Employee Benefit Plans

Pension Plans

The Company sponsored a qualified defined-benefit pension plan and a post-retirement benefit plan (collectively, “the Pension Plans”). The Pension Plans were frozen on September 30, 1986 and since then there have been no new entrants to the Pension Plans.

The Company’s defined-benefit pension plan is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Under ERISA, the Pension Benefit Guaranty Corporation (“PBGC”) has the authority to terminate an underfunded pension plan under limited circumstances. In the event the Company’s pension plan is terminated for any reason while it is underfunded, the Company would incur a liability to the PBGC that may be equal to the entire amount of the underfunding. The Company’s post-retirement benefit plan is not subject to ERISA. As a result, the post-retirement benefit plan is not required to be pre-funded, and, accordingly, has no plan assets.

Pension costs and other post-retirement benefit costs charged to operations are estimated on the basis of annual valuations with the assistance of an independent actuary. Adjustments arising from plan amendments, changes in assumptions and experience gains and losses, are amortized over the average future life expectancy of inactive participants for the defined-benefit plan, and the average remaining future service of active employees expected to receive benefits for the post-retirement benefit plan.

The following tables provide a reconciliation of the changes in the Pension Plans’ benefit obligation and fair value of assets, the funded status of the plans and the amounts recognized in the balance sheets and AOCI as of December 31, 2014 and 2013 (in millions):



	Pension Benefits						Other Post-retirement Benefits
	December 31, 2014			December 31, 2013			December 31, 2014			December 31, 2013
Change in Benefit Obligation:
Obligation at beginning of year	$	40.1		$	43.0		$	3.4		$	5.1
Interest cost	1.8			1.6			0.1			0.2
Actuarial (gain) loss	5.4			(1.7		)	(0.4		)	(0.8		)
Benefit payments	(3.7		)	(2.8		)	(0.1		)	(0.2		)
Curtailment gain	—			—			—			(0.9		)
Benefit obligation at end of year	$	43.6		$	40.1		$	3.0		$	3.4

Change in Plan Assets:
Fair value of plan assets at beginning of year	$	38.0		$	33.0		$	—		$	—
Actual return on plan assets	2.8			3.3			—			—
Employer contributions	3.3			4.5			0.1			0.2
Benefit payments	(3.7		)	(2.8		)	(0.1		)	(0.2		)
Fair value of plan assets at end of year	$	40.4		$	38.0		$	—		$	—

Funded status at end of year	$	(3.2	)	$	(2.1	)	$	(3.0	)	$	(3.4	)

Amounts recognized in the balance sheet consist of:
Current liabilities	$	—		$	—		$	(0.2	)	$	(0.3	)
Non-current liabilities	(3.2		)	(2.1		)	(2.8		)	(3.1		)
Total liabilities	$	(3.2	)	$	(2.1	)	$	(3.0	)	$	(3.4	)

Amounts recognized in AOCI consist of:
Net actuarial loss (gain)	17.9			13.1			(0.4		)	(0.1		)
Total	$	17.9		$	13.1		$	(0.4	)	$	(0.1	)

Additional Information:
Accumulated benefit obligation	$	43.6		$	40.1

During 2014, the underfunded status of the defined-benefit pension plan increased $1.1 million to $3.2 million, due primarily to an actuarial loss of $5.4 million in 2014 attributable primarily to the adoption of the Society of Actuaries RP-2014 mortality table with MP-2014 projection and a decrease in discount rates offset by $3.3 million of Company contributions and higher than expected returns on the Company’s pension plan assets. In addition, during 2013, the Company implemented changes to medical benefits in the post-retirement benefit plan. The most significant change to the plan was the removal of the Company’s subsidy of medical premiums for future retirees, which curtailed future benefits for those participants. The Company recorded a net curtailment gain of $0.9 million in 2013 due to the reduction in future obligations under the plan resulting from the change in benefits.

