Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2012

Pension and Other Postretirement Benefits

Note 15: Pension and Other Postretirement Benefits

We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, the United Kingdom, the United States, and certain employees in Germany. We closed the U.S. defined benefit pension plan to new entrants effective January 1, 2010. Employees who were not active participants in the U.S. defined benefit pension plan on December 31, 2009, will not be eligible to participate in the plan. Annual contributions to retirement plans equal or exceed the minimum funding requirements of applicable local regulations. The assets of the funded pension plans we sponsor are maintained in various trusts and are invested primarily in equity and fixed income securities.

Benefits provided to employees under defined contribution plans include cash contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation. Defined contribution expense for 2012, 2011, and 2010 was $10.9 million, $9.0 million, and $8.1 million, respectively.

We sponsor unfunded postretirement medical and life insurance benefit plans for certain of our employees in Canada and the United States. The medical benefit portion of the United States plan is only for employees who retired prior to 1989 as well as certain other employees who were near retirement and elected to receive certain benefits.

The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets as well as a statement of the funded status and balance sheet reporting for these plans.

	Pension Benefits						Other Benefits
Years Ended December 31,	2012			2011			2012			2011
	(In thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	(240,002	)	$	(226,805	)	$	(49,118	)	$	(45,917	)
Service cost		(5,423	)		(5,863	)		(116	)		(92	)
Interest cost		(10,510	)		(11,687	)		(2,077	)		(2,199	)
Participant contributions		(146	)		(125	)		(11	)		(3	)
Plan amendments		—			(356	)		—			—
Actuarial loss		(21,785	)		(10,855	)		(1,950	)		(4,262	)
Other		—			(7	)		(204	)		—
Foreign currency exchange rate changes		(2,542	)		44			(886	)		525
Benefits paid		16,532			15,652			2,590			2,830
Benefit obligation, end of year	$	(263,876	)	$	(240,002	)	$	(51,772	)	$	(49,118	)

	Pension Benefits						Other Benefits
Years Ended December 31,	2012			2011			2012			2011
	(In thousands)
Change in plan assets:
Fair value of plan assets, beginning of year	$	160,806		$	160,364		$	—		$	—
Actual return on plan assets		16,449			7,074			—			—
Employer contributions		10,448			8,598			2,579			2,827
Plan participant contributions		146			125			11			3
Foreign currency exchange rate changes		1,837			297			—			—
Benefits paid		(16,532	)		(15,652	)		(2,590	)		(2,830	)
Fair value of plan assets, end of year	$	173,154		$	160,806		$	—		$	—
Funded status, end of year	$	(90,722	)	$	(79,196	)	$	(51,772	)	$	(49,118	)
Amounts recognized in the balance sheets:
Prepaid benefit cost	$	8,728		$	9,501		$	—		$	—
Accrued benefit liability (current)		(3,900	)		(3,896	)		(3,002	)		(2,682	)
Accrued benefit liability (noncurrent)		(95,550	)		(84,801	)		(48,770	)		(46,436	)
Net funded status	$	(90,722	)	$	(79,196	)	$	(51,772	)	$	(49,118	)

The accumulated benefit obligation for all defined benefit pension plans was $258.9 million and $235.4 million at December 31, 2012 and 2011, respectively.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with an accumulated benefit obligation in excess of plan assets were $219.4 million, $214.7 million, and $120.0 million, respectively, as of December 31, 2012 and $200.7 million, $196.2 million, and $112.0 million, respectively, as of December 31, 2011. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with an accumulated benefit obligation less than plan assets were $44.5 million, $44.2 million, and $53.2 million, respectively, as of December 31, 2012, and were $39.3 million, $39.2 million, and $48.8 million, respectively, as of December 31, 2011.

The following table provides the components of net periodic benefit costs for the plans.

	Pension Benefits									Other Benefits
Years Ended December 31,	2012			2011			2010			2012			2011			2010
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	5,423		$	5,863		$	4,994		$	116		$	92		$	142
Interest cost		10,510			11,687			11,508			2,077			2,199			2,305
Expected return on plan assets		(11,112	)		(11,170	)		(11,436	)		—			—			—
Amortization of prior service credit		(55	)		(63	)		(129	)		(111	)		(116	)		(195	)
Special termination benefits		—			—			13			—			—			—
Net loss recognition		5,974			6,030			4,775			842			386			424
Net periodic benefit cost	$	10,740		$	12,347		$	9,725		$	2,924		$	2,561		$	2,676

The following table presents the assumptions used in determining the benefit obligations and the net periodic benefit cost amounts.

	Pension Benefits						Other Benefits
Years Ended December 31,	2012			2011			2012			2011
Weighted average assumptions for benefit obligations at year end:
Discount rate		3.7	%		4.5	%		4.3	%		4.3	%
Salary increase		3.9	%		3.9	%		N/A			N/A
Weighted average assumptions for net periodic cost for the year:
Discount rate		4.5	%		5.1	%		4.3	%		5.2	%
Salary increase		3.9	%		4.0	%		N/A			N/A
Expected return on assets		6.9	%		7.4	%		N/A			N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year		N/A			N/A			7.6	%		8.0	%
Rate that the cost trend rate gradually declines to		N/A			N/A			5.0	%		5.0	%
Year that the rate reaches the rate it is assumed to remain at		N/A			N/A			2020			2020

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one percentage-point change in the assumed health care cost trend rates would have the following effects on 2012 expense and year-end liabilities.

