Note 9 – Employee Benefits

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans for certain of its employees. The following tables provide a reconciliation of the changes in the plans’ benefit obligations and the fair value of the plans’ assets for 2013 and 2012, and a statement of the plans’ aggregate funded status as of December 28, 2013 and December 29, 2012:

	Pension Benefits						Other Benefits
(In thousands)	2013			2012			2013			2012
Change in benefit obligation:
Obligation at beginning of year	$	196,167		$	180,341		$	18,096		$	19,945
Service cost		948			884			413			380
Interest cost		7,774			8,472			647			635
Actuarial (gain) loss		(11,635	)		14,458			(2,554	)		(1,838	)
Benefit payments		(10,668	)		(10,583	)		(1,211	)		(1,131	)
Foreign currency translation adjustment		1,472			2,595			(10	)		105

Obligation at end of year		184,058			196,167			15,381			18,096

Change in fair value of plan assets:
Fair value of plan assets at beginning of year		160,980			147,502			—			—
Actual return on plan assets		35,578			18,964			—			—
Employer contributions		1,551			3,216			1,211			1,131
Benefit payments		(10,668	)		(10,583	)		(1,211	)		(1,131	)
Foreign currency translation adjustment		1,429			1,881			—			—

Fair value of plan assets at end of year		188,870			160,980			—			—

Funded (underfunded) status at end of year	$	4,812		$	(35,187	)	$	(15,381	)	$	(18,096	)

The following represents amounts recognized in accumulated OCI (before the effect of income taxes) at December 28, 2013 and December 29, 2012:

	Pension Benefits				Other Benefits
(In thousands)	2013		2012		2013			2012

Unrecognized net actuarial loss (gain)	$	21,128	$	61,125	$	(4,016	)	$	(1,630	)
Unrecognized prior service cost		1		2		20			19

The Company sponsors one pension plan in the U.K. which comprised 40 percent and 36 percent of the above benefit obligation at December 28, 2013 and December 29, 2012, and 34 percent and 35 percent of the above plan assets at December 28, 2013 and December 29, 2012, respectively.

As of December 28, 2013, $0.5 million of the actuarial net loss will, through amortization, be recognized as components of net periodic benefit cost in 2014.

The aggregate status of all overfunded plans is recognized as an asset and the aggregate status of all underfunded plans is recognized as a liability in the Consolidated Balance Sheets. The amounts recognized as a liability are classified as current or long-term on a plan-by-plan basis. Liabilities are classified as current to the extent the actuarial present value of benefits payable within the next 12 months exceeds the fair value of plan assets, with all remaining amounts being classified as long-term. As of December 28, 2013 and December 29, 2012, the total funded status of the plans recognized in the Consolidated Balance Sheets was as follows:

	Pension Benefits						Other Benefits
(In thousands)	2013			2012			2013			2012

Long-term asset	$	15,457		$	—		$	—		$
Current liability		—			—			(1,033	)		(1,187	)
Long-term liability		(10,645	)		(35,187	)		(14,348	)		(16,909	)

Total funded (underfunded) status	$	4,812		$	(35,187	)	$	(15,381	)	$	(18,096	)

The components of net periodic benefit cost are as follows:

(In thousands)	2013			2012			2011
Pension benefits:
Service cost	$	948		$	884		$	1,394
Interest cost		7,774			8,472			9,051
Expected return on plan assets		(11,059	)		(10,263	)		(11,569	)
Amortization of prior service cost		1			1			2
Amortization of net loss		4,005			3,883			2,346

Net periodic benefit cost	$	1,669		$	2,977		$	1,224

Other benefits:
Service cost	$	413		$	380		$	344
Interest cost		647			635			993
Amortization of prior service credit		(2	)		(2	)		(3	)
Amortization of net gain		(160	)		(73	)		(2	)

Net periodic benefit cost	$	898		$	940		$	1,332

The weighted average assumptions used in the measurement of the Company’s benefit obligations are as follows:

	Pension Benefits						Other Benefits
	2013			2012			2013			2012

Discount rate		4.82	%		4.13	%		4.89	%		4.06	%
Expected long-term return on plan assets		7.40	%		7.15	%		N/A			N/A
Rate of compensation increases		N/A			N/A			5.50	%		5.04	%
Rate of inflation		3.40	%		2.70	%		N/A			N/A

The weighted average assumptions used in the measurement of the Company’s net periodic benefit cost are as follows:

	Pension Benefits									Other Benefits
	2013			2012			2011			2013			2012			2011

Discount rate		4.13	%		4.80	%		5.25	%		4.06	%		4.97	%		5.39	%
Expected long-term return on plan assets		7.15	%		7.11	%		7.51	%		N/A			N/A			N/A
Rate of compensation increases		N/A			N/A			N/A			5.04	%		5.04	%		5.04	%
Rate of inflation		2.70	%		3.00	%		3.40	%		N/A			N/A			N/A

The Company’s Mexican postretirement plans use the rate of compensation increase in the benefit formulas. Past service on the U.K. pension plan will be adjusted for the effects of inflation. All other pension and postretirement plans use benefit formulas based on length of service.

The annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) is assumed to range from 5.4 to 9.3 percent for 2014, gradually decrease to 4.5 percent through 2022, and remain at that level thereafter. The health care cost trend rate assumption could have a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point would increase the accumulated postretirement benefit obligation by $1.3 million and the service and interest cost components of net periodic postretirement benefit costs by $0.1 million for 2014. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement benefit obligation and the service and interest cost components of net periodic postretirement benefit costs for 2014 by $1.1 million and $0.1 million, respectively.

The weighted average asset allocation of the Company’s pension fund assets are as follows:

	Pension Plan Assets
Asset category	2013			2012

Equity securities (includes equity mutual funds)		86	%		84	%
Fixed income securities (includes fixed income mutual funds)		4			5
Cash and equivalents (includes money market funds)		7			9
Alternative investments		3			2

Total		100	%		100	%

At December 28, 2013, the Company’s target allocation, by asset category, of assets of its defined benefit pension plans was: (i) equity securities, including equity index funds – at least 60 percent; (ii) fixed income securities – not more than 25 percent; and (iii) alternative investments – not more than 20 percent.

The Company’s pension plan obligations are long-term and, accordingly, the plan assets are invested for the long-term. The Company believes that a diversified portfolio of equity securities (both actively managed and index funds) and private equity funds have an acceptable risk-return profile that, over the long-term, is better than fixed income securities. Consequently, the pension plan assets are heavily weighted to equity investments. Plan assets are monitored periodically. Based upon results, investment managers and/or asset classes are redeployed when considered necessary. Expected rates of return on plan assets were determined based on historical market returns giving consideration to the targeted composition of each plan’s portfolio. None of the plans’ assets are expected to be returned to the Company during the next fiscal year.

The Company’s investments for its pension plans are reported at fair value. The following methods and assumptions were used to estimate the fair value of the Company’s plan asset investments:

Cash and money market funds – Valued at cost, which approximates fair value.

Common stock – Valued at the closing price reported on the active market on which the individual securities are traded.

Mutual funds – Valued at the net asset value of shares held by the plans at December 28, 2013 and December 29, 2012, respectively, based upon quoted market prices.

Limited partnerships – Limited partnerships include investments in various Cayman Island multi-strategy hedge funds. The plans’ investments in limited partnerships are valued at the estimated fair value of the class shares owned by the plans based upon the equity in the estimated fair value of those shares. The estimated fair values of the limited partnerships are determined by the investment managers. In determining fair value, the investment managers of the limited partnerships utilize the estimated net asset valuations of the underlying investment entities. The underlying investment entities value securities and other financial instruments on a mark-to-market or estimated fair value basis. The estimated fair value is determined by the investment managers based upon, among other things, the type of investments, purchase price, marketability, current financial condition, operating results, and other information. The estimated fair values of substantially all of the investments of the underlying investment entities, which may include securities for which prices are not readily available, are determined by the investment managers or management of the respective underlying investment entities and may not reflect amounts that could be realized upon immediate sale. Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments.

The following table sets forth by level, within the fair value hierarchy, the assets of the plans at fair value as of December 28, 2013, and December 29, 2012, respectively:

	Fair Value Measurements at December 28, 2013
(In thousands)	Level 1		Level 2		Level 3		Total

Cash and money market funds	$	13,992	$	—	$	—	$	13,992
Common stock (1)		79,497		—		—		79,497
Mutual funds (2)		27,166		63,435		—		90,601
Limited partnerships		—		—		4,780		4,780

Total	$	120,655	$	63,435	$	4,780	$	188,870

	Fair Value Measurements at December 29, 2012
(In thousands)	Level 1		Level 2		Level 3		Total

Cash and money market funds	$	13,691	$	—	$	—	$	13,691
Common stock (3)		65,604		—		—		65,604
Mutual funds (4)		21,497		55,695		—		77,192
Limited partnerships		—		—		4,493		4,493

Total	$	100,792	$	55,695	$	4,493	$	160,980

(1)	Approximately 84 percent of common stock represents investments in U.S. companies primarily in the health care, utilities, financials, consumer staples, industrials, and information technology sectors. All investments in common stock are listed on U.S. stock exchanges.

