U.K. PENSION PLAN:

In connection with the acquisition of Freightliner, the Company assumed a defined benefit pension plan for its U.K. employees through a standalone section of the Railways Pension Program (Pension Program). The Pension Program is a shared cost arrangement with required contributions shared between Freightliner (60%) and the active members of the Pension Program (40%). The Pension Program is managed by the program's trustees with professional advice obtained from actuaries and other advisers. The Company engages independent actuaries to compute the amounts of liabilities and expenses relating to the Pension Program subject to the assumptions that the Company selects.

The following table presents the actuarial assumptions used to compute the funded status of the Pension Program as of the March 25, 2015 acquisition date and for the calculation of net periodic pension expense associated with the Pension Program for the three and six months ended June 30, 2015:



Discount rate		3.2%
Expected return on plan assets		5.9%
Rate of compensation increase		3.4%

The following table presents the pension liability for the net funded status of the Pension Program as of March 25, 2015 (amounts in thousands):



	March 25, 2015
	GBP			USD
Projected benefit obligation	£	241,636		$	359,941
Fair value of plan assets	184,470			274,787
Funded status	£	(57,166	)	$	(85,154	)

The following table presents the major categories of the Pension Program's plan assets as of March 25, 2015 (amounts in thousands):



	March 25, 2015
	GBP		USD
Growth pooled fund (a)	£	122,016	$	181,755
Defensive pooled fund (b)	24,034		35,801
Private equity pooled fund (c)	20,725		30,872
Government bond pooled fund (d)	10,222		15,227
Infrastructure pooled fund (e)	7,473		11,132
Fair value of plan assets	£	184,470	$	274,787

(a) The growth pooled fund is comprised of global equities, emerging market bonds and hedge funds.

(b) The defensive pool fund is comprised of the Non-Government Bond Pooled Fund, the Government Bond Pooled Fund and cash.

(c) The private equity pooled fund is comprised of a series of sub funds, each representing a different vintage of private equity investment.

(d) The government bond pooled fund is comprised of government debt for developed markets, global investment grade corporate bonds and the Non-Government Bond Pooled Fund.

(e) Infrastructure pooled fund is comprised of investments in facilities, structures and services required to facilitate the orderly operation of the economy.

The following table summarizes the components of the Pension Program related to the net benefit costs recognized in labor and benefits in the Company's consolidated statement of operations for the three and six months ended June 30, 2015 (dollars in thousands):



	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2015			2015
Service cost	$	3,565		$	3,775
Interest cost	2,539			2,688
Expected return on plan assets	(3,964		)	(4,197		)
Net periodic benefit cost	$	2,140		$	2,266

The Company expects to contribute £6.3 million (or $9.9 million at the exchange rate on June 30, 2015) to the Pension Program for the period between the March 25, 2015 Freightliner acquisition date and December 31, 2015. As of June 30, 2015, contributions of £1.8 million (or $2.8 million at the exchange rate on June 30, 2015) have been made to fund the Pension Program since the acquisition date. The Pension Program's assets may undergo significant changes over time as a result of market conditions. In the event that the Pension Program's projected assets and liabilities reveal additional funding requirements, the shared cost arrangement generally means that Freightliner will be required to pay 60% of any additional contributions, with active members contributing the remaining 40%, in each case over an agreed recovery period.