The following table provides components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income (in millions):



	Pension Benefits									Other Post-retirement Benefits
	December 31,									December 31,
	2014			2013			2012			2014			2013			2012
Net Periodic Benefit Cost:
Interest cost	$	1.8		$	1.6		$	1.8		$	0.1		$	0.2		$	0.2
Expected return on plan assets	(2.5		)	(2.3		)	(2.1		)	—			—			—
Amortization of prior service credit	—			—			—			—			(0.1		)	(0.1		)
Amortization of net actuarial (gain) loss	0.4			0.6			0.4			(0.1		)	—			—
Curtailment gain	—			—			—			—			(0.9		)	—
Net periodic benefit (income) cost	$	(0.3	)	$	(0.1	)	$	0.1		$	—		$	(0.8	)	$	0.1

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Net actuarial (gain) loss	$	5.2		$	(2.8	)	$	4.7		$	(0.4	)	$	(0.8	)	$	0.4
Amortization of prior service cost	—			—			—			—			0.1			0.1
Amortization of actuarial (gain) loss	(0.4		)	(0.6		)	(0.4		)	0.1			—			—
Total net loss (gain) recognized in
other comprehensive income	$	4.8		$	(3.4	)	$	4.3		$	(0.3	)	$	(0.7	)	$	0.5

Total recognized in net periodic benefit cost and
other comprehensive income	$	4.5		$	(3.5	)	$	4.4		$	(0.3	)	$	(1.5	)	$	0.6

For both the pension and other post-retirement benefits plans, prior service cost are amortized on a straight-line basis over the average remaining future service of active employees expected to receive benefits under the plan. For the pension benefits plan, gains and losses in excess of 10% of the greater of the benefit obligation and market-related value of assets are amortized over the average future life expectancy of inactive participants. For the post-retirement benefit plan, gains and losses in excess of 10% of the greater of the benefit obligation and market-related value of assets are amortized over the average remaining future service of active employees expected to receive benefits under the plan. The Company uses its fiscal year-end date as the measurement date for the plans. The Company estimated that average future life expectancy is 21.4 years for the pension benefits plan and remaining service life of active participants is 5.7 years for the post-retirement benefits plan.

Assumptions Used:

The following table shows the weighted-average assumptions used in the measurement of:



	Pension Benefits						Other Post-retirement Benefits
	December 31,						December 31,
	2014		2013		2012		2014		2013		2012
Benefit Obligations:
Discount rate	4.00	%	4.60	%	3.80	%	3.99	%	4.60	%	3.85	%
Expected return on assets	5.50	%	6.55	%	7.00	%	N/A		N/A		N/A

Net Periodic Benefit Costs:
Discount rate	4.60	%	3.80	%	4.72	%	4.60	%	3.85	%	4.74	%
Expected return on assets	6.55	%	7.00	%	7.25	%	N/A		N/A		N/A

The weighted-average discount rates used to determine the Pension Plans’ obligations and expenses are based on a yield curve methodology which matches the expected benefits at each duration to the available high quality yields at that duration and calculating an equivalent yield. The decrease in discount rate in 2014 compared to 2013 was due to lower bond yields. The decrease in the expected long-term return on assets assumption in 2014 compared to 2013 was due to an increase in the fixed income asset allocation per the Plan’s dynamic investment policy, lower bond yields and lower expected future returns on equities. The Company uses a building block approach in determining the overall expected long term return on assets. Under this approach, a weighted-average expected rate of return is developed based on historical and expected future returns for each major asset class and the proportion of assets of the class held by the Pension Plans. The Company then reviews the results and may make adjustments to reflect the expected additional return gained through active investment management.

Assumed health care cost trend rates have an effect on the amounts reported for the post-retirement health care plans. The health care cost trend rates assumed for the end of year benefit obligation for the post-retirement benefit plans are as follows:



	December 31, 2014	December 31, 2013
Assumed current trend rate for next year for participants under 65	7.25%	7.50%
Assumed current trend rate for next year for participants 65 and over	6.75%	7.00%
Ultimate year trend rate	5.00%	5.00%
Year that ultimate trend rate is reached for participants under 65	2024	2024
Year that ultimate trend rate is reached for participants 65 and over	2022	2022

A one percent point change in assumed health care cost trend rates would have the following effects (in millions):



	1% Increase		1% Decrease
Effect on total of service and interest cost components of net periodic post-retirement
health care benefit cost	$	—	$	—
Effect on the health care component of the accumulated post-retirement benefit
obligation	$	0.4	$	(0.3	)

