NOTE 10: BENEFIT PLANS

PENSION PLANS

We sponsor three funded, noncontributory defined benefit pension plans. These plans cover substantially all employees hired prior to July 2007, other than those covered by union-administered plans. Normal retirement age is 65, but the plans contain provisions for earlier retirement. Benefits for the Salaried Plan and the Chemicals Hourly Plan are generally based on salaries or wages and years of service; the Construction Materials Hourly Plan provides benefits equal to a flat dollar amount for each year of service. In addition to these qualified plans, we sponsor three unfunded, nonqualified pension plans. The projected benefit obligation presented in the table below includes $101,230,000 and $93,600,000, respectively, related to these unfunded, nonqualified pension plans for 2014 and 2013.

Effective July 2007, we amended our defined benefit pension plans to no longer accept new participants. In December 2013, we amended our defined benefit pension plans so that future service accruals for salaried pension participants ceased effective December 31, 2013. This change included a special transition provision which will allow covered compensation through December 31, 2015 to be considered in the participants’ benefit calculations. The amendment resulted in a curtailment and remeasurement of the salaried and nonqualified pension plans in May 2013 that reduced our 2013 pension expense by approximately $7,600,000 (net of the one-time curtailment loss) of which $800,000 was related to discontinued operations.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:



in thousands	2014	2013
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 911,700	$ 991,338
Service cost	4,157	21,904
Interest cost	44,392	40,995
Plan amendment 1	0	(39,443)
Actuarial (gain) loss	167,041	(61,548)
Benefits paid	(44,068)	(41,546)
Projected benefit obligation at end of year	$ 1,083,222	$ 911,700
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 756,624	$ 683,091
Actual return on plan assets	98,928	110,224
Employer contribution	5,488	4,855
Benefits paid	(44,068)	(41,546)
Fair value of assets at end of year	$ 816,972	$ 756,624
Funded status	(266,250)	(155,076)
Net amount recognized	$ (266,250)	$ (155,076)
Amounts Recognized in the Consolidated
Balance Sheets
Noncurrent assets	$ 0	$ 3,056
Current liabilities	(13,719)	(11,398)
Noncurrent liabilities	(252,531)	(146,734)
Net amount recognized	$ (266,250)	$ (155,076)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 249,867	$ 142,173
Prior service credit	(356)	(168)
Total amount recognized	$ 249,511	$ 142,005


1	The 2013 amendment eliminated future accruals for salaried pension participants effective December 31, 2013.

The accumulated benefit obligation (ABO) and the projected benefit obligation (PBO) exceeded plan assets for all of our defined benefit plans at December 31, 2014 and all plans except the Chemicals Hourly Plan at December 31, 2013. At December 31, 2013, assets in the Chemicals Hourly Plan of $91,803,000 exceeded its ABO by $3,919,000 and its PBO by $3,056,000. The ABO for all of our defined benefit pension plans totaled $1,061,816,000 (unfunded, nonqualified plans of $95,154,000) at December 31, 2014 and $891,394,000 (unfunded, nonqualified plans of $89,289,000) at December 31, 2013.

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income and weighted-average assumptions of the plans at December 31:



dollars in thousands	2014	2013	2012
Components of Net Periodic Pension
Benefit Cost
Service cost	$ 4,157	$ 21,904	$ 22,349
Interest cost	44,392	40,995	43,194
Expected return on plan assets	(50,802)	(47,425)	(48,780)
Curtailment loss	0	855	0
Amortization of prior service cost	188	339	274
Amortization of actuarial loss	11,221	20,429	19,526
Net periodic pension benefit cost	$ 9,156	$ 37,097	$ 36,563
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial loss (gain)	$ 118,915	$ (163,205)	$ 63,981
Prior service cost (credit)	0	(583)	1,286
Reclassification of actuarial loss to net
periodic pension benefit cost	(11,221)	(20,429)	(19,526)
Reclassification of prior service cost to net
periodic pension benefit cost	(188)	(1,194)	(274)
Amount recognized in other comprehensive
income	$ 107,506	$ (185,411)	$ 45,467
Amount recognized in net periodic pension
benefit cost and other comprehensive
income	$ 116,662	$ (148,314)	$ 82,030
Assumptions
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	4.91%	4.33%	4.96%
Expected return on plan assets	7.50%	7.50%	8.00%
Rate of compensation increase
(for salary-related plans)	3.50%	3.50%	3.50%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	4.14%	4.91%	4.19%
Rate of compensation increase
(for salary-related plans)	3.70%	3.50%	3.50%

The estimated net actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic pension benefit cost during 2015 are $20,762,000 and $47,000, respectively.

