EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2013 |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ' |
EMPLOYEE BENEFIT PLANS | ' |
EMPLOYEE BENEFIT PLANS |
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The NuStar Thrift Plan |
The NuStar Thrift Plan (the Thrift Plan) is a qualified employee profit-sharing plan that became effective June 26, 2006. Participation in the Thrift Plan is voluntary and is open to substantially all NuStar GP, LLC employees upon their date of hire, except for part-time employees (as defined in the Thrift Plan), who become eligible upon completing one year of service (as defined in the Thrift Plan). Thrift Plan participants can contribute from 1% up to 30% of their total annual compensation to the Thrift Plan in the form of pre-tax and/or after tax employee contributions. NuStar GP, LLC makes matching contributions in an amount equal to 100% of each participant’s employee contributions up to a maximum of 6% of the participant’s total annual compensation. Our matching contributions to the Thrift Plan for the years ended December 31, 2013, 2012 and 2011 totaled $5.9 million, $6.9 million and $6.5 million, respectively. |
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NuStar GP, LLC also maintains an excess thrift plan (the Excess Thrift Plan) that became effective July 1, 2006. The Excess Thrift Plan is a nonqualified deferred compensation plan that provides benefits to those employees of NuStar GP, LLC whose compensation and/or annual contributions under the Thrift Plan are subject to the limitations applicable to qualified retirement plans under the Code. |
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Pension and Other Postretirement Benefits |
The NuStar Pension Plan (the Pension Plan) is a qualified non-contributory defined benefit pension plan that became effective July 1, 2006. The Pension Plan covers substantially all of NuStar GP, LLC’s employees and generally provides eligible employees with retirement income calculated under a final average pay formula (FAP) or a cash balance formula. Employees hired before January 1, 2011 are covered under FAP, which is based on years of service and compensation during their period of service, and employees become fully vested in their benefits upon attaining five years of vesting service. Employees hired on January 1, 2011 and after are covered under the cash balance formula, which is based on age, service and interest credits, and employees become fully vested in their benefits upon attaining three years of vesting service. Effective January 1, 2014, the Pension Plan was amended to freeze the FAP benefit as of December 31, 2013, and going forward, employees will be covered under the cash balance formula. |
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NuStar GP, LLC also maintains an excess pension plan (the Excess Pension Plan) which is a nonqualified deferred compensation plan that provides benefits to a select group of management or other highly compensated employees of NuStar GP, LLC. The supplemental executive retirement plan (the SERP) has no participants, and it will terminate in 2014 upon a final payment to the former participants. |
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None of the Excess Thrift Plan, the Excess Pension Plan or the SERP is intended to constitute either a qualified plan under the provisions of Section 401 of the Code or a funded plan subject to the Employee Retirement Income Security Act. |
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NuStar GP, LLC also provides a medical benefits plan for retired employees. In 2013, the plan was amended for employees that retire on or after April 1, 2014 to provide a defined subsidy for eligible third-party health care premiums. |
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NuStar Energy reimbursed and will continue to reimburse all costs incurred by us related to these employee benefit plans at cost. We charged NuStar Energy $18.2 million, $23.6 million, and $13.7 million for the years ended December 31, 2013, 2012 and 2011, respectively, for these employee benefit plans, including disposition charges. Our current and noncurrent liabilities for these employee benefits are included in “Accrued compensation expense” and “Long-term liabilities,” respectively, on our consolidated balance sheets. |
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The Pension Plan, Excess Pension Plan and SERP are collectively referred to as the Pension Plans in the tables and discussion below. We use December 31 as the measurement date for our pension and other postretirement plans. |
