Pensions

12 Months Ended

Dec. 31, 2011

Pensions [Abstract]

Pensions

11. Pensions

The Company sponsors defined benefit plans covering substantially all employees. The Company uses a measurement date of December 31 for all its pension plans.

For all U.S. plans, at December 31, 2011, and 2010 the projected benefit obligation and accumulated benefit obligation each exceed plan assets.

For U.S. plans, the following table provides a reconciliation of changes in the plans' benefit obligations and fair value of assets over the two-year period ended December 31, 2011 and the funded status as of December 31 for both years:

(Dollars in thousands)	2011			2010
Change in Projected Benefit Obligations
Projected benefit obligations at January 1	$	95,455		$	87,132
Service cost		1,022			869
Interest cost		4,942			4,882
Actuarial loss		9,297			5,972
Benefits paid		(4,589	)		(3,400	)
Projected benefit obligations at December 31		106,127			95,455
Change in Plan Assets
Fair value of plan assets at January 1		83,539			65,708
Actual return on plan assets		(2,149	)		8,636
Employer contributions		6,169			12,595
Benefits paid		(4,589	)		(3,400	)
Fair value of plan assets at December 31		82,970			83,539
Funded status at December 31	$	(23,157	)	$	(11,916	)
Amounts recognized in the Balance Sheets:
Current liability – Accrued benefit cost	$	(82	)	$	(82	)
Noncurrent liability – Accrued benefit cost		(23,075	)		(11,834	)
Net amount recognized	$	(23,157	)	$	(11,916	)

Amounts recognized in Accumulated Other Comprehensive Income consist of:

(Dollars in thousands)	2011		2010
Accumulated prior service cost	$	238	$	313
Accumulated net actuarial loss		43,394		27,007
Net amount recognized, before tax effect	$	43,632	$	27,320

The accumulated benefit obligation at December 31, 2011 and 2010 was $101.5 million and $90.3 million, respectively.

For U.S. plans, the assumptions used to determine benefit obligations are shown in the following table:

	2011			2010
Weighted average actuarial assumptions at December 31:
Discount rate		4.67	%		5.26	%
Rate of increase in compensation levels		4.00	%		4.00	%

The following tables set forth the fair values of the Company's U.S. pension plans assets as of December 31, 2011 and 2010:

(Dollars in thousands)	Fair Value Measurements at December 31, 2011
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash Equivalents	$	2,311	$	2,311	$	—	$	—
Equities
All Cap (a)		9,060		9,060		—		—
Large Cap (b)		19,748		19,748		—		—
Small Cap Mutual Fund (c)		5,491		—		5,491		—
Microcap Mutual Fund (d)		5,181		5,181		—		—
International Mutual Fund (e)		13,795		13,795		—		—
Fixed Income
Core Fixed Fund Mutual Fund (f)		15,418		15,418		—		—
Long Duration Mutual Fund (g)		7,679		7,679		—		—
Emerging Markets Debt Mutual Fund (h)		4,287		4,287		—		—
Total	$	82,970	$	77,479	$	5,491	$	—

(Dollars in thousands)	Fair Value Measurements at December 31, 2010
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash Equivalents	$	1,011	$	1,011	$	—	$	—
Equities
Large Cap (b)		21,115		21,115		—		—
Mid Cap (i)		9,308		9,308		—		—
Small Cap Mutual Fund (c)		5,618		—		5,618		—
Microcap Mutual Fund (d)		5,012		5,012		—		—
International Mutual Fund (e)		14,587		14,587		—		—
Fixed Income
Core Fixed Fund Mutual Fund (f)		23,743		23,743		—		—
Emerging Markets Debt Mutual Fund (h)		3,145		3,145		—		—
Total	$	83,539	$	77,921	$	5,618	$	—

(a) This category invests in the common stock of primarily U.S. companies across the capitalization spectrum (Large, Mid, and Small Cap) that are undervalued relative to their intrinsic value. The strategy is benchmarked to the Russell 3000 Value Index.

(b) This category consists of Growth and Value strategies investing primarily in the common stock of large capitalization companies located in the United States. Growth oriented strategies seek companies within the Russell 1000 Growth Universe with above average earnings, growth, and revenue expectations. Value oriented strategies seek companies within the Russell 1000 Value Universe that are undervalued relative to their intrinsic value. These strategies are benchmarked to the Russell 1000 Growth and Value Indices respectively.