Assumptions regarding our expected return on plan assets are based primarily on judgments made by us and the Finance Committee of our Board. These judgments take into account the expectations of our pension plan consultants and actuaries and our investment advisors. We base our expected return on long-term investment expectations. The expected return on plan assets used to determine 2014 pension benefit cost was 7.50%.

We establish our pension investment policy by evaluating asset/liability studies periodically performed by our consultants. These studies estimate trade-offs between expected returns on our investments and the variability in anticipated cash contributions to fund our pension liabilities. Our policy balances the variability in potential pension fund contributions to expected returns on our investments.

Our current strategy for implementing this policy is to invest in publicly traded equities and in publicly traded debt and private, nonliquid opportunities, such as venture capital, commodities, buyout funds and mezzanine debt. The target allocation ranges for plan assets are as follows: equity securities — 50% to 77%; debt securities — 15% to 27%; specialty investments — 0% to 20%; commodities — 0% to 6%; and cash reserves — 0% to 5%. Equity securities include domestic investments and foreign equities in the Europe, Australia and Far East (EAFE) and International Finance Corporation (IFC) Emerging Market Indices. Debt securities primarily include domestic debt instruments, while specialty investments include investments in venture capital, buyout funds, mezzanine debt, private partnerships and an interest in a commodity index fund.

The fair values of our pension plan assets at December 31, 2014 and 2013 by asset category are as follows:

Fair Value Measurements at December 31, 2014



in thousands	Level 1 1	Level 2 1	Level 3 1	Total
Asset Category
Debt securities	$ 0	$ 164,695	$ 0	$ 164,695
Investment funds
Commodity funds	0	19,480	0	19,480
Equity funds	457	506,912	0	507,369
Short-term funds	0	15,495	0	15,495
Venture capital and partnerships	0	0	109,933	109,933
Total pension plan assets	$ 457	$ 706,582	$ 109,933	$ 816,972


1	See Note 1 under the caption Fair Value Measurements for a description of the fair value hierarchy.

Fair Value Measurements at December 31, 2013



in thousands	Level 1 1	Level 2 1	Level 3 1	Total
Asset Category
Debt securities	$ 0	$ 137,034	$ 0	$ 137,034
Investment funds
Commodity funds	0	23,773	0	23,773
Equity funds	602	490,355	0	490,957
Short-term funds	0	16,378	0	16,378
Venture capital and partnerships	0	0	88,482	88,482
Total pension plan assets	$ 602	$ 667,540	$ 88,482	$ 756,624


1	See Note 1 under the caption Fair Value Measurements for a description of the fair value hierarchy.

At each measurement date, we estimate the fair value of our pension assets using various valuation techniques. We utilize, to the extent available, quoted market prices in active markets or observable market inputs in estimating the fair value of our pension assets. When quoted market prices or observable market inputs are not available, we utilize valuation techniques that rely on unobservable inputs to estimate the fair value of our pension assets. The following describes the types of investments included in each asset category listed in the tables above and the valuation techniques we used to determine the fair values as of December 31, 2014 and 2013.

The debt securities category consists of bonds issued by U.S. federal, state and local governments, corporate debt securities, fixed income obligations issued by foreign governments, and asset-backed securities. The fair values of U.S. government and corporate debt securities are based on current market rates and credit spreads for debt securities with similar maturities. The fair values of debt securities issued by foreign governments are based on prices obtained from broker/dealers and international indices. The fair values of asset-backed securities are priced using prepayment speed and spread inputs that are sourced from the new issue market.

Investment funds consist of exchange traded and non-exchange traded funds. The commodity funds asset category consists of a single open-end commodity mutual fund. The equity funds asset category consists of index funds for domestic equities and an actively managed fund for international equities. The short-term funds asset category consists of a collective investment trust invested in highly liquid, short-term debt securities. For investment funds publicly traded on a national securities exchange, the fair value is based on quoted market prices. For investment funds not traded on an exchange, the total fair value of the underlying securities is used to determine the net asset value for each unit of the fund held by the pension fund. The estimated fair values of the underlying securities are generally valued based on quoted market prices. For securities without quoted market prices, other observable market inputs are utilized to determine the fair value.

