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Pension and Other Post-Retirement Benefits
 12 Months Ended
Dec. 31, 2013
Pension and Other Postretirement Benefit Expense [Abstract]  
Pension and Other Post-Retirement Benefits
Pension and Other Post-Retirement Benefits
Multi-employer Pension Plan
In connection with the collective bargaining agreement signed with the International Association of Machinists and Aerospace Workers (IAM), the Company contributes to a multi-employer defined benefit pension plan (IAM National Pension Fund). The level of contribution, as specified in the bargaining agreement was $1.35 per hour of employee service for a maximum of 80 hours per bi-weekly pay period through June 30, 2010. Effective July 1, 2010 the contribution per the collective bargaining agreement is $1.50 per hour of employee service for a maximum of 80 hours per bi-weekly pay period. The IAM bargaining agreement provides for a $0.05 increase per hour in the contribution rate beginning on July 1, 2011, with an additional $0.05 increase effective July 1 of each year through 2019.
The collective bargaining agreement with the UAW requires the Company to contribute a specified amount per hour of service to a multi-employer defined benefit pension plan (IAM National Pension Fund). The specified amount was $1.30 in 2010. Per the negotiated UAW collective bargaining agreement, the pension contributions will be as follows:
Effective 1/1/2011 — $1.45
Effective 1/1/2012 — $1.50
Effective 1/1/2014 — $1.55
Effective 1/1/2016 — $1.60
Effective 1/1/2018 — $1.65
Effective 1/1/2019 — $1.70
Effective 1/1/2020 — $1.75
The risk of this multi-employer plan is different from single-employer plans in the following aspects:
1.
Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.
2.
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
3.
If the Company chooses to stop participating in the multi-employer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
The following table summarizes the multi-employer plan to which the Company contributes:
 
 
 
Pension Protection Act Zone Status
 
 
 
 
 
 
 
 
 
 
 
Expiration
Date of
Collective-
Bargaining
Agreement
 
 
 
 
FIP/RP
Status
Pending/
Implemented
 
Contributions of the Company
 
 
 
 
EIN/Pension
Plan Number
 
 
Surcharge
Imposed
 
Pension Fund
2012
 
2013
 
2011
 
2012
 
2013
 
IAM National Pension Fund
51-60321295
 
Green
 
Green
 
No
 
$
22.8

 
$
25.9

 
$
27.9

 
No
 
IAM June 27, 2020
UAW November 30, 2020
Pension Fund
Year Company Contributions to Plan Exceeded More Than 5 Percent of
Total Contributions (as of December 31 of the Plan's Year-End)
IAM National Pension Fund
2011, 2012, 2013

Defined Contribution Plans
The Company contributes to a defined contribution plan available to all U.S. employees, excluding IAM and UAW represented employees. Under the plan, the Company makes a matching contribution of 75% of the employee contribution to a maximum 8% of eligible individual employee compensation. In addition, non-matching contributions based on an employee's age and years of service are paid at the end of each calendar year for certain employee groups.
The Company recorded $39.1, $39.5 and $38.4 in contributions to these plans for the twelve months ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively.
On April 1, 2006, as part of the acquisition of BAE Aerostructures, the Company established a defined contribution pension plan for those employees who are hired after the date of acquisition. Under the plan, the Company contributes 8% of basic salary while participating employees are required to contribute 4% of basic salary. The Company recorded $1.8 in contributions to this plan for the period ended December 31, 2013, $0.8 in contributions for the period ended December 31, 2012 and $0.7 in contributions for the period ended December 31, 2011.
Defined Benefit Pension Plans
Effective June 17, 2005, pension assets and liabilities were spun-off from three Boeing qualified plans into four qualified Spirit AeroSystems plans for each Spirit employee who did not retire from Boeing by August 1, 2005. Effective December 31, 2005, all four qualified plans were merged together. In addition, Spirit has one nonqualified plan providing supplemental benefitsto executives (SERP) who transferred from a Boeing nonqualified plan to a Spirit AeroSystems plan and elected to keep their benefits in this plan. Both plans are frozen as of the date of the Boeing Acquisition (i.e., no future service benefits are being earned in these plans). We intend to fund our qualified pension plan through a trust. Pension assets are placed in trust solely for the benefit of the pension plans' participants and are structured to maintain liquidity that is sufficient to pay benefit obligations.
On April 1, 2006, as part of the acquisition of BAE Aerostructures, the Company established a defined benefit pension plan for those employees that had pension benefits remaining in BAE Systems' pension plan.  In accordance with U.K. legislation, the plan and its assets are managed by an independent trustee company.  The investment strategy adopted by this trustee is documented in a Statement of Investment Principles in line with U.K. legislation. The principles for the investment strategy are to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. The trustee has invested the plan assets in pooled arrangements with authorized investment companies which were selected to be consistent with the plan's overall investment principles and strategy. The specified target asset allocation is 55% equities, 5% real estate, 20% corporate bonds and 20% government bonds.  