(c) This category invests primarily in small capitalization U.S. companies that are either undervalued relative to their intrinsic value or that have above average earnings growth and revenue expectations. The smaller cap orientation of the strategy requires investment manager to be cognizant of liquidity and capital restraints, which are monitored by the investment team on an ongoing basis. This strategy is benchmarked to the Russell 2000 Index.

(d) This category invests primarily in micro-capitalization U.S. companies that are undervalued relative to their intrinsic value. The smaller cap orientation of the strategy requires the investment managers to be cognizant of liquidity and capital restraints, which are monitored by the investment team on an ongoing basis. This strategy is benchmarked to the Russell Micro Cap Value Index.

(e) This category invests in all types of capitalization companies operating in both developed and emerging markets outside the United States. The strategy targets broad diversification across various economic sectors and seeks to achieve lower overall portfolio volatility by investing with complimentary active managers with varying risk characteristics. Total combined exposure to emerging markets typically ranges from 10% to 20%, with a maximum restriction of 40%. This category is benchmarked to the MSCI EAFE Index and the MSCI All Country World Index ex U.S.

(f) This category invests primarily in U.S. denominated investment grade and government securities in addition to MBS and ABS issues. It may invest up to 10% of its assets in non-dollar denominated bonds from issuers located outside of the United States. Investment in non-dollar denominated bonds may be on a currency hedged or un-hedged basis. This category normally invests at least 80% of its assets in bonds and maintains an average portfolio duration that is within ±20% of the duration of the benchmark. This category is benchmarked to the Barclays Capital Aggregate Index.

(g) This category invests in a diversified portfolio of longer duration bonds. The fund typically invests primarily in U.S. investment grade securities, but does have the ability to invest up to 10% in high yield (minimum credit rating of B), and up to 30% in non-U.S. denominated securities. The portfolio has an average duration that normally varies within two years (plus or minus) of the benchmark. This category is benchmarked to the Barclays Capital Long-Term Government/Credit Index.

(h) This category invests primarily in local currency denominated government debt securities of countries within the Emerging Markets. The strategy is broadly diversified by country and will invest in locally denominated corporate securities. This strategy is benchmarked to the JP Morgan GBI-EM Global Diversified Index.

(i) This category invests primarily in small to mid-sized U.S. companies that are undervalued relative to their intrinsic value. The smaller cap orientation of the strategy requires investment manager to be cognizant of liquidity and capital restraints, which are monitored by the investment team on an ongoing basis. This strategy is benchmarked to the Russell Midcap Value Index.

The Company's investment strategy is to earn the highest possible long-term total rate of return while minimizing the associated risk to ensure the preservation of the plan assets for the provision of benefits to participants and their beneficiaries. This is accomplished by active management of a diversified portfolio by fund managers, fund styles, asset types, risk characteristics and investment holdings.

Information about the expected cash flows for the U.S. pension plans follows:

Year	Pension Benefits (Thousands)
Employer contributions
2012	$	2,000
Benefit Payments
2012	$	6,118
2013		5,563
2014		5,802
2015		6,358
2016		6,678
2017 – 2021		34,277

For U.S. plans, the following table provides the components of net periodic pension costs of the plans for the years ended December 31, 2011, 2010, and 2009:

	Year Ended December 31
(Dollars in thousands)	2011			2010			2009
Service cost	$	1,022		$	869		$	768
Interest cost		4,942			4,882			4,791
Expected return on assets		(6,669	)		(5,615	)		(3,822	)
Prior service cost		75			117			203
Net amortization		1,728			1,405			1,942
Net periodic pension cost	$	1,098		$	1,658		$	3,882

Other Changes in Plan Assets and Benefit Obligations Recognized in Other

Comprehensive Income (Loss)

	Year Ended December 31
(Dollars in thousands)	2011			2010
Current year actuarial loss	$	18,115		$	2,951
Amortization of actuarial loss		(1,728	)		(1,405	)
Amortization of prior service cost		(75	)		(117	)
Total recognized in other comprehensive income (loss)	$	16,312		$	1,429
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	17,410		$	3,087

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic pension cost in 2012 are as follows:

