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 $89,652,000 and $101,230,000, respectively, related to these unfunded, nonqualified pension plans for 2015 and 2014.

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	2015	2014
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 1,083,222	$ 911,700
Service cost	4,851	4,157
Interest cost	44,065	44,392
Actuarial (gain) loss	(63,725)	167,041
Benefits paid	(79,960)	(44,068)
Projected benefit obligation at end of year	$ 988,453	$ 1,083,222
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 816,972	$ 756,624
Actual return on plan assets	(5,373)	98,928
Employer contribution	14,047	5,488
Benefits paid	(79,960)	(44,068)
Fair value of assets at end of year	$ 745,686	$ 816,972
Funded status	(242,767)	(266,250)
Net amount recognized	$ (242,767)	$ (266,250)
Amounts Recognized in the Consolidated
Balance Sheets
Noncurrent assets	$ 0	$ 0
Current liabilities	(9,106)	(13,719)
Noncurrent liabilities	(233,661)	(252,531)
Net amount recognized	$ (242,767)	$ (266,250)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 222,580	$ 249,867
Prior service credit	(404)	(356)
Total amount recognized	$ 222,176	$ 249,511

The accumulated benefit obligation (ABO) and the projected benefit obligation (PBO) exceeded plan assets for all of our defined benefit plans at December 31, 2015 and December 31, 2014. The ABO for all of our defined benefit pension plans totaled $987,724,000 (unfunded, nonqualified plans of $89,652,000) at December 31, 2015 and $1,061,816,000 (unfunded, nonqualified plans of $95,154,000) at December 31, 2014.

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	2015	2014	2013
Components of Net Periodic Pension
Benefit Cost
Service cost	$ 4,851	$ 4,157	$ 21,904
Interest cost	44,065	44,392	40,995
Expected return on plan assets	(54,736)	(50,802)	(47,425)
Settlement charge	2,031	0	0
Curtailment loss	0	0	855
Amortization of prior service cost	48	188	339
Amortization of actuarial loss	21,641	11,221	20,429
Net periodic pension benefit cost	$ 17,900	$ 9,156	$ 37,097
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial loss (gain)	$ (3,615)	$ 118,915	$ (163,205)
Prior service cost (credit)	0	0	(583)
Reclassification of actuarial loss to net
periodic pension benefit cost	(23,672)	(11,221)	(20,429)
Reclassification of prior service cost to net
periodic pension benefit cost	(48)	(188)	(1,194)
Amount recognized in other comprehensive
income	$ (27,335)	$ 107,506	$ (185,411)
Amount recognized in net periodic pension
benefit cost and other comprehensive
income	$ (9,435)	$ 116,662	$ (148,314)
Assumptions
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	4.14%	4.91%	4.33%
Expected return on plan assets	7.50%	7.50%	7.50%
Rate of compensation increase
(for salary-related plans)	3.70%	3.50%	3.50%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	4.54%	4.14%	4.91%
Rate of compensation increase
(for salary-related plans)	3.50%	3.70%	3.50%

The settlement charge noted above relates to a lump sum payment to a former employee from the nonqualified plan. This charge is reflected within both cost of revenues and selling, administrative and general expenses in our accompanying Consolidated Statement of Comprehensive Income for the year ended December 31, 2015.

The estimated net actuarial loss and prior service credit that will be amortized from accumulated other comprehensive income into net periodic pension benefit cost (credit) during 2016 are $6,067,000 and $(43,000), 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 2015 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, 2015 and 2014 by asset category are as follows:

Fair Value Measurements at December 31, 2015



in thousands	Level 1 1	Level 2 1	Level 3 1	Total
Asset Category
Debt securities	$ 0	$ 154,745	$ 0	$ 154,745
Investment funds
Commodity funds	0	14,490	0	14,490
Equity funds	647	463,416	0	464,063
Short-term funds	0	9,516	0	9,516
Venture capital and partnerships	0	0	102,872	102,872
Total pension plan assets	$ 647	$ 642,167	$ 102,872	$ 745,686


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

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.

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, 2015 and 2014.

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 maturities, terms, 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, 2015 and 2014 is presented below:

Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)



			Venture
			Capital and
in thousands			Partnerships
Balance at December 31, 2013			$ 88,482
Total gains (losses) for 2014 1			34,071
Purchases, sales and settlements, net			(12,940)
Transfers into (out of) Level 3			320
Balance at December 31, 2014			$ 109,933
Total gains (losses) for 2015 1			5,186
Purchases, sales and settlements, net			(12,247)
Transfers into (out of) Level 3			0
Balance at December 31, 2015			$ 102,872


1	The total gains (losses) for 2015 and 2014 include $47 thousand and $29,329 thousand, respectively, in unrealized gains related to assets still held as of their respective year ends.

Total employer contributions for the pension plans are presented below:



in thousands			Pension
Employer Contributions
2013			$ 4,855
2014			5,488
2015			14,047
2016 (estimated)			9,107

During 2015, 2014 and 2013, we made no contributions to our qualified pension plans. We do not anticipate making contributions to our qualified pension plans in 2016. For our nonqualified pension plans, we made benefit payments of $14,047,000, $5,488,000 and $4,855,000 during 2015, 2014 and 2013, respectively, and expect to make payments of $9,107,000 during 2016.

