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Employee Benefit Plans
12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
Employee Benefit Plans
Pension Plans
Substantially all employees who meet certain requirements of age, length of service and hours worked per year are covered by Company-sponsored pension plans and supplemental pension plan (collectively, the “pension plans”). These pension plans are defined benefit, noncontributory plans. Benefits paid to retirees are based upon age at retirement, years of credited service and average earnings. The Company also has a supplemental pension plan, which is a non-qualified, unfunded plan. The Company uses a December 31 measurement date for the pension plans.
The Company-sponsored pension plans are frozen for all employees except for employees of certain subsidiaries and employees represented by the United Steelworkers of America. The assets of the Company-sponsored pension plans are maintained in a single trust account.
The Company’s funding policy is to satisfy the minimum funding requirements of the Employee Retirement Income Security Act of 1974, commonly called ERISA.
Components of net periodic pension cost (benefit) are as follows:
 
2013
 
2012
 
2011
Service cost
$
699

 
$
608

 
$
539

Interest cost
6,327

 
6,832

 
7,393

Expected return on assets
(9,278
)
 
(9,855
)
 
(10,054
)
Amortization of prior service cost
322

 
324

 
324

Amortization of actuarial loss
1,942

 
594

 
229

Net periodic pension cost (benefit)
$
12

 
$
(1,497
)
 
$
(1,569
)

The expected amortization of pension prior service cost and actuarial loss for the next fiscal year is $282 and $1,716, respectively.
The status of the plans at December 31, 2013 and 2012 are as follows:
 
2013
 
2012
Change in projected benefit obligation:
 
 
 
Projected benefit obligation at beginning of year
$
181,137

 
$
164,407

Service cost
699

 
608

Interest cost
6,327

 
6,832

Benefit payments
(7,097
)
 
(6,558
)
Actuarial (gain) loss
(24,077
)
 
15,848

Projected benefit obligation at end of year
$
156,989

 
$
181,137

Change in plan assets:
 
 
 
Fair value of plan assets at beginning of year
$
187,150

 
$
174,938

Actual (loss) return on assets
(11,966
)
 
18,463

Employer contributions
321

 
307

Benefit payments
(7,097
)
 
(6,558
)
Fair value of plan assets at end of year
$
168,408

 
$
187,150

Funded status – net prepaid
$
11,419

 
$
6,013

Amounts recognized in the consolidated balance sheets consist of:
 
 
 
Prepaid pension cost
$
16,515

 
$
12,891

Accrued liabilities
(325
)
 
(309
)
Pension benefit obligations
(4,771
)
 
(6,569
)
Net amount recognized
$
11,419

 
$
6,013

Pre-tax components of accumulated other comprehensive income (loss):
 
 
 
Unrecognized actuarial loss
$
(25,002
)
 
$
(29,778
)
Unrecognized prior service cost
(1,295
)
 
(1,617
)
Total
$
(26,297
)
 
$
(31,395
)
Accumulated benefit obligation
$
156,474

 
$
180,551


For the plan with an accumulated benefit obligation in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $5,095, $5,095 and $0, respectively, at December 31, 2013; and $5,893, $5,893 and $0, respectively, at December 31, 2012.
The assumptions used to measure the projected benefit obligations for the Company’s defined benefit pension plans are as follows:
 
2013
 
2012
Discount rate
4.50
%
 
3.50 - 3.75%
Projected annual salary increases
0 - 3.00%

 
0 - 3.00%
The assumptions used to determine net periodic pension cost (benefit) are as follows: 
 
2013
 
2012
 
2011
Discount rate
3.50 - 3.75%

 
4.25
%
 
5.25
%
Expected long-term rate of return on plan assets
5.25
%
 
5.75
%
 
6.50
%
Projected annual salary increases
0 - 3.00%

 
0 - 3.00%

 
0 - 3.00%


The Company’s expected return on plan assets is derived from reviews of asset allocation strategies and historical and anticipated future long-term performance of individual asset classes. The Company’s analysis gives consideration to historical returns and long-term, prospective rates of return.
The Company’s pension plan assets are allocated entirely to fixed income securities at December 31, 2013 and 2012.
The Company’s pension plans’ funds are managed in accordance with investment policies recommended by its investment advisor and approved by the Human Resources Committee of the Board of Directors. The overall target portfolio allocation is 100% fixed income securities. These funds’ conformance with style profiles and performance is monitored regularly by management, with the assistance of the Company’s investment advisor. Adjustments are typically made in the subsequent quarters when investment allocations deviate from the target range. The investment advisor provides quarterly reports to management and the Human Resources Committee of the Board of Directors.
The fair values of the Company’s pension plan assets fall within the following levels of the fair value hierarchy as of December 31, 2013:
 
Level 1
 
Level 2
 
Level 3
 
Total
Fixed income securities (1)
$
15,629

 
$
152,803

 
$

 
$
168,432

Accounts payable – pending trades
 
 
 
 
 
 
(24
)
Total
 
 
 
 
 
