Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2013 |
Employee Benefit Plans | ' |
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Note 11 - Employee benefit plans: |
Defined contribution plans - We maintain various defined contribution pension plans with our contributions based on matching or other formulas. Defined contribution plan expense approximated $1.5 million in 2011, $1.6 million in 2012 and $1.8 million in 2013. |
Accounting for defined benefit and postretirement benefits other than pensions (OPEB) plans - We recognize an asset or liability for the over or under funded status of each of our individual defined benefit pension plans on our Consolidated Balance Sheets. Changes in the funded status of these plans are recognized either in net income (loss), to the extent they are reflected in periodic benefit cost, or through other comprehensive income (loss). |
Defined benefit plans - We sponsor various defined benefit pension plans. Non-U.S. employees are covered by plans in their respective countries and a majority of U.S. employees are eligible to participate in a contributory savings plan. The benefits under our plans are based upon years of service and employee compensation. Our funding policy is to contribute annually the minimum amount required under ERISA (or equivalent non-U.S.) regulations plus additional amounts as we deem appropriate. |
We expect to contribute the equivalent of approximately $25.7 million to all of our defined benefit pension plans during 2014. Benefit payments to plan participants out of plan assets are expected to be the equivalent of: |
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Years ending December 31, | | Amount | | | | | | | | | | | | | | |
| | (In millions) | | | | | | | | | | | | | | |
2014 | | $ | 25.5 | | | | | | | | | | | | | | | |
2015 | | | 25.4 | | | | | | | | | | | | | | | |
2016 | | | 25.2 | | | | | | | | | | | | | | | |
2017 | | | 25.9 | | | | | | | | | | | | | | | |
2018 | | | 26.4 | | | | | | | | | | | | | | | |
Next 5 years | | | 148.2 | | | | | | | | | | | | | | | |
The funded status of our non-U.S. defined benefit pension plans is presented in the table below. |
| December 31, | | | | | | | | | | | |
| 2012 | | 2013 | | | | | | | | | | | |
| (In millions) | | | | | | | | | | | |
Change in projected benefit obligations (PBO): | | | | | | | | | | | | | | | | | | |
Benefit obligations at beginning of the year | $ | 460.3 | | | $ | 582.1 | | | | | | | | | | | | |
Service cost | | 10.4 | | | | 13.1 | | | | | | | | | | | | |
Interest cost | | 22.3 | | | | 21.1 | | | | | | | | | | | | |
Participant contributions | | 1.8 | | | | 1.9 | | | | | | | | | | | | |
Actuarial losses (gains) | | 96.4 | | | | (2.8 | ) | | | | | | | | | | | |
Change in currency exchange rates | | 15 | | | | 4.5 | | | | | | | | | | | | |
Benefits paid | | (24.1 | ) | | | (24.8 | ) | | | | | | | | | | | |
Benefit obligations at end of the year | | 582.1 | | | | 595.1 | | | | | | | | | | | | |
Change in plan assets: | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at beginning of the year | | 336.2 | | | | 400.7 | | | | | | | | | | | | |
Actual return on plan assets | | 47.9 | | | | 27.9 | | | | | | | | | | | | |
Employer contributions | | 27.7 | | | | 26.7 | | | | | | | | | | | | |
Participant contributions | | 1.8 | | | | 1.9 | | | | | | | | | | | | |
Change in currency exchange rates | | 11.2 | | | | (1.0 | ) | | | | | | | | | | | |
Benefits paid | | (24.1 | ) | | | (24.8 | ) | | | | | | | | | | | |
Fair value of plan assets at end of year | | 400.7 | | | | 431.4 | | | | | | | | | | | | |
Funded status | $ | (181.4 | ) | | $ | (163.7 | ) | | | | | | | | | | | |
Amounts recognized in the balance sheet: | | | | | | | | | | | | | | | | | | |
Noncurrent pension asset | $ | 5.1 | | | $ | 0.2 | | | | | | | | | | | | |
Accrued pension costs: | | | | | | | | | | | | | | | | | | |
Current | | (1.9 | ) | | | (1.4 | ) | | | | | | | | | | | |
Noncurrent | | (184.6 | ) | | | (162.5 | ) | | | | | | | | | | | |
Total | $ | (181.4 | ) | | $ | (163.7 | ) | | | | | | | | | | | |
Accumulated other comprehensive loss: | | | | | | | | | | | | | | | | | | |
Actuarial losses | $ | 187.1 | | | $ | 157.4 | | | | | | | | | | | | |
Prior service cost | | 5.4 | | | | 2.7 | | | | | | | | | | | | |
