PENSION AND POSTRETIREMENT PLANS

Pension Plans

The Company has a defined benefit retirement plan (the "Company Plan") and a nonqualified supplemental retirement plan (the “PEP”). Both plans have been closed to new participants since December 31, 2009. Employees participating in the Company Plan and the PEP no longer earn service-based credits, but continue to earn interest credits. In addition, effective January 1, 2010, all employees eligible for the defined contribution retirement plan (the “401K Plan”) receive a minimum 3% non-elective contribution (“NEC”) concurrent with each payroll period. Employees are not required to make a contribution to the 401K Plan to receive the NEC. The NEC is non-forfeitable and vests immediately. The 401K Plan also permits discretionary contributions by the Company of 1% to 3% of pay for eligible employees based on service.

The Company’s 401K Plan covers substantially all employees. Prior to 2010, Company contributions to the plan were based on a percentage of employee contributions. In 2013, 2012 and 2011, the Company made non-elective and discretionary contributions to the plan. Non-elective and discretionary contributions were $49.4, $49.0 and $44.3 in 2013, 2012 and 2011, respectively.

In addition, the Company Plan covers substantially all employees hired prior to December 31, 2009. The benefits to be paid under the Company Plan are based on years of credited service through December 31, 2009, interest credits and average compensation. The Company’s policy is to fund the Company Plan with at least the minimum amount required by applicable regulations. The Company made contributions to the Company Plan of $8.4, $11.3 and $0.0 in 2013, 2012 and 2011, respectively.

The PEP covers the Company’s senior management group. Prior to 2010, the PEP provided for the payment of the difference, if any, between the amount of any maximum limitation on annual benefit payments under the Employee Retirement Income Security Act of 1974 and the annual benefit that would be payable under the Company Plan but for such limitation. Effective January 1, 2010, employees participating in the PEP no longer earn service-based credits. The PEP is an unfunded plan.

Projected pension expense for the Company Plan and the PEP is expected to decrease to $7.8 in 2014. This amount excludes any accelerated recognition of pension cost due to the total lump-sum payouts exceeding certain components of net periodic pension cost in a fiscal year. If such levels were to be met in 2014, the Company projects that it would result in an additional $6.4 of pension expense.

The Company plans to make contributions of $11.0 to the Company Plan during 2014.

The effect on operations for both the Company Plan and the PEP are summarized as follows:



	Year ended December 31,
	2013			2012			2011
Service cost for benefits earned	$	3.1		$	2.4		$	2.6
Interest cost on benefit obligation	14.7			14.9			17.1
Expected return on plan assets	(17.3		)	(17.3		)	(18.9		)
Net amortization and deferral	10.5			12.1			7.8
Defined benefit plan costs	$	11.0		$	12.1		$	8.6

Amounts included in accumulated other comprehensive earnings consist of unamortized net loss of $99.6. The accumulated other comprehensive earnings that are expected to be recognized as components of the defined benefit plan costs during 2014 are $6.2 related to amortization of the net loss.

A summary of the changes in the projected benefit obligations of the Company Plan and the PEP are summarized as follows:



	2013			2012
Balance at January 1	$	380.7		$	383.2
Service cost	3.1			2.4
Interest cost	14.7			14.9
Actuarial (gain)/loss	(22.1		)	5.8
Benefits and administrative expenses paid	(26.7		)	(25.6		)
Balance at December 31	$	349.7		$	380.7

The Accumulated Benefit Obligation was $349.7 and $380.7 at December 31, 2013 and 2012, respectively.

A summary of the changes in the fair value of plan assets follows:



	2013			2012
Fair value of plan assets at beginning of year	$	256.8		$	244.5
Actual return on plan assets	28.1			25.0
Employer contributions	9.9			12.9
Benefits and administrative expenses paid	(26.7		)	(25.6		)
Fair value of plan assets at end of year	$	268.1		$	256.8

The net funded status of the Company Plan and the PEP at December 31:



Funded status	$	81.6	$	123.9

Recorded as:
Accrued expenses and other	$	1.6	$	1.4
Other liabilities	80.0		122.5
	$	81.6	$	123.9

Weighted average assumptions used in the accounting for the Company Plan and the PEP are summarized as follows:



	2013		2012		2011
Discount rate	4.8	%	4.0	%	4.0	%
Expected long term rate of return	7.0	%	7.0	%	7.3	%

The Company maintains an investment policy for the management of the Company Plan’s assets. The objective of this policy is to build a portfolio designed to achieve a balance between investment return and asset protection by investing in indexed funds that are comprised of equities of high quality companies and in high quality fixed income securities which are broadly balanced and represent all market sectors. The target allocations for plan assets are 50% equity securities, 45% fixed income securities and 5% in other assets. Equity securities primarily include investments in large-cap, mid-cap and small-cap companies located in the U.S. and to a lesser extent international equities in developed and emerging countries. Fixed income securities primarily include U.S. Treasury securities, mortgage-backed bonds and corporate bonds of companies from diversified industries. Other assets include investments in commodities. The weighted average expected long-term rate of return for the Company Plan’s assets is as follows:



	Target Allocation		Weighted Average Expected Long-Term Rate of Return
Equity securities	50.0	%	5.5	%
Fixed income securities	45.0	%	1.2	%
Other assets	5.0	%	0.3	%

The fair values of the Company Plan’s assets at December 31, 2013 and 2012, by asset category are as follows:



			Fair Value Measurements as of
			December 31, 2013
	Fair Value as of December 31, 2013		Using Fair Value Hierarchy
Asset Category	Fair Value as of December 31, 2013		Level 1		Level 2		Level 3
Cash	$	2.7	$	2.7	$	—	$	—
Equity securities:
U.S. large cap - blend (a)	65.5		—		65.5		—
U.S. mid cap - blend (b)	25.1		—		25.1		—
U.S. small cap - blend (c)	8.1		—		8.1		—
International equity - blend (d)	40.3		—		40.3		—
Commodities index (e)	11.3		—		11.3		—
Fixed income securities:
U.S. fixed income (f)	104.1		—		104.1		—
U.S inflation protection income (g)	11.0		—		11.0		—
Total fair value of the Company Plan’s assets	$	268.1	$	2.7	$	265.4	$	—



			Fair Value Measurements as of
			December 31, 2012
	Fair Value as of December 31, 2012		Using Fair Value Hierarchy
Asset Category	Fair Value as of December 31, 2012		Level 1		Level 2		Level 3
Cash	$	6.9	$	6.9	$	—	$	—
Equity securities:
U.S. large cap - blend (a)	58.1		—		58.1		—
U.S. mid cap - blend (b)	23.2		—		23.2		—
U.S. small cap - blend (c)	6.8		—		6.8		—
International equity - blend (d)	39.4		—		39.4		—
Commodities index (e)	11.5		—		11.5		—
Fixed income securities:
U.S. fixed income (f)	110.9		—		110.9		—
Total fair value of the Company Plan’s assets	$	256.8	$	6.9	$	249.9	$	—


a)	This category represents an equity index fund not actively managed that tracks the S&P 500 Index.


b)	This category represents an equity index fund not actively managed that tracks the S&P mid-cap 400 Index.


c)	This category represents an equity index fund not actively managed that tracks the Russell 2000 Index.


d)	This category represents an equity index fund not actively managed that tracks the MSCI ACWI ex USA Index.


e)	This category represents a commodities index fund not actively managed that tracks the Dow Jones - UBS Commodity Index.


f)	This category primarily represents bond index funds not actively managed that track the Barclays Capital U.S. Aggregate Index and Barclays Capital U.S. TIPS Index.


g)	This category primarily represents a bond index fund not actively managed that tracks the Barclays Capital U.S. TIPS Index.

The following assumed benefit payments under the Company Plan and PEP, which were used in the calculation of projected benefit obligations, are expected to be paid as follows:



2013	$	23.4
2014	23.4
2015	23.5
2016	23.3
2017	23.4
Years 2018-2022	120.5

Post-retirement Medical Plan

The Company assumed obligations under a subsidiary's post-retirement medical plan. Coverage under this plan is restricted to a limited number of existing employees of the subsidiary. This plan is unfunded and the Company’s policy is to fund benefits as claims are incurred. The effect on operations of the post-retirement medical plan is shown in the following table:



	Year ended December 31,
	2013		2012		2011
Service cost for benefits earned	$	0.4	$	0.4	$	0.3
Interest cost on benefit obligation	2.5		2.3		2.2
Net amortization and deferral	1.0		0.3		(0.2		)
Post-retirement medical plan costs	$	3.9	$	3.0	$	2.3

Amounts included in accumulated other comprehensive earnings consist of unamortized net loss of $12.7. The accumulated other comprehensive earnings that are expected to be recognized as components of the post-retirement medical plan costs during 2014 are $1.3 related to amortization of the net loss.

A summary of the changes in the accumulated post-retirement benefit obligation follows:



	2013			2012
Balance at January 1	$	60.7		$	52.7
Service cost for benefits earned	0.4			0.4
Interest cost on benefit obligation	2.5			2.3
Participants contributions	0.3			0.4
Actuarial loss	4.5			6.9
Benefits paid	(2.7		)	(2.0		)
Plan amendment	(3.0		)	—
Balance at December 31	$	62.7		$	60.7

Recorded as:
Other liabilities	$	62.7		$	60.7

The weighted-average discount rates used in the calculation of the accumulated post-retirement benefit obligation were 5.0% and 4.2% as of December 31, 2013 and 2012, respectively. The health care cost trend rate was assumed to be 7.5% of December 31, 2013 and 2012, declining gradually to 5.0% in the year 2021. The health care cost trend rate has a significant effect on the amounts reported. The impact of a percentage point change each year in the assumed health care cost trend rates would change the accumulated post-retirement benefit obligation as of December 31, 2013 by an increase of $8.7 or a decrease of $7.3. The impact of a percentage point change on the aggregate of the service cost and interest cost components of the 2013 post-retirement benefit costs results in an increase of $0.5 or decrease of $0.4. The plan amendment in 2013 reflects the impact of shifting from projection scale AA to projection scale BB for both the RP-2000 Combined Healthy Mortality Table and the RP-2000 Disabled Mortality Table.

The following assumed benefit payments under the Company's post-retirement benefit plan, which reflect expected future service, as appropriate, and were used in the calculation of projected benefit obligations, are expected to be paid as follows:



2014	$	2.5
2015	2.7
2016	2.9
2017	3.0
2018	3.1
Years 2019-2023	17.9

Deferred Compensation Plan

In 2001, the Board approved the Deferred Compensation Plan ("DCP") under which certain of the Company's executives, may elect to defer up to 100.0% of their annual cash incentive pay and/or up to 50.0% of their annual base salary and/or eligible commissions subject to annual limits established by the federal government. The DCP provides executives a tax efficient strategy for retirement savings and capital accumulation without significant cost to the Company. The Company makes no contributions to the DCP. Amounts deferred by a participant are credited to a bookkeeping account maintained on behalf of each participant, which is used for measurement and determination of amounts to be paid to a participant, or his or her designated beneficiary, pursuant to the terms of the DCP. The amounts accrued under this plan were $36.3 and $26.6 at December 31, 2013 and 2012, respectively. Deferred amounts are the Company's general unsecured obligations and are subject to claims by the Company's creditors. The Company's general assets may be used to fund obligations and pay DCP benefits.