Employee Benefit Plans

Retirement Plans

Defined Benefit

The Company maintains a non-contributory defined benefit pension plan covering substantially all U.S. hourly employees (the U.S. Plan) employed as of April 3, 2010. In addition, the employees at Euramax Coated Products Limited and Ellbee Limited participate in a single employer pension plan (the UK Plan). The measurement date for the U.S. and UK plans is the last day of the fiscal year. The Company curtailed the accrual of participant benefits provided under the UK Plan effective March 31, 2009. This curtailment did not affect the timing for the payment of benefits earned under the UK Plan through the curtailment date. In January 2010, the Company's board of directors approved a motion to freeze future benefit accruals under the U.S. Plan. The impact on the Company's projected benefit obligation was not significant.

The following table sets forth the reconciliations of the change in projected benefit obligations and plan assets, the funded status of the Company's defined benefit plans and the amounts recognized in the Company's consolidated balance sheets:



	Year Ended
	December 31, 2013						December 31, 2012
	US			UK			US			UK
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	13,052		$	48,215		$	11,778		$	45,695
Service cost	64			—			59			—
Interest cost	519			2,046			513			2,371
Actuarial (gain) loss	(1,648		)	732			988			60
Benefits paid	(387		)	(1,933		)	(286		)	(1,995		)
Currency translation adjustment	—			969			—			2,084
Projected benefit obligation at end of year	11,600			50,029			13,052			48,215
Accumulated benefit obligation at end of year	11,600			50,029			13,052			48,215

Change in plan assets:
Fair value of plan assets at beginning of year	7,897			29,427			7,185			26,109
Actual gain (loss) on plan assets	1,744			(200		)	854			1,524
Expected return on assets	—			1,661			—			1,680
Employer contributions	75			626			178			872
Administrative expenses	(39		)	—			(34		)	—
Benefits paid	(387		)	(1,933		)	(286		)	(1,995		)
Currency translation adjustment	—			570			—			1,237
Fair value of plan assets at end of year	9,290			30,151			7,897			29,427
Funded status	$	(2,310	)	$	(19,878	)	$	(5,155	)	$	(18,788	)

Amounts recognized in the consolidated balance sheets:
Other liabilities	$	(2,310	)	$	(19,878	)	$	(5,155	)	$	(18,788	)

Pre-tax amounts in accumulated other comprehensive income not yet recognized as components of net periodic pension cost are as follows:



	December 31, 2013			December 31, 2012
Net actuarial loss	$	(8,115	)	$	(10,134	)
Net amounts recognized in balance sheets	$	(8,115	)	$	(10,134	)

Amounts in accumulated other comprehensive income expected to be recognized as components of net periodic pension costs in 2014 are not significant.

Pre-tax amounts recognized in other comprehensive income consist of the following:



	Year Ended
	December 31, 2013					December 31, 2012					December 30, 2011
	US		UK			US			UK		US			UK
Net actuarial (loss) gain	$	2,730	$	(972	)	$	(743	)	$	1,483	$	(2,448	)	$	(3,300	)
Amortization of actuarial loss	292		36			252			92		43			—
Adjustment (currency loss)	—		—			—			—		—			(25		)
Total recognized in other comprehensive income (loss)	$	3,022	$	(936	)	$	(491	)	$	1,575	$	(2,405	)	$	(3,325	)

The Company expects to contribute approximately $0.4 million and $2.0 million to its U.S. and UK plans, respectively, during fiscal 2014.