Net transition obligations | | 1.3 | | | | - | | | | | | | | | | | | |
Total | $ | 193.8 | | | $ | 160.1 | | | | | | | | | | | | |
Accumulated benefit obligations (ABO) | $ | 536.5 | | | $ | 550.2 | | | | | | | | | | | | |
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The components of our net periodic defined benefit pension cost for our non-U.S. defined benefit pension plans are presented in the table below. During 2011, certain eligible participants elected to take lump sum distributions upon their retirement, resulting in a nominal settlement charge in 2011. In December 2013, we amended one of our Canadian plans in which participation with respect to hourly workers was closed to new participants in December 2013, and existing hourly plan participants will no longer accrue additional benefits after December 2013, resulting in a $7.1 million curtailment charge for recognition of previously unamortized prior service cost and transition obligation and $.2 million for special termination benefits. The amounts shown below for the amortization of prior service cost, net transition obligations and recognized actuarial losses for 2011, 2012 and 2013 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2010, 2011 and 2012, respectively, net of deferred income taxes. |
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| | Years ended December 31, | | | | | | |
| | 2011 | | 2012 | | 2013 | | | | | | |
| | (In millions) | | | | | | |
Net periodic pension cost: | | | | | | | | | | | | | | | | | | |
Service cost benefits | | $ | 11.2 | | | $ | 10.4 | | | $ | 13.1 | | | | | | | |
Interest cost on PBO | | | 23.6 | | | | 22.3 | | | | 21.1 | | | | | | | |
Expected return on plan assets | | | (17.6 | ) | | | (17.0 | ) | | | (18.5 | ) | | | | | | |
Settlement losses | | | 0.5 | | | | - | | | | - | | | | | | | |
Curtailment loss | | | - | | | | - | | | | 7.3 | | | | | | | |
Recognized actuarial losses | | | 6.6 | | | | 7.9 | | | | 12.5 | | | | | | | |
Amortization of prior service cost | | | 1.2 | | | | 1.1 | | | | 1.1 | | | | | | | |
Amortization of net transition obligations | | | 0.5 | | | | 0.4 | | | | 0.4 | | | | | | | |
Total | | $ | 26 | | | $ | 25.1 | | | $ | 37 | | | | | | | |
Certain information concerning our non-U.S. defined benefit pension plans is presented in the table below. |
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| | December 31, | | | | | | | | | | |
| | 2012 | | 2013 | | | | | | | | | | |
| | (In millions) | | | | | | | | | | |
Plans for which the ABO exceeds plan assets: | | | | | | | | | | | | | | | | | | |
PBO | | $ | 520 | | | $ | 527 | | | | | | | | | | | |
ABO | | | 482.1 | | | | 489.5 | | | | | | | | | | | |
Fair value of plan assets | | | 333.5 | | | | 364.2 | | | | | | | | | | | |
The weighted-average rate assumptions used in determining the actuarial present value of benefit obligations for our non-U.S. defined benefit pension plans as of December 31, 2012 and 2013 are presented in the table below. |
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Rate | | December 31, | | | | | | | | | | |
| | 2012 | | 2013 | | | | | | | | | | |
Discount rate | | | 3.7 | % | | | 3.8 | % | | | | | | | | | | |
Increase in future compensation levels | | | 3.1 | % | | | 2.7 | % | | | | | | | | | | |
The weighted-average rate assumptions used in determining the net periodic pension cost for our non-U.S. defined benefit pension plans for 2011, 2012 and 2013 are presented in the table below. |
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Rate | | Years ended December 31, | | | | | | |
| | 2011 | | 2012 | | 2013 | | | | | | |
Discount rate | | | 5.1 | % | | | 4.9 | % | | | 3.7 | % | | | | | | |
Increase in future compensation levels | | | 3.1 | % | | | 3.2 | % | | | 3.1 | % | | | | | | |
Long-term return on plan assets | | | 5.5 | % | | | 5.2 | % | | | 5 | % | | | | | | |
Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods. |
The funded status of our U.S. defined benefit pension plan is presented in the table below. |
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| December 31, | | | | | | | | | | | |
| 2012 | | 2013 | | | | | | | | | | | |
| (In millions) | | | | | | | | | | | |
Change in PBO: | | | | | | | | | | | | | | | | | | |
