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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
Employee Benefit Plans

We sponsor two union pension plans that cover certain union employees (“USW plan” and “IUOE plan,” collectively, the "Union plans") and a pension plan for all non-union employees (“Salaried plan”), a postretirement benefit plan for certain employees and a defined contribution plan.

The annual measurement date of these plans is December 31. The following table presents the changes in benefit obligations and plan assets for pension benefits and other postretirement benefits for the years ended December 31, 2014 and 2015 (in thousands):
 
 
Pension Benefits
 
Other Postretirement Benefits
 
 
2014
 
2015
 
2014
 
2015
Change in benefit obligation:
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
142,310

 
$
190,663

 
$
10,418

 
$
12,446

Service cost
 
13,400

 
18,890

 
227

 
243

Interest cost
 
6,675

 
7,754

 
506

 
438

Plan participants’ contributions
 
—

 
—

 
210

 
199

Plan amendment
 
—

 
(3,610
)
 
—

 
—

Actuarial loss (gain)
 
37,934

 
574

 
1,951

 
(579
)
Benefits paid
 
(4,196
)
 
(4,680
)
 
(866
)
 
(1,433
)
Settlement payments
 
(5,460
)
 
—

 
—

 
—

Benefit obligation at end of year
 
190,663

 
209,591

 
12,446

 
11,314

Change in plan assets:
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
100,556

 
127,267

 
—

 
—

Employer contributions
 
24,056

 
20,482

 
656

 
1,234

Plan participants’ contributions
 
—

 
—

 
210

 
199

Actual return on plan assets
 
12,311

 
(327
)
 
—

 
—

Benefits paid
 
(4,196
)
 
(4,680
)
 
(866
)
 
(1,433
)
Settlement payments
 
(5,460
)
 
—

 
—

 
—

Fair value of plan assets at end of year
 
127,267

 
142,742

 
—

 
—

Funded status at end of year
 
$
(63,396
)
 
$
(66,849
)
 
$
(12,446
)
 
$
(11,314
)
Accumulated benefit obligation
 
$
137,851

 
$
148,906

 
 
 
 

The amounts included in pension benefits in the previous table combine the Union plans with the Salaried plan. At December 31, 2014, the fair value of each of the pension plans' assets was less than the fair values of the respective accumulated benefit obligations. At December 31, 2015, the USW and Salaried plans had a combined accumulated benefit obligation of $146.8 million, which exceeded the combined fair value of the plans' assets of $140.6 million.

The 2014 actuarial loss of $37.9 million was due primarily to the impact of decreases in the discount rate used to calculate the benefit obligation, combined with a change to the mortality rates using RP-2014 mortality tables.

The salaried and USW plans were amended effective January 1, 2016 to adjust the benefit calculation from a traditional final average pay formula to a cash balance formula for certain participants. We accounted for this change as a negative plan amendment which resulted in a reduction of our pension liability of $3.6 million.

Amounts recognized in the consolidated balance sheets included in these financial statements were as follows (in thousands):
 
 
Pension Benefits
 
Other Postretirement Benefits
 
 
2014
 
2015
 
2014
 
2015
Amounts recognized in consolidated balance sheets:
 
 
 
 
 
 
 
 
Current accrued benefit cost
 
$
—

 
$
—

 
$
687

 
$
612

Long-term pension and benefits
 
63,396

 
66,849

 
11,759

 
10,702

 
 
63,396

 
66,849

 
12,446

 
11,314

Accumulated other comprehensive loss:
 
 
 
 
 
 
 
 
Net actuarial loss
 
(63,257
)
 
(65,889
)
 
(8,744
)
 
(7,280
)
Prior service credit
 
—

 
3,610

 
7,048

 
3,335

 
 
(63,257
)
 
(62,279
)
 
(1,696
)
 
(3,945
)
Net amount of liabilities and accumulated other comprehensive loss recognized in consolidated balance sheets
 
$
139

 
$
4,570

 
$
10,750

 
$
7,369



Net periodic benefit expense for the years ended December 31, 2013, 2014 and 2015 were as follows (in thousands): 
 
 
Pension Benefits
 
Other  Postretirement Benefits
 
 
2013
 
2014
 
2015
 
2013
 
2014
 
2015
Components of net periodic pension and postretirement benefit expense:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
13,901

 
$
13,400

 
$
18,890

 
$
288

 
$
227

 
$
243

Interest cost
 
5,368

 
6,675

 
7,754

 
412

 
506

 
438

Expected return on plan assets
 
(6,228
)
 
(6,363
)
 
(8,037
)
 
—

 
—

 
—

Amortization of prior service cost (credit)
 
307

 
33

 
—

 
(3,712
)
 
(3,713
)
 
(3,713
)
Amortization of actuarial loss
 
4,334

 
3,071

 
6,306

 
1,035

 
915

 
885

Settlement cost(1)
 
—

 
1,809

 
—

 
—

 
—

 
—

Net periodic expense (credit)
 
$
17,682

 
$
18,625

 
$
24,913

 
$
(1,977
)
 
$
(2,065
)
 
$
(2,147
)


(1) Eleven participants took a lump sum distribution from the USW plan in 2014, resulting in a pension settlement cost of $1.8 million.