(Dollars in thousands)
Prior service cost	$	74
Net actuarial loss		3,335
Total at December 31	$	3,409

For U.S. plans, the assumptions used in the measurement of net periodic pension cost are shown in the following table:

	2011			2010			2009
Weighted average actuarial assumptions at December 31:
Discount rate		5.26	%		5.75	%		6.06	%
Expected annual return on plan assets		8.00	%		8.00	%		8.00	%
Rate of increase in compensation levels		4.00	%		4.00	%		4.00	%

The discount rates that the Company utilizes for its Qualified Plans to determine pension obligations are based on a review of long-term corporate bonds that receive one of the two highest ratings given by a recognized rating agency. The expected rate of return on plan assets was determined by evaluating input from the Company's actuaries including their review of asset class return expectations as well as long-term inflation assumptions. Projected returns are based on broad equity and bond indices that the Company uses to benchmark its actual asset portfolio performance based on its portfolio mix of approximately 65% equity securities and 35% debt securities. The Company also takes into account the effect on its projected returns from any reasonably likely changes in its asset portfolio when applicable. Including the 2011 and 2010 benchmark returns of 1.2% and 22.4% respectively, the Company's 15-25 year return ranged from 6.7% to 8.8% on its benchmark portfolio.

For European plans, the following tables provide a reconciliation of changes in the plan's benefit obligations and fair value of assets over the two-year period ended December 31, 2011 and the funded status as of December 31 of both years:

(Dollars in thousands)	2011			2010
Change in Projected Benefit Obligations
Projected benefit obligations at January 1	$	34,768		$	36,201
Service cost		155			493
Interest cost		1,947			1,773
Employee contributions		107			166
Actuarial (gain) loss		(1,820	)		674
Benefits paid		(1,433	)		(1,729	)
Special termination benefits		200			—
Curtailment gain		—			(1,040	)
Foreign currency exchange rate changes		(455	)		(1,770	)
Projected benefit obligations at December 31		33,469			34,768
Change in Plan Assets
Fair value of plan assets at January 1		22,843			21,832
Actual return on plan assets		1,324			1,797
Employer contributions		1,918			1,707
Employee contributions		107			166
Benefits paid		(1,433	)		(1,729	)
Foreign currency exchange rate changes		(345	)		(930	)
Fair value of plan assets at December 31		24,414			22,843
Funded Status at December 31	$	(9,055	)	$	(11,925	)
Amounts Recognized in the Balance Sheets:
Current liability – Accrued benefit cost	$	(537	)	$	(537	)
Noncurrent liability – Accrued benefit cost		(8,518	)		(11,388	)
Net amount recognized	$	(9,055	)	$	(11,925	)

Amounts recognized in Accumulated Other Comprehensive Income consist of:

(Dollars in thousands)	2011		2010
Accumulated net actuarial loss	$	1,503	$	3,184
Net amount recognized, before tax effect	$	1,503	$	3,184

The 2011 special termination benefit was as a result of the separation of an employee under the Belgium salaried plan. The 2010 curtailment was a result of the Company freezing the benefits under two of its United Kingdom salaried plans at December 31, 2010.

The accumulated benefit obligation at the end of 2011 and 2010 was $32.7 million and $34.0 million, respectively.

For European plans, the assumptions used to determine end of year benefit obligations are shown in the following table:

	2011			2010
Weighted average actuarial assumptions at December 31:
Discount rate		5.00	%		5.35	%
Rate of increase in compensation levels		3.50	%		3.50	%

The following tables sets forth the fair values of the Company's European pension plans assets as of December 31, 2011 and 2010:

(Dollars in thousands)	Fair Value Measurements at December 31, 2011
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash Equivalents	$	280	$	280	$	—	$	—
Equities
M&G PP Discretionary Fund (a)		2,126		2,126		—		—
Global Equity 60-40 Index (b)		3,937		3,937		—		—
Fixed Income
Delta Lloyd Fixed Income (c)		4,514		—		—		4,514
Corporate Bonds (d)		7,872		7,872		—		—
Government Bonds (e)		2,696		2,696		—		—
Real Estate (f)		1,743		1,743		—		—
Insurance Reserves (g)		1,246		—		—		1,246
Total	$	24,414	$	18,654	$	—	$	5,760