Benefit obligations at beginning of the year | $ | 17.8 | | | $ | 19.1 | | | | | | | | | | | | |
Interest cost | | 0.8 | | | | 0.7 | | | | | | | | | | | | |
Actuarial losses (gains) | | 1.4 | | | | (1.7 | ) | | | | | | | | | | | |
Benefits paid | | (.9 | ) | | | (.9 | ) | | | | | | | | | | | |
Benefit obligations at end of the year | | 19.1 | | | | 17.2 | | | | | | | | | | | | |
Change in plan assets: | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at beginning of the year | | 12.9 | | | | 14.4 | | | | | | | | | | | | |
Actual return on plan assets | | 1.9 | | | | 2 | | | | | | | | | | | | |
Employer contributions | | 0.5 | | | | 0.3 | | | | | | | | | | | | |
Benefits paid | | (.9 | ) | | | (.9 | ) | | | | | | | | | | | |
Fair value of plan assets at end of year | | 14.4 | | | | 15.8 | | | | | | | | | | | | |
Funded status | $ | (4.7 | ) | | $ | (1.4 | ) | | | | | | | | | | | |
Amounts recognized in the balance sheet: | | | | | | | | | | | | | | | | | | |
Accrued pension costs: | | | | | | | | | | | | | | | | | | |
Current | $ | (.1 | ) | | $ | (.1 | ) | | | | | | | | | | | |
Noncurrent | | (4.6 | ) | | | (1.3 | ) | | | | | | | | | | | |
Total | $ | (4.7 | ) | | $ | (1.4 | ) | | | | | | | | | | | |
Accumulated other comprehensive loss - actuarial losses | $ | 10.7 | | | $ | 8.1 | | | | | | | | | | | | |
ABO | $ | 19.1 | | | $ | 17.2 | | | | | | | | | | | | |
The components of our net periodic defined benefit pension cost for our U.S. defined benefit pension plan is presented in the table below. The amounts shown below for recognized actuarial losses for 2011, 2012 and 2013 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2010, 2011 and 2012 respectively, net of deferred income taxes. |
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| | Years ended December 31, | | | | | | |
| | 2011 | | 2012 | | 2013 | | | | | | |
| | (In millions) | | | | | | |
Net periodic pension cost (income): | | | | | | | | | | | | | | | | | | |
Interest cost on PBO | | $ | 0.9 | | | $ | 0.8 | | | $ | 0.7 | | | | | | | |
Expected return on plan assets | | | (1.4 | ) | | | (1.3 | ) | | | (1.4 | ) | | | | | | |
Recognized actuarial losses | | | 0.3 | | | | 0.5 | | | | 0.5 | | | | | | | |
Total | | $ | (.2 | ) | | $ | - | | | $ | (.2 | ) | | | | | | |
The discount rate assumptions used in determining the actuarial present value of the benefit obligation for our U.S. defined benefit pension plan as of December 31, 2012 and 2013 are 3.6% and 4.5%, respectively. The impact of assumed increases in future compensation levels does not have an effect on the benefit obligation as the plan is frozen with regards to compensation. |
The weighted-average rate assumptions used in determining the net periodic pension cost for our U.S. defined benefit pension plan for 2011, 2012 and 2013 are presented in the table below. The impact of assumed increases in future compensation levels does not have an effect on the periodic pension cost as the plan is frozen with regards to compensation. |
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Rate | | Years ended December 31, | | | | | | |
| | 2011 | | 2012 | | 2013 | | | | | | |
Discount rate | | | 5.1 | % | | | 4.2 | % | | | 3.6 | % | | | | | | |
Long-term return on plan assets | | | 10 | % | | | 10 | % | | | 10 | % | | | | | | |
Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods. |
The amounts shown in the above tables for actuarial losses, prior service cost and net transition obligations at December 31, 2012 and 2013 have not yet been recognized as components of our periodic defined benefit pension cost as of those dates. These amounts will be recognized as components of our periodic defined benefit cost in future years and are recognized, net of deferred income taxes, in our accumulated other comprehensive income (loss) at December 2012 and 2013. We expect approximately $10.4 million, $.5 million and $.1 million of the unrecognized actuarial losses, prior service costs and net transition obligations, respectively, will be recognized as components of our consolidated net periodic defined benefit pension cost in 2014. |
The table below details the changes in our consolidated other comprehensive income (loss) during 2011, 2012 and 2013. |
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| | Years ended December 31, | | | | | | |