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



in thousands			Pension
Estimated Future Benefit Payments
2016			$ 51,286
2017			52,434
2018			55,527
2019			56,835
2020			58,161
2021-2025			305,043

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, 2015, 2014 and 2013. Total contributions to multiemployer pension plans were $9,800,000 in 2015, $8,503,000 in 2014 and $7,580,000 in 2013.

As of December 31, 2015, a total of 14% of our domestic hourly labor force was covered by collective-bargaining agreements. Of such employees covered by collective-bargaining agreements, 40% were covered by agreements that expire in 2016. We also employed 315 union employees in Mexico who are covered by a collective-bargaining agreement that will expire in 2016. 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, 2015 and 2014. The accrued costs for the supplemental retirement plan were $1,384,000 at December 31, 2015 and $1,421,000 at December 31, 2014.

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, certain of our 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 is reflected within gain on sale of property, plant & equipment and businesses 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	2015	2014
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 85,336	$ 92,888
Service cost	1,894	2,146
Interest cost	2,485	3,297
Liability reduction from curtailment	0	(2,639)
Actuarial gain	(35,195)	(2,617)
Benefits paid	(5,915)	(7,739)
Projected benefit obligation at end of year	$ 48,605	$ 85,336
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	$ (48,605)	$ (85,336)
Net amount recognized	$ (48,605)	$ (85,336)
Amounts Recognized in the Consolidated
Balance Sheets
Current liabilities	$ (6,287)	$ (8,964)
Noncurrent liabilities	(42,318)	(76,372)
Net amount recognized	$ (48,605)	$ (85,336)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial (gain) loss	$ (24,325)	$ 10,921
Prior service credit	(23,928)	(28,160)
Total amount recognized	$ (48,253)	$ (17,239)

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	2015	2014	2013
Components of Net Periodic Postretirement
Benefit Cost
Service cost	$ 1,894	$ 2,146	$ 2,830
Interest cost	2,485	3,297	3,260
Curtailment gain	0	(3,832)	0
Amortization of prior service credit	(4,232)	(4,327)	(4,863)
Amortization of actuarial loss	37	227	1,372
Net periodic postretirement benefit cost (credit)	$ 184	$ (2,489)	$ 2,599
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial (gain) loss	$ (35,209)	$ (5,256)	$ (20,444)
Reclassification of actuarial loss to net
periodic postretirement benefit cost	(37)	(227)	(1,372)
Reclassification of prior service credit to net
periodic postretirement benefit cost	4,232	8,159	4,863
Amount recognized in other comprehensive
income	$ (31,014)	$ 2,676	$ (16,953)
Amount recognized in net periodic
postretirement benefit cost and other
comprehensive income	$ (30,830)	$ 187	$ (14,354)
Assumptions
Assumed Healthcare Cost Trend Rates
at December 31
Healthcare cost trend rate assumed
for next year	n/a	7.50%	7.50%
Rate to which the cost trend rate gradually
declines	n/a	5.00%	5.00%
Year that the rate reaches the rate it is
assumed to maintain	n/a	2025	2019
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate	3.50%	4.10%	3.30%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	3.69%	3.50%	4.10%

The estimated net actuarial gain and prior service credit that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost (credit) during 2016 are $(1,828,000) and $(4,236,000), respectively.

Total employer contributions for the postretirement plans are presented below:



in thousands			Postretirement
Employer Contributions
2013			$ 6,258
2014			7,739
2015			5,915
2016 (estimated)			6,287

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
2016			$ 6,287
2017			5,856
2018			5,623
2019			5,415
2020			5,152
2021–2025			19,229

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



in thousands			Postretirement
Participants Contributions
2013			$ 2,022
2014			1,873
2015			2,031

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 the yield on high-quality bonds with a duration equal to the duration of plan liabilities. At December 31, 2015, the discount rates for our various plans ranged from 3.53% to 4.68% (December 31, 2014 ranged from 3.50% to 4.30%). Beginning in 2016, we are changing the method we use to estimate the service and interest cost components of net periodic benefit cost for our defined benefit pension and other postretirement benefit plans. Historically, we estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Beginning in 2016, we elected to utilize a full yield curve approach to estimate the service and interest cost applying the specific spot rates along the yield curve to the relevant projected cash flows.

We are making this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding yield curve spot rates. This change will not affect the measurement of our total benefit obligations as the change in the service cost and interest cost is completely offset in the actuarial (gain) loss reported.

We are accounting for this change as a change in estimate and, accordingly, are accounting for it prospectively starting in 2016. The estimated weighted-average discount rates to measure service cost and interest cost for 2016 are 4.89% and 3.80%, respectively, for our pension plans and 4.05% and 2.81%, respectively, for our other postretirement plans. The weighted-average discount rates that we would have used for service and interest costs under our prior estimation technique were 4.54% for the pension plans and 3.69% for the other postretirement plans. The reductions in benefit cost for 2016 associated with this change are estimated to be $7,200,000 and $530,000 for our pension and other postretirement plans, respectively.

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, 2015, the expected return on plan assets remains at 7.50%.

Annual pay increases after 2015 will not increase our pension plan obligations as a result of a 2013 plan amendment.

Future increases in the per capital cost of healthcare benefits will not increase our postretirement medical benefits obligation as a result of a 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. Under these plans, we match employees’ eligible contributions at established rates. Expense recognized in connection with these matching obligations totaled $36,085,000 in 2015, $29,215,000 in 2014 and $21,416,000 in 2013.