(Dollars in thousands)	Fair Value Measurements at December 31, 2010
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash Equivalents	$	429	$	429	$	—	$	—
Equities								—
M&G PP Discretionary Fund (a)		2,607		2,607		—		—
Global Equity 60-40 Index (b)		4,179		4,179		—		—
Fixed Income								—
Delta Lloyd Fixed Income (c)		4,409		—		—		4,409
Corporate Bonds (d)		6,346		6,346		—		—
Government Bonds (e)		2,071		2,071		—		—
Real Estate (f)		1,639		1,639		—		—
Insurance Reserves (g)		1,163		—		—		1,163
Total	$	22,843	$	17,271	$	—	$	5,572

(a) This fund invests in a mix of equity shares, bonds, property and cash. Only the equity investments are included in this line with the remaining being allocated to other appropriate categories. The fund is actively managed against its benchmark of the CAPS Balanced Pooled Fund Median. A prudent approach of diversification by both location and investment type is employed by the fund and both active stock selection and asset allocation are used to add value.

(b) This index fund invests 60% in the UK Equity Index Fund and 40% in overseas index funds. The overseas portion has a target allocation of 14% in North American funds, 14% in European funds (not including the UK), 6% in Japanese funds, and 6% in Pacific Basin funds (not including Japan).

(c) This category invests in 6 year Fixed Income investments with Delta Lloyd.

(d) This category invests in the M&G All Stocks Corporate Bond Fund and the Legal & General (LG) AAA Fixed interest—Over 15 Year Fund. These funds, respectively, invest primarily in investment grade corporate bonds, as well as other debt instruments, including higher yielding corporate bonds, government debt, convertible and preferred stocks, money market instruments and equities; and in long-dated sterling denominated AAA-rated corporate bonds, as well as smaller holdings in gilts—both providing a fixed rate of interest.

(e) This category invests mainly in long term gilts through the LG Over 15 Year Gilts Index and the M&G PP Discretionary Fund.

(f) This category invests in the M&G UK Property Fund. The fund invests directly in commercial properties in the UK and is actively managed against its performance benchmark of the BNY Mellon CAPS Pooled Fund Property Median. The fund is well diversified investing in the retail, office, and industrial sectors of the market. A small portion of this category is also held in the M&G PP Discretionary Fund.

(g) This category invests in insurance policies in the name of the individual plan members.

The Company's Level 3 investments in the Delta Lloyd fixed income fund and insurance reserves were valued using significant unobservable inputs. Inputs to these valuations include characteristics and quantitative data relating to the assets and reserves, investment and insurance policy cost, position size, liquidity, current financial condition of the company/insurer and other relevant market data. The following table sets forth changes in fair value measurements using significant unobservable inputs during 2011:

(Dollars in thousands)	Delta Lloyd Fixed Income			Insurance Reserves
Balance at January 1, 2011	$	4,409		$	1,163
Purchases		702			171
Sales/Maturities		(422	)		(43	)
Foreign currency translation		(175	)		(45	)
Balance at December 31, 2011	$	4,514		$	1,246

At December 31, 2011, the projected benefit obligations, accumulated benefit obligations, and fair value of plan assets for European pension plans with a projected benefit obligation in excess of plan assets, and for pension plans with an accumulated benefit obligation in excess of plan assets, was as follows:

	Projected Benefit Obligation Exceeds the Fair Value of Plan's Assets		Accumulated Benefit Obligation Exceeds the Fair Value of Plan's Asset
(Dollars in thousands)	2011		2011
Projected benefit obligation	$	25,477	$	18,989
Accumulated benefit obligation	$	24,676	$	18,951
Fair value of plan assets	$	15,398	$	9,637

At December 31, 2010, the projected benefit obligations and accumulated benefit obligations exceeded the fair value of plan assets for all of the European pension plans.

Information about the expected cash flows for the European pension plans follows:

Year	Pension Benefits (Thousands)
Employer contributions
2012	$	1,258
Benefit Payments
2012	$	2,771
2013		1,253
2014		998
2015		1,115
2016		1,075
2017 – 2021		6,329

Total benefits expected to be paid include both the Company's share of the benefit cost and the participants' share of the cost, which is funded by participant contributions to the plan.

