Note G – Employee and Retiree Benefit Plans

The Company has defined benefit pension plans that are principally noncontributory and cover most full-time employees. All pension plans are funded except for the U.S. and Canadian nonqualified supplemental plans and the U.S. directors’ plan. All U.S. tax qualified plans meet the funding requirements of federal laws and regulations.

Contributions to foreign plans are based on local laws and tax regulations. The Company also sponsors health care and life insurance benefit plans, which are not funded, that cover most active and retired U.S. employees. Additionally, most U.S. retired employees are covered by a life insurance benefit plan. The health care benefits are contributory; the life insurance benefits are noncontributory.

The table that follows provides the components of net periodic benefit expense for the three-month and six-month periods ended June 30, 2013 and 2012.


	Three Months Ended June 30,
							Other
	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	2013			2012			2013			2012
Service cost	$	7,094			6,035			1,230			1,049
Interest cost		7,700			7,545			1,279			1,342
Expected return on plan assets		(7,569	)		(6,520	)		0			0
Amortization of prior service cost		303			313			(44	)		(43	)
Amortization of transitional asset		121			116			2			2
Recognized actuarial loss		4,759			3,847			473			452
Special termination benefits		0			6,170			0			0

Net periodic benefit expense	$	12,408			17,506			2,940			2,802


	Six Months Ended June 30,
							Other
	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	2013			2012			2013			2012
Service cost	$	14,697			11,923			2,397			2,090
Interest cost		14,131			14,837			2,513			2,791
Expected return on plan assets		(13,269	)		(12,825	)		0			0
Amortization of prior service cost		579			625			(86	)		(89	)
Amortization of transitional asset		241			227			4			4
Recognized actuarial loss		8,291			7,614			930			941
Special termination benefits		0			6,170			0			0

Net periodic benefit expense	$	24,670			28,571			5,758			5,737

During the six-month period ended June 30, 2013, the Company made contributions of $27.5 million to its defined benefit pension and postretirement benefit plans. Remaining funding in 2013 for the Company’s defined benefit pension and postretirement plans is anticipated to be $21.0 million.

In March 2010, the United States Congress enacted a health care reform law. Along with other provisions, the law (a) eliminates the tax free status of federal subsidies to companies with qualified retiree prescription drug plans that are actuarially equivalent to Medicare Part D plans beginning in 2013; (b) imposes a 40% excise tax on high-cost health plans as defined in the law beginning in 2018; (c) eliminated lifetime or annual coverage limits and required coverage for preventative health services beginning in September 2010; and (d) imposed a fee of $2 (subsequently adjusted for inflation) for each person covered by a health insurance policy beginning in September 2010. The Company provides a health care benefit plan to eligible U.S. employees and eligible U.S. retired employees. The law did not significantly affect the Company’s Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012 and the Consolidated Statements of Income for the three-month and six-month periods ended June 30, 2013 and 2012. The Company continues to evaluate the various components of the law as further guidance is issued and cannot predict with certainty all the ways it may impact the Company. However, based on the information available to date, the Company currently believes that the health care reform law will not have a material effect on its financial condition, net income or cash flow in future periods.