Note 8 - Pension and Other Postretirement Benefit Plans

We have funded noncontributory employee defined benefit pension plans that cover substantially all U.S. and Canadian employees (the “plans”). Employees covered under the U.S. salaried plan are eligible to participate upon the completion of one year of service and benefits are determined by their cash balance accounts, which are based on an allocation they earn each year. Employees covered under the Canadian salaried plan are eligible to participate upon the completion of two years of service and benefits are based upon career average salary and years of service. Employees covered under the hourly plans are generally eligible to participate at the time of employment and benefits are generally based on a fixed amount for each year of service. U.S. employees are vested in the plans after five years of service; Canadian hourly employees are vested after two years of service. We use a December 31 measurement date for all of our plans.

In addition to providing pension benefits, we also have certain unfunded health care and life insurance programs for U.S. non-bargained and Canadian employees who meet certain eligibility requirements. These benefits are provided through contracts with insurance companies and health service providers. The coverage is provided on a non-contributory basis for certain groups of employees and on a contributory basis for other groups.

Obligations and Funded Status:

	Pension Benefits									Other Benefits
	Successor						Predecessor			Successor						Predecessor
	Year Ended December 31,			Period from February 26 to December 31,			Period from January 1 to February 26,			Year Ended December 31,			Period from February 26 to December 31,			Period from January 1 to February 26,
	2011			2010			2010			2011			2010			2010
Change in benefit obligation:
Benefit obligation-beginning of period	$	221,851		$	200,440		$	196,313		$	80,202		$	76,842		$	65,065
Service cost		1,571			1,125			264			452			362			60
Interest cost		12,266			9,910			1,956			4,401			3,771			636
Actuarial losses (gains)		15,908			15,270			4,228			(48	)		1,579			11,800
Benefits paid		(14,662	)		(10,926	)		(2,228	)		(4,307	)		(3,658	)		(803	)
Foreign currency exchange rate changes		(2,687	)		5,534			(93	)		(490	)		837			(15	)
Plan amendment		-			498			-			-			-			-
Incurred retiree drug subsidy reimbursements		-			-			-			158			105			25
Plan participant's contributions		-			-			-			508			364			74
Benefit obligation-end of period		234,247			221,851			200,440			80,876			80,202			76,842

Accumulated benefit obligation	$	233,653		$	221,260		$	199,939		$	-		$	-		$	-

Change in plan assets:
Fair value of assets-beginning of period		185,217			166,488			168,233			-			-			-
Actual return (loss) on plan assets		4			15,849			(143	)		-			-			-
Employer contribution		15,387			8,366			727			3,799			3,295			729
Plan participant's contribution		-			-			-			508			363			74
Benefits paid		(14,662	)		(10,926	)		(2,228	)		(4,307	)		(3,658	)		(803	)
Foreign currency exchange rate changes		(2,499	)		5,440			(101	)		-			-			-
Fair value of assets-end of period		183,447			185,217			166,488			-			-			-
Reconciliation of funded status:
Unfunded status	$	(50,800	)	$	(36,634	)	$	(33,952	)	$	(80,876	)	$	(80,202	)	$	(76,842	)
Amounts recognized in the consolidated balance sheets:
Prepaid benefit cost	$	64		$	560		$	1,004			-			-			-
Accrued benefit liability		(50,863	)		(37,194	)		(34,956	)	$	(80,876	)	$	(80,202	)	$	(76,842	)
Accumulated other comprehensive loss (income)		38,446			10,476			-			1,571			1,619			-
Net amount recognized	$	(12,353	)	$	(26,158	)	$	(33,952	)	$	(79,305	)	$	(78,583	)	$	(76,842	)
Amounts expected to be recognized in AOCI in the following fiscal year:
Amortization of net transition (asset)/obligation	$	-								$	-
Amortization of prior service (credit) cost		44									-
Amortization of net (gain)/loss		1,060									(36	)
Total amortization	$	1,104								$	(36	)

Components of Net Periodic Benefit Cost:

Pension Benefits	Successor						Predecessor
	Year Ended December 31,			Period from February 26 to December 31,			Period from January 1 to February 26,			Year Ended December 31,
	2011			2010			2010			2009
Service cost-benefits earned during the period	$	1,571		$	1,125		$	264		$	1,479
Interest cost on projected benefit obligation		12,266			9,910			1,956			11,566
Expected return on plan assets		(12,936	)		(10,301	)		(2,204	)		(12,347	)
Prior service cost (net)		44			-			51			335
Other amortization (net)		59			-			591			2,424
Net amount charged to income	$	1,004		$	734		$	658		$	3,457
Curtailment charge (gain) and special termination benefits		-			-			-			3,006
Total benefits cost charged to income	$	1,004		$	734		$	658		$	6,463

Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	(59	)	$	-		$	-
Prior service (credit) cost		-			498			-
Amortization of prior service (credit) cost		(44	)		-			-
Change in net actuarial (gain) loss		28,073			9,978			-
Amount of net actuarial valuation (gain) loss		-			-			-
Total (gain) loss recognized in other comprehensive income	$	27,970		$	10,476		$	-
Total (gain) loss recognized in total benefits charged to income and other comprehensive income	$	28,974		$	11,210		$	658

Other Benefits	Successor					Predecessor
	Year Ended December 31,			Period from February 26 to December 31,		Period from January 1 to February 26,			Year Ended December 31,
	2011			2010		2010			2009
Service cost-benefits earned during the period	$	452		$	362	$	60		$	300
Interest cost on projected benefit obligation		4,401			3,771		636			3,662
Prior service cost (net)		-			-		(262	)		(1,573	)
Other amortization (net)		(103	)		-		(1	)		(503	)
Net amount charged to income	$	4,750		$	4,133	$	433		$	1,886
Curtailment charge (gain) and special termination benefits		-			-		-			24
Total benefits cost charged to income	$	4,750		$	4,133	$	433		$	1,910

Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	103		$	-	$	-
Prior service (credit) cost		-			-		-
Amortization of prior service (credit) cost		-			-		-
Change in net actuarial (gain) loss		(151	)		1,619		-
Amount of net actuarial valuation (gain) loss		-			-		-
Total (gain) loss recognized in other comprehensive income		(48	)		1,619		-
Total (gain) loss recognized in total benefits charged to income and other comprehensive income	$	4,702		$	5,752	$	433

During 2009, we recorded pre-tax curtailment charge of $2.2 million as a result of a reduction of workforce in our London, Ontario facility.

Actuarial Assumptions:

Assumptions used to determine benefit obligations as of December 31 were as follows:

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Average discount rate		4.89	%		5.45	%		4.91	%		5.47	%
Rate of increase in future compensation levels		3.00	%		3.00	%		N/A			N/A

Assumptions used to determine net periodic benefit cost for the years ended December 31 were as follows:

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Average discount rate		5.45	%		6.01	%		5.48	%		6.00	%
Rate of increase in future compensation levels		3.00	%		3.50	%		N/A			N/A
Expected long-term rate of return on assets		6.96	%		7.33	%		N/A			N/A

The expected long-term rate of return on assets is determined primarily by looking at past performance. In addition, management considers the long-term performance characteristics of the asset mix.

Assumed health care cost trend rates at December 31 were as follows:

	2011			2010
Health care cost trend rate assumed for next year		8.34	%		8.60	%
Rate to which the cost trend rate is assumed to decline		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2019			2014

The health care cost trend rate assumption has a significant effect on the amounts reported. A one-percentage point change in assumed health care cost trend rates would have the following effects on 2011:

	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on total of service and interest cost	$	898	$	(634	)
Effect on postretirement benefit obligation	$	9,939	$	(8,244	)

Plan Assets:

Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2011, are presented in the table below. Our pension plan assets were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels. For more information on a description of the fair value hierarchy, see Note 13.

	Level 1			Level 2			Level 3			Total			% of Total
Cash and cash equivalents	$	6,486		$	-		$	-		$	6,486		4	%
Equity securities:
U.S. large-cap	16,945			-			-			16,945			9	%
U.S. mid-cap	15,199			-			-			15,199			8	%
U.S. small-cap	2,744			-			-			2,744			2	%
U.S. indexed	14,391			-			-			14,391			8	%
Canadian large-cap	20,419			-			-			20,419			11	%
Canadian mid-cap	9,471			-			-			9,471			5	%
Canadian small-cap	2,215			-			-			2,215			1	%
Large growth	8,550			-			-			8,550			5	%
Pooled equities	-			2,414			-			2,414			1	%
International markets	9,246			12,859			-			22,105			12	%
Fixed income securities:
Government bonds	20,928			-			-			20,928			11	%
Corporate bonds	41,580			-			-			41,580			23	%
Total assets at fair value	$	168,174		$	15,273		$	-		$	183,447		100	%
% of fair value hierarchy	92		%	8		%	-		%	100		%

Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2010, are presented in the following table:

	Level 1			Level 2			Level 3			Total			% of Total
Cash and cash equivalents	$	5,796		$	-		$	-		$	5,796		3	%
Equity securities:
U.S. large-cap	20,028			-			-			20,028			11	%
U.S. mid-cap	12,565			-			-			12,565			7	%
U.S. small-cap	2,744			-			-			2,744			1	%
U.S. indexed	14,665			-			-			14,665			8	%
Canadian large-cap	26,929			-			-			26,929			15	%
Canadian mid-cap	5,740			-			-			5,740			3	%
Canadian small-cap	3,429			-			-			3,429			2	%
Large growth	9,095			-			-			9,095			5	%
Pooled equities	-			2,597			-			2,597			1	%
International markets	9,587			11,743			-			21,330			12	%
Fixed income securities:
Government bonds	17,193			-			-			17,193			9	%
Corporate bonds	43,106			-			-			43,106			23	%
Total assets at fair value	$	170,877		$	14,340		$	-		$	185,217		100	%
% of fair value hierarchy	92		%	8		%	-		%	100		%

Our investment objectives are (1) to maintain the purchasing power of the current assets and all future contributions; (2) to maximize return within reasonable and prudent levels of risk; (3) to maintain an appropriate asset allocation policy that is compatible with the actuarial assumptions, while still having the potential to produce positive real returns; and (4) to control costs of administering the plan and managing the investments.

Our desired investment result is a long-term rate of return on assets that is at least a 5% real rate of return, or 5% over inflation as measured by the Consumer Price Index for the U.S. plans. The target rate of return for the plans have been based upon the assumption that future real returns will approximate the long-term rates of return experienced for each asset class in our investment policy statement. Our investment guidelines are based upon an investment horizon of greater than five years, so that interim fluctuations should be viewed with appropriate perspective. Similarly, the Plans' strategic asset allocation is based on this long-term perspective.

We believe that the Plans' risk and liquidity posture are, in large part, a function of asset class mix. Our investment committee has reviewed the long-term performance characteristics of various asset classes, focusing on balancing the risks and rewards of market behavior. Based on this and the Plans' time horizon, risk tolerances, performance expectations and asset class preferences, the following two strategic asset allocations were derived for our U.S. plans.

Asset allocation for our Accuride Retirement Plan and Erie Hourly Pension Plan:

	Lower Limit			Strategic Allocation			Upper Limit
Domestic Large Capitalization Equities:
Value		10	%		11	%		20	%
Growth		10	%		13	%		20	%
Index-Passive		15	%		20	%		25	%
Domestic Small Cap Equities		2	%		10	%		10	%
International Equities		5	%		11	%		15	%
Fixed Income:
Intermediate		15	%		35	%		35	%

Asset allocation for remainder of our U.S. plans:

	Lower Limit			Strategic Allocation			Upper Limit
Domestic Large Capitalization Equities:
Value		10	%		10	%		20	%
Growth		10	%		10	%		20	%
Index-Passive		15	%		17	%		25	%
Domestic Mid Cap Equities		5	%		10	%		15	%
International Equities		5	%		13	%		15	%
Fixed Income:
Intermediate		15	%		35	%		35	%
Money Market		1	%		5	%		10	%

The allocation of the fund is reviewed periodically. Should any of the strategic allocations extend beyond the suggested lower or upper limits, a portfolio rebalance may be appropriate.

While we use the same methodologies to manage the Canadian plans, the primary objective is to achieve a minimum rate of return of Consumer Price Index plus 3 over 4-year moving periods, and to obtain total fund rates of return that are in the top third over 4-year moving periods when compared to a representative sample of Canadian pension funds with similar asset mix characteristics. The asset mix for the Canadian pension fund is targeted as follows:

	Minimum			Maximum
Total Equities		40	%		65	%
Foreign Equities		0	%		50	%
Bonds and Mortgages		25	%		50	%
Short-Term		0	%		15	%

Cash Flows-We expect to contribute approximately $14.5 million to our pension plans and $4.3 million to our other postretirement benefit plans in 2012. Pension and postretirement benefits (which include expected future service) are expected to be paid out of the respective plans as follows:

	Pension Benefits		Other Benefits
2012	$	13,074	$	4,313
2013	$	12,992	$	4,557
2014	$	13,224	$	4,667
2015	$	13,497	$	4,733
2016	$	13,702	$	4,815
2017 – 2021 (in total)	$	73,942	$	25,005

Other Plans-We also provide a 401(k) savings plan and a retirement contribution plan for substantially all U.S. salaried employees. Select employees may also participate in the Accuride Executive Retirement Allowance Policy and a supplemental savings plan. Expenses recognized in the full year 2011 and for the periods January 1 to February 26, February 26 to December 31, 2010 were $3.3 million, $0.3 million, and $1.6 million, respectively. No expenses were recognized in 2009.