For European plans, the following table provides the components of net periodic pension costs of the plans for the years ended December 31, 2011, 2010 and 2009:

	Year Ended December 31
(Dollars in thousands)	2011			2010			2009
Service cost	$	155		$	493		$	482
Interest cost		1,947			1,773			1,888
Expected return on assets		(1,442	)		(1,283	)		(1,211	)
Net amortization		68			148			171
Special termination benefits		200			—			—
Net periodic pension cost	$	928		$	1,131		$	1,330

Other Changes in Plan Assets and Benefit Obligations Recognized in Other

Comprehensive Income (Loss)

	Year Ended December 31
(Dollars in thousands)	2011			2010
Current year actuarial (gain) loss	$	(1,702	)	$	159
Amortization of actuarial loss		(68	)		(137	)
Amortization of transition obligation		—			(10	)
Curtailment		—			(1,040	)
Foreign currency exchange		90			(216	)
Total recognized in other comprehensive income	$	(1,680	)	$	(1,244	)
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	(752	)	$	(113	)

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic pension cost in 2012 are as follows:

Total net actuarial loss at December 31 $  16

For European plans, the assumptions used in the measurement of the net periodic pension cost are shown in the following table:

	2011			2010			2009
Weighted average actuarial assumptions at December 31:
Discount rate		5.35	%		5.51	%		5.51	%
Expected annual return on plan assets		6.03	%		6.32	%		6.30	%
Rate of increase in compensation levels		3.50	%		4.22	%		3.97	%

The expected rate of return on plan assets was determined by evaluating input from the Company's actuaries, including their review of asset class return expectations as well as long-term inflation assumptions. Projected returns are based on broad equity and bond indices that the Company uses to benchmark its actual asset portfolio performance based on its portfolio mix of approximately 25% equity securities, 74% debt securities, and 1% with other investments. The Company also takes into account the effect on its projected returns from any reasonably likely changes in its asset portfolio when applicable.

The non-current portion of $31.6 million and $23.2 million at December 31, 2011 and 2010, respectively, for the U.S. and European pension liabilities is included in accrued pension and other liabilities.

The Company also sponsors a defined contribution plan for certain U.S. employees that permits employee contributions of up to 50% of eligible compensation in accordance with Internal Revenue Service guidance. Under this defined contribution plan, the Company makes a fixed contribution of 3% of eligible employee compensation on a quarterly basis and matches contributions made by each participant in an amount equal to 50% of the employee contribution up to a maximum of 1% of employee compensation. In addition, each of these employees is eligible for an additional discretionary Company contribution of up to 4% of employee compensation based upon annual Company performance at the discretion of the Company's Board of Directors. Employer matching and fixed contributions for non-represented employees vest immediately. Employer discretionary contributions vest after two years of service. For each bargaining unit employee who contributes to the plan at the Catlettsburg, Kentucky facility, the Company matches a maximum of $25.00 employee contributions per month to the plan. As of June 8, 2010, under this facility's new collective bargaining agreement, current employees have the option of remaining in the defined benefit plan or converting to an enhanced defined contribution plan. The election to convert will freeze the defined benefit calculation as of such date and employees who elect to freeze their defined benefit will be eligible to receive a Company contribution to the enhanced defined contribution plan of $1.15 per actual hour worked as well as for other related hours paid but not worked. The Company will then make additional lump sum contributions to employees of $5,000 per year that have converted on the next three anniversary dates of the voluntary conversion to the enhanced defined contribution plan. As a result, employees that have converted will be excluded from the aforementioned $25.00 match. For bargaining unit employees hired after June 8, 2010, the Company contributes $1.15 per actual hour worked, as well as for other related hours paid but not worked, for eligible employees. For bargaining unit employees at the Columbus, Ohio facility, the Company makes contributions to the USW 401(k) Plan of $1.15 per actual hour worked for eligible employees. For bargaining unit employees at the Neville Island, Pennsylvania facility, the Company, effective August 1, 2011, began making contributions of $1.65 per actual hour worked to the defined contribution pension plan for eligible employees when their defined benefit pension plan was frozen. Employer matching contributions for bargaining unit employees vest immediately. Total expenses related to the defined contribution plans was $1.8 million for each of the years ended December 31, 2011, 2010, and 2009, respectively.