Effective December 31, 2013, the U.K. pension plan was closed and benefits were frozen and thereafter subject only to statutory pension revaluation, resulting in a net curtailment gain of $13.1. This gain was due to the loss of salary linkage for employed members of the plan, less the cost of other benefit changes made as part of the plan closure.

Other Post-Retirement Benefit Plans
We also have post-retirement health care coverage for eligible U.S. retirees and qualifying dependents prior to age 65. Eligibility for employer-provided benefits is limited to those employees who were employed at the date of acquisition (Spirit) and retire on or after attainment of age 62 and 10 years  of service. Employees who do not satisfy these eligibility requirements can retire with post-retirement medical benefits at age 55 and 10 years  of service, but they must pay the full cost of medical benefits provided.
Obligations and Funded Status
The following tables reconcile the funded status of both pension and post-retirement medical benefits to the balance on the consolidated balance sheets for the fiscal years 2013 and 2012. Benefit obligation balances presented in the tables reflect the projected benefit obligation (PBO) and accumulated benefit obligation (ABO) for our pension plans, and accumulated post-retirement benefit obligations (APBO) for our post-retirement medical plan. We use an end of fiscal year measurement date of December 31 for our U.S. pension and post-retirement medical plans as required by FASB authoritative guidance.

 
Pension Benefits
 
Other
Post-Retirement
Benefits
 
Periods Ended
December 31,
 
Periods Ended
December 31,
U.S. Plans
2013
 
2012
 
2013
 
2012
Change in projected benefit obligation:
 
 
 
 
 
 
 
Beginning balance
$
1,080.3

 
$
909.9

 
$
75.7

 
$
83.8

Service cost
—

 
—

 
2.8

 
3.3

Employee contributions
—

 
—

 
—

 
—

Interest cost
42.9

 
42.5

 
2.1

 
3.5

Actuarial (gains) and losses
(148.5
)
 
135.0

 
(8.6
)
 
(14.7
)
Special Termination Benefits
(4.1
)
 
—

 
—

 
—

Benefits paid
(21.2
)
 
(7.1
)
 
(0.4
)
 
(0.2
)
Projected benefit obligation at the end of the period
$
949.4

 
$
1,080.3

 
$
71.6

 
$
75.7

Assumptions used to determine benefit obligation:
 
 
 
 
 
 
 
Discount rate
4.89
%
 
4.69
%
 
3.89
%
 
2.94
%
Rate of compensation increase
N/A

 
N/A

 
N/A

 
N/A

Medical assumptions:
 
 
 
 
 
 
 
Trend assumed for the year
N/A

 
N/A

 
8.05
%
 
8.50
%
Ultimate trend rate
N/A

 
N/A

 
4.50
%
 
4.50
%
Year that ultimate trend rate is reached
N/A

 
N/A

 
2030

 
2030

Change in fair value of plan assets:
 
 
 
 
 
 
 
Beginning balance
$
1,149.0

 
$
1,027.2

 
$
—

 
$
—

Actual return on assets
51.5

 
130.9

 
—

 
—

Employer contributions to plan
—

 
—

 
0.4

 
0.2

Benefits paid
(21.2
)
 
(7.1
)
 
(0.4
)
 
(0.2
)
Expenses paid
—

 
(2.0
)
 
—

 
—

Ending balance
$
1,179.3

 
$
1,149.0

 
$
—

 
$
—

Reconciliation of funded status to net amounts recognized:
 
 
 
 
 
 
 
Funded status (deficit)
$
230.0

 
$
68.7

 
$
71.6

 
$
75.7

Employer contributions between measurement date and fiscal year end
—

 
—

 
—

 
—

Net amounts recognized
$
230.0

 
$
68.7

 
$
71.6

 
$
75.7

Amounts recognized in the balance sheet:
 
 
 
 
 
 
 
Noncurrent assets
$
231.1

 
$
69.9

 
$
—

 
$
—

Current liabilities
—

 
—

 
(2.9
)
 
(1.3
)
Noncurrent liabilities
(1.1
)
 
(1.2
)
 
(68.7
)
 
(74.4
)
Net amounts recognized
$
230.0

 
$
68.7

 
$
(71.6
)
 
$
(75.7
)
Amounts not yet reflected in net periodic benefit cost and included in AOCI:
 
 
 
 
 
 
 