| | 2011 | | 2012 | | 2013 | | | | | | |
| | (In millions) | | | | | | |
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
Current year: | | | | | | | | | | | | | | | | | | |
Net actuarial gain (loss) | | $ | (19.8 | ) | | $ | (66.9 | ) | | $ | 14.7 | | | | | | | |
Plan curtailment | | | - | | | | - | | | | 7.1 | | | | | | | |
Settlements | | | 0.5 | | | | - | | | | - | | | | | | | |
Amortization of unrecognized: | | | | | | | | | | | | | | | | | | |
Net actuarial losses | | | 6.9 | | | | 8.3 | | | | 13 | | | | | | | |
Prior service cost | | | 1.2 | | | | 1.1 | | | | 1.1 | | | | | | | |
Net transition obligations | | | 0.5 | | | | 0.4 | | | | 0.4 | | | | | | | |
Total | | $ | (10.7 | ) | | $ | (57.1 | ) | | $ | 36.3 | | | | | | | |
At December 31, 2012 and 2013, substantially all of the assets attributable to our U.S. plan were invested in the Combined Master Retirement Trust (CMRT), a collective investment trust sponsored by Contran to permit the collective investment by certain master trusts that fund certain employee benefits plans sponsored by Contran and certain of its affiliates. The CMRT’s long-term investment objective is to provide a rate of return exceeding a composite of broad market equity and fixed income indices (including the S&P 500 and certain Russell indices) while utilizing both third-party investment managers as well as investments directed by Mr. Simmons (prior to his death in December 2013). Prior to his death, Mr. Simmons was the sole trustee of the CMRT, and he, along with the CMRT’s investment committee, of which Mr. Simmons was a member, actively managed the investments of the CMRT. |
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The CMRT trustee and investment committee did not maintain a specific target asset allocation in order to achieve their objectives, but instead they periodically change the asset mix of the CMRT based upon, among other things, advice they receive from third-party advisors and their expectations regarding potential returns for various investment alternatives and what asset mix would generate the greatest overall return. Prior to December 2012, the CMRT had an investment in TIMET common stock; however, in December 2012 the CMRT sold its shares of common stock in conjunction with the tender offer discussed in Note 6. During the history of the CMRT from its inception in 1988 through December 31, 2013, the average annual rate of return has been 14%. For the years ended December 31, 2011, 2012 and 2013, the assumed long-term rate of return for plan assets invested in the CMRT was 10%. In determining the appropriateness of the long-term rate of return assumption, we primarily relied on the historical rates of return achieved by the CMRT, although we considered other factors as well including, among other things, the investment objectives of the CMRT’s managers and their expectation that such historical returns would in the future continue to be achieved over the long-term. |
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Following the death of Mr. Simmons in December 2013, the Contran board of directors in January 2014 appointed a financial institution as the new directed trustee of the CMRT, and the Contran board appointed five individuals (all executive officers of Contran) as the new investment committee of the CMRT. The new investment committee intends to reallocate to current and/or new investment managers or various mutual funds the portion of the CMRT assets that had previously been under the direct and active management by Mr. Simmons. Such reallocation will be done prudently over a period of time, given the asset composition of this portion of the portfolio. Concurrent with this change in investment strategy in which there is no longer a portion of the CMRT’s assets under the direct and active management by Mr. Simmons, and considering the long-term asset mix for the assets of the CMRT and the expected long-term rates of return for such asset components as well as advice from Contran’s actuaries, beginning in 2014 the assumed long-term rate of return for plan assets invested in the CMRT will be reduced to 7.5%. |
