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Retirement Beneifts
 12 Months Ended
Dec. 31, 2013
Pension And Other Postretirement Benefit Disclosure [Abstract]  
Pension And Other Postretirement Benefits Disclosure [Text Block]

Note 10 — Retirement Benefits

 

The Company has funded and unfunded non-contributory U.S. and foreign defined benefit pension plans. Benefits under these plans are generally provided based on either years of service and final average pay or a specified dollar amount per year of service. The US defined benefit pension plan has been closed to new participants since 2004, while the Canadian and UK defined benefit pension plans have been closed to new entrants since 2006 and 2007, respectively. These US, Canadian and UK employees are eligible instead for defined contribution plans.

 

The Company also has a number of health care and life insurance benefit plans covering eligible employees who reached retirement age while working for the Company. These benefits have been discontinued for substantially all future retirees. The Company anticipates future cost-sharing changes for its discontinued plans that are consistent with past practices.

 

The Company uses a December 31 measurement date for all of its plans. There were no amendments made in 2013 or 2012 to the defined benefit pension plans which had a significant impact on the total pension benefit obligation.

 

The following table sets forth the reconciliation of beginning and ending balances of the benefit obligations and the plan assets for the Company's defined benefit pension and other benefit plans at December 31, (in millions):

 

 Pension Benefits  Other Benefits
 2013 2012 2013 2012
Change in benefit obligation           
Benefit obligation at beginning of year $ 879.5 $ 832.4 $ 30.4 $ 33.7
Service cost   16.7   16.0   -   -
Interest cost   36.5   36.5   1.1   1.3
Plan participants’ contributions   0.7   0.7   -   -
Amendments  0.4   -   -   -
Actuarial loss (gain)  (69.2)   24.2   (1.4)   (2.4)
Currency impact  0.3  3.9   -   -
Other  (0.5)  (0.5)   (0.1)  0.0
Benefits paid   (36.2)   (33.7)   (1.9)   (2.2)
Benefit obligation at end of year $ 828.2 $ 879.5 $ 28.1 $ 30.4
Change in plan assets           
Fair value of plan assets at beginning of year $ 726.3 $ 647.6 $ - $ -
Actual return on plan assets   64.8   82.8   -   -
Employer contributions   8.0   25.1   -   -
Plan participants’ contributions   0.7   0.7   -   -
Currency impact   0.4   3.8   -   -
Benefits paid   (36.2)   (33.7)   -   -
Fair value of plan assets at end of year $ 764.0 $ 726.3 $ - $ -
FUNDED STATUS$ (64.2) $ (153.2) $ (28.1) $ (30.4)
Amounts recognized in the consolidated balance sheet consist of:           
Prepaid pensions (included in Other long-term assets) $ 18.7 $ 5.6 $ - $ -
Accrued benefit liability (short-term and long-term)   (82.9)   (158.8)   (28.1)   (30.4)
Net amount recognized in the consolidated balance sheet$ (64.2) $ (153.2) $ (28.1) $ (30.4)
Amounts recognized in Accumulated other comprehensive loss (income) consist of:           
Net actuarial loss $ 107.2 $ 208.9 $ (0.9) $ 0.4
Prior service cost (credit)   1.0   0.8   (6.2)   (7.1)
Net amount recognized in Accumulated other comprehensive loss$ 108.2 $ 209.7 $ (7.1) $ (6.7)

The accumulated benefit obligation for all defined benefit pension plans was $771.9 million and $824.1 million at December 31, 2013 and 2012, respectively. Information with respect to plans with accumulated benefit obligations in excess of plan assets is as follows, (in millions):

 

  2013 2012 
 Projected benefit obligation$ 77.2 $ 765.9 
 Accumulated benefit obligation$ 74.5 $ 725.0 
 Fair value of plan assets$ - $ 607.1 

As of December 31, 2013, all of the Company's qualified defined benefit plans had assets in excess of the accumulated benefit obligation. As of December 31, 2012, half of these qualified defined benefit plans were underfunded on an accumulated benefit obligation basis.

