Pension and Other Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2012

Pension and Other Postretirement Benefit Plans [Abstract]

Pension and Other Postretirement Benefit Plans

Note 7 - Pension and Other Postretirement Benefit Plans

We have funded noncontributory employee defined benefit pension plans that cover a majority of 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
	Year Ended December 31,						Year Ended December 31,
(In thousands)	2012			2011			2012			2011
Change in benefit obligation:
Benefit obligation—beginning of period	$	234,247		$	221,851		$	80,876		$	80,202
Service cost		1,785			1,571			478			452
Interest cost		11,198			12,266			3,999			4,401
Actuarial losses (gains)		25,532			15,908			4,644			(48	)
Benefits paid		(15,653	)		(14,662	)		(4,106	)		(4,307	)
Foreign currency exchange rate changes		3,401			(2,687	)		558			(490	)
Curtailment		(804	)		—			—			—
Incurred retiree drug subsidy reimbursements		—			—			170			158
Plan participant's contributions		—			—			506			508
Benefit obligation—end of period		259,706			234,247			87,125			80,876
Accumulated benefit obligation	$	259,015		$	233,653		$	—		$	—
Change in plan assets:
Fair value of assets—beginning of period		183,447			185,217			—			—
Actual return on plan assets		21,166			4			—			—
Employer contributions		11,153			15,387			3,600			3,799
Plan participant's contributions		—			—			506			508
Benefits paid		(15,653	)		(14,662	)		(4,106	)		(4,307	)
Foreign currency exchange rate changes		3,155			(2,499	)		—			—
Fair value of assets—end of period		203,268			183,447			—			—
Reconciliation of funded status:
Unfunded status	$	(56,438	)	$	(50,800	)	$	(87,125	)	$	(80,876	)
Amounts recorded in the consolidated balance sheets:
Prepaid benefit cost	$	—		$	63			—			—
Accrued benefit liability		(56,438	)		(50,863	)	$	(87,125	)	$	(80,876	)
Accumulated other comprehensive loss (income)		53,420			38,447			6,370			1,571
Net amount recognized	$	(3,018	)	$	(12,353	)	$	(80,755	)	$	(79,305	)
Amounts recorded in AOCI in the following fiscal year:
Amortization of prior service (credit) cost		44						—
Amortization of net (gain)/loss		2,697						113
Total amortization	$	2,741					$	113

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,
(In thousands)	2012			2011			2010			2010
Service cost-benefits earned during the period	$	1,785		$	1,571		$	1,125		$	264
Interest cost on projected benefit obligation		11,198			12,266			9,910			1,956
Expected return on plan assets		(11,800	)		(12,936	)		(10,301	)		(2,204	)
Prior service cost (net)		44			44			—			51
Other amortization (net)		1,035			59			—			591
Total benefits cost charged to income	$	2,262		$	1,004		$	734		$	658
Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	(1,035	)	$	(59	)	$	—		$	—
Prior service (credit) cost		—			—			498			—
Amortization of prior service (credit) cost		(44	)		(44	)		—			—
Change in net actuarial (gain) loss		16,052			28,073			9,978			—
Amount of net actuarial valuation (gain) loss		—			—			—			—
Total (gain) loss recognized in other comprehensive income		14,973			27,970			10,476			—
Total (gain) loss recognized in total benefits charged to income and other comprehensive income	$	17,235		$	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,
(In thousands)	2012			2011			2010		2010
Service cost-benefits earned during the period	$	478		$	452		$	362	$	60
Interest cost on projected benefit obligation		3,999			4,401			3,771		636
Prior service cost (net)		—			—			—		(262	)
Other amortization (net)		(34	)		(103	)		—		(1	)
Total benefits cost charged to income	$	4,443		$	4,750		$	4,133	$	433
Recognized in other comprehensive income (loss):
Amortization of net transition (asset) obligation	$	35		$	103		$	—	$	—
Change in net actuarial (gain) loss		4,764			(151	)		1,619		—
Total (gain) loss recognized in other comprehensive income		4,799			(48	)		1,619		—
Total (gain) loss recognized in total benefits charged to income and other comprehensive income	$	9,242		$	4,702		$	5,752	$	433