The CMRT unit value is determined semi-monthly, and the plans have the ability to redeem all or any portion of their investment in the CMRT at any time based on the most recent semi-monthly valuation. However, the plans do not have the right to individual assets held by the CMRT and the CMRT has the sole discretion in determining how to meet any redemption request. For purposes of our plan asset disclosure, we consider the investment in the CMRT as a Level 2 input because (i) the CMRT value is established semi-monthly and the plans have the right to redeem their investment in the CMRT, in part or in whole, at anytime based on the most recent value and (ii) observable inputs from Level 1 or Level 2 were used to value approximately 83% of the assets of the CMRT at each of December 31, 2012 and 2013, as noted below. The aggregate fair value of all of the CMRT assets, including funds of Contran and its other affiliates that also invest in the CMRT, and supplemental asset mix details of the CMRT are as follows: |
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| December 31, | | | | | | | | | | |
| 2012 | | 2013 | | | | | | | | | | |
| (In millions) | | | | | | | | | | |
CMRT asset value | $ | 726.4 | | | $ | 722.8 | | | | | | | | | | | |
CMRT fair value input: | | | | | | | | | | | | | | | | | |
Level 1 | | 82 | % | | | 79 | % | | | | | | | | | | |
Level 2 | | 1 | | | | 4 | | | | | | | | | | | |
Level 3 | | 17 | | | | 17 | | | | | | | | | | | |
| | 100 | % | | | 100 | % | | | | | | | | | | |
CMRT asset mix: | | | | | | | | | | | | | | | | | |
Domestic equities, principally publicly traded | | 43 | % | | | 53 | % | | | | | | | | | | |
International equities, publicly traded | | 2 | | | | - | | | | | | | | | | | |
Fixed income securities, publicly traded | | 12 | | | | 35 | | | | | | | | | | | |
Privately managed limited partnerships | | 8 | | | | 11 | | | | | | | | | | | |
Other, primarily cash | | 35 | | | | 1 | | | | | | | | | | | |
| | 100 | % | | | 100 | % | | | | | | | | | | |
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The relatively large percentage of the CMRT invested in cash and other assets at December 31, 2012 is the result of the CMRT’s December 2012 disposition of its shares of TIMET common stock, which generated aggregate proceeds to the CMRT of $254.7 million (or approximately 35% of the CMRT’s total asset value at December 31, 2012), and which funds were invested in a cash equivalent at the end of 2012. Subsequently in January 2013, the CMRT redeployed such proceeds into other investments. |
In determining the expected long-term rate of return on non-U.S. plan asset assumptions, we consider the long-term asset mix (e.g. equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we receive third-party advice about appropriate long-term rates of return. Such assumed asset mixes are summarized below: |
— | In Germany, the composition of our plan assets is established to satisfy the requirements of the German insurance commissioner. Our German pension plan assets represent an investment in a large collective investment fund established and maintained by Bayer AG in which several pension plans, including our German pension plan and Bayer’s pension plans, have invested. Our plan assets represent a very nominal portion of the total collective investment fund maintained by Bayer. These plan assets are a Level 3 input because there is not an active market that approximates the value of our investment in the Bayer investment fund. We determine the fair value of the Bayer plan assets based on periodic reports we receive from the managers of the Bayer plan. These periodic reports are subject to audit by the German pension regulator. | | | | | | | | | | | | | | | | | |
— | In Canada, we currently have a plan asset target allocation of 45% to equity securities, 48% to fixed income securities, 7% to other investments and cash. We expect the long-term rate of return for such investments to average approximately 125 basis points above the applicable equity or fixed income index. The Canadian assets are Level 1 input because they are traded in active markets. | | | | | | | | | | | | | | | | | |