Accumulated gain (loss)
(89.7
)
 
(221.5
)
 
4.2

 
(4.4
)
Accumulated other comprehensive income (AOCI)
$
(89.7
)
 
$
(221.5
)
 
$
4.2

 
$
(4.4
)
Cumulative employer contributions in excess of net periodic benefit cost
319.7

 
290.2

 
(75.8
)
 
(71.2
)
Net amount recognized in the balance sheet
$
230.0

 
$
68.7

 
$
(71.6
)
 
$
(75.6
)
Information for pension plans with benefit obligations in excess of plan assets:
 
 
 
 
 
 
 
Projected benefit obligation/APBO
$
1.1

 
$
1.2

 
$
71.6

 
$
75.7

Accumulated benefit obligation
1.1

 
1.2

 
—

 
—


 
Pension Benefits
 
Periods Ended
December 31,
U.K. Plans
2013
 
2012
Change in projected benefit obligation:
 
 
 
Beginning balance
$
70.3

 
$
57.2

Service cost
7.2

 
7.4

Interest cost
3.2

 
2.8

Employee contributions
0.1

 
0.1

Actuarial (gains) and losses
9.6

 
(0.2
)
Benefits paid
(0.6
)
 
(0.3
)
Rebates from U.K. Government
—

 
0.2

Plan Curtailments
(13.1
)
 
—

Exchange rate changes
1.6

 
3.1

Projected benefit obligation at the end of the period
$
78.3

 
$
70.3

Assumptions used to determine benefit obligation:
 
 
 
Discount rate
4.75
%
 
4.70
%
Rate of compensation increase
3.25
%
 
3.10
%
Change in fair value of plan assets:
 
 
 
Beginning balance
$
78.8

 
$
57.7

Actual return on assets
9.9

 
8.1

Company contributions
9.0

 
9.0

Employee contributions
0.1

 
0.1

Rebates from U.K. Government
—

 
0.9

Benefits paid
(0.6
)
 
(0.3
)
Exchange rate changes
2.5

 
3.3

Ending balance
$
99.7

 
$
78.8

Reconciliation of funded status to net amounts recognized:
 
 
 
Funded status (deficit)
21.5

 
8.5

Net amounts recognized
$
21.5

 
$
8.5

Amounts recognized in the balance sheet:
 
 
 
Noncurrent assets
$
21.5

 
$
8.5

Noncurrent liabilities
—

 
—

Net amounts recognized
$
21.5

 
$
8.5

Amounts not yet reflected in net periodic benefit cost and included in AOCI:
 
 
 
Accumulated gain (loss)
4.4

 
8.9

Accumulated other comprehensive income (AOCI)
4.4

 
8.9

Prepaid (unfunded accrued) pension cost
17.1

 
(0.4
)
Net amount recognized in the balance sheet
$
21.5

 
$
8.5

Information for pension plans with benefit obligations in excess of plan assets:
 
 
 
Projected benefit obligation/APBO
$
—

 
$
—

Accumulated benefit obligation
—

 
—

Fair value of assets
$
—

 
$
—



Annual Expense
The components of pension and other post-retirement benefit plans expense for the U.S. plans and the assumptions used to determine benefit obligations for 2013, 2012 and 2011 are as follows:
 
Pension Benefits
 
Other
Post-Retirement
Benefits
 
Periods Ended
December 31,
 
Periods Ended
December 31,
U.S. Plans
2013
 
2012
 
2011
 
2013

2012

2011
Components of net periodic benefit cost (income):
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
—

 
$
—

 
$
—

 
$
2.7

 
$
3.3

 
$
3.0

Interest cost
42.9

 
42.5

 
41.9

 
2.1

 
3.5

 
3.7

Expected return on plan assets
(80.0
)
 
(71.6
)
 
(63.8
)
 
—

 
—

 
—

Amortization of net (gain) loss
11.8

 
5.7

 
—

 
—

 
1.2

 
0.7

Special Termination Benefits
(4.1
)
 
—

 
—

 
—

 
—

 
—

Net periodic benefit cost (income)
(29.4
)
 
(23.4
)
 
(21.9
)
 
4.8

 
8.0

 
7.4

Other changes recognized in OCI:
 
 
 
 
 
 
 
 
 
 
 
Total recognized in OCI (income) loss
$
(131.8
)
 
$
72.0

 
$
73.3

 
$
(8.6
)
 
$
(15.9
)
 
$
4.6

Total recognized in net periodic benefit cost and OCI
$
(161.2
)
 
$
48.6

 
$
51.4

 
$
(3.8
)
 
$
(7.9
)
 
$
12.0

Assumptions used to determine net periodic benefit costs:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.01
%
 
