Note 8 - Pension and Other Postretirement Benefit Plans

We have funded noncontributory employee defined benefit pension plans that cover U.S. and Canadian employees (the "plans") who meet eligibility requirements. Employees covered under the U.S. salaried plan, who were hired prior to 2006, 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 interest allocations they earned each year and pay allocations earned for years prior to 2009. 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 who are 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. For the pension obligation as of December 31, 2014, the Company used the recently issued mortality tables. This change along with an increased discount rate increased our obligation.

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
	Year Ended December 31,						Year Ended December 31,
(In thousands)	2014			2013			2014			2013
Change in benefit obligation:
Benefit obligation—beginning of period	$	232,901		$	259,706		$	74,933		$	87,125
Service cost		1,088			1,156			340			528
Interest cost		10,764			10,320			3,670			3,467
Actuarial losses (gains)		31,205			(12,102	)		12,469			(10,801	)
Benefits paid		(14,421	)		(18,260	)		(4,295	)		(4,078	)
Foreign currency exchange rate changes		(10,679	)		(8,074	)		(1,780	)		(1,325	)
Curtailment		—			—			—			—
Plan amendment		—			—			435			(539	)
Incurred retiree drug subsidy reimbursements		—			—			180			172
Plan participant's contributions		103			155			422			384
Benefit obligation—end of period	$	250,961		$	232,901		$	86,374		$	74,933

Accumulated benefit obligation	$	250,745		$	232,208		$	86,374		$	74,933

Change in plan assets:
Fair value of assets—beginning of period	$	220,707		$	203,268		$	—		$	—
Actual return on plan assets		21,939			33,625			—			—
Employer contributions		11,376			9,539			3,873			3,694
Plan participant's contributions		103			155			422			384
Benefits paid		(14,421	)		(18,260	)		(4,295	)		(4,078	)
Foreign currency exchange rate changes		(11,572	)		(7,620	)		—			—
Fair value of assets—end of period		228,132			220,707			—			—
Reconciliation of funded status:
Unfunded status	$	(22,829	)	$	(12,194	)	$	(86,374	)	$	(74,933	)
Amounts recorded in the consolidated balance sheets:
Prepaid benefit cost	$	9,518		$	8,493		$	—		$	—
Accrued benefit liability		(32,348	)		(20,687	)		(86,374	)		(74,933	)
Accumulated other comprehensive loss (income)		35,621			15,201			6,507			(5,292	)
Net amount recognized	$	12,791		$	3,007			(79,867	)	$	(80,225	)
Amounts recorded in AOCI in the following fiscal year:
Amortization of prior service (credit) cost	$	44		$	44		$	(35	)	$	(35	)
Amortization of net (gain)/loss		1,304			201			443			322
Total amortization	$	1,348		$	245		$	408		$	287

Components of Net Periodic Benefit Cost:

Pension Benefits
	Year Ended December 31,
(In thousands)	2014			2013			2012
Service cost-benefits earned during the period	$	1,088		$	1,156		$	1,785
Interest cost on projected benefit obligation		10,764			10,320			11,198
Expected return on plan assets		(12,812	)		(11,726	)		(11,800	)
Prior service cost (net)		44			44			44
Other amortization (net)		211			2,607			1,035
Total benefits cost (credited) charged to income	$	(705	)	$	2,401		$	2,262

Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	—		$	—		$	(1,035	)
Prior service (credit) cost		—			—			—
Amortization of prior service (credit) cost		(44	)		(44	)		(44	)
Change in net actuarial (gain) loss		20,674			(35,568	)		16,052
Amortization of net actuarial valuation (gain) loss		(211	)		(2,607	)		—
Amounts recognized in other comprehensive income		20,419			(38,219	)		14,973
Amounts recognized in total benefits charged to income and other comprehensive income	$	19,714		$	(35,818	)	$	17,235

Other Benefits
	Year Ended December 31,
(In thousands)	2014			2013			2012
Service cost-benefits earned during the period	$	340		$	528		$	478
Interest cost on projected benefit obligation		3,670			3,467			3,999
Prior service cost (net)		(35	)		—			—
Other one-time charge		435			—			—
Other amortization (net)		299			114			(34	)
Total benefits cost charged to income	$	4,709		$	4,109		$	4,443

Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	35		$	—		$	35
Change in net actuarial (gain) loss		11,764			(11,660	)		4,764
Amounts recognized in other comprehensive income		11,799			(11,660	)		4,799
Amounts recognized in total benefits charged to income and other comprehensive income	$	16,508		$	(7,551	)	$	9,242

Actuarial Assumptions:

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

	Pension Benefits		Other Benefits
	2014	2013	2014	2013
Average discount rate	3.99%	4.77%	4.14%	4.85%
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
	2014	2013	2014	2013
Average discount rate	4.77%	4.19%	4.85%	4.20%
Rate of increase in future compensation levels	3.00%	3.00%	N/A	N/A
Expected long-term rate of return on assets	6.12%	6.08%	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:

	2014	2013
Health care cost trend rate assumed for next year	7.17%	7.63%
Rate to which the cost trend rate is assumed to decline	4.81%	4.82%
Year that the rate reaches the ultimate trend rate	2024	2022

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 2014:

	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on total of service and interest cost	$	1,034	$	(556	)
Effect on postretirement benefit obligation	$	11,763	$	(9,498	)

Plan Assets:

Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2014, 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 Level 1 plan assets are valued using active trading prices as listed in the New York stock exchange and the Toronto stock exchange. Our Level 2 plan assets are securities for which the market is not considered to be active and are valued using observable inputs, which may include, among others, the use of adjusted market prices, last available bids or last available sales prices. 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.

(In thousands)	Level 1			Level 2			Level 3		Total			% of Total
Cash and cash equivalents	$	6,756		$	—		$	—	$	6,756			3	%
Equity securities:
U.S. large-cap		12,030			11,815			—		23,845			10	%
U.S. mid-cap		—			13,255			—		13,255			6	%
U.S. small-cap		—			4,426			—		4,426			2	%
U.S. indexed		—			12,018			—		12,018			5	%
Canadian large-cap		5,503			—			—		5,503			2	%
Canadian mid-cap		2,002			—			—		2,002			1	%
Canadian small-cap		167			—			—		167			0	%
Large growth		—			6,381			—		6,381			3	%
Pooled equities		—			9,516			—		9,516			4	%
International markets		—			14,588			—		14,588			6	%
Fixed income securities:
Government bonds		30,812			4,166			—		34,978			15	%
Corporate bonds		60,121			34,576			—		94,697			42	%
Total assets at fair value	$	117,391		$	110,741		$	—		228,132		$	100	%
% of fair value hierarchy		51	%		49	%		—		100	%

Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2013, are presented in the following table:

(In thousands)	Level 1			Level 2			Level 3		Total			% of Total
Cash and cash equivalents	$	8,314		$	—		$	—	$	8,314			4	%
Equity securities:
U.S. large-cap		21,639			—			—		21,639			10	%
U.S. mid-cap		—			6,840			—		6,840			3	%
U.S. small-cap		—			3,399			—		3,399			2	%
U.S. indexed		—			18,954			—		18,954			9	%
Canadian large-cap		27,574			—			—		27,574			12	%
Canadian mid-cap		11,263			—			—		11,263			5	%
Large growth		—			11,659			—		11,659			5	%
Pooled equities		10,775			3,271			—		14,046			6	%
International markets		—			26,545			—		26,545			12	%
Fixed income securities:
Government bonds		11,185			10,754			—		21,939			10	%
Corporate bonds		25,684			22,851			—		48,535			22	%
Total assets at fair value	$	116,434		$	104,273		$	—	$	220,707			100	%
% of fair value hierarchy		53	%		47	%		—		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%	10%	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	14%	20%
Foreign Equities	7%	10%
Bonds and Mortgages	70%	80%
Short-Term	0%	0%

Cash Flows—We expect to contribute approximately $8.3 million to our pension plans and $4.2 million to our other postretirement benefit plans in 2015. Pension and postretirement benefits (which include expected future service) are expected to be paid out of the respective plans as follows:

(In thousands)	Pension Benefits		Other Benefits
2015	$	14,029	$	4,406
2016	$	14,067	$	4,554
2017	$	13,890	$	4,742
2018	$	14,037	$	4,820
2019	$	14,099	$	4,937
2020 – 2024 (in total)	$	72,275	$	25,766

Other Plans—We also provide a 401(k) savings plan and a retirement contribution plan for substantially all U.S. salaried employees. Expenses recognized for the years ended December 31, 2014, 2013, and 2012 totaled $1.1 million, $1.3 million, and $1.4 million, respectively.