 

The following table sets forth the components of pension and other benefit costs for the years ended December 31, (in millions):

 

  Pension Benefits Other Benefits
  2013 2012 2011 2013 2012 2011
                   
Components of net periodic benefit cost:                  
Service cost$ 16.7 $ 16.0 $ 13.6 $ - $ - $ -
Interest cost  36.5   36.5   38.1   1.1   1.3   1.6
Expected return on plan assets  (46.7)   (39.9)   (41.8)   -   -   -
Amortization of prior service cost/(credit)  0.2   0.2   0.2   (1.0)   (1.0)   (1.0)
Amortization of actuarial losses  13.8   17.4   8.4   (0.1)   -   -
Curtailment and settlement losses (gains)  -   -   (0.1)   -   -   -
Net periodic benefit cost$ 20.5 $ 30.2 $ 18.4 $ 0.0 $ 0.3 $ 0.6
Changes recognized in other comprehensive loss (income), before tax:                 
Current year net actuarial (gain)/loss$ (87.8) $ (19.1) $ 99.8 $ (1.4) $ (2.5) $ 1.8
Current year prior service (cost)/credit  0.4   -   -   -   -   -
Amortization of prior service (cost)/credit  (0.2)   (0.2)   (0.2)   1.0   1.0   1.0
Amortization of net actuarial loss  (13.8)   (17.4)   (8.4)   0.1   -   -
Currency impact  (0.1)   (0.2)   0.1   -   -   -
Other adjustments  -   0.3   -   -   0.3   -
Total recognized in other comprehensive (income) loss  (101.5)   (36.6)   91.3   (0.3)   (1.2)   2.8
Total recognized in net periodic pension cost and other comprehensive loss (income)$ (81.0) $ (6.4) $ 109.7 $ (0.3) $ (0.9) $ 3.4
Amortization expected to be recognized through income during 2014                 
Amortization of prior service cost/(credit)$ 0.2       $(1.0)      
Amortization of net loss  3.5         (0.1)      
Total expected to be recognized through income during next fiscal year$ 3.7       $(1.1)      

The Company also maintains six defined contribution pension plans. The total cost of these plans was $11.2 million in 2013, $10.5 million in 2012 and $9.7 million in 2011, excluding the employer match for the 401(k) plan. This cost is not included in the above net periodic benefit cost for the defined benefit pension plans.

 

 

As of December 31, 2012, the Company participated in four multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union represented employees. During 2013, the Company elected to withdraw from one of these multiemployer plans at a cost of $0.5 million. As of December 31, 2013, one of the three multiemployer defined benefit pension plans in which the Company participates is considered to be less than 65 percent funded. The Company's total contributions to these plans were $0.9 million in 2013 and $0.7 million in both 2012 and 2011.  These contributions represent more than five percent of the total contributions made to each of these plans during the past three years.  After assessing future required contributions and/or the potential liabilities associated with withdrawing from these plans, the Company has concluded that none of these plans are significant.

 

Assumptions

 

The following assumptions were used to determine the projected benefit obligations at the measurement date and the net periodic benefit cost for the year:

 

   Pension Benefits Other Benefits 
   2013 2012 2011 2013 2012 2011 
                     
 Weighted-average assumptions used to determine benefit obligations at December 31,                  
 Discount rate5.04% 4.22% 4.42% 4.60% 4.20% 4.40% 
 Rate of compensation increase3.18% 3.11% 3.53% 3.00% 3.00% 3.50% 
 Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31,                  
 Discount rate4.22% 4.42% 5.38% 4.20% 4.40% 5.40% 
 Expected return on plan assets6.70% 6.50% 7.00% N/A  N/A  N/A  
 Rate of compensation increase3.11% 3.53% 3.56% 3.00% 3.50% 3.50% 

At the end of each year, the Company determines the appropriate expected return on assets for each plan based upon its strategic asset allocation (see discussion below). In making this determination, the Company utilizes expected returns for each asset class based upon current market conditions and expected risk premiums for each asset class.