(2)	Approximately 32 percent of mutual funds are actively managed funds and approximately 68 percent of mutual funds are index funds. Additionally, 33 percent of the mutual funds’ assets are invested in U.S. equities, 58 percent in non-U.S. equities, and 9 percent in non-U.S. fixed income securities.

(3)	Approximately 90 percent of common stock represents investments in U.S. companies primarily in the health care, utilities, financials, consumer staples, industrials, and information technology sectors. All investments in common stock are listed on U.S. stock exchanges.

(4)	Approximately 32 percent of mutual funds are actively managed funds and approximately 68 percent of mutual funds are index funds. Additionally, 31 percent of the mutual funds’ assets are invested in U.S. equities, 59 percent in non-U.S. equities, and 10 percent in non-U.S. fixed income securities.

The table below reflects the changes in the assets of the plan measured at fair value on a recurring basis using significant unobservable inputs (Level 3 hierarchy as defined by ASC 820) during the year ended December 28, 2013:

(In thousands)	Limited Partnerships

Balance, December 29, 2012	$	4,493
Redemptions		(1,133	)
Subscriptions		900
Net appreciation in fair value		520

Balance, December 28, 2013	$	4,780

The assets of the plans do not include investments in securities issued by the Company. The Company expects to contribute approximately $1.6 million to its pension plans and $1.0 million to its other postretirement benefit plans in 2014. The Company expects future benefits to be paid from the plans as follows:

(In thousands)	Pension Benefits		Other Benefits

2014	$	11,187	$	1,033
2015		11,382		1,022
2016		11,524		1,005
2017		11,651		985
2018		11,780		973
2019-2023		61,040		4,864

Total	$	118,564	$	9,882

The Company contributes to the IAM National Pension Fund, National Pension Plan (IAM Plan), a multiemployer defined benefit plan. Participation in the IAM Plan was negotiated under the terms of two collective bargaining agreements in Port Huron, Michigan, the Local 218 IAM and Local 44 UAW that expire on May 1, 2016 and July 20, 2016, respectively. The Employer Identification Number for this plan is 51-6031295.

The risks of participating in multiemployer plans are different from single-employer plans in the following aspects: (i) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the underfunded obligations of the plan may be borne by the remaining participating employers; (iii) if the Company chooses to stop participating in the plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company makes contributions to the IAM Plan trusts that cover certain union employees; contributions by employees are not required nor are they permitted. Contributions to the IAM Plan were $0.9 million in 2013, $1.0 million in 2012, and $0.9 million in 2011. The Company’s contributions are less than five percent of total employer contributions made to the IAM Plan indicated in the most recently filed Form 5500.

Under the Pension Protection Act of 2006, the IAM Plan’s actuary must certify the plan’s zone status annually. Plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. If a plan is determined to be in endangered status, red zone or yellow zone, the plan’s trustees must develop a formal plan of corrective action, a Financial Improvement Plan and/or a Rehabilitation Plan. For 2013 and 2012 the IAM Plan was determined to have green zone status; therefore, no formal plan of corrective action is either pending or has been implemented.

The Company sponsors voluntary employee savings plans that qualify under Section 401(k) of the Internal Revenue Code of 1986. Compensation expense for the Company’s matching contribution to the 401(k) plans was $3.2 million in 2013, $2.9 million in 2012, and $3.0 million in 2011. The Company’s match is a cash contribution. Participants direct the investment of their account balances by allocating among a range of asset classes including mutual funds (equity, fixed income, and balanced funds), and money market funds. The plans do not allow direct investment in securities issued by the Company.

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (the Act) was enacted. The Act mandates a method of providing for postretirement benefits to the United Mine Workers of America (UMWA) current and retired employees, including some retirees who were never employed by the Company. In October 1993, beneficiaries were assigned to the Company and the Company began its mandated contributions to the UMWA Combined Benefit Fund, a multiemployer trust. Beginning in 1994, the Company was required to make contributions for assigned beneficiaries under an additional multiemployer trust created by the Act, the UMWA 1992 Benefit Plan. The ultimate amount of the Company’s liability under the Act will vary due to factors which include, among other things, the validity, interpretation, and regulation of the Act, its joint and several obligation, the number of valid beneficiaries assigned, and the extent to which funding for this obligation will be satisfied by transfers of excess assets from the 1950 UMWA pension plan and transfers from the Abandoned Mine Reclamation Fund. Contributions to the plan were $290 thousand, $315 thousand, and $338 thousand for the years ended December 28, 2013, December 29, 2012, and December 31, 2011, respectively.