— | In Norway, we currently have a plan asset target allocation of 12% to equity securities, 78% to fixed income securities, 9% to real estate and the remainder primarily to other investments and liquid investments such as money markets. The expected long-term rate of return for such investments is approximately 8%, 4%, 6% and 4%, respectively. The majority of Norwegian plan assets are Level 1 inputs because they are traded in active markets; however approximately 8% of our Norwegian plan assets are invested in real estate and other investments not actively traded and are therefore a Level 3 input. | | | | | | | | | | | | | | | | | |
— | We also have plan assets in Belgium and the United Kingdom. The Belgian plan assets are invested in certain individualized fixed income insurance contracts for the benefit of each plan participant as required by the local regulators and are therefore a Level 3 input. The United Kingdom plan assets consist of marketable securities which are Level 1 inputs because they trade in active markets. | | | | | | | | | | | | | | | | | |
We regularly review our actual asset allocation for each plan, and will periodically rebalance the investments in each plan to more accurately reflect the targeted allocation and/or maximize the overall long-term return when considered appropriate. |
The composition of our December 31, 2012 and 2013 pension plan assets by fair value level is shown in the table below. The amounts shown for plan assets invested in the CMRT include a nominal amount of cash held by our U.S. pension plan which is not part of the plan’s investment in the CMRT. |
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| Fair Value Measurements at December 31, 2012 | |
| Total | | Quoted prices | | Significant | | Significant | |
in active markets | other | unobservable | |
(Level 1) | observable | inputs | |
| inputs | (Level 3) | |
| (Level 2) | | |
| (In millions) | |
Germany | $ | 224.8 | | | $ | - | | | $ | - | | | $ | 224.8 | |
Canada: | | | | | | | | | | | | | | | |
Local currency equities | | 22.4 | | | | 22.4 | | | | - | | | | - | |
Non local currency equities | | 30.3 | | | | 30.3 | | | | - | | | | - | |
Local currency fixed income | | 38 | | | | 38 | | | | - | | | | - | |
Global mutual fund | | 5.6 | | | | 5.6 | | | | - | | | | - | |
Cash and other | | 2.1 | | | | 2.1 | | | | - | | | | - | |
Norway: | | | | | | | | | | | | | | | |
Local currency equities | | 3.2 | | | | 3.2 | | | | - | | | | - | |
Non local currency equities | | 5.2 | | | | 5.2 | | | | - | | | | - | |
Local currency fixed income | | 40.9 | | | | 40.9 | | | | - | | | | - | |
Non local currency fixed income | | 4.8 | | | | 4.8 | | | | - | | | | - | |
Real estate | | 5.5 | | | | - | | | | - | | | | 5.5 | |
Cash and other | | 7.6 | | | | 7 | | | | - | | | | 0.6 | |
U.S. | | | | | | | | | | | | | | | |
CMRT | | 14.4 | | | | - | | | | 14.4 | | | | - | |
Other | | 10.3 | | | | 3.1 | | | | - | | | | 7.2 | |
Total | $ | 415.1 | | | $ | 162.6 | | | $ | 14.4 | | | $ | 238.1 | |
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| Fair Value Measurements at December 31, 2013 | |
| Total | | Quoted prices | | Significant | | Significant | |
in active markets | other | unobservable | |
(Level 1) | observable | inputs | |
| inputs | (Level 3) | |
| (Level 2) | | |
| (In millions) | |
Germany | $ | 247.5 | | | $ | - | | | $ | - | | | $ | 247.5 | |
Canada: | | | | | | | | | | | | | | | |
Local currency equities | | 24 | | | | 24 | | | | - | | | | - | |
Non local currency equities | | 33 | | | | 33 | | | | - | | | | - | |
Local currency fixed income | | 44.7 | | | | 44.7 | | | | - | | | | - | |
Global mutual fund | | 6.1 | | | | 6.1 | | | | - | | | | - | |
Cash and other | | 0.5 | | | | 0.5 | | | | - | | | | - | |
Norway: | | | | | | | | | | | | | | | |
Local currency equities | | 2 | | | | 2 | | | | - | | | | - | |
Non local currency equities | | 5.2 | | | | 5.2 | | | | - | | | | - | |
Local currency fixed income | | 35 | | | | 35 | | | | - | | | | - | |
Non local currency fixed income | | 3.6 | | | | 3.6 | | | | - | | | | - | |
Real estate | | 4.8 | | | | - | | | | - | | | | 4.8 | |
Cash and other | | 13.2 | | | | 12.4 | | | | - | | | | 0.8 | |
U.S. | | | | | | | | | | | | | | | |
CMRT | | 15.8 | | | | - | | | | 15.8 | | | | - | |
Other | | 11.8 | | | | 3.4 | | | | - | | | | 8.4 | |
Total | $ | 447.2 | | | $ | 169.9 | | | $ | 15.8 | | | $ | 261.5 | |
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A rollforward of the change in fair value of Level 3 assets follows. |