 

The Company also determines the discount rate to be used to calculate the present value of pension plan liabilities at the end of each year. The discount rate for the Company's U.S. and Canadian pension plans is determined by matching the expected cash flows associated with its benefit obligations to a yield curve based on high quality, fixed income debt instruments with maturities that closely match the expected funding period of its pension liabilities. This yield curve is derived using a bond matching approach which incorporates a selection of bonds that align with the Company's projected benefit obligations. As of December 31, 2013, the Company used a discount rate of 5.1% for its U.S. pension plans compared to a discount rate of 4.2% used in 2012. For its Canadian pension plan, the Company used a discount rate of 4.75% compared to the 4.1% discount rate used in 2012.

 

For its UK pension plan the discount rate was derived using a yield curve fitted to the yields on AA bonds in the Barclays Capital Sterling Aggregate Corporate Index and uses sample plan cash flow data as a proxy to plan specific liability cash flows. The derived discount rate is the single discount rate equivalent to discounting these liability cash flows at the term-dependent spot rate of AA corporate bonds. This methodology resulted in a December 31, 2013 discount rate for the UK pension plan of 4.6% as compared to a discount rate of 4.5% used in 2012.

 

The rate of compensation increase assumption reflects the Company's actual experience and best estimate of future increases.

 

The assumed health care cost trend rates used to determine the projected postretirement benefit obligation are as follows:

 

   Other Benefits 
   2013 2012 2011 
         
 Assumed health care cost trend rates at December 31,      
 Health care cost trend assumed for next year8.5% 8.8% 9.0% 
 Rate to which the cost trend is assumed to decline5.0% 5.0% 5.0% 
 Year that the rate reaches the ultimate trend rate2028 2028 2028 

Assumed health care cost trend rates have an effect on the amounts reported for the postretirement benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects (in millions):

 

   One Percentage Point Increase One Percentage Point Decrease 
         
 Effect on total of service and interest cost$ 0.1 $ - 
 Effect on postretirement benefit obligation$ 1.3 $(1.3) 

Plan Assets

 

The Company's combined targeted and actual domestic and foreign pension plans weighted average asset allocation at December 31, 2013 and 2012 by asset category are as follows:

 

    Percentage of Plan Assets
    Target Actual
 Asset Category  2014 2013 2012
 Equity securities   28%  40%  40%
 Debt securities & Cash   60%  43%  43%
 Alternative Investments   12%  17%  17%
 Total   100%  100%  100%

At the end of each year, the Company estimates the expected long-term rate of return on pension plan assets based on the strategic asset allocation for its plans. In making this determination, the Company utilizes expected rates of return for each asset class based upon current market conditions and expected risk premiums for each asset class. The Company has written investment policies and asset allocation guidelines for its domestic and foreign pension plans. In establishing these policies, the Company has considered that its various pension plans are a major retirement vehicle for most plan participants and has acted to discharge its fiduciary responsibilities with regard to the plans solely in the interest of such participants and their beneficiaries. The goal underlying the establishment of the investment policies is to provide that pension assets shall be invested in a prudent manner and so that, together with the expected contributions to the plans, the funds will be sufficient to meet the obligations of the plans as they become due. To achieve this result, the Company conducts a periodic strategic asset allocation study to form a basis for the allocation of pension assets between various asset categories. Specific policy benchmark percentages are assigned to each asset category with minimum and maximum ranges established for each. The assets are then tactically managed within these ranges. Equity securities include investments in large-cap, mid-cap and small-cap companies located inside and outside the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities and US Treasuries. Derivative investments include futures contracts used by the plan to adjust the level of its investments within an asset allocation category. All futures contracts are 100% supported by cash or cash equivalent investments. At no time may derivatives be utilized to leverage the asset portfolio.

 

Equity securities include Company common stock in the amounts of $35.0 million (5.3% of total domestic plan assets) and $27.6 million (4.4% of total domestic plan assets) at December 31, 2013 and 2012, respectively.