Weighted average assumptions used in computing the benefit obligations are as follows:



	December 31, 2013				December 31, 2012
	US		UK		US		UK
Weighted-average assumptions
Discount rate	4.90	%	4.50	%	4.01	%	4.50	%

Weighted average assumptions used in computing net periodic pension cost are as follows:



	Year Ended
	December 31, 2013				December 31, 2012				December 30, 2011
	US		UK		US		UK		US		UK
Weighted-average assumptions
Discount rate	4.01	%	4.50	%	4.40	%	4.90	%	5.57	%	5.40	%
Rate of compensation increases	—		—		—		—		—		—
Expected long-term rate of return on plan assets	8.00	%	6.17	%	8.00	%	6.47	%	8.00	%	6.78	%

Net periodic pension cost for the plans includes the following components:



	Year Ended
	December 31, 2013						December 31, 2012						December 30, 2011
	US			UK			US			UK			US			UK
Components of net periodic pension cost
Service cost	$	64		$	—		$	59		$	—		$	59		$	—
Interest cost	519			2,046			513			2,371			510			2,381
Expected return on assets	(623		)	(1,661		)	(576		)	(1,680		)	(555		)	(1,847		)
Amortization of actuarial loss	292			36			252			92			43			—
Total Company defined benefit net periodic pension cost	252			421			248			783			57			534
Multi-employer benefit expense	1,158			—			1,303			—			1,247			—
Multi-employer pension withdrawal penalty	—			—			39			—			1,200			—
Net periodic pension cost	$	1,410		$	421		$	1,590		$	783		$	2,504		$	534

The following table sets forth the actual asset allocation for the plans as of December 31, 2013, December 31, 2012, and December 30, 2011 and the target asset allocation for the plans:



	December 31, 2013				December 31, 2012				December 30, 2011				Target
	US		UK		US		UK		US		UK		US		UK
Equity securities	71	%	—	%	66	%	—	%	42	%	62	%	55	%	—	%
Debt securities	18	%	36	%	22	%	36	%	23	%	37	%	19	%	35	%
Cash and cash equivalents	1	%	—	%	1	%	1	%	27	%	1	%	3	%	—	%
Investment funds	10	%	64	%	11	%	63	%	8	%	—	%	23	%	65	%

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio.

The investment strategy of the plans is to ensure, over the long-term life of the plan, an adequate pool of assets along with contributions by the Company to support the benefit obligations to participants, retirees, and beneficiaries. The Company desires to achieve market returns consistent with a prudent level of diversification. All investments are made solely in the interest of each plan's participants and beneficiaries for the exclusive purposes of providing benefits to such participants and their beneficiaries and defraying the expenses related to administering the plan. The target allocation of all assets is to reflect proper diversification in order to reduce the potential of a single security or single sector of securities having a disproportionate impact on the portfolio. The Company utilizes an outside investment consultant and investment manager to implement its investment strategy. Plan assets are generally invested in liquid funds that are selected to track broad market equity and bond indices. Investment performance of plan assets is reviewed semi-annually and the investment objectives are evaluated over rolling four year time periods.

The following table presents the fair value of the U.S. Plan pension assets classified under the appropriate level of fair value hierarchy as of December 31, 2013 and December 31, 2012:



	December 31, 2013								December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents(a)	$	88	$	—	$	—	$	88	$	125	$	—	$	—	$	125
Equity securities
U.S Equities (b)	5,245		—		—		5,245		4,002		—		—		4,002
Global Equities (c)	1,298		—		—		1,298		1,191		—		—		1,191
Debt securities (d)	1,699		—		—		1,699		1,716		—		—		1,716
Investment funds (e)	960		—		—		960		863		—		—		863
Total U.S. Plan Assets	$	9,290	$	—	$	—	$	9,290	$	7,897	$	—	$	—	$	7,897


(a)	Cash and cash equivalents consists of a short term investment in marketable securities valued at cost.


(b)	U.S. equities consist of exchange traded funds valued at closing price on the active market which they are traded.


(c)	Global equities consist of mutual funds invested in international equities. The value is based on the net asset value of the fund divided by the number of shares outstanding, which is updated daily. The net asset value is based on quoted market prices for underlying equities. The funds have regularly occurring transactions and regularly available pricing.


(d)	Debt securities consist of mutual funds invested in fixed income securities. The value is based on the net asset value of the fund divided by the number of shares outstanding, which is updated daily. The net asset value is based on market value of the underlying assets. The funds have regularly occurring transactions and regularly available pricing.