Plan Assets:

The Company has adopted a dynamic investment strategy to reduce the pension plan’s investment risk as the funded status improves. The strategy will reduce the allocation to return seeking assets (primarily equities) and increase the allocation to liability hedging assets (primarily fixed income) over time with the intention of reducing the volatility of the funded status and pension costs. Based on the plan’s funded status, the Company’s current target allocations are: 0-5% cash, 20-26% equity and 74-80% fixed income. The Company’s investment target also sets forth the requirement for diversification within asset class, types and classes for investments prohibited and permitted, specific indices to be used for benchmark in investment decisions and criteria for individual securities.

The fair value measurements of the Pension Plans’ assets by asset category at December 31, 2014 are as follows (in millions):



Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	0.8	$	0.8	$	—	$	—
Group trust	35.9		—		35.9		—
Group annuity contract	3.7		—		3.7		—
Total	$	40.4	$	0.8	$	39.6	$	—

The fair value measurements of the Pension Plans’ assets by asset category at December 31, 2013 are as follows (in millions):



Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	2.5	$	2.5	$	—	$	—
Group trust	31.8		—		31.8		—
Group annuity contract	3.7		—		3.7		—
Total	$	38.0	$	2.5	$	35.5	$	—

During 2013, the Company reinvested the majority of the plan assets in an investment instrument (“Group Trust”), comprised of a diversified portfolio of investments across various asset classes, including U.S. and foreign equities and U.S. high yield and investment grade corporate bonds. The Group Trust is valued at the net asset value provided by the administrator of the fund. The net asset fair value is based on the value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding.

The group annuity consists primarily of investment grade fixed income securities. The annuity contract is valued based on discounted cash flows of current yields of similar securities with comparable duration based on the underlying fixed income investments.

Estimated Future Contributions and Benefit Payments

The Company currently does not expect to make contributions to its pension plan in 2015 and expects to contribute a minimum of $0.2 million to its other post-retirements benefits plan.

Estimated future benefit payments reflecting future service are as follows (in millions):



Year ending December 31,	Pension Benefits		Other Post-retirement Benefits
2015	$	2.8	$	0.2
2016	3.0		0.2
2017	3.0		0.2
2018	3.3		0.2
2019	3.0		0.2
2020 through 2024	14.0		0.9

Expected amortization from AOCI into net periodic benefit cost for the year ending December 31, 2015 (in millions):



	Pension Benefits		Other Post-retirement Benefits
Expected amortization of net actuarial loss	$	0.6	$	—
Total expected amortizations for the year ended	$	0.6	$	—

Multi-employer Defined Benefit Plan

The Company contributed $0.4 million in the year ended December 31, 2014, and $0.3 million in each of the years ended December 31, 2013 and 2012, respectively, to multi-employer defined benefit plans under the terms of a collective-bargaining agreement that covers its union represented employees.

Savings Plans

The Company maintains defined-contribution plans in the U.S., subject to Section 401(k) of the Internal Revenue Code, and in Canada, subject to the Income Tax Act. For the year ended December 31, 2014, eligible U.S. employees could elect to contribute, on a tax-deferred basis, from 1% to 75% of their compensation to a maximum of $17,500. Eligible U.S. employees over 50 years of age could also contribute an additional $5,500 on a tax-deferred basis. In Canada, employees can elect to contribute up to a maximum of $24,270 Canadian dollars. As of December 31, 2014, under the 401(k) plan, the Company matches 100% of U.S. employee contributions up to 2% of base salary and matches 25% of employee contributions from 2% to 6% of base salary for a total maximum company contribution of 3%. Effective January 1, 2015, the Company will match 50% of U.S. employee contributions up to 6% of base salary and the maximum contribution increased to $18,000. For Canadian employees, the Company matches 50% of employee contributions up to 6% of employee contributions for a total maximum company contribution of 3%. Effective January 1, 2015, the maximum contribution available to employees in Canada increased to $24,930. For the years ended December 31, 2014, 2013 and 2012, the Company made matching payments of $3.0 million, $2.8 million and $2.3 million, respectively.