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Effective January 1, 2013, Asphalt JV employees became employees of Asphalt JV and were 100% vested in the Pension Plan, as a result of the disposition. |
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The changes in the benefit obligation, the changes in fair value of plan assets, the funded status and the amounts recognized in our consolidated balance sheet for our Pension Plans and other postretirement benefit plans as of and for the years ended December 31, 2013 and 2012 were as follows: |
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| Pension Plans | | Other Postretirement | | | | | | | | |
Benefit Plans | | | | | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | |
Benefit obligation, January 1 | $ | 114,046 | | | $ | 78,017 | | | $ | 20,962 | | | $ | 18,672 | | | | | | | | | |
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Service cost | 16,321 | | | 15,614 | | | 1,171 | | | 1,258 | | | | | | | | | |
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Interest cost | 5,036 | | | 4,012 | | | 940 | | | 976 | | | | | | | | | |
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Transfer to joint venture | — | | | — | | | (1,284 | ) | | (90 | ) | | | | | | | | |
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Disposition charges (a) | 180 | | | 4,397 | | | — | | | 1,284 | | | | | | | | | |
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Plan amendments | (24,560 | ) | | (295 | ) | | (11,822 | ) | | (2,420 | ) | | | | | | | | |
Benefits paid | (7,353 | ) | | (1,647 | ) | | (248 | ) | | (149 | ) | | | | | | | | |
Participants contributions | — | | | — | | | 125 | | | 62 | | | | | | | | | |
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Actuarial (gain) loss | (15,708 | ) | | 18,359 | | | (2,690 | ) | | 2,622 | | | | | | | | | |
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Curtailment (a) | (330 | ) | | (4,411 | ) | | — | | | (1,253 | ) | | | | | | | | |
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Benefit obligation, December 31 | $ | 87,632 | | | $ | 114,046 | | | $ | 7,154 | | | $ | 20,962 | | | | | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | |
Plan assets at fair value, January 1 | $ | 69,269 | | | $ | 53,787 | | | $ | — | | | $ | — | | | | | | | | | |
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Actual return on plan assets | 11,905 | | | 6,063 | | | — | | | — | | | | | | | | | |
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Company contributions | 1,752 | | | 11,066 | | | 123 | | | 87 | | | | | | | | | |
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Benefits paid | (7,353 | ) | | (1,647 | ) | | (248 | ) | | (149 | ) | | | | | | | | |
Participants contributions | — | | | — | | | 125 | | | 62 | | | | | | | | | |
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Plan assets at fair value, December 31 | $ | 75,573 | | | $ | 69,269 | | | $ | — | | | $ | — | | | | | | | | | |
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Reconciliation of funded status: | | | | | | | | | | | | | | | |
Fair value of plan assets at December 31 | $ | 75,573 | | | $ | 69,269 | | | $ | — | | | $ | — | | | | | | | | | |
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Less: Benefit obligation at December 31 | 87,632 | | | 114,046 | | | 7,154 | | | 20,962 | | | | | | | | | |
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Funded status at December 31 | $ | (12,059 | ) | | $ | (44,777 | ) | | $ | (7,154 | ) | | $ | (20,962 | ) | | | | | | | | |
Amounts recognized in the consolidated balance sheets: | | | | | | | | | | | | | | | |
Accrued compensation expense | $ | (2,333 | ) | | $ | (137 | ) | | $ | (141 | ) | | $ | (243 | ) | | | | | | | | |
Long-term liabilities | (9,726 | ) | | (44,640 | ) | | (7,013 | ) | | (20,719 | ) | | | | | | | | |
Net pension liability | $ | (12,059 | ) | | $ | (44,777 | ) | | $ | (7,154 | ) | | $ | (20,962 | ) | | | | | | | | |
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(a) | Disposition charge in 2013 relates to NuStar Energy’s San Antonio Refinery Sale and the curtailment in 2013 relates to the SERP retirement benefits. Disposition charges and curtailment in 2012 relate to the Asphalt Sale. | | | | | | | | | | | | | | | | | | | | | | |
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The components of net periodic benefit cost related to our Pension Plans and other postretirement benefit plans, which are reimbursed to us by NuStar Energy, were as follows: |
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| Pension Plans | | Other Postretirement |
Benefit Plans |