(e)	Investment funds consist of balanced equity and debt mutual funds. The value is based on net asset value of the fund divided by the number of shares outstanding, which is updated daily. The net asset value is based on the market value of the underlying assets. The funds have regularly occurring transactions and regularly available pricing.

The following table presents the fair value of the UK Plan pension assets classified under the appropriate level of fair value hierarchy as of December 31, 2013 and December 31, 2012:



	December 31, 2013								December 31, 2012
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents (f)	$	180	$	—	$	—	$	180	$	286	$	—	$	—	$	286
Debt securities (g)	10,805		—		—		10,805		10,702		—		—		10,702
Investment Funds (h)	9,891		9,275		—		19,166		9,541		8,898		—		18,439
Total UK Plan Assets	$	20,876	$	9,275	$	—	$	30,151	$	20,529	$	8,898	$	—	$	29,427


(f)	Cash and cash equivalents consists of cash held in bank accounts and short term investments valued at cost.


(g)	Debt securities consist of a mutual fund invested in corporate bonds. The value is based on the net asset value of the fund divided by the number of shares outstanding, which is updated daily. The net asset value is based on market prices for underlying assets. The fund has regularly occurring transactions and regularly available pricing.


(h)	Investment Funds consist of mutual and pooled pension funds. The value is based on the net asset value of the fund divided by the number of shares outstanding. The net asset value is based on market prices for underlying assets. The funds have regularly available pricing. The funds are classified as Level 1 or Level 2 based on the volume of market activity.

Total benefit payments expected to be paid to participants from the plans are as follows:



	Expected Benefit Payments
	US		UK
2014	$	263	$	1,725
2015	300		1,854
2016	339		1,884
2017	379		1,998
2018	438		2,113
2019 - 2023	3,168		12,156

Multi-employer Benefit Plans

The Company makes contributions to two multi-employer defined benefit pension plans based on obligations under collective bargaining agreements covering employees in our Feasterville, Pennsylvania and Ivyland, Pennsylvania locations. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

a) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b) If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c) If the Company chooses to stop participating in one of its multiemployer plans, it may be required to pay the plan an amount based on the underfunded status of the plan, referred to as withdrawal liability.

Withdrawal Activity

In prior years, the Company made payments based on hours worked into a multi-employer pension trust established for the benefit of certain collective bargaining employees in our Romeoville, Illinois location. During the second quarter of 2011, the Company announced plans to move its operations in Romeoville, IL to its existing facility in Nappanee, IN. This move, intended to reduce fixed overhead costs, triggered an early withdrawal from the Central States, Southeast and Southwest Areas Pension Plan benefiting hourly employees at the Romeoville facility. As a result, the Company recorded a $1.2 million charge in its U.S. Residential Products segment for liabilities associated with this withdrawal. The liability represents the present value of future payments for the Company's proportionate share of unfunded vested benefits under the multiemployer plan. The Company received notification of the final assessment from the plan trustee in July 2012. The total withdrawal liability was determined to be $1.2 million and will be settled over a 20 year period. Total contributions to the Central States, Southeast and Southwest Areas Pension Plan were not significant in 2011 .

Plan Contributions

The Company’s participation in these plans for the annual period ended December 31, 2013, is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number (EIN) and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status available in 2013 and 2012 is for the plan’s year-end as of December 31, 2012 and December 30, 2011, respectively. The zone status is based on information the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. This last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject. The Company's contributions to the Teamsters Pension Trust Fund of Philadelphia and Vicinity have not exceeded 5 percent of total plan contributions for the fiscal years 2013, 2012 or 2011. The Company's contributions to the Warehouse Employees Local 169 and Employers Joint Pension Fund exceeded 5 percent in 2013, 2012 and 2011.



