Employee Retirement Plans

12 Months Ended

Dec. 31, 2011

Employee Retirement Plans [Abstract]

Employee Retirement Plans

Note 14. Employee Retirement Plans

The Company sponsors defined benefit plans and defined contribution profit sharing plans which provide retirement income and death benefits for eligible employees. The annual measurement date of the benefit obligations, fair value of plan assets, and funded status is December 31.

Actuarial Assumptions

	Year Ended December 31,
	2011			2010			2009
Assumptions used to determine benefit obligations at the annual measurement date were:
Obligation discount rate		5.40	%		5.90	%		6.10	%
Compensation increase rate		3.00	%		3.00	%		3.00	%
Assumptions used to determine net periodic benefit costs were:
Obligation discount rate		5.90	%		6.10	%		6.50	%
Long-term rate of return on plan assets		7.75	%		7.75	%		7.75	%
Compensation increase rate		3.00	%		3.00	%		4.00	%

The obligation discount rate assumption is determined by deriving a single discount rate from a theoretical settlement portfolio of high quality corporate bonds sufficient to provide for the plans’ projected benefit payments. The expected long-term rate of return on plan assets is an assumption reflecting the anticipated weighted average rate of earnings on the portfolio over the long-term. To arrive at this rate, we developed estimates based upon the anticipated performance of the assets in its portfolio. The compensation increase rate pertains solely to the pension plan of the Company’s Inland Barge segment as the accrued benefits of the Company’s remaining pension plans were frozen in 2009.

Components of Net Retirement Cost

	Year Ended December 31,
	2011			2010			2009
	(in millions)
Expense Components
Service cost	$	0.8		$	0.9		$	3.0
Interest		19.6			18.7			19.7
Expected return on plan assets		(22.8	)		(20.1	)		(15.7	)
Amortization and deferral:
Actuarial loss		1.8			1.9			4.2
Prior service cost		0.1			0.1			0.1
Other		—			0.2			(0.4	)
Defined benefit expense		(0.5	)		1.7			10.9
Profit sharing		9.3			8.3			7.6
Net expense	$	8.8		$	10.0		$	18.5

Obligations and Funded Status

	Year Ended December 31,
	2011			2010
	(in millions)
Accumulated Benefit Obligations	$	364.8		$	335.7
Projected Benefit Obligations:
Beginning of year	$	335.8		$	326.1
Service cost		0.8			0.9
Interest		19.6			18.7
Benefits paid		(14.7	)		(12.9	)
Actuarial loss		23.3			3.3
Amendments		—			0.2
Settlements		—			(0.5	)
End of year	$	364.8		$	335.8
Plans’ Assets:
Beginning of year	$	291.1		$	257.6
Actual return on assets		(1.2	)		35.3
Employer contributions		15.4			11.6
Benefits paid		(14.7	)		(12.9	)
Settlements		—			(0.5	)
End of year	$	290.6		$	291.1
Consolidated Balance Sheet Components:
Funded status	$	(74.2	)	$	(44.7	)

The unfunded status of the plans of $74.2 million and $44.7 million at December 31, 2011 and 2010, respectively, was recognized in the accompanying balance sheets as accrued pension liability and included in Accrued Liabilities. No plan assets are expected to be returned to us during the year ending December 31, 2012.

Amounts Recognized in Other Comprehensive Income (Loss)

	Year Ended December 31,
	2011			2010			2009
	(in millions)
Actuarial gain (loss)	$	(47.3	)	$	11.9		$	18.7
Amortization of actuarial loss		1.7			1.9			4.2
Amortization of prior service cost		0.1			0.1			0.1
Other		—			(0.2	)		—
Curtailments		—			—			33.5
Settlements		—			0.2			—
Total before income taxes		(45.5	)		13.9			56.5
Income tax expense (benefit)		(16.9	)		5.2			20.9
Net amount recognized in other comprehensive income (loss)	$	(28.6	)	$	8.7		$	35.6

Included in AOCL at December 31, 2011 were the following amounts that have not been recognized in net periodic pension cost: prior service cost of $0.3 million ($0.2 million net of related income taxes) and unrecognized actuarial losses of $112.1 million ($70.5 million net of related income taxes).

Actuarial loss included in AOCL and expected to be recognized in net periodic pension cost for the year ended December 31, 2012 is $3.4 million ($2.2 million net of related income taxes).