	1% Increase		1% Decrease
	(In thousands)
Effect on total of service and interest cost components	$	220	$	(182	)
Effect on postretirement benefit obligation	$	5,276	$	(4,371	)

Plan assets are invested using a total return investment approach whereby a mix of equity securities and fixed income securities are used to preserve asset values, diversify risk, and achieve our target investment return benchmark. Investment strategies and asset allocations are based on consideration of the plan liabilities, the plan’s funded status, and our financial condition. Investment performance and asset allocation are measured and monitored on an ongoing basis.

Plan assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of equity investments is to maximize the long-term real growth of assets, while the role of fixed income investments is to generate current income, provide for more stable periodic returns, and provide some protection against a prolonged decline in the market value of equity investments.

Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension plans is 30-40% in fixed income securities and 60-70% in equity securities and for our pension plans where the majority of the participants are in payment or terminated vested status is 75-80% in fixed income securities and 20-25% in equity securities. Equity securities include U.S. and international equity, primarily invested through investment funds. Fixed income securities include government securities and investment grade corporate bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of return assumptions based on the historical rates of returns for equity and fixed income securities of the type in which our plans invest.

The following table presents the fair values of the pension plan assets by asset category.

	December 31, 2012								December 31, 2011
	Fair Market Value at December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Market Value at December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Asset Category:
Equity securities (a)
Large-cap fund	$	62,151	$	—	$	62,151	$	—	$	59,693	$	—	$	59,693	$	—
Mid-cap fund		11,581		—		11,581		—		10,105		—		10,105		—
Small-cap fund		15,955		—		15,955		—		14,423		—		14,423		—
Debt securities (b)
Government bond fund		24,385		—		24,385		—		23,270		—		23,270		—
Corporate bond fund		21,819		—		21,819		—		19,004		—		19,004		—
Fixed income fund (c)		37,231		—		37,231		—		34,279		—		34,279		—
Cash & equivalents		32		32		—		—		32		32		—		—
Total	$	173,154	$	32	$	173,122	$	—	$	160,806	$	32	$	160,774	$	—

(a) This category includes investments in actively managed and indexed investment funds that invest in a diversified pool of equity securities of companies located in the United States, Canada, Western Europe and other developed countries throughout the world. The funds are valued using the net asset value method in which an average of the market prices for the underling investments is used to value the fund.

(b) This category includes investments in investment funds that invest in U.S. treasuries, other national, state and local government bonds, and corporate bonds of highly rated companies from diversified industries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(c) This category includes guaranteed insurance contracts.

The plans do not invest in individual securities. All investments are through well diversified investment funds. As a result, there are no significant concentrations of risk within the plan assets.

The following table reflects the benefits as of December 31, 2012 expected to be paid in each of the next five years and in the aggregate for the five years thereafter from our pension and other postretirement plans as well as Medicare subsidy receipts. Because our other postretirement plans are unfunded, the anticipated benefits with respect to these plans will come from our own assets. Because our pension plans are primarily funded plans, the anticipated benefits with respect to these plans will come primarily from the trusts established for these plans.

	Pension Plans		Other Plans		Medicare Subsidy Receipts
	(In thousands)
2013	$	14,565	$	3,057	$	184
2014		14,994		3,045		174
2015		15,417		3,069		162
2016		18,007		3,010		150
2017		16,765		2,919		137
2018-2022		88,509		14,059		495
Total	$	168,257	$	29,159	$	1,302

We anticipate contributing $10.5 million and $2.8 million to our pension and other postretirement plans, respectively, during 2013.

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2012, the changes in these amounts during the year ended December 31, 2012, and the expected amortization of these amounts as components of net periodic benefit cost for the year ended December 31, 2013 are as follows.

	Pension Benefits			Other Benefits
	(In thousands)
Components of accumulated other comprehensive loss:
Net actuarial loss	$	79,370		$	13,116
Net prior service credit		(223	)		(388	)
	$	79,147		$	12,728

	Pension Benefits			Other Benefits
	(In thousands)
Changes in accumulated other comprehensive loss:
Net actuarial loss, beginning of year	$	68,463		$	11,846
Amortization cost		(5,974	)		(842	)
Liability loss		21,785			1,950
Asset gain		(5,337	)		—
Currency impact		433			162
Net actuarial loss, end of year	$	79,370		$	13,116
Prior service credit, beginning of year	$	(281	)	$	(488	)
Amortization credit		55			111
Currency impact		3			(11	)
Prior service credit, end of year	$	(223	)	$	(388	)

	Pension Benefits			Other Benefits
	(In thousands)
Expected 2013 amortization:
Amortization of prior service credit	$	(54	)	$	(111	)
Amortization of net loss		6,507			937
	$	6,453		$	826