		Pension Protection Act Zone Status			Company Contributions (in thousands)
		Pension Protection Act Zone Status			Company Contributions (in thousands)							Expiration of Collective Bargaining Agreement
Plan Name	EIN/Pension Plan Number	2013	2012	FIP/RP Status Implemented	2013		2012		2011		Surcharge Imposed	Expiration of Collective Bargaining Agreement
Teamsters Pension Trust Fund of Philadelphia and Vicinity (1)	23-1511735/001	Yellow	Yellow	Implemented	$	220	$	213	$	211	No	12/31/2015
Warehouse Employees Local 169 and Employers Joint Pension Fund	23-6230368/001	Red	Red	Implemented	$	938	$	955	$	1,036	Yes	12/31/2017
Total contributions					$	1,158	$	1,168	$	1,247

(1) The Trustees of the Teamsters Pension Trust Fund of Philadelphia and Vicinity elected to apply the special amortization and special asset valuation provisions provided for under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010) for Plan Years beginning January 1, 2009 and later. The special amortization rule allows that portion of the plan’s experience loss attributable to net investment losses incurred in the year ended December 31, 2008 to be amortized over a 30-year period rather than a 15-year period. The special asset valuation rule allows the recognition of investment losses in the year ended December 31, 2008 to be spread over a 10-year period rather than a 5-year period.

Supplemental Executive Retirement Plan

The Company has a supplemental retirement plan for certain named members of management. At December 31, 2013 and December 31, 2012 the accrued liability for future benefits under the plan was $0.2 million and $0.4 million, respectively. This liability is recorded in other liabilities in the consolidated balance sheets. Benefits expense in 2013, 2012 and 2011 was not significant. Amounts recognized in or reclassified from other comprehensive income (loss) related to the Supplemental Executive Retirement Plan were not significant for 2013, 2012, or 2011.

Defined Contribution

The Company maintains two defined contribution retirement and savings plans for U.S. employees, which allow the employees to contribute a percentage of their pretax and/or after-tax income in accordance with specified guidelines. The Company matches a certain percentage of employee pre-tax contributions up to certain limits. Further, the plans provide for discretionary contributions by the Company based on years of service and age. The Company's expense in 2013, 2012 and 2011 was $0.7 million, $0.6 million and $0.6 million, respectively.

The Company also contributes to various defined contribution plans for European employees. Total contributions under these plans in 2013, 2012, and 2011 totaled $2.2 million, $2.2 million and $2.1 million, respectively.

Incentive Plans

The Company has an incentive compensation plan that covers key employees. The costs of the plan are computed in accordance with a formula that incorporates EBITDA (as defined in the plan) and return on average net assets. Compensation expense recorded under the plan in 2013, 2012, and 2011 was not significant.

In May 2011, the Company established the Phantom Stock Plan (the "Plan”) to provide a limited number of key employees a long term monetary incentive based on the financial condition and performance of the Company. The Plan allows for a maximum of 5,000 Phantom Shares, of which 1,104 and 386 units were granted during 2013 and 2012, respectively. Under the Plan, participants are granted Phantom Shares which entitle the participant to receive payments in cash which are determined based on the Company's earnings and outstanding debt as of the measurement date. In December 2012, the measurement date was amended from the original measurement date of December 31, 2013 to December 31, 2015. No other changes or amendments to the plan were made. Payments are to be made in two equal installments as of the last day of the first quarter of 2016 and 2017. Participants must be employed on the date of payout to be eligible for the cash reward. At each reporting date, the Company updates the liability related to this award based on grants, forfeitures, and other inputs, as applicable, which may result in recognition of additional expense or benefit. The Company determined as of December 31, 2013, the liability related to the Plan no longer met the probability threshold required by generally accepted accounting principles for recognition in the financial statements. As a result, previously recorded compensation expense of $2.4 million was reversed within selling, general, and administrative expenses during the fourth quarter of 2013. Total compensation expense related to the Plan recorded in fiscal year 2013 was a benefit of $1.6 million and total compensation expense recorded in 2012 and 2011 were $0.3 million and $1.3 million, respectively. As of December 31, 2012, the associated liability was recorded within other liabilities on the consolidated balance sheet. The Company believes payout related to the Plan remains reasonably possible and the likely range is from $1.1 million to $1.3 million.