Other changes in plan assets and benefit obligations recognized in other comprehensive loss during 2014 and 2015 were as follows (in thousands):
 
 
Pension Benefits
 
Other Postretirement Benefits
 
 
2013
 
2014
 
2015
 
2013
 
2014
 
2015
Beginning balance
 
$
(52,239
)
 
$
(36,184
)
 
$
(63,257
)
 
$
3,055

 
$
3,053

 
$
(1,696
)
Net actuarial gain (loss)
 
11,414

 
(31,986
)
 
(8,938
)
 
2,675

 
(1,951
)
 
579

Plan amendment
 
—

 
—

 
3,610

 
—

 
—

 
—

Amortization of prior service cost (credit)
 
307

 
33

 
—

 
(3,712
)
 
(3,713
)
 
(3,713
)
Amortization of actuarial loss
 
4,334

 
3,071

 
6,306

 
1,035

 
915

 
885

Settlement cost
 
—

 
1,809

 
—

 
—

 
—

 
—

Amount recognized in other comprehensive loss
 
16,055

 
(27,073
)
 
978

 
(2
)
 
(4,749
)
 
(2,249
)
Ending balance
 
$
(36,184
)
 
$
(63,257
)
 
$
(62,279
)
 
$
3,053

 
$
(1,696
)
 
$
(3,945
)


We match our employees' qualifying contributions to our defined contribution plan, resulting in expense to us. Expenses related to the defined contribution plan were $7.1 million, $8.3 million and $8.9 million in 2013, 2014 and 2015, respectively.

Actuarial gains and losses are amortized over the average future service period of current active plan participants expected to receive benefits. The corridor approach is used to determine when actuarial gains and losses are to be amortized and is equal to 10 percent of the greater of the projected benefit obligation or the market related value of plan assets. The amount of gain or loss in excess of the calculated corridor is subject to amortization. The estimated net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from AOCL into net periodic benefit cost in 2016 are $4.9 million and $(0.2) million, respectively. The estimated net actuarial loss and prior service credit for the other defined benefit postretirement plan that will be amortized from AOCL into net periodic benefit cost in 2016 are $0.7 million and $(3.3) million, respectively.

The weighted-average rate assumptions used to determine benefit obligations as of December 31, 2014 and 2015 were as follows:  
 
 
Pension Benefits
 
Other
Postretirement Benefits
 
 
2014
 
2015
 
2014
 
2015
Discount rate—Salaried plan
 
3.91%
 
3.95%
 
n/a
 
n/a
Discount rate—USW plan
 
3.56%
 
3.82%
 
n/a
 
n/a
Discount rate—IUOE plan
 
3.93%
 
4.03%
 
n/a
 
n/a
Discount rate—Other Postretirement Benefits
 
n/a
 
n/a
 
3.66%
 
4.00%
Rate of compensation increase—Salaried plan
 
5.00%
 
*
 
n/a
 
n/a
Rate of compensation increase—USW plan
 
3.50%
 
3.50%
 
n/a
 
n/a
Rate of compensation increase—IUOE plan
 
5.00%
 
5.00%
 
n/a
 
n/a

*The 2015 rate of compensation increase assumption is calculated by 10-year age groupings beginning with ages 20-29 at 11% dropping to 4% by ages 70 and above.