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| 2012 | | 2013 | | | | | | | | | | | |
| (In millions) | | | | | | | | | | | |
Fair value at beginning of year | $ | 200.6 | | | $ | 238.1 | | | | | | | | | | | | |
Gain on assets held at end of year | | 33 | | | | 11.2 | | | | | | | | | | | | |
Gain on assets sold during the year | | 0.1 | | | | - | | | | | | | | | | | | |
Assets purchased | | 15.1 | | | | 16.1 | | | | | | | | | | | | |
Assets sold | | (14.3 | ) | | | (14.6 | ) | | | | | | | | | | | |
Transfers out | | (1.0 | ) | | | - | | | | | | | | | | | | |
Currency exchange rate fluctuations | | 4.6 | | | | 10.7 | | | | | | | | | | | | |
Fair value at end of year | $ | 238.1 | | | $ | 261.5 | | | | | | | | | | | | |
Postretirement benefits other than pensions (OPEB) - We provide certain health care and life insurance benefits for eligible retired employees. Certain of our Canadian employees may become eligible for such postretirement health care and life insurance benefits if they reach retirement age while working for us. In the U.S., employees who retired after 1998 are not entitled to any such benefits. The majority of all retirees are required to contribute a portion of the cost of their benefits and certain current and future retirees are eligible for reduced health care benefits at age 65. We have no OPEB plan assets, rather, we fund medical claims as they are paid. Contribution to our OPEB plans to cover benefit payments are expected to be the equivalent of: |
|
Years ending December 31, | | Amount | | | | | | | | | | | | | | | |
| | (In millions) | | | | | | | | | | | | | | |
2014 | | | 0.5 | | | | | | | | | | | | | | | |
2015 | | | 0.5 | | | | | | | | | | | | | | | |
2016 | | | 0.5 | | | | | | | | | | | | | | | |
2017 | | | 0.5 | | | | | | | | | | | | | | | |
2018 | | | 0.5 | | | | | | | | | | | | | | | |
Next 5 years | | | 2.7 | | | | | | | | | | | | | | | |
The funded status of our OPEB plans is presented in the table below: |
|
| December 31, | | | | | | | | | | | |
| 2012 | | 2013 | | | | | | | | | | | |
| (In millions) | | | | | | | | | | | |
Change in accumulated OPEB obligations: | | | | | | | | | | | | | | | | | | |
Obligations at beginning of the year | $ | 13.2 | | | $ | 14.6 | | | | | | | | | | | | |
Service cost | | 0.3 | | | | 0.3 | | | | | | | | | | | | |
Interest cost | | 0.6 | | | | 0.6 | | | | | | | | | | | | |
Actuarial losses (gains) | | 0.5 | | | | (1.6 | ) | | | | | | | | | | | |
Plan amendments | | - | | | | (4.4 | ) | | | | | | | | | | | |
Curtailment | | - | | | | (.1 | ) | | | | | | | | | | | |
Change in currency exchange rates | | 0.4 | | | | (.9 | ) | | | | | | | | | | | |
Benefits paid from employer contributions | | (.4 | ) | | | (.3 | ) | | | | | | | | | | | |
Obligations at end of the year | | 14.6 | | | | 8.2 | | | | | | | | | | | | |
Fair value of plan assets | | - | | | | - | | | | | | | | | | | | |
Funded status | $ | (14.6 | ) | | $ | (8.2 | ) | | | | | | | | | | | |
Amounts recognized in the balance sheet: | | | | | | | | | | | | | | | | | | |
Current accrued pension costs | $ | (.5 | ) | | $ | (.4 | ) | | | | | | | | | | | |
Noncurrent accrued pension costs | | (14.1 | ) | | | (7.8 | ) | | | | | | | | | | | |
Total | $ | (14.6 | ) | | $ | (8.2 | ) | | | | | | | | | | | |
Accumulated other comprehensive income: | | | | | | | | | | | | | | | | | | |
Net actuarial losses | $ | 5.1 | | | $ | 3 | | | | | | | | | | | | |
Prior service credit | | (4.7 | ) | | | (7.9 | ) | | | | | | | | | | | |
Total | $ | 0.4 | | | $ | (4.9 | ) | | | | | | | | | | | |
The amounts shown in the table above for net actuarial losses and prior service credit at December 31, 2012 and 2013 have not yet been recognized as components of our periodic OPEB cost as of those dates. These amounts will be recognized as components of our periodic OPEB cost in future years and are recognized, net of deferred income taxes, in our accumulated other comprehensive income (loss). We expect to recognize approximately $.3 million of unrecognized actuarial losses and $1.0 million of prior service credit as components of our periodic OPEB cost in 2014. |
At December 31, 2013, the accumulated OPEB obligations for all OPEB plans was comprised of $.9 million related to U.S. plans and $7.3 million related to our Canadian plan (2012 - $1.1 million and $13.5 million, respectively). |