4.69
%
 
5.67
%
 
2.94
%
 
4.23
%
 
5.33
%
Expected return on plan assets
7.00
%
 
7.00
%
 
7.00
%
 
N/A

 
N/A

 
N/A

Salary increases
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

Medical Assumptions:
 
 
 
 
 
 
 
 
 
 
 
Trend assumed for the year
N/A

 
N/A

 
N/A

 
8.50
%
 
8.97
%
 
9.47
%
Ultimate trend rate
N/A

 
N/A

 
N/A

 
4.50
%
 
4.50
%
 
4.50
%
Year that ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2030

 
2030

 
2030

The estimated net (gain) loss that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year for each of Pension Benefits and Other Post-Retirement Benefits plans is zero.
The components of the pension benefit plan expense for the U.K. plans and the assumptions used to determine benefit obligations for 2013, 2012 and 2011 are as follows:
 
Pension Benefits
 
Periods Ended
December 31,
U.K. Plans
2013
 
2012
 
2011
Components of net periodic benefit cost (income):
 
 
 
 
 
Service cost
$
7.2

 
$
7.4

 
$
6.0

Interest cost
3.2

 
2.8

 
2.5

Expected return on plan assets
(4.6
)
 
(3.7
)
 
(3.3
)
Amortization of net (gain)
(0.1
)
 
—

 
(0.3
)
Curtailment (gain) loss recognized
(13.1
)
 
—

 
—

Net periodic benefit cost
$
(7.4
)
 
$
6.5

 
$
4.9

Other changes recognized in OCI:
 
 
 
 
 
Total income recognized in OCI
$
4.5

 
$
(4.9
)
 
$
5.9

Total recognized in net periodic benefit cost and OCI
$
(2.9
)
 
$
1.6

 
$
10.8

Assumptions used to determine net periodic benefit costs:
 
 
 
 
 
Discount rate
4.70
%
 
4.80
%
 
5.30
%
Expected return on plan assets
5.80
%
 
5.80
%
 
6.10
%
Salary increases
3.10
%
 
3.20
%
 
3.55
%
The estimated net (gain) loss that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year for the U.K. plan is zero.
Assumptions
The Company sets the discount rate assumption annually for each of its retirement-related benefit plans as of the measurement date, based on a review of projected cash flow and a long-term high-quality corporate bond yield curve. The discount rate determined on each measurement date is used to calculate the benefit obligation as of that date, and is also used to calculate the net periodic benefit (income)/cost for the upcoming plan year.
The pension expected return on assets assumption is derived from the long-term expected returns based on the investment allocation by class specified in the Company's investment policy. The expected return on plan assets determined on each measurement date is used to calculate the net periodic benefit (income)/cost of the upcoming plan year.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. To determine the health care cost trend rates the Company considers national health trends and adjusts for its specific plan design and locations.
A one-percentage point increase in the initial through ultimate assumed health care trend rates would have increased the accumulated post-retirement benefit obligation by $5.7 at December 31, 2013 and the aggregate service and interest cost components of non-pension post-retirement benefit expense for 2013 by $0.4. A one-percentage point decrease would have decreased the obligation by $5.2 and the aggregate service and interest cost components of non-pension post-retirement benefit expense for 2013 by $0.4.
U.S. Plans
The Company's investment objective is to achieve long-term growth of capital, with exposure to risk set at an appropriate level. This objective shall be accomplished through the utilization of a diversified asset mix consisting of equities (domestic and international) and taxable fixed income securities. The allowable asset allocation range is:
Equities
20 - 50%
Fixed income
50 - 80%
Real estate
0 -   7%

Investment guidelines include that no security, except issues of the U.S. Government, shall comprise more than 5% of total Plan assets and further, no individual portfolio shall hold more than 7% of its assets in the securities of any single entity, except issues of the U.S. Government. The following derivative transactions are prohibited — leverage, unrelated speculation and "exotic" collateralized mortgage obligations or CMOs. Investments in hedge funds, private placements, oil and gas and venture capital must be specifically approved by the Company in advance of their purchase.
The Company's plans have asset allocations for the U.S., as of December 31, 2013 and December 31, 2012, as follows:
 
2013
 
2012
Asset Category — U.S.
 
 
 
Equity securities — U.S. 
29
%
 
29
%
Equity securities — International
4
%
 
4
%
Debt securities
65
%
 
65
%
Real estate
2
%
 
2
%
Total
100
%
 
100
%

U.K. Plans
The Trustee's investment objective is to ensure that they can meet their obligation to the beneficiaries of the Plan. An additional objective is to achieve a return on the total Plan, which is compatible with the level of risk considered appropriate. The overall benchmark allocation of the Plan's assets is:
Equity securities
55
%
Debt securities
40
%
Property
5
%

