to select the discount rate that matched the duration and payment stream of the benefits in each plan. This resulted in the selection of the 4.02% discount rate assumption for the U.S. qualified pension plans, 3.46% for the U.S. non-qualified pension plans, and 2.72% for the other benefits. A similar process was followed for the non-U.S.-based plans.

Assumed health care cost trend rates have an effect on the amounts reported for our healthcare plan. The following table sets forth the healthcare trend rate assumptions used:
 
2012
 
2011
Assumed health care cost trend rates as of December 31:
 
 
 
Health care cost trend rate assumed for next year
8.40
%
 
8.40
%
Rate to which the cost rate is assumed to decline (the ultimate trend rate)
5.00
%
 
5.00
%
Year that the rate reaches the ultimate trend rate
2020

 
2020



A one percentage-point change in assumed healthcare cost trend rates would have the following effects (in millions):

 
1-Percentage-Point Increase
 
1-Percentage-Point Decrease
Effect on total of service and interest cost
$
0.1

 
$
(0.1
)
Effect on the post-retirement benefit obligation
0.3

 
(0.3
)


Expected future benefit payments are shown in the table below (in millions):
 
For the Years Ended December 31,
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018-2022
Pension benefits
$
18.2

 
$
17.3

 
$
18.0

 
$
18.7

 
$
19.1

 
$
111.0

Other benefits
1.5

 
1.4

 
0.9

 
0.7

 
0.6

 
1.9



We believe that by adequately diversifying the plan assets, asset returns can be optimized at an acceptable level of risk.  Since equity securities have historically generated higher returns than fixed income securities and the plan is not fully funded, we believe it is appropriate to allocate more assets to equities than fixed income securities. In addition, these categories are further diversified among various asset classes including high yield and emerging markets debt, and international and emerging markets equities in order to avoid significant concentrations of risk. Our U.S. pension plan represents 89%, our Canadian pension plan 6%, and our United Kingdom (“U.K.”) pension plan 5% of the total fair value of our plan assets as of December 31, 2012.

Our U.S. pension plans' weighted-average asset allocations as of December 31, 2012 and 2011, by asset category, are as follows:
 
Plan Assets as of December 31,
Asset Category
2012
 
2011
U.S. equity
34.2
%
 
33.6
%
International equity
26.1

 
24.4

Fixed income
37.8

 
41.9

Money market/cash
1.9

 
0.1

Total
100.0
%
 
100.0
%


U.S. pension plan investments are invested within the following range targets:
Asset Category
Target
U.S. equity
36.0
%
International equity
24.0
%
Fixed income
38.0
%
Money market/cash/guaranteed investment contracts
2.0
%


Our Canadian pension plan was invested solely in a balanced fund that maintains diversification among various asset classes, including Canadian common stocks, bonds and money market securities, U.S. equities, other international equities and fixed income investments. Our U.K. pension plan was invested in a broad mix of assets consisting of U.K., U.S. and international equities, and U.K. fixed income securities, including corporate and government bonds.

The fair values of our pension plan assets, by asset category, are as follows (in millions):
 
Fair Value Measurements as of December 31, 2012
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Asset Category:
 
 
 
 
 
 
 
Cash and cash equivalents
4.5

 
—

 
—

 
4.5

Commingled pools / Collective Trusts
 
 
 
 
 
 
 
U.S. equity(1)
—

 
36.7

 
—

 
36.7

International equity (2)
—

 
60.3

 
—

 
60.3

Fixed income (3)
—

 
85.3

 
—

 
85.3

Mutual funds
 
 
 
 
 
 
 
U.S. equity (4)
47.3

 
—

 
—

 
47.3

International equity (4)
3.9

 
—

 
—

 
3.9

Fixed income (5)
7.8

 
—

 
—

 
7.8

Balanced pension trust (6)
 
 
 
 
 
 
 
U.S. equity
—

 
2.4

 
—

 
2.4

International equity
—

 
7.9

 
—

 
7.9

Fixed income
—

 
6.6

 
—

 
6.6

Pension fund
 
 
 
 
 
 
 
U.S. equity (7)
—

 
1.3

 
—

 
1.3

International equity (7)
—

 
6.7

 
—

 
6.7

Fixed income (8)
—

 
6.1

 
—

 
6.1

Total
63.5

 
213.3

 
—

 
276.8

 
 
Fair Value Measurements as of December 31, 2011
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
Total
Asset Category:
 
 
 
 
 
 
 
Cash and cash equivalents
0.2

 
—

 
—

 
0.2

Commingled pools / Collective Trusts
 
 
 
 
 
 
 
U.S. equity(1)
—

 
33.4

 
—

 
33.4

International equity (2)
—

 
48.3

 
—

 
48.3

Fixed income (3)
—

 
81.9

 
—

 
81.9

Mutual funds
 
 
 
 
 
 
 
U.S. equity (4)
38.8

 
—

 
—

 
38.8

International equity (4)
4.4

 
—

 
—

 
4.4

Fixed income (5)
8.4

 
—

 
—

 
8.4

Balanced pension trust (6)
 
 
 
 
 
 
 