The venture capital and partnerships asset category consists of various limited partnership funds, mezzanine debt funds and leveraged buyout funds. The fair value of these investments has been estimated based on methods employed by the general partners, including consideration of, among other things, reference to third-party transactions, valuations of comparable companies operating within the same or similar industry, the current economic and competitive environment, creditworthiness of the corporate issuer, as well as market prices for instruments with similar maturity, term, conditions and quality ratings. The use of different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly different estimates of fair value of these securities.

A reconciliation of the fair value measurements of our pension plan assets using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and 2014 is presented below:

Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)



			Venture
			Capital and
in thousands			Partnerships
Balance at December 31, 2012			$ 98,011
Total gains (losses) for the period			10,581
Purchases, sales and settlements, net			(20,110)
Transfers in (out) of Level 3			0
Balance at December 31, 2013			$ 88,482
Total gains (losses) for the period 1			34,071
Purchases, sales and settlements, net			(12,940)
Transfers in (out) of Level 3			320
Balance at December 31, 2014			$ 109,933


1	The total gains for the period include $29,329 thousand in unrealized gains related to assets still held at December 31, 2014.

Total employer contributions for the pension plans are presented below:



in thousands			Pension
Employer Contributions
2012			$ 4,509
2013			4,855
2014			5,488
2015 (estimated)			13,718

During 2014, 2013 and 2012, we made no contributions to our qualified pension plans. We do not anticipate making contributions to our qualified pension plans in 2015. For our nonqualified pension plans, we made benefit payments of $5,488,000, $4,855,000 and $4,509,000 during 2014, 2013 and 2012, respectively, and expect to make payments of $13,718,000 during 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



in thousands			Pension
Estimated Future Benefit Payments
2015			$ 55,322
2016			51,749
2017			52,231
2018			56,112
2019			57,522
2020-2024			303,803

We contribute to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. A multiemployer plan is subject to collective bargaining for employees of two or more unrelated companies. Multiemployer plans are managed by boards of trustees on which management and labor have equal representation. However, in most cases, management is not directly represented. The risks of participating in multiemployer plans differ from single employer plans as follows:

assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers

if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers

if we cease to have an obligation to contribute to one or more of the multiemployer plans to which we contribute, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability

None of the multiemployer pension plans that we participate in are individually significant. Our contributions to individual multiemployer pension funds did not exceed 5% of the fund’s total contributions in the three years ended December 31, 2014, 2013 and 2012. Total contributions to multiemployer pension plans were $8,503,000 in 2014, $7,580,000 in 2013 and $7,227,000 in 2012.

As of December 31, 2014, a total of 15% of our domestic hourly labor force was covered by collective bargaining agreements. Of such employees covered by collective bargaining agreements, 12% were covered by agreements that expire in 2015. We also employed 272 union employees in Mexico who are covered by a collective bargaining agreement that will expire in 2015. None of our union employees in Mexico participate in multiemployer pension plans.

In addition to the pension plans noted above, we had one unfunded supplemental retirement plan as of December 31, 2014 and 2013. The accrued costs for the supplemental retirement plan were $1,421,000 at December 31, 2014 and $1,328,000 at December 31, 2013.

POSTRETIREMENT PLANS

In addition to pension benefits, we provide certain healthcare and life insurance benefits for some retired employees. In 2012, we amended our postretirement healthcare plan to cap our portion of the medical coverage cost at the 2015 level. Substantially all our salaried employees and where applicable, hourly employees may become eligible for these benefits if they reach a qualifying age and meet certain service requirements. Generally, Company-provided healthcare benefits terminate when covered individuals become eligible for Medicare benefits, become eligible for other group insurance coverage or reach age 65, whichever occurs first.

The March 2014 sale of our cement and concrete businesses in the Florida area (see Note 19) significantly reduced total expected future service of our postretirement plans resulting in a reduction in the projected benefit obligation of $2,639,000 and a one-time curtailment gain of $3,832,000. This gain was reflected within gain on sale of property, plant & equipment, net in our accompanying Consolidated Statement of Comprehensive Income for the year ended December 31, 2014.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:



in thousands	2014	2013
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 92,888	$ 113,500
Service cost	2,146	2,830
Interest cost	3,297	3,260
Liability reduction from curtailment	(2,639)	0
Actuarial gain	(2,617)	(20,444)
Benefits paid	(7,739)	(6,258)
Projected benefit obligation at end of year	$ 85,336	$ 92,888
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 0	$ 0
Actual return on plan assets	0	0
Fair value of assets at end of year	$ 0	$ 0
Funded status	$ (85,336)	$ (92,888)
Net amount recognized	$ (85,336)	$ (92,888)
Amounts Recognized in the Consolidated
Balance Sheets
Current liabilities	$ (8,964)	$ (9,431)
Noncurrent liabilities	(76,372)	(83,457)
Net amount recognized	$ (85,336)	$ (92,888)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 10,921	$ 16,405
Prior service credit	(28,160)	(36,319)
Total amount recognized	$ (17,239)	$ (19,914)