The Company's plans have asset allocations for the U.K., as of December 31, 2013 and December 31, 2012, as follows:
 
2013
 
2012
Asset Category — U.K.
 
 
 
Equity securities
54
%
 
56
%
Debt securities
37
%
 
39
%
Other
9
%
 
5
%
Total
100
%
 
100
%

Projected contributions and benefit payments
Required pension contributions under Employee Retirement Income Security Act (ERISA) regulations are expected to be zero in 2014 and discretionary contributions are not expected in 2014. SERP and post-retirement medical plan contributions in 2014 are not expected to exceed $2.9. Expected contributions to the U.K. plan for 2014 are $0.7.
We monitor our defined benefit pension plan asset investments on a quarterly basis and we believe that we are not exposed to any significant credit risk in these investments.
The total benefits expected to be paid over the next ten years from the plans' assets or the assets of the Company, by country, are as follows:
U.S.
Pension Plans
 
Other
Post-Retirement
Benefit Plans
2014
$
15.3

 
$
2.9

2015
$
19.6

 
$
5.3

2016
$
24.6

 
$
6.0

2017
$
29.7

 
$
6.7

2018
$
35.0

 
$
7.7

2019-2023
$
254.6

 
$
42.3


U.K.
Pension Plans
2014
$
0.7

2015
$
0.7

2016
$
0.7

2017
$
0.7

2018
$
0.8

2019-2023
$
4.2


Fair Value Measurements
The pension plan assets are valued at fair value. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Temporary Cash Investments — These investments consist of U.S. dollars and foreign currencies held in master trust accounts. Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as level 1 investments.
Collective Investment Trusts — These investments are public investment vehicles valued using middle market prices and performance of the fund. The trust allocates notional units to the policy holder based on the underlying notional unit buy (offer) price using the middle market price plus transaction costs. These investments are classified within level 2 of the valuation hierarchy. In addition, the collective investment trust includes a real estate fund which is classified within level 3 of the valuation hierarchy.
Commingled Equity and Bond Funds — These investments are valued at the closing price reported by the Plan Trustee. These investments are not being traded in an active market, but are backed by various investment securities managed by the Bank of New York. Fair value is being calculated using unobservable inputs that rely on the Bank of New York's own assumptions and are therefore classified within level 2 of the valuation hierarchy, although these assumptions are based on underlying investments which are traded on an active market.
As of December 31, 2013 and December 31, 2012, the pension plan assets measured at fair value on a recurring basis were as follows:
 
 
 
At December 31, 2013 Using
Description
December 31, 2013 Total
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Temporary cash investments
$
1.0

 
$
1.0

 
$
—

 
$
—

Collective Investment Trusts
$
98.7

 
$
—

 
$
94.0

 
$
4.7

Commingled Equity and Bond Funds
$
1,179.3

 
$
—

 
$
1,179.3

 
$
—

 
$
1,279.0

 
$
1.0

 
$
1,273.3

 
$
4.7

 
 
 
 
At December 31, 2012 Using
Description
December 31, 2012 Total
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Temporary cash investments
$
0.8

 
$
0.8

 
$
—

 
$
—

Collective Investment Trusts
$
78.0

 
$
—

 
$
74.1

 
$
3.9

Commingled Equity and Bond Funds
$
1,149.0

 
$
—

 
$
1,149.0

 
$
—

 
$
1,227.8

 
$
0.8

 
$
1,223.1

 
$
3.9

The table below sets forth a summary of changes in the fair value of the Plan's level 3 investment assets and liabilities for the years ended December 31, 2013 and December 31, 2012:
 
December 31, 2013
Description
Beginning
Fair Value
 
Purchases
 
Gain (Loss)
 
Sales,
Maturities,
Settlements, Net
 
Exchange
rate
 
Ending Fair
Value
Collective Investment Trusts
$
3.9

 
$
0.4

 
$
0.4

 
$
—

 
$
—

 
$
4.7

 
$
3.9

 
$
0.4

 
$
0.4

 
$
—

 
$
—

 
$
4.7


 
December 31, 2012
Description
Beginning
Fair Value
 
Purchases
 
Gain (Loss)
 
Sales,
Maturities,
Settlements, Net
 
Exchange
rate
 
Ending Fair
Value
Collective Investment Trusts
$
3.1

 
$
0.6

 
$
0.2

 
$
—

 
$
—

 
$
3.9

 
$
3.1

 
$
0.6

 
$
0.2

 
$
—

 
$
—

 
$
3.9