 
$
168,408

(1) 
Fixed income securities are comprised of corporate bonds (71%), government bonds (20%), government agencies securities (5%) and other fixed income securities (4%).
The fair values of the Company’s pension plan assets fall within the following levels of the fair value hierarchy as of December 31, 2012:
 
Level 1
 
Level 2
 
Level 3
 
Total
Fixed income securities (2)
$
10,562

 
$
176,610

 
$

 
$
187,172

Accounts payable – pending trades
 
 
 
 
 
 
(22
)
Total
 
 
 
 
 
 
$
187,150


(2) 
Fixed income securities are comprised of corporate bonds (75%), government bonds (16%), government agencies securities (6%) and other fixed income securities (3%).
The estimated future pension benefit payments are:
2014
$
7,994

2015
8,178

2016
8,523

2017
8,965

2018
9,181

2019 — 2023
49,926


During 2013, the Company was party to multi-employer pension plans in California and Ohio. The overall cost of such plans to the Company is insignificant. In 2013, in connection with the January 2013 restructuring plan, the Company closed its facility in Gardena, California and elected to withdraw from the California multi-employer pension plan. The Company incurred a withdrawal liability of $720 which is recorded in "Restructuring Charges" in the Consolidated Statement of Operations. If the Company elects to withdraw from the Ohio multi-employer pension plan in the future, it could potentially incur a withdrawal liability at that time. The Ohio multi-employer pension plan withdrawal liability was estimated to be $4,800 as of December 31, 2013.
Postretirement Plan
The Company also provides declining value life insurance to its retirees and a maximum of three years of medical coverage to qualified individuals who retire between the ages of 62 and 65. The Company does not fund these benefits in advance, and uses a December 31 measurement date.
Components of net periodic postretirement benefit cost for 2013, 2012 and 2011 were as follows:
 
2013
 
2012
 
2011
Service cost
$
153

 
$
161

 
$
164

Interest cost
148

 
170

 
222

Amortization of prior service cost

 

 

Amortization of actuarial gain
(23
)
 

 

Net periodic postretirement benefit cost
$
278

 
$
331

 
$
386


The expected amortization of postretirement prior service cost and actuarial gain for the next fiscal year are insignificant.
The status of the postretirement benefit plans at December 31, 2013 and 2012 were as follows:
 
2013
 
2012
Change in accumulated postretirement benefit obligations:
 
 
 
Accumulated postretirement benefit obligation at beginning of year
$
4,379

 
$
4,635

Service cost
153

 
161

Interest cost
148

 
170

Benefit payments
(201
)
 
(193
)
Actuarial gain
(2,502
)
 
(394
)
Accumulated postretirement benefit obligation at end of year
$
1,977

 
$
4,379

Funded status – net liability
$
1,977

 
$
4,379

Amounts recognized in the consolidated balance sheets consist of:
 
 
 
Accrued liabilities
$
(139
)
 
$
(296
)
Postretirement benefit obligations
(1,838
)
 
(4,083
)
Net amount recognized
$
(1,977
)
 
$
(4,379
)
Pre-tax components of accumulated other comprehensive income (loss):
 
 
 
Unrecognized actuarial gain
$
3,139

 
$
661

Total
$
3,139

 
$
661


The assumed health care cost trend rates for medical plans at December 31 were as follows:
 
2013
 
2012
 
2011
Medical cost trend rate
7.50
%
 
8.00
%
 
8.50
%
Ultimate medical cost trend rate
5.00
%
 
5.00
%
 
5.00
%
Year ultimate medical cost trend rate will be reached
2019

 
2019

 
2018


A 1% increase in the health care cost trend rate assumptions would have increased the accumulated postretirement benefit obligation at December 31, 2013 by $81 with no significant impact on the annual periodic postretirement benefit cost. A 1% decrease in the health care cost trend rate assumptions would have decreased the accumulated postretirement benefit obligation at December 31, 2013 by $75 with no significant impact on the annual periodic postretirement benefit cost.
The weighted average discount rate used to determine the net periodic postretirement benefit costs and the accumulated postretirement benefit obligations were as follows:
 
2013
 
2012
 
2011
Net periodic postretirement benefit costs
3.50
%
 
3.75
%
 
5.25
%
Accumulated postretirement benefit obligations
4.00
%
 
3.50
%
 
3.75
%

Retirement Savings Plans
The Company’s retirement savings plan for U.S. employees includes features under Section 401(k) of the Internal Revenue Code. Effective July 1, 2011, the Company’s 401(k) matching contribution was increased to 100% of each dollar on eligible employee contributions up to the first 6% of the employee’s pre-tax compensation and the Company’s fixed contribution of 4% of eligible earnings for all employees was eliminated. Company contributions cliff vest after two years of employment.
Effective July 1, 2012, the Company's 401(k) plan was amended to include the U.S. employees of Tube Supply. Employees were eligible to participate in the Company's 401(k) plan immediately. Tube Supply's existing plan assets were rolled over into the Company's 401(k) plan during 2012 as a result of this amendment.
The amounts expensed by the Company relating to its 401(k) plan and other international retirement plans was $4,265, $5,260 and $4,414 for the years ended December 31, 2013, 2012 and 2011, respectively.