The fair value of the Company's pension plan assets at December 31, 2013 and 2012, by asset category are as follows (in millions):

 

    Total Quoted Prices in Active Markets for Identical Assets (Level 1) Quoted Prices in Active Market for Similar Asset (Level 2) Significant Unobservable Inputs (Level 3) 
 Cash and cash equivalents $ 26.3 $ 26.3 $ - $ - 
 Equity securities:   -          
  US Large-cap (a)   82.0   82.0   -   - 
  US Mid-cap and Small-cap Growth (b)   42.1   42.1   -   - 
  International Large-cap   105.3   105.3   -   - 
  Emerging Markets   40.4   40.4   -   - 
 Fixed Income Securities:   -          
  US Treasuries   66.8   66.8   -   - 
  Corporate Bonds (c)   119.4   119.4   -   - 
  Asset Backed Securities and Other   89.3   89.3   -   - 
 Derivatives:   -          
  Equity/Debt Futures (d)   60.1   -   60.1   - 
 Alternative Investment Funds (e)   132.3   -   -   132.3 
 Balance at December 31, 2013 $ 764.0 $ 571.6 $ 60.1 $ 132.3 
                
 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Quoted Prices in Active Market for Similar Asset (Level 2) Significant Unobservable Inputs (Level 3) 
 Cash and cash equivalents $ 45.9 $ 45.9 $ - $ - 
 Equity securities:             
  US Large-cap (a)   86.1   86.1   -   - 
  US Mid-cap and Small-cap Growth (b)   31.7   31.7   -   - 
  International Large-cap   46.0   46.0   -   - 
  Emerging Markets   37.8   37.8   -   - 
 Fixed Income Securities:             
  US Treasuries   52.9   52.9   -   - 
  Corporate Bonds (c)   113.9   113.9   -   - 
  Asset Backed Securities and Other   122.6   122.6   -   - 
 Derivatives:             
  Equity/Debt Futures (d)   63.2   -   63.2   - 
 Alternative Investment Funds (e)   126.2   -   -   126.2 
 Balance at December 31, 2012 $ 726.3 $ 536.9 $ 63.2 $ 126.2 
                
  (a) Includes an actively managed portfolio of large-cap US stocks 
  (b) Includes $35.0 million and $27.6 million of the Company's common stock at December 31, 2013 and 2012, respectively, and an investment in actively managed mid-cap and small-cap US stocks 
  (c) Includes primarily investment grade bonds of US issuers from diverse industries 
  (d) Includes primarily large-cap US and foreign equity futures as well as short positions in US Treasuries to adjust the duration of the portfolio 
  (e) Includes investments in hedge funds, including fund of fund products. 

The fair value of the Company's alternative investment funds measured using significant unobservable inputs (Level 3) at December 31, 2013, are as follows (in millions):

 

    Alternative Investment Funds 
 Balance at December 31, 2011 $117.8 
 Actual return on plan assets:    
  Relating to assets still held at the reporting date   9.2 
  Relating to assets sold during the period   - 
 Purchases, sales and settlements, net   (0.8) 
 Transfers in and/or out of Level 3   - 
 Balance at December 31, 2012 $ 126.2 
 Actual return on plan assets:    
  Relating to assets still held at the reporting date   9.0 
  Relating to assets sold during the period   0.2 
 Purchases, sales and settlements, net   (3.1) 
 Transfers in and/or out of Level 3   - 
 Balance at December 31, 2013 $ 132.3 

The alternative investments held by the Company's pension plans consist of fund of fund products. Funds of funds invest in a number of investment funds managed by a diversified group of third-party investment managers who employ a variety of alternative investment strategies, including relative value, security selection, distressed value, global macro, specialized credit and directional strategies. The objective of these funds is to achieve the desired capital appreciation with lower volatility than either traditional equity or fixed income securities. The alternative investments are valued using net asset values provided by the fund managers. The net asset values are determined based on the fair values of the underlying investments in the funds.

 

The Company's other postretirement benefits are unfunded; therefore, no asset information is reported.

 

Contributions

 

Although not required under the Pension Protection Act of 2006, the Company may make a voluntary contribution to its qualified domestic defined benefit pension plans in 2014. The Company expects to contribute approximately $4.0 million to its foreign plans in 2014.

 

Estimated Future Benefit Payments

 

The following domestic and foreign benefit payments, which reflect future service, as appropriate, are expected to be paid as follows, (in millions):

   Pension Benefits Other Benefits    
              
 2014$ 37.5 $ 2.4      
 2015$ 39.7 $ 2.4      
 2016$ 42.4 $ 2.3      
 2017$ 44.4 $ 2.2      
 2018$ 47.1 $ 2.2      
 2019-2023$ 267.7 $ 9.5