U.S. equity
—

 
2.1

 
—

 
2.1

International equity
—

 
6.5

 
—

 
6.5

Fixed income
—

 
6.5

 
—

 
6.5

Pension fund
 
 
 
 
 
 
 
U.S. equity (7)
—

 
1.1

 
—

 
1.1

International equity (7)
—

 
5.5

 
—

 
5.5

Fixed income (8)
—

 
4.8

 
—

 
4.8

Money market instruments (9)
—

 
0.7

 
—

 
0.7

Total
51.8

 
190.8

 
—

 
242.6



Additional information about assets measured at Net Asset Value (“NAV”) per share (in millions):

 
As of December 31, 2012
 
Fair Value
 
Redemption Frequency
 (if currently eligible)
 
Redemption Notice Period
Asset Category:
 
 
 
 
 
Commingled pools / Collective Trusts
 
 
 
 
 
U.S. equity (1)
$
36.7

 
n/a
 
n/a
International equity (2)
60.3

 
 Monthly
 
10 - 15 days
Fixed income (3)
85.3

 
Quarterly
 
15 days
Mutual funds
 
 
 
 
 
U.S. equity (4)
47.3

 
n/a
 
n/a
International equity (4)
3.9

 
n/a
 
n/a
Fixed income (5)
7.8

 
n/a
 
n/a
Balanced pension trust (6)
 
 
 
 
 
U.S. equity
2.4

 
Daily
 
5 days
International equity
7.9

 
Daily
 
5 days
Fixed income
6.6

 
Daily
 
5 days
Pension fund
 
 
 
 
 
U.S. equity (7)
1.3

 
Daily
 
7 days
International equity (7)
6.7

 
Daily
 
7 days
Fixed income (8)
6.1

 
Daily
 
7 days
Total
$
272.3

 
 
 
 

 
As of December 31, 2011
 
Fair Value
 
Redemption Frequency
 (if currently eligible)
 
Redemption Notice Period
Asset Category:
 
 
 
 
 
Commingled pools / Collective Trusts
 
 
 
 
 
U.S. equity (1)
$
33.4

 
n/a
 
n/a
International equity (2)
48.3

 
 Monthly
 
10 - 15 days
Fixed income (3)
81.9

 
Quarterly
 
15 days
Mutual funds
 
 
 
 
 
U.S. equity (4)
38.8

 
n/a
 
n/a
International equity (4)
4.4

 
n/a
 
n/a
Fixed income (5)
8.4

 
n/a
 
n/a
Balanced pension trust (6)
 
 
 
 
 
U.S. equity
2.1

 
Daily
 
5 days
International equity
6.5

 
Daily
 
5 days
Fixed income
6.5

 
Daily
 
5 days
Pension fund
 
 
 
 
 
U.S. equity (7)
1.1

 
Daily
 
7 days
International equity (7)
5.5

 
Daily
 
7 days
Fixed income (8)
4.8

 
Daily
 
7 days
Money market instruments (9)
0.7

 
Daily
 
7 days
Total
$
242.4

 
 
 
 

(1) 
This category includes investments primarily in U.S. equity securities that include large, mid and small capitalization companies.
(2) 
This category includes investments primarily in non-U.S. equity securities that include large, mid and small capitalization companies in large developed markets as well as emerging markets equities.
(3) 
This category includes investments in U.S. investment grade and high yield fixed income securities, non-U.S. fixed income securities and emerging markets fixed income securities.
(4) 
These funds seek capital appreciation and generally invest in common stocks of U.S. and non-U.S. issuers. They may invest in growth stocks or value stocks.
(5) 
This fund seeks to provide inflation protection. It currently invests at least 80% of its assets in inflation-indexed bonds issued by the U.S. government. It may invest in bonds of any maturity, though the fund typically maintains a dollar-weighted average maturity of 7 to 20 years.
(6) 
The investment objectives of the fund are to provide long-term capital growth and income by investing primarily in a well-diversified, balanced portfolio of Canadian common stocks, bonds and money market securities. The fund also holds a portion of its assets in U.S. and non-U.S. equities.
(7) 
This category includes investments in U.S. and non-U.S. equity securities and aims to provide returns consistent with the markets in which it invests and provide broad exposure to countries around the world.
(8) 
This category includes investments in U.K. government index-linked securities (index-linked gilts) that have maturity periods of 5 years or longer and investment grade corporate bonds denominated in sterling.
(9) 
This fund invests in U.K. money market instruments and includes cash, bank deposits and short-term fixed interest investments.


The majority of our commingled pool /collective trusts, mutual funds and balanced pension trusts are managed by professional investment advisors. The NAVs per share are furnished in monthly and/or quarterly statements received from the investment advisors and reflect valuations based upon their pricing policies. We have assessed the classification of the inputs used to value these investments at Level 1 for mutual funds and Level 2 for commingled pool / collective trusts and balanced pension trusts through examination of their pricing policies and the related controls and procedures. The fair values we report are based on the pool or trust's NAV per share. The NAVs per share are calculated periodically (daily or no less than one time per month) as the aggregate value of each pool or trust's underlying assets divided by the number of units owned. See Note 20 for information about our fair value hierarchies and valuation techniques.