Plan Assets

The estimated fair value of plan assets at year end 2011 and 2010, indicating input levels used to determine fair value, and the range of target asset allocations are as follows:

	Target Allocation			December 31, 2011			December 31, 2010
Cash and cash equivalents					3	%		1	%
Equity securities		55-65	%		66			68
Debt securities		35-45	%		31			31
Total					100	%		100	%

	Fair Value Measurement as of December 31, 2011
	(in millions)
	Level 1		Level 2		Level 3		Total
Temporary cash investments	$	9.7	$	—	$	—	$	9.7
Common trust funds		—		207.4		—		207.4
Registered investment companies		73.5		—		—		73.5
	$	83.2	$	207.4	$	—	$	290.6

	Fair Value Measurement as of December 31, 2010
	(in millions)
	Level 1		Level 2		Level 3		Total
Temporary cash investments	$	3.5	$	—	$	—	$	3.5
Common trust funds		—		210.3		—		210.3
Registered investment companies		71.7		—		—		71.7
Corporate stock		2.9		—		—		2.9
Corporate bonds		2.0		—		—		2.0
U.S. government obligations		0.7		—		—		0.7
	$	80.8	$	210.3	$	—	$	291.1

The Company’s pension investment strategies have been developed as part of a comprehensive asset/liability management process that considers the relationship between both the assets and liabilities of the plans. These strategies consider not only the expected risk and returns on plan assets, but also the actuarial projections of liabilities, projected contributions, and funded status. The equity allocation is heavily weighted toward domestic large capitalized companies. There is also a lesser exposure to domestic small/mid cap companies, as well as international equities. The fixed income allocation is equally split between a limited duration portfolio and a core plus portfolio that has a duration in-line with published bond indices. This asset mix is designed to meet the longer-term obligations of the plan as projected by actuarial studies.

The principal pension investment strategies include asset allocation and active asset management. The range of target asset allocations has been determined after giving consideration to the expected returns of each asset category, the expected performance of each asset category, the volatility of the asset returns over time, and the complementary nature of the asset mix within the portfolio. Each asset category is managed by external money managers with the objective of generating returns that exceed market-based benchmarks.

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used in determining fair value, including the general classification of such instruments pursuant to the valuation hierarchy as described further in Note 3 Fair Value Accounting.

Temporary cash investments — These investments consist of U.S. dollars held in master trust accounts with the trustee. These temporary cash investments are classified as Level 1 instruments.

Common trust funds — Common trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Holdings of common trust funds are classified as Level 2 investments.

Registered investment companies — Registered investment companies are mutual funds registered with the Securities and Exchange Commission. Mutual fund shares are traded actively on public exchanges. The share prices for mutual funds are published at the close of each business day. Holdings of mutual funds are classified as Level 1 investments.

Corporate stock — This investment category consists of stock issued by U.S. companies traded actively on exchanges. Price quotes for these shares are readily available. Holdings of corporate stock are classified as Level 1 investments.

Corporate bonds — Corporate bonds consist of fixed income securities of U.S. and non-U.S. corporations. These assets are valued using quoted prices in active markets. Corporate bonds are classified as Level 1 investments.

U.S. government obligations — U.S government obligations consist of fixed income securities issued directly by the U.S. Treasury or by government-sponsored enterprises. These assets are valued using quoted prices in active markets. U.S. government obligations are classified as Level 1 investments.

Cash Flows

Employer contributions for the year ending December 31, 2012 are expected to be $17.3 million for the defined benefit plans compared to $15.4 million contributed during 2011. Employer contributions to the 401(k) plans and the Supplemental Profit Sharing Plan for the year ending December 31, 2012 are expected to be $9.3 million compared to $8.2 million, $7.9 million, and $7.4 million during 2011, 2010, and 2009, respectively.

Benefit payments expected to be paid during the next ten years are as follows:

	Amounts
	(in millions)
2012	$	14.7
2013		15.7
2014		16.8
2015		18.0
2016		19.3
2017-2021		116.1

During the first quarter of 2009, the Company amended its Supplemental Retirement Plan (the “Supplemental Plan”) to reduce future retirement plan costs. This amendment provides that all benefit accruals under the Supplemental Plan cease effective March 31, 2009, and the Supplemental Plan was frozen as of that date. In addition, the Company amended the Trinity Industries, Inc. Standard Pension Plan (the “Pension Plan”). This amendment was designed to reduce future pension costs and provides that, effective March 31, 2009, all future benefit accruals under the Pension Plan automatically ceased for all participants, and the accrued benefits under the Pension Plan were determined and frozen as of that date. Accordingly, as a result of these amendments, the accrued pension liability was reduced by $44.1 million with an offsetting reduction in funded status of pension liability included in AOCL.

Participants in the Pension Plan are now eligible to receive future retirement benefits through a company-funded annual retirement contribution provided through the Profit Sharing Plan for Employees of Trinity Industries, Inc. and Certain Affiliates. The contribution ranges from one to three percent of eligible compensation based on service. Both the annual retirement contribution and the company matching contribution are discretionary, requiring board approval, and are made annually with the investment of the funds directed by the participants.