PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

6 Months Ended

Jun. 30, 2013

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

NOTE G — PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Nonunion Defined Benefit Pension, Supplemental Benefit Pension, and Postretirement Health Benefit Plans

The following is a summary of the components of net periodic benefit cost:

	Three Months Ended June 30
	Nonunion Defined						Supplemental				Postretirement
	Benefit Pension Plan						Benefit Pension Plan				Health Benefit Plan
	2013			2012			2013		2012		2013			2012
	(in thousands)
Service cost	$	2,367		$	2,297		$	—	$	—	$	83		$	78
Interest cost	1,922			2,173			38		53		187			188
Expected return on plan assets	(3,155		)	(3,016		)	—		—		—			—
Amortization of prior service credit	—			—			—		—		(47		)	(47		)
Amortization of net actuarial loss and other	2,714			2,692			65		50		133			104
Net periodic benefit cost	$	3,848		$	4,146		$	103	$	103	$	356		$	323

	Six Months Ended June 30
	Nonunion Defined						Supplemental				Postretirement
	Benefit Pension Plan						Benefit Pension Plan				Health Benefit Plan
	2013			2012			2013		2012		2013			2012
	(in thousands)
Service cost	$	4,734		$	4,594		$	—	$	—	$	166		$	157
Interest cost	3,845			4,346			75		105		375			375
Expected return on plan assets	(6,309		)	(6,032		)	—		—		—			—
Amortization of prior service credit	—			—			—		—		(95		)	(95		)
Amortization of net actuarial loss and other	5,427			5,384			130		101		267			208
Net periodic benefit cost	$	7,697		$	8,292		$	205	$	206	$	713		$	645

Nonunion Defined Benefit Pension Plan

The Company’s nonunion defined benefit pension plan covers substantially all noncontractual employees hired before January 1, 2006. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits have not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who are active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate.

The plan amendment resulted in a plan curtailment which was recorded as of June 30, 2013. The effect of the plan curtailment was a reduction of the projected benefit obligation (“PBO”) to the amount of the plan’s accumulated benefit obligation. The decrease in the PBO reduced the unrecognized net actuarial loss of the plan, which is reported on an after-tax basis in accumulated other comprehensive loss in the consolidated balance sheet, with no curtailment gain or loss recognized in current earnings. The net unrecognized actuarial loss of the plan was also reduced by the net actuarial gain which resulted from the remeasurement of the assets and PBO of the plan upon curtailment. The remaining pre-tax unrecognized net actuarial loss of $30.6 million will continue to be amortized over the average remaining future years of service of the plan participants, which is approximately 8 years.

The curtailment of the plan had no impact on net periodic benefit cost for the three- and six-month periods ended June 30, 2013. Effective July 1, 2013, service cost will be eliminated. The Company may incur pension settlement expense for periods subsequent to June 30, 2013 if annual lump sum distributions exceed annual service and interest cost of the plan.

The following table discloses the changes in the PBO and plan assets of the nonunion defined benefit pension plan for the six months ended June 30, 2013:

	Nonunion Defined
	Benefit Pension Plan
	(in thousands)
Change in projected benefit obligation
Projected benefit obligation at December 31, 2012	$	260,950
Service cost	4,734
Interest cost	3,845
Actuarial gain and other(1)	(10,747		)
Benefits paid	(10,745		)
Curtailment	(29,262		)
Projected benefit obligation at June 30, 2013	218,775
Change in plan assets
Fair value of plan assets at December 31, 2012	181,225
Actual return on plan assets	12,575
Employer contributions	9,000
Benefits paid	(10,745		)
Fair value of plan assets at June 30, 2013	192,055
Funded status at June 30, 2013(2)	$	(26,720	)
Accumulated benefit obligation	$	218,775

(1) Net actuarial gain from remeasurement upon curtailment was impacted by an actual return on plan assets during the first six months of 2013 that exceeded the assumed annualized return rate of 7.5% combined with an increase in discount rates since the last measurement date. The discount rate used to remeasure the PBO was 3.9% compared to a rate of 3.1% as of the December 31, 2012 measurement date.

(2) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at June 30, 2013.

During the six months ended June 30, 2013 the Company contributed $9.0 million to the nonunion defined benefit pension plan and elected to apply the contributions to the 2012 plan year under the applicable funding rules of the Internal Revenue Code (the “IRC”). The plan had a preliminary adjusted funding target attainment percentage (“AFTAP”) of 92% as of the January 1, 2013 valuation date. The AFTAP is determined by measurements prescribed by the IRC, which differ from the funding measurements for financial statement reporting purposes. While the final AFTAP calculation will not be available until September 2013, the Company believes that the AFTAP has improved as a result of the 2013 contributions applied to the 2012 plan year. After consideration of the contributions made in 2013 and the effect of the plan curtailment on required funding levels, the Company’s required minimum contribution to its nonunion defined benefit pension plan for the 2013 plan year has been satisfied based upon currently available actuarial information.

Multiemployer Plans

Under the provisions of the Taft-Hartley Act, retirement and health care benefits for ABF’s contractual employees are provided by a number of multiemployer plans. ABF contributes to multiemployer pension and postretirement benefit plans monthly based generally on the time worked by its contractual employees, in accordance with its collective bargaining agreement with the IBT and other related supplemental agreements. ABF recognizes as expense the contractually required contribution for the period and recognizes as a liability any contributions due and unpaid. The Company intends to meet its obligations to the multiemployer plans under its collective bargaining agreement with the IBT, which is currently under extension.

ABF contributes to 25 multiemployer pension plans, which vary in size and in funded status. In the event of the termination of certain multiemployer pension plans or if ABF were to withdraw from certain multiemployer pension plans, under current law, the Company would have material liabilities for its share of the unfunded vested liabilities of each such plan. Multiemployer plans that enter reorganization status subject contributing employers to an increased contribution requirement but will generally not require a contribution increase of more than 7% over the level required in the preceding year. ABF has not received notification of any plan reorganization or plan termination, and ABF does not currently intend to withdraw from these plans. Therefore, the Company believes the occurrence of events that would require recognition of liabilities for its share of unfunded vested benefits is remote.

Approximately one half of ABF’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). As disclosed in the Annual Funding Notice for the 2012 plan year, the actuarial funded percentage of the Central States Pension Plan was 53.9% as of January 1, 2012. ABF received a Notice of Critical Status for the Central States Pension Plan which reported that on March 29, 2013, the plan’s actuary certified that the plan remained in critical status, as defined by the Pension Protection Act of 2006, for the plan year beginning January 1, 2013.

The multiemployer plan administrators have provided to the Company no other significant changes in information related to multiemployer plans from the information disclosed in the Company’s 2012 Annual Report on Form 10-K.