| Year Ended December 31, | | Year Ended December 31, |
| 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 |
| (Thousands of Dollars) |
Components of net periodic benefit | | | | | | | | | | | |
cost: |
Service cost | $ | 16,321 | | | $ | 15,614 | | | $ | 12,484 | | | $ | 1,171 | | | $ | 1,258 | | | $ | 1,040 | |
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Interest cost | 5,036 | | | 4,012 | | | 2,881 | | | 940 | | | 976 | | | 888 | |
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Expected return on plan assets | (4,535 | ) | | (3,917 | ) | | (3,617 | ) | | — | | | — | | | — | |
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Amortization of prior service credit | (41 | ) | | (18 | ) | | (18 | ) | | (198 | ) | | — | | | — | |
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Amortization of net loss | 2,071 | | | 1,393 | | | 485 | | | 209 | | | 139 | | | 71 | |
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Net periodic benefit cost before other charges | 18,852 | | | 17,084 | | | 12,215 | | | 2,122 | | | 2,373 | | | 1,999 | |
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Other charges (a) | 847 | | | 4,397 | | | — | | | — | | | 1,284 | | | — | |
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Net periodic benefit cost | $ | 19,699 | | | $ | 21,481 | | | $ | 12,215 | | | $ | 2,122 | | | $ | 3,657 | | | $ | 1,999 | |
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(a) | In 2013 other charges for the Pension Plans include an Excess Pension settlement, disposition charges and a curtailment gain associated with the SERP retirement benefits. Other charges in 2012 include disposition charges related to Asphalt JV. | | | | | | | | | | | | | | | | | | | | | | |
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Adjustments recognized in other comprehensive income (loss) related to our Pension Plans and other postretirement benefit plans were as follows: |
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| Pension Plans | | Other Postretirement |
Benefit Plans |
| Year Ended December 31, | | Year Ended December 31, |
| 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 |
| (Thousands of Dollars) |
Net unrecognized gain (loss) | | | | | | | | | | | |
arising during the year: |
Net actuarial gain (loss) (a) | $ | 24,122 | | | $ | (11,800 | ) | | $ | (16,260 | ) | | $ | 2,690 | | | $ | (1,368 | ) | | $ | (1,433 | ) |
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Prior service credit | 24,514 | | | 295 | | | — | | | 11,822 | | | 2,420 | | | — | |
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Net unrealized gain (loss) | 48,636 | | | (11,505 | ) | | (16,260 | ) | | 14,512 | | | 1,052 | | | (1,433 | ) |
arising during the year |
Net loss reclassified into income: | | | | | | | | | | | |
Amortization of prior service credit | (41 | ) | | (18 | ) | | (18 | ) | | (198 | ) | | — | | | — | |
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Amortization of net loss | 2,071 | | | 1,393 | | | 485 | | | 209 | | | 139 | | | 71 | |
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Net loss reclassified into income | 2,030 | | | 1,375 | | | 467 | | | 11 | | | 139 | | | 71 | |
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Income tax (expense) benefit | (18,053 | ) | | 4,269 | | | 6,064 | | | (5,499 | ) | | (390 | ) | | 535 | |
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Total changes in other | $ | 32,613 | | | $ | (5,861 | ) | | $ | (9,729 | ) | | $ | 9,024 | | | $ | 801 | | | $ | (827 | ) |
comprehensive income (loss) |
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(a) In 2013 net actuarial gain (loss) for the Pension Plans includes an Excess Pension settlement and in 2012 includes the Asphalt JV curtailment. |
The amounts recorded as a component of accumulated other comprehensive loss related to our Pension Plans and other postretirement benefit plans were as follows: |
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| Pension Plans | | Other Postretirement |
Benefit Plans |
| December 31, | | December 31, |
| 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 |
| (Thousands of Dollars) |
Unrecognized actuarial loss (a) | $ | (10,283 | ) | | $ | (36,476 | ) | | $ | (26,069 | ) | | $ | (2,289 | ) | | $ | (5,188 | ) | | $ | (3,959 | ) |
Prior service credit (a) | 24,853 | | | 380 | | | 103 | | | 14,044 | | | 2,420 | | | — | |
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Deferred tax (liability) asset | (3,639 | ) | | 14,414 | | | 10,145 | | | (4,328 | ) | | 1,171 | | | 1,561 | |
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Accumulated other comprehensive | $ | 10,931 | | | $ | (21,682 | ) | | $ | (15,821 | ) | | $ | 7,427 | | | $ | (1,597 | ) | | $ | (2,398 | ) |