Actuarial Assumptions:

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

	Pension Benefits						Other Benefits
	2012			2011			2012			2011
Average discount rate		4.19	%		4.89	%		4.20	%		4.91	%
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
	2012			2011			2012			2011
Average discount rate		4.89	%		5.45	%		4.91	%		5.48	%
Rate of increase in future compensation levels		3.00	%		3.00	%		N/A			N/A
Expected long-term rate of return on assets		6.35	%		6.96	%		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:

	2012			2011
Health care cost trend rate assumed for next year		8.08	%		8.34	%
Rate to which the cost trend rate is assumed to decline		4.82	%		5.00	%
Year that the rate reaches the ultimate trend rate		2022			2019

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 2012:

	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on total of service and interest cost	$	1,143	$	(699	)
Effect on postretirement benefit obligation	$	11,810	$	(9,643	)

Plan Assets:

Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2012, 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 value 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 via the use of observable inputs, which may include, among others, the use of adjusted market prices last available, bids or last available sales prices and/or other observable inputs. 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 12.

(In thousands)	Level 1			Level 2			Level 3			Total			% of Total
Cash and cash equivalents	$	6,088		$	—		$	—		$	6,088			3	%
Equity securities:
U.S. large-cap		12,787			9,045			—			21,832			11	%
U.S. mid-cap		7,582			5,946			—			13,528			7	%
U.S. small-cap		123			2,978			—			3,101			1	%
U.S. indexed		—			15,705			—			15,705			8	%
Canadian large-cap		24,450			—			—			24,450			12	%
Canadian mid-cap		8,228			—			—			8,228			4	%
Canadian small-cap		3,173			—			—			3,173			1	%
Large growth		—			9,563			—			9,563			5	%
Pooled equities		—			2,833			—			2,833			1	%
International markets		—			26,235			—			26,235			13	%
Fixed income securities:
Government bonds		9,750			9,916			—			19,666			10	%
Corporate bonds		27,794			21,072			—			48,866			24	%
Total assets at fair value	$	99,975		$	103,293		$	—		$	203,268			100	%
% of fair value hierarchy		49	%		51	%		—	%		100	%

In the fair value presentation below, we changed certain securities from Level 1 to Level 2 as it was determined that these investments are priced with observable inputs rather than quoted market prices in an active market. Our pension plan weighted-average asset allocations by level within the fair value hierarchy at December 31, 2011, are presented in the following table:

(In thousands)	Level 1			Level 2			Level 3			Total			% of Total
Cash and cash equivalents	$	6,486		$	—		$	—		$	6,486			4	%
Equity securities:
U.S. large-cap		8,659			8,286			—			16,945			9	%
U.S. mid-cap		10,043			5,155			—			15,198			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		—			22,106			—			22,106			12	%
Fixed income securities:
Government bonds		9,820			11,108			—			20,928			11	%
Corporate bonds		25,595			15,985			—			41,580			23	%
Total assets at fair value	$	92,708		$	90,739		$	—		$	183,447			100	%
% of fair value hierarchy		51	%		49	%		—	%		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 $13.1 million to our pension plans and $4.4 million to our other postretirement benefit plans in 2013. 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
2013	$	14,221	$	4,435
2014	$	13,713	$	4,511
2015	$	14,136	$	4,599
2016	$	14,159	$	4,687
2017	$	14,240	$	4,820
2018 – 2022 (in total)	$	76,318	$	24,666

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, 2012 and 2011 and for the periods January 1 to February 26, February 26 to December 31, 2010 were $1.4 million, $3.3 million, $0.3 million, and $1.6 million, respectively.