The weighted-average rate assumptions used to determine net pension and other postretirement benefit expense for the years ended December 31, 2013, 2014 and 2015 were as follows:
 
 
 
Pension Benefits
 
Other
Postretirement Benefits
 
 
2013
 
2014
 
2015
 
2013
 
2014
 
2015
Discount rate—Salaried plan
 
4.00%
 
4.89%
 
3.91%
 
n/a
 
n/a
 
n/a
Discount rate—USW plan
 
3.39%
 
4.07%
 
3.56%
 
n/a
 
n/a
 
n/a
Discount rate—IUOE plan
 
3.99%
 
4.89%
 
3.93%
 
n/a
 
n/a
 
n/a
Discount rate—Other Postretirement Benefits
 
n/a
 
n/a
 
n/a
 
3.58%
 
4.52
%
 
3.66
%
Rate of compensation increase—Salaried plan
 
5.00%
 
5.00%
 
5.50%
 
n/a
 
n/a
 
n/a
Rate of compensation increase—USW plan
 
3.50%
 
3.50%
 
3.50%
 
n/a
 
n/a
 
n/a
Rate of compensation increase—IUOE plan
 
5.00%
 
5.00%
 
5.00%
 
n/a
 
n/a
 
n/a
Expected rate of return on plan assets—Salaried plan
 
6.80%
 
6.00%
 
6.00%
 
n/a
 
n/a
 
n/a
Expected rate of return on plan assets—USW plan
 
6.80%
 
6.00%
 
6.00%
 
n/a
 
n/a
 
n/a
Expected rate of return on plan assets—IUOE plan
 
6.80%
 
6.00%
 
6.00%
 
n/a
 
n/a
 
n/a


The 2014 discount rate for the USW plan reflects a combination of the rates prior to and after the lump sum settlement payments made during 2014.

The non-pension postretirement benefit plans provide for retiree contributions and contain other cost-sharing features such as deductibles and coinsurance. The accounting for these plans anticipates future cost sharing that is consistent with management's expressed intent to increase the retiree contribution rate generally in line with health care cost increases.
 
The annual assumed rate of increase in the health care cost trend rate for 2016 is 5.1% decreasing systematically to 4.3% by 2092 for pre-65 year-old participants. The health care cost trend rate assumption has an effect on the amounts reported. As of December 31, 2015, a 1.0% change in assumed health care cost trend rates would have the following effect (in thousands):  
 
 
1%
Increase
 
1%
Decrease
Change in total of service and interest cost components
 
$
29

 
$
27

Change in postretirement benefit obligation
 
$
473

 
$
435



The fair value of the pension plan assets at December 31, 2014 were as follows (in thousands):
Asset Category
 
Total
 
Quoted Prices in Active  Markets for
Identical Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Domestic Equity Securities(a):
 
 
 
 
 
 
 
 
Small-cap fund
 
$
3,050

 
$
3,050

 
$
—

 
$
—

Mid-cap fund
 
3,025

 
3,025

 
—

 
—

Large-cap fund
 
22,760

 
22,760

 
—

 
—

International equity fund
 
13,990

 
13,990

 
—

 
—

Fixed Income Securities(a):
 
 
 
 
 
 
 
 
Short-term bond funds
 
3,485

 
3,485

 
—

 
—

Intermediate-term bond funds
 
19,713

 
19,713

 
—

 
—

Long-term investment grade bond funds
 
56,361

 
56,361

 
—

 
—

Other:
 
 
 
 
 
 
 
 
Short-term investment funds
 
4,603

 
4,603

 
—

 
—

Group annuity contract
 
280

 
—

 
—

 
280

Fair value of plan assets
 
$
127,267

 
$
126,987

 
$
—

 
$
280

 
 
 
 
 
 
 
 
 
(a) We hold equity and fixed income securities through investments in mutual funds, which are dedicated to each category as indicated.

The fair value of the pension plan assets at December 31, 2015 were as follows (in thousands):
Asset Category
 
Total
 
Quoted Prices in Active  Markets for
Identical Assets
(Level 1)
 
Significant
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Domestic Equity Securities(a):
 
 
 
 
 
 
 
 
Small-cap fund
 
$
3,492

 
$
3,492

 
$
—

 
$
—

Mid-cap fund
 
3,495

 
3,495

 
—

 
—

Large-cap funds
 
26,304

 
26,304

 
—

 
—

International equity fund
 
16,530

 
16,530

 
—

 
—

Fixed Income Securities(a):
 
 
 
 
 
 
 
 
Short-term bond funds
 
3,834

 
3,834

 
—

 
—

Intermediate-term bond funds
 
18,141

 
18,141

 
—

 
—

Long-term investment grade bond funds
 
66,758

 
66,758

 
—

 
—

Other:
 
 
 
 
 
 
 
 
Short-term investment funds
 
3,944

 
3,944

 
—

 
—

Group annuity contract
 
244

 
—

 
—

 
244

Fair value of plan assets
 
$
142,742

 
$
142,498

 
$
—

 
$
244

 
 
 
 
 
 
 
 