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income, weighted-average assumptions and assumed trend rates of the plans at December 31:



dollars in thousands	2014	2013	2012
Components of Net Periodic Postretirement
Benefit Cost
Service cost	$ 2,146	$ 2,830	$ 4,409
Interest cost	3,297	3,260	5,851
Curtailment gain	(3,832)	0	0
Amortization of prior service credit	(4,327)	(4,863)	(1,372)
Amortization of actuarial loss	227	1,372	1,346
Net periodic postretirement benefit cost (credit)	$ (2,489)	$ 2,599	$ 10,234
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial (gain) loss	$ (5,256)	$ (20,444)	$ 13,562
Prior service credit	0	0	(38,414)
Reclassification of actuarial loss to net
periodic postretirement benefit cost	(227)	(1,372)	(1,346)
Reclassification of prior service credit to net
periodic postretirement benefit cost	8,159	4,863	1,372
Amount recognized in other comprehensive
income	$ 2,676	$ (16,953)	$ (24,826)
Amount recognized in net periodic
postretirement benefit cost and other
comprehensive income	$ 187	$ (14,354)	$ (14,592)
Assumptions
Assumed Healthcare Cost Trend Rates
at December 31
Healthcare cost trend rate assumed
for next year	7.50%	7.50%	8.00%
Rate to which the cost trend rate gradually
declines	5.00%	5.00%	5.00%
Year that the rate reaches the rate it is
assumed to maintain	2025	2019	2019
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	4.10%	3.30%	4.60%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	3.50%	4.10%	3.30%

The estimated net actuarial loss and prior service credit that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost (credit) during 2015 are $258,000 and $(4,232,000), respectively.

Total employer contributions for the postretirement plans are presented below:



in thousands			Postretirement
Employer Contributions
2012			$ 6,834
2013			6,258
2014			7,739
2015 (estimated)			8,964

The employer contributions shown above are equal to the cost of benefits during the year. The plans are not funded and are not subject to any regulatory funding requirements.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



in thousands			Postretirement
Estimated Future Benefit Payments
2015			$ 8,964
2016			8,750
2017			8,462
2018			8,472
2019			8,213
2020–2024			34,592

Contributions by participants to the postretirement benefit plans for the years ended December 31 are as follows:



in thousands			Postretirement
Participants Contributions
2012			$ 1,901
2013			2,022
2014			1,873

PENSION AND OTHER POSTRETIREMENT BENEFITS ASSUMPTIONS

Each year we review our assumptions about the discount rate, the expected return on plan assets, the rate of compensation increase (for salary-related plans) and the rate of increase in the per capita cost of covered healthcare benefits.

In selecting the discount rate, we consider fixed-income security yields, specifically high-quality bonds. We also analyze the duration of plan liabilities and the yields for corresponding high-quality bonds. At December 31, 2014, the discount rates for our various plans ranged from 3.50% to 4.30% (December 31, 2013 ranged from 3.80% to 5.15%).

In estimating the expected return on plan assets, we consider past performance and long-term future expectations for the types of investments held by the plan as well as the expected long-term allocation of plan assets to these investments. At December 31, 2014, the expected return on plan assets remained at 7.50%.

In projecting the rate of compensation increase, we consider past experience and future expectations. At December 31, 2014, our projected weighted-average rate of compensation increase was 3.70%, up from 3.50% at December 31, 2013.

In selecting the rate of increase in the per capita cost of covered healthcare benefits, we consider past performance and forecasts of future healthcare cost trends. At December 31, 2014, our assumed rate of increase in the per capita cost of covered healthcare benefits remained at 7.50% for 2015, decreasing each year until reaching 5.0% in 2025 and remaining level thereafter. Increases in the per capita cost after 2015 are not expected to increase our obligations related to postretirement medical benefits as a result of the 2012 plan amendment to cap medical coverage cost at the 2015 level.

DEFINED CONTRIBUTION PLANS

We sponsor two defined contribution plans. Substantially all salaried and nonunion hourly employees are eligible to be covered by one of these plans. Expense recognized in connection with these plans totaled $29,215,000 in 2014, $21,416,000 in 2013 and $18,460,000 in 2012.