income (loss), net of tax |
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(a) | Represents the balance of accumulated other comprehensive income (loss) that has not been recognized as a component of net periodic benefit cost. | | | | | | | | | | | | | | | | | | | | | | |
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In 2014, we expect to recognize $0.2 million and $0.1 million of the unrecognized actuarial loss for Pension Plans and other postretirement benefit plans, respectively. The aggregate accumulated benefit obligation for our Pension Plans as of December 31, 2013 and 2012 was $86.9 million and $84.6 million, respectively. As of December 31, 2013 and 2012, the aggregate accumulated benefit obligation for the Pension Plans exceeded plan assets. |
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The investment policies and strategies for the assets of our qualified Pension Plan incorporate a well-diversified approach that is expected to earn long-term returns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk, and the market value of the Pension Plan’s assets may fluctuate from year to year. Risk tolerance is determined based on NuStar Energy’s financial ability to withstand risk within the investment program and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the Pension Plan’s mix of assets includes a diversified portfolio of equity and fixed-income instruments. The aggregate asset allocation is reviewed on an annual basis. As of December 31, 2013, the target allocations for plan assets are 65% equity securities and 35% fixed income investments. |
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The overall expected long-term rate of return on plan assets for the Pension Plan is estimated using models of asset returns. Model assumptions are derived using historical data with the assumption that capital markets are informationally efficient. Three models are used to derive the long-term expected returns for each asset class. Since each method has distinct advantages and disadvantages and differing results, an equal weighted average of the methods’ results is used. |
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We disclose the fair value for each major class of plan assets in the Pension Plan into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists. |
The major classes of plan assets measured at fair value for the Pension Plan, were as follows: |
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| December 31, 2013 | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Asset class: | | | | | | | | | | | | | | | |
Cash equivalent securities | $ | 1,552 | | | $ | — | | | $ | — | | | $ | 1,552 | | | | | | | | | |
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Equity securities: | | | | | | | | | | | | | | | |
U.S. large cap equity fund (a) | — | | | 45,756 | | | — | | | 45,756 | | | | | | | | | |
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International stock index fund (b) | 7,652 | | | — | | | — | | | 7,652 | | | | | | | | | |
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Fixed income securities: | | | | | | | | | | | | | | | |
Bond market index fund (c) | 20,613 | | | — | | | — | | | 20,613 | | | | | | | | | |
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Total | $ | 29,817 | | | $ | 45,756 | | | $ | — | | | $ | 75,573 | | | | | | | | | |
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| December 31, 2012 | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Asset class: | | | | | | | | | | | | | | | |
Cash equivalent securities | $ | 1,294 | | | $ | — | | | $ | — | | | $ | 1,294 | | | | | | | | | |
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Equity securities: | | | | | | | | | | | | | | | |
U.S. large cap equity fund (a) | — | | | 39,676 | | | — | | | 39,676 | | | | | | | | | |
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International stock index fund (b) | 6,652 | | | — | | | — | | | 6,652 | | | | | | | | | |
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Fixed income securities: | | | | | | | | | | | | | | | |
Bond market index fund (c) | 21,647 | | | — | | | — | | | 21,647 | | | | | | | | | |
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Total | $ | 29,593 | | | $ | 39,676 | | | $ | — | | | $ | 69,269 | | | | | | | | | |
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(a) | This fund is a low-cost equity index fund not actively managed that tracks the S&P 500. Fair values were estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. | | | | | | | | | | | | | | | | | | | | | | |