 
(a) We hold equity and fixed income securities through investments in mutual funds, which are dedicated to each category as indicated.
The group annuity contract is valued at contract value, which approximates fair value as determined by the contract provider. The balance at the end of the year represents total contributions plus interest earned less benefit payments and expenses paid. The group annuity contract is guaranteed a specified return, by the Metropolitan Life Insurance Company, based on the Barclay's Capital Aggregate Bond Fund return. The fair value measurements for the group annuity contract which used significant unobservable inputs (Level 3) for the years ended December 31, 2014 and 2015 were as follows (in thousands):
 
2014
 
2015
Beginning balance
$
297

 
$
280

Actual return on plan assets:
 
 
 
Relating to assets still held at the reporting date
17

 
1

Purchases, issuances, sales and settlements:
 
 
 
Settlements
(34
)
 
(37
)
Ending balance
$
280

 
$
244



The investment strategies for the various funds held as pension plan assets by asset category are as follows: 
 
 
 
Asset Category
 
Fund’s Investment Strategy
Domestic Equity Securities:
 
 
Small-cap fund
 
Seeks to track performance of the Center for Research in Security Prices ("CRSP") US Small Cap Index
Mid-cap fund
 
Seeks to track performance of the CRSP US Mid Cap Index
Large-cap funds
 
Seeks to track performance of the Standard & Poor’s 500 Index
International equity fund
 
Seeks long-term growth of capital by investing 65% or more of assets in international equities
Fixed Income Securities:
 
 
Short-term bond funds
 
Seeks current income with limited price volatility through investment in primarily high quality bonds
Intermediate-term bond funds
 
Seeks moderate and sustainable level of current income by investing primarily in high quality fixed income securities with maturities from five to ten years
Long-term investment grade bond funds
 
Seeks high and sustainable current income through investment primarily in long-term high grade bonds
Other:
 
 
Short-term investment funds
 
Invests primarily in high quality commercial paper and government securities
Group annuity contract
 
Guarantees a specified return based on a specified index

The expected long-term rate of return on plan assets was determined by combining a review of projected returns, historical returns of portfolios with assets similar to the current portfolios of the union and non-union pension plans and target weightings of each asset classification. Our investment objective for the assets within the pension plans is to earn a return that meets or exceeds the growth of obligations that result from interest and changes in the discount rate, while avoiding excessive risk. Defined diversification goals are set in order to reduce the risk of wide swings in the market value from year to year, or of incurring large losses that may result from concentrated positions. As a result, our plan assets have no significant concentrations of credit risk. Additionally, liquidity risks are minimized because all of the funds that the plans have invested in are publicly traded. We evaluate risks based on the potential impact of the predictability of contribution requirements, probability of under-funding, expected risk-adjusted returns and investment return volatility. Funds are invested with multiple investment managers. Our segment liabilities are calculated using rates defined by the Pension Protection Act of 2006. Investments are made so as to match the durations of the short and intermediate term liabilities. Additional investments are made to bring the overall investment allocation to 70% debt securities and 30% equity securities.

The target allocation and actual weighted-average asset allocation percentages at December 31, 2014 and 2015 were as follows:
 
 
2014
 
2015
 
 
Actual(a)
 
Target
 
Actual(a)
 
Target
Equity securities
 
34%
 
30%
 
35%
 
30%
Debt securities
 
62%
 
67%
 
62%
 
67%
Other
 
4%
 
3%
 
3%
 
3%
 
 
 
 
 
 
 
 
 
(a)
Cash contributions of $24.1 million and $20.5 million were made to the pension plans during 2014 and 2015, respectively. Amounts contributed in 2014 and 2015 in excess of benefit payments made were to be invested in debt and equity securities over a twelve-month period, with the amounts that remained uninvested as of December 31, 2014 and 2015 scheduled for investment in accordance with the target. Excluding these uninvested cash amounts, the actual allocation percentages at December 31, 2014 would have been 35% equity securities and 65% debt securities and at December 31, 2015, would have been 36% equity securities and 64% debt securities. In 2016, we will invest these uninvested cash amounts to bring the total asset allocation in line with the target allocation.

As of December 31, 2015, the benefit amounts we expect to pay through December 31, 2025 were as follows (in thousands): 
 
 
Pension
Benefits
 
Other
Postretirement
Benefits
2016
 
$
8,300

 
$
612

2017
 
$
13,351

 
$
629

2018
 
$
14,343

 
$
668

2019
 
$
15,440

 
$
722

2020
 
$
19,944

 
$
790

2021 through 2025
 
$
100,735

 
$
4,422


Contributions estimated to be paid into the plans in 2016 are $22.9 million and $0.6 million for the pension and other postretirement benefit plans, respectively.