In the fourth quarter of 2013, we amended the benefit formula for most Canadian participants of our plans effective January 1, 2014, resulting in a curtailment gain as of December 31, 2013. Key assumptions including the service cost and benefit duration as of December 31, 2013 now reflect these plan revisions to the benefit formula. |
The components of our periodic OPEB costs are presented in the table below. The amounts shown below for amortization of prior service credit and recognized actuarial losses for 2011, 2012 and 2013 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2010, 2011 and 2012, respectively, net of deferred income taxes. |
|
| Years ended December 31, | | | | | | | |
| 2011 | | 2012 | | 2013 | | | | | | | |
| (In millions) | | | | | | | |
Net periodic OPEB cost: | | | | | | | | | | | | | | | | | | |
Service cost | $ | 0.2 | | | $ | 0.3 | | | $ | 0.3 | | | | | | | | |
Interest cost | | 0.6 | | | | 0.6 | | | | 0.6 | | | | | | | | |
Amortization of prior service credit | | (.8 | ) | | | (.6 | ) | | | (.6 | ) | | | | | | | |
Recognized actuarial losses | | 0.3 | | | | 0.3 | | | | 0.3 | | | | | | | | |
Curtailment gain | | - | | | | - | | | | (.6 | ) | | | | | | | |
Total | $ | 0.3 | | | $ | 0.6 | | | $ | - | | | | | | | | |
The table below details the changes in benefit obligations recognized in accumulated other comprehensive income (loss) during 2011, 2012 and 2013. |
|
| Years ended December 31, | | | | | | | |
| 2011 | | 2012 | | 2013 | | | | | | | |
| (In millions) | | | | | | | |
Changes in benefit obligations recognized in other comprehensive income (loss): | | | | | | | | | | | | | | | | | | |
Current year: | | | | | | | | | | | | | | | | | | |
Net actuarial loss | $ | (2.0 | ) | | $ | (.5 | ) | | $ | 1.6 | | | | | | | | |
Plan amendments/curtailment | | - | | | | - | | | | 4.5 | | | | | | | | |
Amortization of unrecognized: | | | | | | | | | | | | | | | | | | |
Net actuarial loss | | 0.3 | | | | 0.3 | | | | 0.3 | | | | | | | | |
Prior service credit | | (.8 | ) | | | (.6 | ) | | | (1.1 | ) | | | | | | | |
Total | $ | (2.5 | ) | | $ | (.8 | ) | | $ | 5.3 | | | | | | | | |
A summary of our key actuarial assumptions used to determine the net benefit obligation as of December 31, 2012 and 2013 are presented in the table below. The weighted average discount rate was determined using the projected benefit obligation as of such dates. The impact of assumed increases in future compensation levels does not have a material effect on the actuarial present value of the benefit obligation as substantially all of such benefits relate solely to eligible retirees, for which compensation is not applicable. |
|
| 2012 | | 2013 | | | | | | | | | | | |
Healthcare inflation: | | | | | | | | | | | | | | | | | | |
Initial rate | | 7 | % | | | 7 | % | | | | | | | | | | | |
Ultimate rate | | 5 | % | | | 5 | % | | | | | | | | | | | |
Year of ultimate rate achievement | | 2018 | | | 2020 | | | | | | | | | | | |
Weighted average discount rate | | 3.9 | % | | | 4.6 | % | | | | | | | | | | | |
Assumed health care cost trend rates affect the amounts we report for health care plans. A one percent change in assumed health care trend rates would not have a material effect on the net periodic OPEB cost for 2013 or on the accumulated OPEB obligation at December 31, 2013. |
The weighted average discount rate used in determining the net periodic OPEB cost for 2013 was 3.9% (2012 - 4.1%; 2011 - 5.1%). Such weighted average rate was determined using the projected benefit obligation as of the beginning of each year. The impact of assumed increases in future compensation levels does not have a material effect on the net periodic OPEB cost as substantially all of such benefits relate solely to eligible retirees, for which compensation is not applicable. The impact of the assumed rate of return on plan assets also does not have a material effect on the net periodic OPEB cost as there were no plan assets as of December 31, 2012 or 2013. |
Variances from actuarially-assumed rates will result in additional increases or decreases in accumulated OPEB obligations, net periodic OPEB cost and funding requirements in future periods. |