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(b) | This fund tracks the performance of the Total International Composite Index. | | | | | | | | | | | | | | | | | | | | | | |
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(c) | This fund tracks the performance of the Barclays Capital U.S. Aggregate Bond Index. | | | | | | | | | | | | | | | | | | | | | | |
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For the year ended December 31, 2013, we contributed $1.8 million to the Pension Plans. We expect to contribute approximately $4.3 million to the Pension Plans during 2014, which principally represents contributions either required by regulations or laws, or with respect to unfunded plans, necessary to fund current benefits. Since costs incurred by us related to the Pension Plan and our other postretirement benefit plan are reimbursed by NuStar Energy, funding for these plans will primarily be provided by NuStar Energy. |
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The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the years ending December 31: |
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| Pension Plans | | Other | | | | | | | | | | | | | | | | |
Postretirement | | | | | | | | | | | | | | | | |
Benefit Plans | | | | | | | | | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | | | | | | | | | |
2014 | $ | 7,129 | | | $ | 141 | | | | | | | | | | | | | | | | | |
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2015 | $ | 5,337 | | | $ | 168 | | | | | | | | | | | | | | | | | |
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2016 | $ | 5,833 | | | $ | 196 | | | | | | | | | | | | | | | | | |
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2017 | $ | 6,971 | | | $ | 220 | | | | | | | | | | | | | | | | | |
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2018 | $ | 7,392 | | | $ | 252 | | | | | | | | | | | | | | | | | |
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Years 2019-2023 | $ | 49,601 | | | $ | 1,992 | | | | | | | | | | | | | | | | | |
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The weighted-average assumptions used to determine the benefit obligations were as follows: |
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| Pension Plans | | Other | | | | | | | | | | | | |
Postretirement | | | | | | | | | | | | |
Benefit Plans | | | | | | | | | | | | |
| December 31, | | December 31, | | | | | | | | | | | | |
| 2013 | | 2012 | | 2013 | | 2012 | | | | | | | | | | | | |
Discount rate | 5.04 | % | | 4.48 | % | | 5.28 | % | | 4.51 | % | | | | | | | | | | | | |
Rate of compensation increase | 3.51 | % | | 3.69 | % | | n/a | | | n/a | | | | | | | | | | | | | |
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The weighted-average assumptions used to determine the net periodic benefit cost were as follows: |
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| Pension Plans | | Other Postretirement | | | | | | |
Benefit Plans | | | | | | |
| Year Ended December 31, | | Year Ended December 31, | | | | | | |
| 2013 | | 2012 | | 2011 | | 2013 | | 2012 | | 2011 | | | | | | |
Discount rate | 4.48 | % | | 5.21 | % | | 5.82 | % | | 4.51 | % | | 5.25 | % | | 5.8 | % | | | | | | |
Expected long-term rate of | 6.75 | % | | 7 | % | | 7.5 | % | | n/a | | | n/a | | | n/a | | | | | | | |
return on plan assets | | | | | | |
Rate of compensation increase | 3.69 | % | | 4.05 | % | | 4.07 | % | | n/a | | | n/a | | | n/a | | | | | | | |
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The assumed health care cost trend rates were as follows: |
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| December 31, | | | | | | | | | | | | | | | | | | |
| 2013 | | 2012 | | | | | | | | | | | | | | | | | | |
Health care cost trend rate assumed for next year | 7.45 | % | | 7.64 | % | | | | | | | | | | | | | | | | | | |
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate) | 5 | % | | 5 | % | | | | | | | | | | | | | | | | | | |
Year that the rate reached the ultimate trend rate | 2020 | | | 2020 | | | | | | | | | | | | | | | | | | | |
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Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. We sponsor a contributory postretirement health care plan. The plan has an annual limitation (a cap) on the increase of the employer’s share of the cost of covered benefits. The cap on the increase in employer’s cost is 2.5% per year. The assumed increase in total health care cost exceeds the 2.5% indexed cap, so increasing or decreasing the health care cost trend rate by 1% does not materially change our obligation or expense for the postretirement health care plan. |